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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.
 
 

Monday, July 24, 2017

IMGL AUTUMN GAMING CONFERENCE 2017 IN COPENHAGEN

 
The International Masters of Gaming Law fall 2017 gaming conference will be held in Copenhagen, Denmark, on September 10–12 at the Copenhagen Marriott Hotel. The conference will include, but not be limited to, substantive presentations on (1) the impact of the United States Supreme Court’s upcoming hearing on New Jersey’s challenge of the sports book restrictions imposed by the Professional and Amateur Sports Protection Act; (2) the growing presence and regulation of land-based and Internet esports activities; (3) enforcement developments in the worldwide regulatory push to identify and stop money laundering; (4) trends in European gaming; (5) the latest developments in addressing compulsive gambling; (6) the future of fantasy sports if sports books restrictions are lifted in the United States; and (7) the practical impact of the ever-expanding merger of land-based casinos, Internet gaming, skill-based games, government lotteries, and esports. Further details regarding the conference and registration for the conference are available on the International Masters of Gaming Law website.


International Masters of Gaming Law is a nonprofit corporation dedicated to conducting two gaming conferences each calendar year (one in North America and one elsewhere in the gaming world); providing gaming Master Classes in conjunction with unrelated gaming conferences and expos on a worldwide basis; publishing American Gaming Lawyer, Canadian Gaming Lawyer, European Gaming Lawyer, Asian Gaming Lawyer, Indian Gaming Lawyer, and La Ley Del Juego (Spanish gaming publication); supporting the UNLV Gaming Law Journal; and providing substantive gaming-related papers for publication in a variety of commercial and educational publications.
 
 
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.

Friday, July 14, 2017

Gaming & Hospitality Legal News: Volume 10, Number 5

Recreational Pot Comes to Nevada... But Why Are The Shelves Empty?by Kate Lowenhar-Fisher, Jennifer Gaynor, Jeff Silver, and Greg Gemignani
On July 1, 2017, Nevada became the fifth state in the United States to legalize the sale of recreational marijuana. The epicenter of “what happens here, stays here” tourism just added a new vice to its repertoire! So, what’s the problem?

Among other things, Nevada’s recreational marijuana dispensaries are facing the specter of empty shelves. Why? Because a wrinkle in the ballot measure that legalized recreational marijuana sales in Nevada gives licensed liquor wholesalers a temporary 18-month monopoly on marijuana distribution rights … “unless the [Nevada] Department [of Taxation] determines that an insufficient number of marijuana distributors will result from this limitation.” In order to fill its shelves, a Nevada-licensed recreational marijuana dispensary must use a licensed recreational marijuana distributor to transport the product from the cultivation facility to its retail outlet, because the law for recreational use does not allow dispensaries to transport marijuana from a cultivation facility to their stores (whereas dispensaries selling medical marijuana were allowed to move “medical-use” product from cultivation locations without an independent distribution network).

Despite efforts by marijuana dispensaries to stock up prior to July 1, overwhelming demand for recreational marijuana has resulted in dwindling supplies. And now, distributors are nowhere to be found. That is because very few liquor wholesalers have applied to become licensed marijuana distributors, and those that have made such application have failed to meet the requirements for licensure. The Nevada Department of Taxation (NDOT) reported that as of July 7, 2017, ZERO distribution licenses have been issued by NDOT.

Perhaps liquor wholesalers fear risking their federal alcohol permits issued by the Alcohol and Tobacco Tax and Trade Bureau? It would appear that marijuana distribution licenses would have to be issued to persons other than liquor wholesalers – however, nothing is that simple. A small group of liquor wholesalers, known as the Independent Alcohol Distributors of Nevada, sued and, on June 21, won a temporary injunction against NDOT to prevent marijuana distribution licenses from being issued to persons other than liquor wholesalers.

In response, on July 7, Governor Sandoval endorsed emergency regulations that would give NDOT the authority to determine whether there are a sufficient number of marijuana distributors to service the market – a determination that would allow NDOT to open up distributor licensing to those other than licensed liquor wholesalers. The emergency regulations will be considered by NDOT on July 13. Stay tuned.

Kate Lowenhar-Fisher, Jennifer Gaynor, and Greg Gemignani 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. See the masthead for the contact information of the other authors.

2017 Legislative Update – Overview of Changes To Nevada Gaming Law
by Jennifer Gaynor, Greg Gemignani, Kate Lowenhar-Fisher, and Jeff Silver

The Nevada Legislature, which meets every other year for 120 days, recently wrapped their 2017 session. In this session, the Legislature tackled a diverse set of issues that will impact gaming companies that operate in Nevada, including changes to the confidentiality of information submitted to Nevada’s gaming regulators, allowing for pari-mutuel wagers on esports and other events beyond traditional sports and racing, and adjusting the boundaries for casino resort development within the city of Las Vegas.

Assembly Bill 75 – Nevada Gaming Control Board’s Omnibus Bill

Assembly Bill 75, which was brought by the Nevada Gaming Control Board (“Board”), exempts manufacturers, distributors, and independent contractors associated with gaming from certain licensing requirements and revises provisions governing the regulation of trustees of an employee stock ownership plan by the Nevada Gaming Commission (“Commission”).

What may be the most interesting change, however, is this bill’s addition of a fifth possible action that Nevada gaming regulators may take to dispose of a gaming application: “rejection of the application.” Before this bill, the Commission could approve or deny an application, or refer the application back to staff (the fourth option available is withdrawal of the application, which may be done at the Board level only). Now, the Commission may “reject” an application. Such a rejection is not a “denial,” but it allows the Commission to dispose of an application without having to deny it. This was done to provide the Commission more flexibility. But what is unclear is how other jurisdictions will handle a multi-jurisdictional applicant or licensee that has received a rejection (but not a denial) from Nevada. Additionally, gaming contracts regularly address contingencies that include what may happen if a licensing application that is required for a party to fulfill a contract is withdrawn or denied. This standard gaming contract language will need to be updated to reflect the additional potential outcome of “rejection.”

Assembly Bill 219 – Adjusting Gaming Districts in the City of Las Vegas

This was a bill brought on behalf of the City of Las Vegas to help them redefine the location of Gaming Enterprise Districts (“GEDs”) within city boundaries, to balance between gaming development and preservation of settled residential areas. This bill eliminates a portion of the Las Vegas Boulevard gaming corridor GED where that GED encroached into an established residential area within the city. The bill also creates the Historic Downtown Gaming District, to encourage development in the historic gaming center of downtown Las Vegas. This district matches up with the City’s long-standing “permissive downtown casino district” where nonrestricted gaming would be acceptable, within a zone bordered by Main Street, Stewart Avenue, Third Street, and Carson Avenue. The change was needed to allow for development of new and expanded gaming resorts within the downtown core.

Senate Bill 120 – Adjustments to Nevada’s Problem Gambling Program

Senate Bill 120 revises the membership and duties of the Advisory Committee on Problem Gambling. The bill allows Nevada’s Governor more flexibility in filling the appointments to the Advisory Committee on Problem Gambling because the membership requirements had been so narrowly defined that some advisory seats were left vacant as there were no appropriate people to fill them. The bill also provides that the Advisory Committee shall provide advice and information to decision- makers in the state, such as the Governor, Legislature, and the Department of Health and Human Services, about problem gambling for purposes including assisting in the establishment of priorities for problem gambling programs and services and recommending legislation, regulations, or the adoption of public policy concerning problem gambling.

Senate Bill 240 – Pari-Mutuel Wagering for “Other Events”

Brought by the Boyd School of Law gaming law class, Senate Bill 240 clarifies that the pari-mutuel system of gaming may be utilized for wagers on events other than horse racing, dog racing, or sporting events. With the growing popularity of “esports” – competitive video games where players often compete in a stadium-style tournament – the gaming law class believed that it would be helpful to provide flexibility to gaming operators in offering wagers on such events. This bill also allows for pari-mutuel wagering on a variety of other non-racing or sporting events, which may, for example, potentially include the results of reality competition shows.

Senate Bill 376 – Confidentiality of Information Submitted to Nevada’s Gaming Regulators


Senate Bill 376 addresses the confidentiality of data and information provided by gaming applicants and licensees to state regulatory agencies. This bill amends NRS 463.120, the statutory section that provides for confidentiality of information submitted to the Board and Commission as part of the Nevada state gaming application process, to provide that

… if any applicant or licensee provides or communicates any information and data to an agent or employee of the Board or Commission in connection with its regulatory, investigative or enforcement authority:
(a) All such information and data are confidential and privileged and the confidentiality and privilege are not waived if the information and data are shared or have been shared with an authorized agent of any agency of the United States Government, any state or any political subdivision of a state … in connection with regulatory, investigative or enforcement authority …
(b) The applicant or licensee has a privilege to refuse to disclose, and to prevent any other person or governmental agent, employee or agency from disclosing, the privileged information and data.

“Information and data” is defined to mean all information and data in any form, including, without limitation, any oral, written, audio, visual, digital, or electronic form, as well as any account, book, correspondence, file, message, paper, record, report, or any document containing self-evaluative assessments, self-critical analysis, or self-appraisals of an applicant’s or licensee’s compliance with statutory or regulatory requirements.

This change was made because the confidentiality of information obtained by the Board and Commission as a part of their routine regulatory responsibilities has been under continual assault by civil litigants, and the Board wants to encourage full disclosure by applicants.

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.

Please view our website for this News Bulletin.
Disclaimer: Gaming & Hospitality Legal News is published by Dickinson Wright PLLC to inform our clients and friends of important developments in the fields of gaming law, federal Indian law, and hospitality law. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in Gaming & Hospitality Legal News.

Thursday, July 6, 2017

Kate Lowenhar-Fisher is quoted on ESPN's Chalk Story

Kate Lowenhar-Fisher  (Member, Las Vegas) was recently quoted on ESPN’s Chalk Story,Supreme Court will hear New Jersey sports betting appeal: What's next?”  Kate is quoted, "Unless and until there's an economic imperative for the professional sports leagues to get behind sports betting -- and I mean more than just words -- it won't happen," said Kate Lowenhar-Fisher, a gaming industry attorney with Dickinson Wright in Las Vegas. "The illegal sports betting market is huge, and I doubt that the widespread legal betting market would bring in millions of new viewers.  People who like to bet on sports already do."

Ms. Lowenhar-Fisher 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. You may reach Kate in the Las Vegas, NV office at 702-550-4459.

Monday, July 3, 2017

Kate Lowenhar-Fisher and Greg Gemignani Co-Author Article

Kate Lowenhar-Fisher (Member, Las Vegas) and Greg Gemignani (Member, Las Vegas) co-authored an article for June’s edition Online Gaming Law titled, The Impact of Regulatory Scrutiny on Daily Fantasy Sports in the U.S.”  Kate and Greg examine the effect of regulation on daily fantasy sports (DFS), discuss the implications of Los Angeles Turf Club v. Horse Racing Labs, and assess the current legal status of DFS in the United States.



Ms. Lowenhar-Fisher 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. She may be reached in the Las Vegas, Nevada office at 702-550-4459.

Mr. 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 our Las Vegas, Nevada office at 702-550-4468.





 







 

Tuesday, June 20, 2017

Liability Potentially Extended to Gamblers

By: Michael Lipton, Q.C. (Partner, Toronto)
and Chantal Cipriano (Associate, Toronto)

Will the result of the controversial decision in Paton Estate v. Ontario Lottery and Gaming Corporation1 (“OLGC”) impose a duty of care on the OLGC similar to the “commercial host”
duty of care that is owed by establishments serving alcohol?

The case arises out of the actions of a solicitor’s clerk, who due to a chronic gambling problem, stole millions of dollars from the Paton Estate (the “Estate”) and other clients of the solicitor’s firm by forging documents, and selling Estate assets. Over a fourteen month period, she lost millions belonging to the Estate by playing at an OLGC casino while misrepresenting herself as a lawyer. The causes of action against the OLGC included unjust enrichment, negligence and knowing receipt of trust funds for failure to scrutinize the source of the clerk’s money and permitting a compulsive gambler to continue gambling at its casinos.

The motion court judge struck the statement of claim on the grounds that the clerk misrepresenting herself as a lawyer to the operators of the OLGC’s casinos did not lead to the conclusion that the OLGC had notice she was gambling with trust funds obtained by fraud. In addition, the judge found that the OLGC had valid reasons for retaining money that it had received, since it did not owe a duty of care to the clerk as a problem gambler, and accordingly did not act negligently. Consequently, the claim was struck on the basis that it did not allege a reasonable cause of action and that it was “plain and obvious” the lawsuit would have no chance of success.

Please read the entire article here.


Please feel free contact Michael Lipton at 416-866-2929 or Chantal Cipriano at 416-646-6864 in our Toronto office.