Sharon Harris’s G2E

Thousands attended the G2E Expo at the Sands Expo Center from October 8-11. The American Gaming Association (AGA) and Reed Exhibitions reported the 27,000-plus attendees represented significant increases in all categories:

  • Key buyer attendance increased 16 percent, including 27 percentwho were first-time participants. Many new visitors came from expanding international markets.
  • Total attendance grew by six percent.
  • Educational programs’ turnout increased 30 percent. Designating several sessions to a special events corner within the exhibit floor expedited accessibility for attendees.

SPORTS BETTING EVERY DAY

The daily seminar calendar included multiple sports betting topics, each with a different focus and diverse panel experts. Several corrected misconceptions about the May 14 Supreme Court of the United States (SCOTUS) ruling, which did not legalize sports betting. The decision gave states the authority to determine its legality and operation within their borders. This report summarizes topics and news from numerous seminars.

Currently, Delaware, Mississippi, Nevada, New Jersey and West Virginia have authorized legal, regulated sports betting. One New Mexico tribe is offering sports wagering under an existing Class III gaming compact.Pennsylvania and Rhode Island will launch within months. New York and Connecticut have partial legislation in place.

Longtime New Jersey Division of Gaming Enforcement (DGE) Director David Rebuck is proud his state leads this growing group. The state’s nine-year legal battle in multiple courts gave New Jersey legislators and regulators the time to research how Nevada and many international systems implemented their own program. Rebuck praised New Jersey as the epitome of regulation and integrity.

Rebuck dislikes what he calls the “race to the bottom” Congressional mentality that misunderstands the industry’s safeguards. He referred to legislators as “extremely naive” in their knowledge of the U.S. gaming market.

According to Rebuck, an estimated 108 illegal sites within all 50 states and tribal lands are easy to find. He considers today’s gaming climate an “enlightened period to raise up” all component groups to do a better job.

The tribal story is tricky because introducing sports betting at Indian casinos may add new complications. Tribes exploring their options must navigate tribal, federal and state laws. The original 1992 PASPA law, which banned sports betting, also included tribal lands.

Now potentially available, launching sports betting at tribal casinos requires more examination because of existing negotiated compacts, sovereignty issues and taxation questions. For the tribes, what are the costs of expanding infrastructure and seeking approvals? Is sports betting worth it?

Because the National Indian Gaming Commission (NIGC) considers sports betting as Class III gaming, states will be involved and must review their compact approach to tribes. Some may have to amend state constitutions. If set payment fees are in place, what about possible revenue sharing options? It may be too overwhelming to even start a program.

Tribes will have to make their decisions, but some already have. The Choctaw in Mississippi were the first to offer sports betting outside Nevada; Connecticut’s Mohegans and  Mashantucket Pequots support possible expansion.

Although not currently on the legislative agenda in California, the UnitedAuburn Indian Community (UAIC)has partnered with MGM GVC Interactive in preparation. The alliance promises MGM’s brands and proprietary technology for retail and mobile sports bettingonline poker and online casinos games at the UAIC’s Thunder Valley Casino Resort in metropolitan Sacramento.If opened, the property can only benefit from the recent MGM and the National Basketball Association (NBA) professional sports league deal.

California attorney Jane G. Zerbi said many negotiated tribal compacts have long-range expiration dates. Some expire in 2020, but several amendments extend to 2030 or 2040. Compact revisions will alter the tribal regulator’s role.

National Tribal Gaming Commissioners & Regulators (NTGCR) Chairman Jamie Hummingbird is also the Cherokee Gaming Commission Director in Oklahoma. He is in his seventh NTGCR term and boasts that Indian gaming evolved from a “mom and pop business with humble facilities” to an industry totaling more than half the U.S. gaming dollars.

For both current and future gaming, including sports betting, Hummingbird said, “We want a balanced approach to regulation and new technology that protects tribes and consumers. If it is good for business and legal, we should find a way to make it happen.”

Obviously, gaming wants sports betting, but what about the sports world? ESPN sports anchor Scott Van Pelt welcomes it and said, “I’m pro being an adult and want to do adult things like sports betting.”

How should gaming approach a widespread introduction?Sara Slane, American Gaming Association (AGA) senior vice president of public affairs, wants the AGA to coalesce with all relevant stakeholders to squash all federal legislation. She described four overlapping objectives between the gaming industry and leagues-integrity monitoring, responsible gaming, establishing mobile betting models and eliminating the illegal marketplace.

Guaranteeing operation integrity sparked strong conversations because Van Pelt claimed the sports world already receives complaints. Slane countered that gaming already complies with unprecedented complex licensing mandates and regulations.

“I testified before Congress that 40 states have some type of casino. What will Washington do that we’re not? We are already regulated on banking issues and there are currently about 4,000 commercial and tribal regulators,” said Slane.

Also considered financial institutions, casinos, and certainly sports books, must comply with federal procedures to report suspicious financial activity. According to McDonald Carano Gaming & Administrative Law Group Partner A.G. Burnett, also a former regulator, current technology is sufficient to deter any criminal activity. He said operators have no appetite for more regulation and oppose an “open door to future oversight.”

The semantics of “royalty” versus “integrity fee” created tense, combative moments. Kenny Gersh, Major League Baseball (MLB) executive vice president, gaming and new business ventures, strongly supports a data and monitoring “royalty” charge. He called it “only fair” since the MLB develops the products and assumes the risks. The MLB still owns the game content and he believes that if someone else profits from it, the MLB should participate. Across the gaming industry, the MLB position remains mostly unpopular.

Gersh reported a drop in the suggested fee, down from one percent to .25 percent, of the handle. He claimed that everyone will profit if done right.

Gersh acknowledged challenges to promoting baseball because younger consumers may get bored with its slower pace. The MLB has spent millions on cameras to track all field action, like pitch velocity, to help the MLB boost the action and uniformly deliver data in near real time to licensed operators.

Slane rebuffed Gersh’s contention, countering that casinos shoulder the risks and cannot enjoy a viable sports betting program if the leagues take a percentage. She continued referring to “integrity fees” and favored contractual agreements among stakeholders over federal legislation and/or fees. Companies like MGM have already partnered with the National Football League (NFL) and the National Hockey League (NHL).

Even among all U.S and international operators, the MLB’s position has few champions. Christopher Grove, managing director, sports and emerging verticals, for Eilers & Krejcik Gaming LLC, also advocated commercial agreements.

Grove questioned whether operators view this opportunity as a minor amenity or a potential profit center that erodes the illegal market. A property’s approach to sports betting can make a difference so fees detract from its appeal.

Van Pelt questioned the value of the leagues selling their data when the games are seen live. He asserted that “in-play” sports betting, wagered during the games, works for baseball because every game is actually a series of events, with breaks and unique outcomes per inning.

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Rebuck’s experience with regulations makes him a strong opponent of integrity fees. He stated they have been and will prove unsuccessful nationwide since the official data is already public. It could prove valuable only if the technology changes the input processing of data.

How will technology lure new customers? Master Consulting Principal Stephen Masters previously worked for Nielson ratings, the organization that measures consumption of all television, phone and computer platforms. His analysis encouraged developing great mobile apps to attract and retain the 41 percent of younger betters between 18-34. Growth depends on gaining casual younger fans accustomed to instant recreational availability.

Masters also advised that reasonable tax rates accompany rapid mobile app growth. Top quality national advertising in large states like California, New York and Illinois should help market programs.

Van Pelt said he supports sports betting growth in limited niches like golf tournaments or NASCAR racing. He agreed that any enduring program must sustain consumers’ attention.

The variables for successful sports betting programs will ultimately depend on the unique elements of every property, its ownership, jurisdictional or tribal regulations and tax obligations.

SEXUAL HARASSMENT

Workplace sexual harassment and assault is a pervasive national issue. The #metoo movement has encouraged alleged victims to publicize their stories. This exposure has caused the fall and public scorn of many powerful individuals.

Casino mogul Steve Wynn became the most visible gaming example in 2018. The Wall Street Journal reported that over time, more than 150 people publicly condemned the 76-year-old billionaire for sexual harassment. Dozens accused him of sexually inappropriate behavior in his hotels’ massage rooms.

A married manicurist allegedly received a $7.50 million settlement. She claimed that despite her objections, Wynn coerced her to have sex on a massage table in 2005. The employee later filed a detailed report with the hotel’s supervisor.

Wynn has continuously denied the charges, calling them “preposterous” and unproven. He even countersued, but the fallout from the accusations proved too damaging and he resigned as Wynn Resorts Chairman. His name was removed from the Boston-area casino under construction. The project was renamed Encore-like the Las Vegas venue-for its Massachusetts casino license.

While Wynn was gaming’s most high-profile example of alleged harassment and/or assault, he is not alone. The “Sexual Harassment: Recognizing a Problem and What to do Next” seminar discussed the twists and turns of modern harassment. Experts discussed this era where the accused may have to prove innocence instead of the accuser proving guilt.

The panelists included Caesars Entertainment SVP, Human Resources Matt Krystofiak, SVP/General Counsel at Golden Entertainment Inc (GEI) Phyllis A. Gilland and Cooper Levenson Attorneys at Law Partner Russell Lichtenstein. Each offered different perspectives.

Krystofiak described five components all companies should have ready to anticipate and prevent sexual harassment claims. Harassment is typically a perceived grievance and Krystofiak emphasized the necessity of a policy statement with clear definitions. Other critical elements include anti-harassment training, multiple reporting channels, training investigators and hiring a skilled attorney.

As a trial lawyer, Lichtenstein explained the uncertainty and unpopularity of a jury trial in the current climate. Timeliness is vital, as better memories may help a prosecution.

As in-house counsel, Gilland added her own insights. GEI emerged when Golden Gaming and Lakes Entertainment merged in 2015. The new Nevada company owns and operates two distinct gaming divisions with eight resort casinos and a video gaming equipment route at almost 1,000 separate Nevada and Montana locations. GEI also owns 60 Nevada taverns.

Because public perception never guarantees fairness, Gilland recommends her personnel refrain from hiding facts or ignoring headlines. Following Wynn’s accusations and resignation, GEI retained outside attorneys to interact and advise all senior management. They urged executives to publicly detail any potential pitfalls.

Years of hands-on experience helped formulate Gilland’s extensive advice for GEI’s 7,200 employees.High employee turnover requires Gilland to constantly update policies and conduct training. Companies must provide multiple clear ways to report harassment and management must prepare for almost anything.

Gilland revealed that sexual harassment extends far beyond traditional male/female scenarios, encompassing diverse accusers and defendants. She said that cases involving women harassing women equal those of men harassing women. Hiring more women is no solution because women may harass men and men may also harass men. The time of the alleged incident can be relevant because some incidents happen at night or outside the job location.

Alleged victims should have liaisons within the company to voice their complaints. These can include the chief executive, human resources personnel, anonymous hotlines, in-house or outside counsel. The burden to investigate starts with a compassionate, thoroughly trained Human Resources department.

It is a mistake to not coordinate and combine policies and procedures. Gilland urged these steps:

  • Make timely and prompt responses to all accusations. She said, “An immediate response could avoid litigation.”
  • Analyze both work and personal emails between the accuser and the accused. Sometimes people will not say things in a workplace email, but will on their own personal messages.
  • Develop a successful compliance program. Tip lines are only occasionally used because of bogus messages or scams.
  • Designate specific people who are directed to oversee complaints and subsequent actions.

In an earlier seminar, gaming consultant Thomas Auriemma also recommended all companies develop a compliance plan, code of conduct, written policies to define all types of harassment and a whistleblower or ethics hotline for reporting. However, it may be tricky and he acknowledged that today’s cultural environment could motivate politicians and lawyers to overreact and make judgments without all the facts.

With so many Nevadans working in the gaming industry, regulators are now taking a statewide view. Nevada Gaming Control Board Chairwoman Becky Harris said her board is evaluating whether to create a 16-item questionnaire as part of the Nevada licensing process. Annual reporting would be required. Some attorneys and industry members call this compliance checklist punitive since companies already comply with state and federal regulations and guidelines.

Just as important as prevention are post-accusation investigation methods. If both sides seem credible, career history reviews of both are recommended. Krystofiak said, “Management must not define conduct as illegal when it may in fact be legal. The term ‘harassment’ is often used freely without much thought.”

The new federal tax laws have created another wrinkle to making any settlement offers. Lichtenstein recommended attorneys and executives explore the tax implications. The rules regarding the deductibility of these payments from corporate taxes have changed significantly.

Senior management must weigh the real costs of settlement offers and negotiations. Gilland suggests executives determine the best settlement resolution, avoiding a knee-jerk decision that will ultimately overburden the company financially.

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