Tuesday, June 30, 2015

The Next Generation of Gamers

By Jeffrey A. Silver

On April 29, 2015, the UC Berkeley Golden Bears eSports team beat Arizona State to win the collegiate video gaming championship tournament. The winners received their remaining years’ tuition, and if they were graduating seniors, they received a year’s worth of tuition in cash. The contest was sponsored by Blizzard Entertainment, a video game developer whose “Heroes of the Storm” game, which was used in the competition, is scheduled to be released this month. The most notable “milestone” was that the game was broadcast live on ESPN2.

In July 2014 a similar contest featuring the game “Dota 2” was held in a Seattle basketball arena crammed with 11,000 screaming spectators. The contestants were playing for $11 million in total prize money and, according to The New York Times, “moved another step closer to securing [social] gaming’s legitimacy as a major-league spectator sport.” The October 2014 “League of Legends” tournament that was held in Seoul, Korea’s soccer stadium was sold out with 40,000 fans in attendance, another indicator of the rabid devotion to this form of entertainment.

“Global revenue for games is $20 billion higher than the music industry’s and is chasing that of the movie business,” says Nick Wingfield, a writer for The New York Times, and “this fall [2014], Robert Morris University in Chicago will dole out over $500,000 in athletic scholarships to gamers.” He added, “More than 70 million people worldwide watch e-sports over the Internet or on TVs, according to estimates by SuperData Research.”

The Las Vegas Convention and Visitors Authority (“LVCVA”) recently released its year-end statistics that showed over 41 million visitors came to Las Vegas in 2014, a new record! However, there were also a few notable trends in the 2014 “Las Vegas Visitor Profile” conducted by my friends at GLS Research in San Francisco, a company which prepares the annual report for the LVCVA. Their in-person interviews of 3,600 visitors per month revealed that 19% of the interviewees stated that this was their first trip to Las Vegas, and 47% of all visitors said their primary reason for visiting Las Vegas was vacation or pleasure, up significantly from 41% last year. Of the new visitors, 69% said they came primarily for either vacation or pleasure. However, the most surprising, or perhaps disconcerting, statistic was that only 12% of the visitors said they came primarily to gamble!

These two stories are not disparate. Combine them with the recent successes of fantasy sports and we can plainly see the preference of both the millennials and Gen-Xers to a more varied, interactive, and challenging form of gaming entertainment. This is surely a “sea change,” but the dilemma for legalized gaming is to find a way to monetize the phenomenon. The Nevada Legislature recently passed SB 9, which was hurriedly signed into law by the Governor. The preamble to the Bill states, “the continued growth and success of the gaming industry in the State of Nevada depends on the fostering of a business and regulatory environment that promotes continued advances in the use of technology in gaming, which improves the entertainment experience, encourages innovation and supports expansion of the domestic technology sector of the economy of this State.”

In sum, the Legislature has directed the Nevada Gaming Commission to adopt regulations that encourage manufacturers to deploy gaming devices that differentiate requirements for outcomes of a game of skill, a game of chance, and hybrid game. To accomplish this, greater flexibility must be allowed in payout percentages. The Commission was also asked to provide guidelines for some type of integration of social networking technologies so that players enrolled in interactive mediums could engage in games supported by networked servers.

Dickinson Wright’s gaming lawyers are poised to represent game manufacturers, developers, and other ancillary businesses who need access to the casino and resort industry or whose products may require regulatory review.

To read the complete article, please click here.

Tuesday, June 23, 2015

New Law Provides Gaming Industry with Broader Background Investigation Powers

By Kate Lowenhar-Fisher, Jennifer Gaynor and Greg Gemignani

The Nevada Legislature has amended the state’s consumer reporting laws to remove restrictions on the information a credit reporting agency may report to gaming operators. With the passage of Senate Bill 409, a credit reporting agency is no longer prohibited from reporting to gaming licensees information about a job applicant regarding bankruptcies older than ten years, other civil judgments older than seven years, and criminal convictions older than seven years.

Sponsored by former Nevada Gaming Control Board Chairman Senator Mark Lipparelli, SB409 is aimed at allowing gaming operators to conduct more thorough background checks on prospective employees.

Federal law (15 U.S.C. § 1681c) prohibits a credit reporting agency from disclosing in an individual’s credit report information related to a bankruptcy filing that is more than ten years old and certain other negative credit information, including reports of a civil judgment or criminal proceeding that is more than seven years old. Nevada Revised Statutes 598C.150 contained similar prohibitions.

However, the federal law provides for certain exceptions, including an exception for a credit report prepared in connection with the employment of an individual whose salary will be greater than $75,000.

Senate Bill 409 creates a similar exception in Nevada state law for a credit report prepared for a gaming licensee in connection with a person who is seeking employment with the licensee or employment in a position connected directly with the licensee’s operations.

The bill also removes the prohibition against disclosing a record of conviction of a crime which is more than seven years old, meaning that there is no limitation of time for which such a record may be disclosed.

These changes are effective upon bill passage, which means that those seeking positions in Nevada’s gaming industry should be aware that this information will be made available to their prospective employer and take extra care to proactively disclose all bankruptcies, civil judgments, and criminal proceedings, no matter the age of the event.

Tuesday, June 16, 2015

Beyond the Slot Machine: New Bill Directs Nevada’s Gaming Regulators to Craft Regulations to Allow “Hybrid” Games

By Kate Lowenhar-Fisher, Jennifer Gaynor and Greg Gemignani

Nevada is the world’s preeminent gaming destination. Not by chance, but by being a leader in gaming and entertainment innovations. Nevada was the first state in the nation to legalize gaming in 1931, the first to introduce the world to the “casino-resort” with the Mirage in 1989, and, more recently, the first state to license and regulate Internet gaming. Now Nevada legislators have given regulators the green light to allow for the state to take a leadership position in the new world of “hybrid” games.

What is a “hybrid” game? For those who follow gaming law, you know there are two types of games, skill games and games of chance. Then there are those games that fall somewhere on the spectrum between “pure skill” games and “pure chance” games. A “hybrid” game would be one where, by definition, the outcome will be determined by a combination of skill and chance – and possibly other factors (or “identifiers”), including frequency of play, use of other casino services or amenities, and use in combination with other technologies, such as social networking platforms like Facebook and Instagram.

The idea is to draw in a new generation of customers who relate to electronic skill-based game play and would be drawn to features such as bonus rounds that reward the skill of a player, integration of the games with their social media accounts, interactive networked game play, and the use of electronic commerce transactions.

Senate Bill 9 calls for the Nevada Gaming Commission to draft regulations allowing the development of such technology for gaming devices. The bill includes a policy directive and enhanced rulemaking authority to make it clear that Nevada’s gaming regulators have the authority to both develop technical standards for such hybrid games and to allow incorporation of other technologies into gaming devices.

Tuesday, June 9, 2015

Nevada Set to Regulate Nightclubs in Gaming Establishments

By Kate Lowenhar-Fisher, Jennifer Gaynor and Greg Gemignani

In the current legislative session in Nevada, a bill sponsored by the Nevada State Gaming Control Board has been amended to promote the regulation of nightclubs and nightclub employees that operate on a gaming premise. In Nevada, a gaming premise is deemed to be anything on the parcel with a gaming establishment, or as former Gaming Control Board Member Randy Sayre once said “generally, anything inside the borders of the adjacent streets, not just the gaming floor.”

Currently, the Gaming Control Board in Nevada has the power to call anyone associated with or operating within a gaming premise forward for licensing. For example, the Gaming Control Board could call forward a dress shop owner that is a tenant of a casino property. However, in such an instance, the Gaming Control Board would have to incur the investigative costs for such discretionary licensing activity. Because of this, when the Gaming Control Board has concerns regarding the conduct of a nightclub operator, the Board generally investigates the casino licensee and brings disciplinary action (which may include substantial fines) against the casino licensee for not adequately policing its nightclub tenants.

The provisions of SB38 change the basis for such licensing by requiring nightclubs on a gaming premise and their employees to register as gaming entities and employees. Because the nightclubs will be subject to Nevada’s gaming statutes, the Gaming Control Board will have the power to compel licensing while shifting the cost of investigations to the nightclub operators and employees.

As news stories and official notices to the industry have highlighted, there have been a number of issues regarding activities in nightclubs that are tenants of casino operators. Such previously publicized activities include, but are not limited to, refusals to let gaming agents and law enforcement on the premises to investigate allegations of law violations, drug dealing, prostitution and patron dumping (removing overly intoxicated patrons from an establishment and simply “dumping” them, by leaving them on their own outside).

The expansion of the gaming regulatory regime in Nevada to include nightclubs is an effort to curb such illicit activity occurring at clubs on a gaming premise and to ensure that bad actors that are terminated at one club or a gaming premise do not show up at a competing club or gaming premise.

The current bill has the support of major club operators, including Hakkasan, major casino operators, including Wynn Resorts, and the Nevada State Gaming Control Board. It passed the Nevada Senate unanimously, and its first hearing in the Assembly occurred without any opposition to the bill. As many gaming practitioners know, other jurisdictions often look to Nevada for legal developments in gaming because Nevada was the pioneer in regulating gaming activities and involvement in the gaming industry. Therefore, if this change to regulate nightclubs through the state’s gaming regulatory body is successful, other jurisdictions may follow.

Thursday, June 4, 2015

Bill C-290 Losing Steam

By Michael D. Lipton, Q.C., Kevin J. Weber and Jack Tadman

Bill C-290 is a private member’s bill which would alter the Canadian Criminal Code to allow for provincial lottery corporations to offer single-game sports betting.

Despite passing through the House of Commons unanimously, Bill C-290 has been held up by the Canadian Senate since 2012.

In January 2015, Kathleen Wynne, the Premier of Ontario, and Ontario’s Finance Minister Charles Sousa, spoke publicly in favour of passing Bill C-290.

Senator Bob Runciman, a supporter of bill C-290, said in a May 2015 interview with CBC News that “he would be surprised” if Bill C-290 was passed.

According to Senator Vern White, who is opposed to passing the bill, said passing Bill C-290 is not a priority of the Senate and there may not be enough support within the Senate to pass it.

If the Bill is not passed prior to the Canadian elections, which are tentatively scheduled for October 19, 2015, Bill C-290 must be reintroduced into the House of Commons and essentially start from the beginning.

Tuesday, June 2, 2015

Medical Marijuana and Gaming: To Divest or Not to Divest?

By Kate Lowenhar-Fisher, Jennifer Gaynor and Greg Gemignani

Even as more and more states pass laws permitting sales and use of medical and recreational marijuana, marijuana remains an illegal Schedule I drug under the federal Controlled Substances Act.

On May 6, 2014, Nevada State Gaming Control Board Member Terry Johnson issued a Notice to Licensees stating that “… the Board does not believe investment or any other involvement in a medical marijuana facility or establishment by a person who has received a gaming approval or has applied for a gaming approval is consistent with the effective regulation of gaming.” The Notice went on to illuminate the Board’s view that “any such investment or involvement by gaming licensees or applicants would tend to reflect discredit upon gaming in the State of Nevada.”

In its July 2014 hearing, the Board went further and made it clear that a person could not be in the gaming business if his spouse was in the medical marijuana business. In the Board’s view, there must be strict separation between the gaming and medical marijuana businesses.

Furthermore, in light of the civil forfeiture actions undertaken by United States Attorneys in various states around the country, the Board is seriously considering whether there are issues related to medical marijuana licensees lending money or leasing property to gaming licensees.

As a result of the board’s position, gaming licensees and gaming license applicants who have been awarded (or are pursuing) medical marijuana licenses must consider whether and how to divest from the gaming business.

Thursday, May 28, 2015

Canadian Gaming Summit Less Than One Month Away

This year’s Canadian Gaming Summit, which is advertised as Canada’s premier annual conference and exhibition for gaming professionals, will take place at Caesars Windsor from June 16-18.

The Canadian Gaming Summit has educational programs, a trade show, networking events, an annual awards program, and a charity reception.

Dickinson Wright attorneys have integral roles organizing and participating in the legal and regulatory educational programs.

Michael Lipton, from Dickinson Wright’s Toronto office, is the current co-chair of the legal and regulatory track and is moderating an anti-money laundering panel and an iGaming panel. Bob Stocker, from Dickinson Wright’s Lansing office, is joining Michael on the iGaming panel.

Kevin Weber, from Dickinson Wright’s Toronto office, is moderating a panel discussion of problem gambling lawsuits. Thomas McNeill, from Dickinson Wright’s Detroit office, will be participating on that panel.

Jack Tadman, from Dickinson Wright’s Toronto office, will be moderating a panel on the legality of fantasy sports. Greg Gemignani, from Dickinson Wright’s Las Vegas office, will be participating on that panel.

At the 2011 Canadian Gaming Summit, Michael Lipton received the Canadian Gaming Association’s lifetime achievement award in recognition of his contributions to the Canadian gaming industry.

The Canadian Gaming Summit is well attended by regulators, operators, and suppliers. It is an excellent way to make introductions and network with prominent stakeholders in the Canadian gaming industry.