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Tuesday, September 19, 2017

Rift Widens Over States' Role In Sports Betting


Kate Lowenhar-Fisher (Member, Las Vegas) is quoted in the article “Rift Widens Over States' Role In Sports Betting published by Law360.  “It is pretty obvious why the leagues would rather lobby the federal government for a single piece of legislation than state governments for 50 pieces of potentially inconsistent legislation,” said Kate. “There are certain states that likely will continue to reject legal gambling within their borders. That’s the point. The feds should have no real place in the sports betting discussion aside from aiding states in the enforcement of their own laws to the extent sports betting activity affects interstate  commerce.”   


“Gambling has always been the purview of the states, and a ‘federal framework’ sounds like an unconstitutional nightmare,” Lowenhar-Fisher said. “If PASPA gets struck down, then the feds should amend or repeal the Federal Wire Act and get out of the way.”
 

Ms. Lowenhar-Fisher (Member, Las Vegas) is a leading Nevada gaming attorney who counsels many of the world’s premier gaming companies on regulatory issues in connection with mergers and acquisitions, corporate restructuring, reorganizations and financings.  She has extensive experience advising clients on issues related to Internet gaming, social gaming, fantasy sports, liquor licensing, nightclubs, restaurants, sweepstakes, contests, and promotions. She regularly represents individuals and businesses before regulatory agencies, including the Nevada State Gaming Control Board, the Nevada Gaming Commission, the Clark County Liquor and Gaming Licensing Board and the Las Vegas City Council.

Friday, September 15, 2017

Nevada 2017 Legislative Update: Gaming Law


Jennifer Gaynor (Member, Las Vegas), Greg Gemignani (Member, Las Vegas), Kate Lowenhar-Fisher (Member, Las Vegas), and Jeff Silver (Of Counsel, Las Vegas), were featured on the cover of the Clark County Bar Association Communique, (September - 2017 edition).

The article is titled, “Nevada 2017 Legislative Update: Gaming Law” and discusses how in 2017, Nevada’s lawmakers addressed gaming industry issues, including the confidentiality of information submitted to Nevada gaming regulators, the boundaries of gaming enterprise districts (“GEDs”) in the City of Las Vegas, and pari-mutuel wagers for e-sports events.

 

Jennifer Gaynor, Greg Gemignani, and Kate Lowenhar-Fisher are Members in Dickinson Wright’s Las Vegas office, and Jeff Silver is Of Counsel in the Las Vegas office. Jennifer Gaynor can be reached at 702-550-4462 or jgaynor@dickinsonwright.com. Jeff Silver can be reached at 702-550-4482 or jsilver@dickinsonwright.com.
 

Wednesday, September 6, 2017

MARIJUANA AND THE GAMING INDUSTRY IN NEVADA: JUST SAY NO


On August 24, 2017, the Nevada Gaming Commission (“Commission”) engaged in a “Policy Discussion” regarding “Marijuana and the Gaming Industry.” Spurred by what has become a flood of questions from gaming licensees regarding their responsibilities in the recreational marijuana era in Nevada, the Commission hoped to provide some clarity and guidance for gaming licensees regarding the issues of third-party events and business associations. 

Commission Chairman Alamo made clear at the outset that this was not a forum in which the Commission would be rule-making, but that it would just be a discussion of current law, as it applies to certain issues that have been raised by licensees. 

Before delving into specific issues, however, Chairman Alamo also made a general statement about his view as to what the Commission’s policy regarding marijuana should be, which is that: “On one hand you have the gaming industry and on the other hand you have the marijuana industry and the two shall not meet” because marijuana is still a Schedule 1 drug under federal law and licensees must comply with federal laws. He pointed to Nevada Gaming Commission Regulation 5.011 –which provides grounds for disciplinary action for licensees, including the broad category of actions that “would reflect or tend to reflect discredit upon the State of Nevada or the gaming industry.” 

A survey by Chairman Alamo of his fellow Commissioners’ opinions on that statement elicited a general consensus from the Commission that involvement with marijuana was an unsuitable method of operation for Nevada gaming licensees. Along with fears of discrediting Nevada’s gaming industry, the Commissioners voiced concern that the federal government may take a stronger interest in Nevada’s gaming industry if the state appears unconcerned about marijuana use or promotion on gaming properties. 

How this sentiment by the Commission will be put into effect in the form of disciplinary actions brought by Nevada’s gaming regulators is yet to be seen. However, the discussion that followed provides some hints.

The discussion focused on three issues:
1. Events on the premises of a licensed gaming establishment that cater to or promote the use, sale, cultivation or distribution of marijuana.
2. Contracting with or maintaining a business relationship with an individual or entity engaged in the sale, cultivation or distribution of marijuana, including vendors and landlord/tenant relationships.
3. Licensees receiving financing from or providing financing to an individual, entity or establishment that sells, cultivates or distributes marijuana. 

These three issues are but the tip of the iceberg, and Chairman Alamo recognized that with the statement that there will be future questions the Commission will look at that will require more nuance, and that these three issues seemed to present a good starting point for the discussion.

On the first issue – whether gaming licensees can allow on their premises events or conferences that promote the resale, cultivation or use of marijuana – a few points were made clear. One was that the Commission wants to have a “level playing field” for all licensees, and to not penalize those licensees who err on the side of caution in not allowing such events and lose out on revenue to another licensee down the road who books the marijuana conference. The Commission members, again, made it clear they were not setting policy and did not say that licensees could not host a marijuana-related conference or event. However, it was made clear that to do so would put a licensee at risk of disciplinary action. This risk was made clearer by the sentiment expressed by Chairman Alamo, who stated that the only way to get parity and stability between a licensee that abides by the law and the one down the street that doesn’t do so is to “file a complaint” so that the gaming regulators can act upon it.

Nevada Gaming Control Board (“Board”) Chairman Burnett, seeking to put a finer point on the question, asked the Commission if having a marijuana convention would be seen as an embarrassment for Nevada’s gaming industry. Commission Member Fuetsch responded that she believed that having a marijuana convention would “be the wrong thing to do and have an impact on the gaming industry if it’s held at a casino.” Commission Member Townsend responded: “No, no and no … There is no upside to a handful of dollars over a weekend than there is to the downside of the damage it can do to the integrity of the industry and the State.” 

Chairman Alamo condensed the discussion of the second and third questions, which are a licensee contracting with or engaging in business with someone in the marijuana business, including in the landlord/tenant context, and a licensee providing funding for or receiving financing from a marijuana industry company. Both Chairman Alamo and Commission Member Pro were, as Chairman Alamo said, “crystal clear” on the final two issues – saying “no” to both of them and suggesting that licensees should “follow the money” and should not “go there in any way, shape or form.” 

It remains less than crystal clear, however, what exactly this all means for licensees in practice. Commission Member Moran, for example, raised questions that cannot be easily answered, including if hotel rooms in casino resorts are private or public, whether children of gaming licensees may be allowed to be in the state-legal marijuana business and if a licensee comes into possession of money they learn came from marijuana business proceeds, should they not accept it? 

Board Member Johnson said it best when he made the statement “that marijuana use violates federal law is not the end of the story” and expressed that Nevada’s gaming regulators must balance that concern with the will of the people in Nevada and our state’s legislature in voting for medical and recreational marijuana to be authorized in Nevada. But this, alas, will not be an easy path for Nevada’s gaming regulators to walk. There are many gray areas and countervailing rights and laws (reasonable expectation of privacy for guests in hotel rooms or the freedom of speech when it comes to events on gaming premises, for example) that must be considered. And, of course, there are issues of practicality – such as how much can you expect each gaming licensee to know about every customer and business partner and how far should licensees be expected to go to police marijuana use on their premises – that also must play into the creation of any good policy. For now, however, gaming licensees at least have more information than they did before regarding how Nevada’s gaming regulators may approach these policy issues going forward. If in doubt, “just say no.”
 

Jennifer Gaynor, Greg Gemignani, and Kate Lowenhar-Fisher are Members in Dickinson Wright’s Las Vegas office, and Jeff Silver is Of Counsel in the Las Vegas office. Jennifer Gaynor can be reached at 702-550-4462 or jgaynor@dickinsonwright.com. Jeff Silver can be reached at 702-550-4482 or jsilver@dickinsonwright.com.

 
 
 
 

Thursday, August 31, 2017

Nevada oddsmakers cheer top-court review of N.J. sports betting case


Greg Gemignani (Member, Las Vegas) was quoted in the Las Vegas Sun article on "Nevada oddsmakers cheer top-court review of N.J. sportsbetting case".
 
The article focuses on the U.S. Supreme Court’s decision to hear a case against a law preventing legalizing sports gambling in New Jersey. The Professional and Amateur Sports Protection Act prohibited sports betting across the country, except in Nevada, Montana, and Delaware. The Supreme Court decided to hear New Jersey’s challenge to a 3rd U.S. Circuit Court of Appeals decision that used the protection act as justification to kill a sports betting law Gov. Chris Christie approved in 2014.  “If it falls, you’ll have two lobbying groups,” Greg said. “One will be people from the gaming side who say we should be able to take wagers on sports. And then we will have the flip side, led by the NCAA and I think the NFL, the only pro league adamantly opposed to sports wagering.”

Greg Gemignani's practice focuses primarily on intellectual property law, gaming law, technology law, internet law, online gaming law, and online promotions law. He has represented many clients ranging from the largest casino companies to start-up internet ventures. Greg may be reached in the Las Vegas office at 702-550-4468.

Friday, August 25, 2017

DraftKings, FanDuel Face Test of Their Business as They Go It Alone


Greg Gemignani (Member, Las Vegas) was recently quoted in the Wall Street Journal articleDraftKings, FanDuel Face Test of Their Business as They Go It Alone.” One big unknown of the industry is how would daily fantasy sports fare if sports betting becomes more widely legal in the U.S. The U.S. Supreme Court recently agreed to hear a case that challenges a federal ban on sports betting in much of the country. Greg told the Wall Street Journal that he doesn’t see how daily fantasy could compete in a world where “you can bet on sports directly instead of having to use this somewhat clunky process.”
 
Greg Gemignani's practice focuses primarily on intellectual property law, gaming law, technology law, internet law, online gaming law, and online promotions law. He has represented many clients ranging from the largest casino companies to start-up internet ventures. He may be reached in our Las Vegas, Nevada, office at 702-550-4468.

Monday, August 14, 2017

NEVADA MODERNIZES GAMING MANUFACTURER’S STATUTES

Gaming & Hospitality Legal News: Volume 10, Number 7
by Jennifer Gaynor, Greg Gemignani, Kate Lowenhar-Fisher, and Jeff Silver

Nevada has one of the oldest and most developed bodies of gaming law and regulation in the world. The Nevada licensing regime reaches not only casinos and those offering gaming to the public but also many gaming device manufacturers. Since “wide-open” gaming was legalized in the 1930s, Nevada’s gaming statutes, regulatory agencies, and regulations have been in a constant state of evolution.

As mentioned, Nevada regulates manufacturers and distributors of gaming devices used in Nevada gaming establishments. A gaming device is defined as either:

  • A slot machine
  • A program that controls or interprets wins and losses
  • A random number generator used to determine or influence the outcome of a game and wager
  • A system of accounting or management of any game in which the result of the wager is determined electronically
  • An assembly consisting of at least two of the following components: (1) an electronic assembly designed for use in a slot machine; (2) a cabinet with electrical wiring and provisions for a display and coin or ticket in; (3) a mechanical or electric display unit intended for use with gambling; (4) an assembled mechanical or electromechanical unit designed for use in slot machines.
Nevada defines a manufacturer to be anyone that manufactures, produces, designs, controls the design, controls the assembly, or makes modifications to a gaming device, mobile gaming system, cashless wagering system, or interactive gaming system.

The combination of the broad definition of a gaming device with the broad definition of a manufacturer was consistent with vertical manufacturing of slot machines as it existed in Nevada for decades. Traditionally, gaming devices (slot machines) were custom-built devices that were made with customized components. As slot machines and gaming devices became computerized, off-the-shelf technologies, such as CPUs, memory, CRT displays, and LCD displays became more common. With further computerization, operating systems moved from proprietary systems designed for specific device architectures to customized versions of Windows and Linux. Today, slot machines and gaming device architecture is nearly indistinguishable from off-the-shelf computers and computing devices. This has led to increasing use of independent contractors, design companies, and component assemblers by traditional gaming device manufacturers.


In response to the evolution of the gaming device manufacturing industry, Nevada has periodically adjusted its statutes and regulations to reflect such evolution. This summer a new and significant step was made with the enactment of AB75. Prior to the enactment of AB75, a gaming device manufacturer had to control all aspects of the design, creation, and manufacture of gaming devices for use in Nevada. AB75 allows licensed gaming device manufacturers to increase their use of third-party developers, assemblers, and designers provided that the licensed gaming manufacturer assumes all legal and regulatory responsibility for the gaming device.

The changes ushered in by AB75 will allow manufacturers and vendors with appropriate agreements to expand existing relationships, form new relationships, and broaden the participation of those involved in programming, designing, creating hardware, and assembling gaming devices for use in Nevada. If you have questions regarding this new development in gaming law, or gaming law in general, please contact us.


Jennifer Gaynor, Greg Gemignani, and Kate Lowenhar-Fisher are Members in Dickinson Wright’s Las Vegas office, and Jeff Silver is Of Counsel in the Las Vegas office. Jennifer Gaynor can be reached at 702.550.4462 or jgaynor@dickinsonwright.com. Jeff Silver can be reached at 702.550.4482 or jsilver@dickinsonwright.com.
For a printable version of this Gaming & Hospitality Newsletter, click here.


Thursday, July 27, 2017

NEVADA’S LOOMING MARIJUANA SHORTAGE: EMERGENCY REGULATIONS ADOPTED

 
On July 13, the Nevada Tax Commission (the “Commission”) held a public hearing to discuss the potential marijuana product shortfall facing the state’s dispensaries following the launch of state-authorized recreational marijuana sales in Nevada on July 1. The reason for the potential product shortfall: a provision in the initiative petition that legalized recreational marijuana in Nevada that gave an 18-month monopoly on recreational marijuana distribution to licensed liquor distributors.

As of the date of the hearing, there were only two liquor distributors that had received licenses as marijuana distributors.  This number appears to be far short of what will be needed to restock Nevada’s 47 licensed retail marijuana dispensaries, which report ongoing heavy traffic from recreational purchasers. According to news sources, these 47 dispensaries reported more than 40,000 retail transactions in the first weekend of recreational sales.

After taking public comment, which included input from liquor distributors and marijuana dispensaries and their representatives, as well as other members of the public, the Commission voted unanimously to adopt the emergency regulations.

The emergency regulations do not automatically open up the recreational marijuana distribution market; they merely give the Nevada Department of Taxation the discretion to consider the situation and make a determination regarding whether more distributors are needed. The regulations include a prescribed process and timeline for the Department to make the determination. In addition, that determination must be made at a publicly noticed meeting, after a request is made with five days’ notice for the state’s marijuana establishments to complete a survey that will help the Department determine if there is a need. This public meeting has not yet been set, but it is expected to be scheduled soon.
 
 
Jennifer Gaynor, Greg Gemignani, and Kate Lowenhar-Fisher are Members in Dickinson Wright’s Las Vegas office, and Jeff Silver is Of Counsel in the Las Vegas office. Jennifer Gaynor can be reached at 702.550.4462 or jgaynor@dickinsonwright.com. Jeff Silver can be reached at 702.550.4482 or jsilver@dickinsonwright.com.