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virtual Round Table Gaming 2016 Round table: Gaming Law 2016

MEET THE EXPERTS

Jamie Nettleton - Addisons Paul Voigt - Taylor Wessing T: +61 2 8915 1030 T: +49 30 885636-0 E: [email protected] E: [email protected] W: www.addisonslawyers.com.au W: www.taylorwessing.com amie Nettleton enjoys a global reputation as a law expert. He aul Voigt is a member of Taylor Wessing’s German Technology, Media advises Australian and international gambling operators on Australian and Telecommunications practice. He has an excellent track record in J legal issues, as well as in relation to investments overseas. Clients P dealing with the legal aspects of e-gaming, e-commerce, IT include gaming machine manufacturers, wagering operators, and other gambling and data protection. Paul is to some of the biggest online poker and providers. service providers. Jamie also has extensive specific expertise and knowledge in the field of He is a specialist for information technology law, regularly publishes on a variety and social media. of technology-oriented topics in all relevant German legal magazines and regularly lectures on technology issues Jamie is Vice President of the International Masters of Gaming Law and a Senior Fellow at the University of Melbourne where he teaches Gambling and the Law. Jamie has been Kim Walberg - Taft Stettinius & Hollister ranked as a leading gaming by Chambers Global every year since 2008 T: +1 312 836 4164 E: [email protected] Kate Bedford - University of Kent W: www.taftlaw.com T: +44 (0) 1227 82 (4868) IM R. WALBERG concentrates her practice in commercial litigation, E: [email protected] including breach of , business , shareholder disputes, class W: www.kent.ac.uk K action , construction litigation, zoning litigation, commercial he Bingo Project (http://www.kent.ac.uk/thebingoproject/) is a lease disputes, enforcement of restrictive covenants, trust litigation and Section 1983 civil research project based at Kent Law School (University of Kent, rights litigation. T Canterbury). It is funded by the Economic and Social Research Council – one of the UK’s main academic research funders. It uses four case studies of bingo Kim has defended the City of Chicago and the Chicago Department in multiple class around the world to explore the governance of risk, welfare, and gambling in actions alleging due process violations based on the purported deprivation of money and law, politics, and political economy. The case studies are of bingo regulation in England other personal property. Kim has achieved successful resolutions of these cases at the district and Wales; Canada; Brazil; and online in the European Union. NB: These answers to the level, involving issues which have been appealed and affirmed by the United States questions below relate only to the England and Wales case study. Supreme Court.

The Principal Investigator was Dr Kate Bedford (Reader in Law). Her academic research is on law and political economy. Kate is interested in bingo because it is a key site of working class women’s gambling, and because it often mixes charity and commerce. It can offer important lessons to academics and policymakers about gender, class, and the regulation of speculation. She has played bingo since she was a child.

2 3 Round table: Gaming Law 2016

MEET THE EXPERTS

Joerg Hofmann - Melchers T: +49 (0) 62 21-18 50-141 E: [email protected] W: www.melchers-law.com oerg is the immediate Past President of the International Masters of Gaming Law (IMGL) and group leader of the Gaming & Betting J Law Practice Group of MELCHERS law firm. He has been practicing gaming law since the mid-90s and MELCHERS’ legal advice is highly valued by global market leaders in all sectors of the gaming industry. A highly recognised expert in the field, Joerg has been consistently ranked as a “Leading Individual” in Gaming & Gambling by Chambers Global since 2011 and is the only German Lawyer listed among “Germany’s Best ” in the category “Gaming Law” by BestLawyers and Handelsblatt in 2014 and 2015. In 2015, Joerg further received the award “Gaming Law – Lawyer of the Year in Germany – 2015” from Global Law Experts. He has also repeatedly been listed in Who’sWhoLegal for sport and entertainment in Germany.

Henrik Hoffmann - Advokat Henrik Norsk Hoffmann T: +49 69 2727 6486 E: [email protected] W: www.hnhlaw.eu nternational commercial lawyer with working experience in several different . Providing legal counselling in English, I German and Danish. Special Focus on international , international commercial arbitration and gaming law.

4 5 Round table: Gaming Law 2016 Gaming Law 2016

The Gaming Law Roundtable 2016 is an essential tool for better understanding the recent regulatory changes and current trends. Highlighted topics include: the responsibilities of the licensee to tackle the issue of gambling addiction, a discussion on how mobile devices are revolutionising the gaming industry, and an outlook on the gaming industry from the perspective of bingo operations in the United Kingdom. Featured countries are: United Kingdom, Germany, Denmark, Australia and the United States.

1. Who are the main regulators and what services, but does not make liable Australian • preventing gambling from being a source Under the 2005 Act, all operators (commercial are the key that apply to the gam- residents who access these services. of crime or disorder, being associated with crime and non-commercial) offering bingo with ag- ing industry in your ? or disorder, or being used to support crime, gregate stakes or prizes of over £2,000 in any Whereas the IGA targets the supply of inter- • ensuring that gambling is conducted in a seven day period must hold an operating license H. Hoffman: The only regulator of the gambling active (or online) gambling services, State and fair and open way, and from the . Bingo games industry in Denmark is the Danish Gambling Au- Territory continues to regulate land- • protecting children and other vulnerable are allowed in pubs, members’ clubs, miners’ thority, which is an independent public author- based gambling activities. Different regulatory persons from being harmed or exploited by welfare institutes and commercial clubs (where ity. With effect from 1 January 2012 all previ- frameworks exist for different types of gam- gambling. proceeds can be taken as profit) without an op- ous gambling related legislation and bling, including casinos, sports betting, gam- erating license, so long as they do not exceed were combined in a single Danish gambling act, ing machines and lotteries. Separate regulatory The Act covers both commercial and non-com- the £2,000 threshold or involve links with oth- and the market went through a partial liberali- bodies exist in each State/Territory. mercial bingo operations. er premises. Members’ clubs (commercial and sation allowing privately owned operators to of- non-commercial) and miners’ welfare institutes fer betting and . Each State and Territory regulator is responsible Commercial bingo operators include tradition- can charge limited participation fees of £1 per for granting licences, monitoring compliance al bingo halls, seaside bingo arcades, holiday person per day. Pubs cannot charge participa- The Danish Gambling Act is supported/ regu- and enforcing the relevant gambling legislation parks, commercial sports and social clubs, and tion fees. lated in detail by a number of Orders, in its jurisdiction. The leading licensing jurisdic- adult gaming centres. These require an operat- where the most important ones are the Execu- tions for online gambling in Australia are the ing license for the company and a personal li- To charge higher participation fees, of up to £3 tive Orders on i) Online Betting, ii) Land Based Northern Territory (Northern Territory Racing cense for key staff, both issued by the Gambling per person per day, members’ clubs and miners’ Betting, iii) Online Casino, iv) Land Based Casino Commission (NTRC)) and Norfolk Island (Norfolk Commission. They also require a premises li- welfare institutes require a local authority per- and v) Slot Machines. Island Gaming Authority (NIGA)). cense from the relevant local authority. mit. To qualify for a club gaming permit, mem- bers’ clubs must be genuine members’ clubs, Nettleton: As a Federation, the legislative power Bedford: Gambling regulation in United King- Non-profit making bingo operators include ex- with participation in gaming restricted to mem- in Australia is divided between the Federal Gov- dom is driven by the Gambling Act 2005 (the services clubs, miners’ welfare institutes, po- bers and their bona fide guests but open to ernment and the eight constituent States and Act). This aimed to modernise gambling regula- litically-affiliated clubs; working men’s clubs; them all. The rules around this are extensive. Territories. Traditionally, the power to regulate tion, reflecting a New Labour desire to encour- non-profit making sports and social clubs; vil- The Act outlines minimum numbers of mem- gambling activities in Australia is reserved to the age the leisure sector as a crucial part of the UK lage halls; community centres; and churches. bers required to establish a members’ club and States and Territories. economy. It replaced a law and policy approach Proceeds are donated or used for the benefit of waiting periods to play, and the Gambling Com- In 2001, the Federal Government enacted the characterised by a reluctant tolerance of gam- members. When bingo was first legally enabled mission has offered guidance to local authori- Interactive Gambling Act (IGA), which prohibits bling. The 1968 Betting and Gaming Act, which in United Kingdom, in 1934 via the Betting and ties on determining whether a club is a genuine the provision of ‘interactive’ (or online) gam- reflected that approach, employed a prescrip- Gaming Act and then more explicitly in 1956 via members’ club, and whether there is ‘‘substan- bling services with an ‘Australian customer link’ tive, ‘command and control’-style of regulation the Small Lotteries and Gaming Act, legislators tial of activities other than gaming.” (Operational Prohibition), subject to express -ex in which operators had little flexibility in inter- intended to support these sorts of activities. [1] Clubs can only be established for gaming if emptions in respect of wagering services (with preting rules and procedures. The 2005 Gam- Bingo can be run – without a license – to raise established for whist or bridge, a long-standing the exception of in-play sports betting services bling Act aimed to move to a more self-regula- money for a good cause, so long as the players class-based distinction that continues to impact provided online) and lottery services (with the tory approach, where operators had more free- are informed where the money is going and all bingo. exception of instant lotteries). The IGA also pro- dom to decide how they could best comply with the money raised is donated to the good cause hibits the advertising in Australia of interactive standards laid down by the new national regula- (minus reasonable costs for organising the J. Hofmann: Traditionally, gambling law in Ger- gambling services (Advertising Prohibition). The tor, the Gambling Commission. event). If played for cash prizes (to a maximum many is considered to be part of the law of pub- IGA imposes liability on entities involved in the of £600 in any event), participation fees of up to lic order and is therefore regulated at state lev- supply and promotion of interactive gambling The licensing principles of the Act are threefold: £8 can be charged. They must be donated. 1 Gambling Commission. 2012. Guidance to Licensing Authorities, 138.

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el, i.e. by each of the federal states (‘Laender’) One further body worth mentioning is the Gam- five video gaming terminals in licensed retail minus winnings) is due. This is technically not a of Germany. bling Committee consisting of representatives establishments, truck stops, veteran and frater- tax but a duty which can be deducted from the of each of the 16 German states, who are ap- nal establishments. The video gaming terminals corporate taxes as a business expense, when The respective authorities in each of the 16 Ger- pointed by the head gambling supervisory au- are all connected to and monitored by a Central calculating the tax base for corporate taxes lia- man federal states are therefore in charge of the thorities of the respective states. The Gambling Communications System. The Video Gaming Act ble in Denmark. However, no deductions of bo- execution of the relevant gambling – there Committee, despite having been criticised for grants the IGB “jurisdiction over” and authority nuses etc. are allowed when calculating the tax is no “main” regulator as such. Often, the com- being unconstitutional by German , still to “supervise all gaming operations governed by base, and a negative GGR in one period cannot petent authorities will be the respective Min- must be understood to have a fairly strong in- [the] Act,” including the power to issue regula- be setoff in previous or future positive GGR. istries of the Interior (e.g., with regard to the fluence on the German gambling regulation. It, tions regarding the operation of video gaming land-based casino sector). In the slot machine however, may not be compared to bodies such and the licensing of video gaming. See 230 ILCS For Land Based casino and slot machines the gambling sector, however, local gaming halls are as the UK Gambling Commission which act as 40/78. The IGB has promulgated a set of rules to gambling duty depends on the size of the GGR supervised by the respective municipal offices. the main regulator for gambling. implement the Riverboat Gambling Act and the and is 30-75% of GGR. Video Gaming Act. Some other, nationwide, competences have Walberg: Casinos and Video Gaming in Illinois are Gambling duty must be calculated and paid on a been assigned to specific regulators pursuant to regulated by the Illinois Gaming Board (IGB”), a Voigt: Germany consists of 16 Federal States. monthly basis. the Interstate Treaty on Gambling (the ‘Interstate five-member board, appointed by the Governor Each of them has a gaming regulator responsi- Treaty’), the main legal framework in gambling and confirmed by the State Senate. The IGB ad- ble for lotteries, sports betting, casino and -pok Nettleton: The Australian taxation regime in re- law, which is implemented by the Gambling Acts ministers a regulatory and tax collection system er games in their respective territory. Neverthe- spect of gambling operators can be divided into of the individual states. Among these regula- for gambling and video gaming less, the legislation is basically the same all over two categories; (i) those taxes imposed gener- tors are the Hessian Ministry of the Interior and in Illinois, and oversees gaming operations; the Germany, as the Federal States all agreed upon ally in relation to all Australian businesses, and Sports (responsible for conducting the sports licensing of suppliers to casinos and employees an “Interstate Treaty on Gambling” that applies (ii) those taxes which directly target companies betting licensing process as per the Interstate of casinos; and the licensing of video gaming in all of the Federal States, and nationwide laws conducting gambling activities. Treaty), the authorities of North Rhine - West manufacturers, distributors, suppliers, terminal apply with respect to land-based slot machines phalia (responsible for granting permissions to operators, locations and individuals who service and horse racing. All Australian companies, including gambling operators of lotteries and sports betting for TV video gaming terminals. operators, are required to pay corporate income advertising and advertising on the internet) and Only the small Federal State of Schleswig-Hol- tax (currently 30%) and goods and services tax the authorities of Lower Saxony (responsible for Donald Tracy is the current Chairman of the stein is a peculiarity in this aspect. From 2012 (GST) of 10% on all sales. payment blocking against unlawful gambling on IGB. The IGB holds a meeting at least once each to 2013, Schleswig-Holstein had its own Gaming the internet). quarter of the fiscal year. The IGB’s Administra- Act in place, under which more than 50 gaming A number of additional taxes are imposed spe- tor performs all duties assigned by the IGB, in- licenses have been awarded to private provid- cifically on gambling operators. These taxes, Licences for online gambling and sports bet- cluding the daily administration of the IGB’s re- ers. With these licenses, providers may lawfully which represent a significant source of revenue ting issued under the Gaming Act of Schleswig- sponsibilities. The current IGB Administrator is offer (online) gaming services within Schleswig- for State and Territory governments, include a Holstein (repealed in 2013, but still applicable Mark Ostrowski. Holstein (but not within the remaining parts combination of: for Schleswig-Holstein licensees) are supervised of Germany); respective licenses are still valid by the Ministry of the Interior in Schleswig-Hol- The primary pieces of legislation are the Illinois even though in the meantime Schleswig-Hol- • direct gambling taxes paid to the licensing stein. Riverboat Gambling Act, 230 ILCS 10/1, et seq., stein joined the Interstate Treaty on Gambling authority and calculated by reference to gam- and the Illinois Video Gaming Act, 230 ILCS 40/1, and the Schleswig-Holstein Gaming Act does no bling revenue of the company. The method by Other states have been assigned to regulate et seq. The Riverboat Gambling Act was enacted longer apply. which these taxes are calculated will be set out specific types of lotteries on behalf of all Ger- in 1990 and made Illinois the second state in the in the operator’s licence conditions and the rel- man states, e.g. the Free and Hanseatic City of nation to legalise riverboat gambling. Current- 2. Can you explain how the current tax re- evant legislation; Hamburg regulates so-called class lotteries and ly, there are 10 casinos operating throughout gime in your jurisdiction works? • licence fees paid to the licensing authority, Rhineland Palatine regulates other national lot- Illinois. The Video Gaming Act, which incorpo- either yearly or as a one-off payment (depend- teries operated across all German states. rates the Riverboat Gambling Act, was enacted H. Hoffman: For all online gambling a gambling ing on the licence held). In the case of exclusive in 2009 and authorised the placement of up to duty of 20% on Gross Gaming Revenue (wagers licences such as retail totalisators, this is usually

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a one-off fee payable on grant of the licence; port the assumption that the tax base is GGR Notwithstanding the Riverboat Gambling Act’s sports betting is levied with a specific sports and and not stakes. prohibition on taxing outside of the Act, local Il- betting tax of 5% of the players’ stakes. Regard- • race fields/sports fixture fees are charged linois municipalities and counties have attempt- ing online casino and poker games, no specific by sports or racing control bodies to betting Slot machine operators, in addition to the reg- ed to impose their own taxes on gaming and taxation rules exist. Accordingly, a general VAT operators in for their use of race ular corporate taxes, have to pay municipal gambling machines. For example, Cook County of 19% applies. Even though this appears much fields and sports fixtures information. This fee is amusement tax ranging between 12-20%, de- enacted the Gambling Machine Tax Ordinance higher than the 5% sports betting tax, the VAT calculated by reference to a percentage of gross pending on the law of the respective municipal- on 9 November 2012, which imposes registra- is generally not levied from the stakes but from revenue from betting activities or betting- turno ity. The tax base for this amusement tax is the tion and tax requirements on “Gambling Ma- the gross gaming revenue of the casino and pok- ver. gross income generated from the slot machines. chines” displayed for play or operation by the er games, and such gross gaming revenue will public within Cook County. Although the Tax Or- often be around 3-10% of the stakes. Thus, the The nature and extent of these taxes vary quite Walberg: The Riverboat Gambling Act, 230 ILCS dinance applies to both gambling devices oper- tax burden for online casino and poker games is significantly and depend on the type of gambling 10/21, provides that licensees shall not be sub- ated in casinos (e.g., slot machines) and video generally lower than the one for sports bets. service provided and the licensing jurisdiction. jected to any excise tax, license tax, permit tax, gaming terminals (e.g., video poker machines) privilege tax, occupation tax or excursion tax operated in licensed establishments under the 3. Have there been any recent regulatory J. Hofmann: Taxation of gambling products in which is imposed exclusively upon the licensee Video Gaming Act, the machines are taxed at changes or interesting developments? Germany largely depends on the product type by the State or any political subdivision there- different rates. For gambling devices, the Tax Or- and the regulations in the respective federal of, except as provided in the Act. With regard dinance imposes an annual tax on the owner of H. Hoffman: In December 2015, the Danish par- state. Accordingly, tax rates with regard to some to Video Gaming, the State of Illinois imposes $1,000 per gambling device and $200 per video liament passed new legislation to amend the gambling sectors vary throughout Germany. a 30% tax on net terminal income. See 230 ILCS gaming terminal. Before any gambling machine Danish Gambling Act. 40/60. The tax is collected by the IGB. Revenues is made available for use by the public, the own- Land-based casino operators are exempt from generated from the play of video gaming ter- er is required to remit the tax due to the Cook The most significant changes were that a new corporate taxation but must generally pay taxes minals are deposited by the terminal operator, County Department of Revenue, after which the type of license was introduced, which in terms on gross gaming revenue (i.e. the amount by who is responsible for tax payments, in a spe- director issues a tax emblem to be affixed to the of revenue and compliance requirements is de- which the total of all stakes exceeds the total of cially created, separate bank account main- gambling machine as evidence of the payment. signed to accommodate operators who offer all winnings paid out, “GGR”) or are subject to a tained by the video gaming terminal operator The operation of a gambling machine without a Fantasy Sports. The license fee is lower, and the combination of gross gaming revenue and profit to allow for electronic fund transfers of moneys tax emblem will subject the owner and the per- maximum on GGR within this limited license taxation. Tax rates range between 20% and 80% for tax payment. The State’s percentage of net son displaying the gambling machine to substan- was increased significantly from the limit on the per state. Some states impose additional levies terminal income is reported and remitted to the tial daily fines. The Cook County Ordinance was so-called revenue limited licenses. or apply progressive tax rates depending on the IGB within 15 days after the 15th day of each challenged in two separate pieces of litigation economic capability of the casino operator. month and within 15 days after the end of each by a Cook County based casino and the Illinois Further, the weekly calculation and payment of month by the video terminal operator. Each Gaming Machine Operators Association. The Il- gambling duty for betting and online casino was Operators offering licensed or unlicensed sports video terminal operator keeps a record of net linois Appellate Court rejected both challenges changed to monthly calculation, which in effect or horse race betting to German customers, terminal income. All tax payments not remitted and sustained the validity and constitutional- will reduce the effective gambling duty, since throughout Germany, are subject to a 5% fed- when due are assessed a penalty on the unpaid ity of the tax, in part, because Cook County is a the likelihood of a negative GGR over a month eral tax on stakes. balance at a rate of 1.5% per month. A terminal home rule unit whose taxing authority was not of operation is very much smaller than the case operator who falsely reports or fails to report pre-empted by the Riverboat Gambling Act. See was with the weekly calculations. Since 1 January 2015 all online casino operators, the amount due is subject to criminal prosecu- Midwest Gaming & Entertainment, LLC v. County not only the non-EU-based online casino opera- tion and the termination of its gaming license. of Cook, 2015 IL App (1st) 142786; Illinois Coin Talks are going on in political circles that Danske tors, have been subject to VAT. It has so far not The IGB’s rules provide for additional penalties Mach. Operators Ass’n v. Cty. of Cook, 2015 IL Spil should be sold off to private operators and been clarified by the tax authorities what they for non-payment of taxes, including the disa- App (1st) 150547. the Danish market opened completely. This was consider the applicable tax base to be. Strong bling of all video gaming terminals operated by one of the announcements made by the sitting arguments, in particular the comparison to the the terminal operator until all overdue amounts Voigt: For sports betting, horse racing and lot- government before the general election in June land-based casino sector and of plus fines are paid in full. teries there are specific tax stipulations in the 2015, and at least this is still being considered. the Court of of the European Union sup- “Race Betting and Lottery Act”. For example,

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Nettleton: There have been a number of signifi- ty in connection with the grant by governments announced a 10% duty cut on commercial bingo In June 2015, the European Commission initi- cant developments in the Australian regulatory of gambling licences. – double what the industry had requested. ated a so-called pilot process, i.e. a pre-stage to landscape this year. formal infringement proceedings against Ger- Bedford: There are currently 615 commercial J. Hofmann: Gambling regulation in Germany many. It is likely that the current endeavours of From a licensing perspective, the status of Nor- bingo premises in the UK, the overwhelming for many years now has become almost famous the German states are an attempt to react to folk Island as both an external territory of Aus- majority of which are profit-making businesses. for its constant changes and continues to be the European Commission’s criticism. tralia and a leading licensing jurisdiction remains However commercial bingo has been in decline an issue of debate. Since 2005, already two at- a matter of uncertainty. From 1 July 2016, Nor- in United Kingdom when measured by the num- tempts at regulating gambling have failed due Judging by the fact that the amendments pro- folk Island will lose its right to self-govern and ber of licensed clubs, the duty paid to govern- to the respective laws having been found to vio- posed so far raise multiple practical and legal will become, in effect, a regional council of New ment, and the money staked. The smoking ban, late European law and the current main regu- issues, it can, however, be questioned whether South Wales. As a result of this process, a num- implemented in 2007, had a particularly signifi- latory framework, the Interstate Treaty 2012, is the German states will be successful in prevent- ber of Norfolk Island will be repealed. cant impact on attendance. destined to follow a similar path. ing the European Commission from initiating formal infringement proceedings. An impor- At the time of writing, the Norfolk Island gam- There is poor data on the scale of non-com- The Interstate Treaty 2012 introduced a licens- tant aspect relating to this is that the European bling laws have not been expressly repealed. mercial bingo in the UK. Most bingo fundraising ing process for 20 sports betting licences intend- Commission not only criticised the failures of Unless and until this happens, we consider that does not require a license, and most providers ed to be applicable for a seven-year experimen- the sports betting licensing process, but also the NIGA will continue as a regulator and exist- of bingo in members’ clubs require neither an tal phase as of entry into force of the Interstate questioned the total ban on online casinos pro- ing licences will remain in full force and effect. operating license nor a local authority permit. Treaty. Thereby, in theory, private operators vided for in the Interstate Treaty. The current However, the Federal Government is in the pro- However our research shows that non-commer- were allowed to obtain a sports betting licence. proposals for amendment do not take this into cess of conducting a performance review of the cial bingo is in decline, with falling attendance The sports betting licensing process initiated in account. There are, however, strong arguments NIGA. Pending the outcome of this review, the and loss of institutional memory about how to 2012, however, was flawed from the start and to support that the total ban is unlawful. ability of the NIGA to grant and renew licences organise games. The number of new club gam- has meanwhile been held to violate EU law due has been restricted. As at the time of writing, it ing permits issued by local authorities – required to its non-transparent and discriminatory char- Walberg: After the passage of the Illinois Video remains unclear what recommendations will be for higher participation fees to be charged for acteristics by courts. It came to a total halt in Gaming Act in 2009 but before video gaming made, and how this might affect the NIGA and bingo games – is at a five year low. In one part September 2014 and to date none of the 20 went live in Illinois in 2012, terminal operators the exercise by it of its functions. of South Wales visited for fieldwork there had sports betting licences have been issued. The and establishments entered into “pre-licensure been 400 working men’s clubs attached to the CJEU in its recent judgement in the Ince case agreements” granting the operator the exclu- Another noteworthy development is the intro- regional branch in the 1980s. Most of those (C-336/14) established that this situation effec- sive right to place video gaming terminals at the duction of the Australian Association of National were thought by local experts to have offered tively upholds the monopoly, which was found establishment for the term of the agreement af- Advertisers Wagering Advertising & Marketing bingo. In May 2014 there were 116 clubs left, to be unlawful and made the introduction of the ter both parties had become licensed. Entry into Communication Code (AANA Code). The AANA and many of those were in danger of closing. current Interstate Treaty necessary in the first pre-licensure agreements was an industry wide Code is a self-regulatory framework for adver- Most still offered bingo. place. practice. In the 2013 case of Triple 7 Ill., LLC v. tising and marketing of wagering services and Gaming & Entm’t Mgmt.-Ill., LLC, 2013 IL App will come into effect on 1 July 2016. The AANA We see from the Hansard record an intensified The German states are currently trying to solve (3d) 120860, the Illinois Appellate Court for the Code will facilitate consumer complaints and sense that bingo provides a safe, respectable this dilemma through minimalist amendment Third District upheld the validity and enforce- enforcement. outlet for elderly working class women’s leisure to the Interstate Treaty. As per the most recent ability of these pre-licensure agreements. Triple – a framing evident among some (but not all) drafts for such amendments, the total number 7 remains the only appellate opinion in Illinois Finally, the High Court handed down recently its lawmakers when bingo was first explicitly de- of available licences is to be increased to a 40 which addresses the validity of pre-licensure decisions in claims brought by Tabcorp and Tat- bated in Parliament in the 1950s. Now many and the 35 applicants who in the licensing pro- agreements on the merits. Illinois circuit courts tersalls relating to the change by the Victorian politicians contrast bingo halls with betting cess of 2012 demonstrated that they fulfil the confronting this issue have consistently adopted Government of the licensing regime relating to shops, pay day lenders, and pawn shops as sites licensing requirements are to receive a prelimi- the holding in Triple 7. gaming machines. Those claims – which were in of sociality, community, and harmless fun. The nary license once the amendments take effect, excess of $1 billion in total – were unsuccessful Mary Portas review on high street regeneration currently intended for 1 July 2017. On 7 August 2015, the Illinois Appellate Court and confirm the principle of sovereign immuni- actively promotes them. In 2014 the Chancellor for the Fifth District in J&J Ventures Gaming,

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LLC and Action Gaming, LLC v. Wild, Inc., 2015 As the – relatively important – Federal State of very lenient, but there are some very strict rules debated by the 1977 Rothschild commission IL App (5th) 140092, a dispute over the validity Hesse, which is responsible for the on-going and practises that are enforced with a close to on gambling. This was in response to what the of an assignment of a pre-licensure agreement, sports betting licensing proceedings, believes zero tolerance approach – particularly in regard Gaming Board (the then national regulator of held for the first time in more than three years the envisaged law amendments to be insuffi- to marketing of bonuses and direct marketing. bingo) considered objectionable game innova- of litigation surrounding pre-licensure -agree cient and unlawful from a European perspective, tions where high participation fees were being ments that the court did not have jurisdiction to there is a chance that Hesse will go its own way Nettleton: When considering entering the Aus- charged to players. However the issue of the decide the case because the intend- and no longer form part of the Interstate Treaty tralian market, gambling operators should be game’s boundaries is especially significant now. ed the IGB to have “exclusive authority” over on Gambling applicable in the rest of Germany. aware of various prohibitions and restrictions In part because bingo premises licenses offer ac- agreements affecting the placement and opera- which are unique to the Australian regulatory cess to lucrative games machines entitlements tion of video gaming terminals in Illinois, includ- Furthermore, the European Commission is likely landscape in respect of gambling. – including up to 20% of the total gaming ma- ing pre-licensure agreements. Importantly, the to commence infringement proceedings against chines being B3 machines (with a £2 stake and question of jurisdiction was raisedsua sponte by Germany in the near future as it regards Ger- The key issue to note when considering Aus- £500 prize) – and in part because bingo machines the court, and all parties agreed that the court man gambling law as incoherent and unlawful tralia as a potential gambling market is the total are explicitly defined by the 2005 Gambling Act had the requisite jurisdiction to decide the mer- from a European perspective. prohibition on online gaming contained in the as not gaming machines (meaning that they do its of the case. J&J Ventures is currently on ap- IGA. However, the IGA, which contains the pro- not count towards the quota of total machines peal before the Illinois Supreme Court and a de- 4. Are there any compliance issues or poten- hibition on online gaming, expressly excludes allowed on a premises) there has been an at- cision is expected in autumn 2016. This decision tial pitfalls that companies need to be cautious from the scope of that prohibition the provision tempted expansion in the type of operators and is expected to have far-reaching implications on about? of online bookmaking services. premises offering bingo. Some operators have the future role of the IGB and the video gaming developed new, variant forms of bingo, often industry in Illinois. H. Hoffman: The Danish system is actually pretty Legislation at the Australian State and Territory called electronically, and not requiring players straight forward and the compliance programs level includes provisions which require approv- to stop the game by shouting out. Membership Voigt: The regulatory gaming regime in Ger- etc. do not contain many potential pitfalls. als to be obtained to use race fields information/ has also been removed as a criterion for com- many is in turmoil at the moment. Various na- sports fixture information (see above). mercial bingo operators, meaning that bingo tional courts as well as the European Court of There is an on-going non-resolved issue regard- has expanded into non-member environments Justice recently decided that the German sports ing the funds on the set-off free account, which Finally, in-play betting is very popular with punt- such as adult gaming centres. As a result there betting licensing process, which started in 2012 is a bank account where the player funds are ers and is routinely offered by betting operators has been a growing need for regulators to rule and according to which 20 private providers placed, and where the bank has signed a decla- in many jurisdictions (for example, the United on boundary disputes between bingo and other were supposed to receive sports betting licens- ration that it will not set off a positive balance Kingdom). By contrast, the IGA prohibits the forms of gaming. es, is intransparent and a breach of European on this account in other accounts with a nega- provision of online in-play betting services in re- freedoms. Respective court decisions make it tive balance held by the same operator in that spect of sporting events (In-Play Prohibition). In In 2009 the Gambling Commission issued a doc- difficult for gambling regulators to enforce the bank. However, the DGA is currently interpret- other words, Australian licensed operators are ument on ‘key characteristics of bingo’, intended prohibition of unlicensed sports betting offers ing the Executive Orders in a way, where they able to offer in-play betting online in respect of to help clarify the game’s boundaries.[2] This fo- of providers that are licensed in other European demand that balancing between this account racing events. While certain Australian licensed cused on stakes and participation fees in bingo countries. and the total balance of all player accounts operators have sought to address the In-Play machines. Most recently, in 2014 the Commis- takes place every single day even on bank holi- Prohibition through “click-to-call” technology, sion published a guidance note on ‘What con- As a result of respective court decisions, the days and weekends. recent comments by the Australian Federal Gov- stitutes bingo’.[3] This guidance is intended ‘to Federal States are planning on amending the ernment indicate an intent to clarify the scope help bingo operators avoid creating and offering German gambling law and allow up to 40 sports It surprises many operators and it is a fairly of the In-Play Prohibition. This issue is consid- products that we consider to be casino games, betting providers in Germany, with interim li- heavy administrative burden, which ultimately ered in greater detail in our response to ques- lotteries or fixed odds betting” (s.1.1). It identi- censes being provided to 35 providers that have does not serve to secure the wanted protection tions 7 and 8 below. fies 3 ‘fundamental principles of bingo: that the already taken part in the sports betting licensing for the players in case of the operator’s bank- game is an equal chance game; that it must in- proceedings that started 2012 and fulfil certain ruptcy. Bedford: The definition of the game has long 2 Gambling Commission. (2009). Key characteristics of bingo. minimum criteria. Respective law changes are been contested. In fact the issue of whether (London: Stationery Office). likely to be agreed upon in June. Further, the Danish marketing rules are generally bingo should have a statutory definition was 3 Gambling Commission. (2014). What constitutes bingo? (London: Stationery Office).

14 15 Round table: Gaming Law 2016

volve a degree of participation, and that it must man gaming law have been considered to be in group CVC Capital Partners only a few bling technologies. As a result, gambling prod- have a clearly defined end point (s. 3.3). conflict with the German as well as weeks ago signed a deal to take over the major- ucts utilising emerging technologies have been with European law. ity share of Malta-based operator Tipico, one of incorporated into the existing legislative frame- Most commercial operators we interviewed wel- the leading sports betting operators in Germany work (often with surprising results). comed this guidance, with some seeing profit As the question to what extent German gam- and sponsor of football clubs FC Bayern Munich potential in more automated forms of the game ing law shall be liberalised is a highly political and Hamburg’s HSV. We consider it likely that These emerging technologies often demonstrate that resemble electronic lotteries. However one one, strict German gambling requirements are this trend in M&A activity will continue. the inadequacy of Australia’s current regulatory industry insider contended that any game defi- not likely to change very soon. However, to the regime and, over time, may become a catalyst nition could be reversed by the Commission in extent that the legislator is not able to draft a 6. How is technological innovation shifting for reform of the Australian gambling regulatory the absence of a statutory definition, leading to bulletproof gaming law, attacks on the prohibi- the landscape in the gambling industry? landscape. uncertainty in product development. tion stipulations will continue, and enforcement of the strict German requirements will remain H. Hoffman: With tablets and smartphones be- J. Hofmann: Clearly, technology drives the in- J. Hofmann: Despite the tumultuous legal situ- difficult. coming more and more popular the landscape dustry. One of the best examples to illustrate this ation and the fact that in the online casino and in the gambling industry is changing rapidly and the shift in the landscape in the gambling sports betting sector (with the exception of 5. Are you noticing any particular trends in from land-based and web-based to mobile. The industry are mobile devices. Mobile devices, un- Schleswig-Holstein licences) no licences are tru- M&A activity? strongest operators in future customer acquisi- like other devices used to access remote gam- ly available/have been issued and unclear situa- tion will be the ones with the best mobile solu- bling products or traditional brick-and-mortar tion as to the exact license terms resulting there- Nettleton: For a period of time, the Australian tions. casinos and gaming halls, allow customers to ac- from, it would be a clear mistake to assume that market experienced an influx of leading -over cess gambling products from wherever they are compliance is not an of relevance in Germany. seas bookmakers acquiring local, online book- The customers of tomorrow have grown up with and at any time they wish. Also, the increased In fact, regulators even demand certain compli- makers to enable an Australian operation to be a smartphone and hardly ever used web-based popularity of social games associated with mo- ance from operators, despite finding them to launched with their international brand. services or even go to a brick and mortar estab- bile devices provides for some interesting devel- violate the written law. They claim that certain lishment. opments. There is a trend of gambling operators KYC standards have to be in place in order to en- More recently, the Australian market has ex- combining gambling products with other forms sure the protection of minors and consumers. It perienced an increase in parties seeking to en- The type of operators that are suffering the of gaming or introducing social games into their is also advised to comply with the Federal Anti- gage in backdoor listings or reverse mergers most at the moment are the horse tracks/horse product portfolio. These developments and the Money-Laundering Act, which applies to online between dormant, mining companies listed on betting operators and land-based slot machine constant technological innovation challenge gambling operations. the Australian Stock Exchange (ASX) and emerg- operators. They have real difficulties attracting regulators to adapt. Unfortunately, however, ing technology or gaming companies. The Aus- new and even maintaining existing customers. one must conclude that, in general, regulation Voigt For about a decade, Germany has been tralian Securities and Investment Commission is considerably lacking behind in its attempt to prohibiting most kinds of gambling offers to pri- (ASIC), Australia’s corporate regulator, and the Further, the higher complexity in many social catch up with the constant innovations and the vate providers. According to the very strict word- ASX have expressed concerns regarding these gaming products seem also to attract younger new means of distribution used by an increasing ing of the law, private entities are generally pro- proposals. Accordingly, proposed listings of this players much more than many of the more tra- number of operators. hibited from offering sports betting, casino or type should be approached with caution. ditional gambling games of the casino industry. poker games to German players; the provision This is clearly indicated by the large revenues in Walberg: As discussed, the Video Gaming Act of online games of chance is generally forbid- J. Hofmann: Indeed. It has long been expect- social gaming where no prices are paid out. requires that all video gaming terminals in Il- den regardless of the types of gaming. Thus, pri- ed that consolidations would take place in the linois be connected and monitored by a Cen- vate providers offering (online) gaming services gambling sector and we have been noticing Nettleton: Over the past year, the Australian tral Communications System. In 2011, the IGB to German players are in a difficult situation. an increased interest of private equity compa- market has seen an increased interest in gam- awarded the contract to Scientific Games Corpo- nies to get involved in the market. Some of the bling products utilising new and emerging tech- ration, which implemented a system designed However, the validity of respective strict gaming most recent mergers (2015) include the merger nologies, such as daily fantasy sports and eS- to support up to 16,000 video gaming sites and prohibition stipulations has been disputed from of Betfair and Paddy Power and the merger of ports. Australia’s regulatory regime relating to approximately 60,000 video gaming terminals the start. In a number of decisions by national Ladbrokes and Coral. Further, GVC acquired the online gambling is complex, outdated and ulti- from its Illinois operations centre. The system and European courts, various aspects of Ger- total share capital of bwin in 2015 and private mately ineffective in regulating emerging gam- was certified in 2012 by Gaming Laboratories

16 17 Round table: Gaming Law 2016

International, the gaming industry’s leading in- portunities relating to the evolution of the based operators in the UK said in interviews 8. Are there any exciting technological de- dependent gaming testing laboratory and tech- gambling industry from land-based to online? that they do not consider online bingo to be an velopments on the horizon? nical consultant. The system, which satisfied the equivalent product. This is in part because many standards established by regulators in gaming Nettleton: In Australia, the key challenges re- online gambling companies that offer bingo lack Nettleton: There is increased interest in new jurisdictions worldwide, enables real-time com- lating to the evolution of the gambling industry an understanding of the game’s distinctive cul- forms of bookmaking, daily fantasy sports, so- munication and control between every licensed from land-based to online exist largely at the ture and demographic. Some land-based opera- cial games and eSports (among others). Some video gaming terminal in Illinois. The system is regulatory level. As alluded to above, the Aus- tors also argued that online bingo was used as of these new platforms are already conduct- expected to become the largest video gaming tralian regulatory regime was developed at a a gateway to get customers to play casino style ing business in Australia; others are in the early network in the United States. This brand of in- time when the development of new technolo- games, and slots, which were more profitable. stages. What is clear is that Australian develop- novation promotes the integrity and security of gies and the market disruption this would cause However gaming machines are central to land- ers are at the forefront of creating new gaming the Illinois video gaming industry. was not fully appreciated. based bingo revenues as well: from October products. 2014 to September 2015 gaming machine rev- In addition, numerous smartphone applications The inadequacy of the Australian framework enue accounted for 46% of gross gaming yield 9. What measures are being implemented have developed to assist gamers in locating for gambling regulation was recognised in the in licensed (land based) bingo facilities in United to tackle the issue of gambling addiction? and evaluating establishments which host vid- Report relating to the Review of Illegal- Off Kingdom. eo gaming terminals. For example, the “Illinois shore Wagering – conducted by the Hon. - H. Hoffman: All licensees holding either a bet- Video Gaming Locator” app identifies the near- ry O’Farrell, the former premier of New South J. Hofmann: I consider the challenges and op- ting or an online casino license are under an est video gaming terminals in your vicinity, pro- Wales – that was released at the end of April portunities to be fairly closely intertwined with obligation to have, maintain and comply with a vides the name address and telephone number (O’Farrell Report). one another. For gaming halls, the increased pathological/problem gambling policy. The basic of the establishments and displays ratings of the The O’Farrell Report presented a significant op- interest of customers in online operations may legal requirements are that each operator must machines by other gamers. Establishments are portunity to review and update the IGA to ad- be considered a threat to their business. How- offer both a 24 hour cool off period as well as also developing apps to contact their customers dress the challenges posed by new technolo- ever, it will also likely provide opportunities and both temporary and permanent self-exclusion with relevant information, including the place- gies. However, the singular recommendation a new focus of business. This is particularly im- options. Further, the licensee must offer access ment of new machines, deals and promotions. concerning new technology, that is, the recom- portant considering that – at least in Germany to a gambling addiction self-test and have links mendation that the Federal Government con- – the number of gaming halls have drastically to recognised gambling addiction treatment fa- Voigt: In Germany, there is a general state mo- sider relaxing the In-Play Prohibition in the IGA, fallen as a result of regulatory changes (such as cilities. In case a player chooses to self-exclude nopoly in place with respect to most types of was rejected by the Government in its response distance requirements which have caused cer- then the gambling website must automatically gambling. Apart from land-based slot machine to the O’Farrell Report. The Government has tain gaming halls that are considered to be too offer the contact details to such a treatment fa- casinos, which currently face a hard time but indicated its intention to “clarify” the IGA by close to another gaming hall or a youth institu- cility. are permissible to a certain extent and continue amending the IGA to ensure that “click‑to‑call” tion to shut down). generating high revenues, it is comparatively services are prohibited. The Danish Gambling Authority also offers a risky and difficult for private providers to offer I may also add, that we do not only witness a central self-exclusion database known under land-based gambling services to German play- While clarity in the law is required, there re- trend from land-based gambling to online gam- the name ROFUS. The login procedure of all li- ers. Thus, the online sector is extremely impor- mains opportunity for online gambling busi- bling. The Spielbank Berlin – the casino of Ber- censed web-sites and mobile access must cross tant for (in particular international) private pro- nesses to be licensed and provided in Australia lin – increased its interest in online poker dur- check with the ROFUS database before the play- viders. In addition, online services have a better (subject to various restrictions)! ing the first years of the new millennium as a er attempting to log in can be allowed to access scalability than land-based casinos. Pre-existing sign to expand their land-based poker offering the gambling offer and his/her player account. software from other markets can – with some Bedford: The Gambling Commission’s recent and has been rewarded for this move. The Spiel- This way it is possible for anyone to self-exclude adaptations – also be used in Germany. Thus, guidance on the definition of bingo encompass- bank Berlin meanwhile is part of very popular in one central place and be denied access from the online sector is getting more and more im- es online play. Although many land based op- poker series such as the European Poker Tour gambling from all licensed operators. portant in particular for international compa- erators had at first seen online bingo as a threat (EPT) and is renowned for its poker offering, nies aiming at German players. to their business, most now either see synergies which obviously translates into profits and an Also worth noticing in this regard is a case where between the products, or feel that online bin- increased GGR. the Danish Gambling Authority initiated police 7. Can you outline the challenges and op- go has little impact on in-hall play. Many land- investigation against a licensee due to the fact

18 19 Round table: Gaming Law 2016

that the licensee had allowed a player to play • a national self-exclusion scheme; go they said that it was rare, and that it was nor- that made problem gambling far more central for more money than the player could actually • a voluntary pre-commitment scheme; mally relevant to machines. That is supported to the regulations. For example the new social afford. However, the player never used the self- • a prohibition on credit betting; by the latest data on problem gambling rates responsibility codes require licensed bingo op- exclusion options available. It is indeed a very • training by licensed online operators of across different sectors from the 2010 Preva- erators to put in place measures for sector-wide controversial case where the Danish Gambling staff in the responsible conduct of gambling; lence Study self-exclusion (where individuals who request Authority is linking the source of fund examina- • the provision of activity statements to cus- to be excluded from a licensed bingo premises tion connected with the Anti-Money Launder- tomers; Some commercial operators felt that there were are subsequently excluded from licensed bingo ing requirements also to the problem gambling. • a reduction in the period in which custom- several features of bingo’s distinctiveness that facilities run by other operators), and for ‘cus- er verification must be conducted; and made it relatively low risk. These included the tomer interaction.’ This requires staff to iden- The legal authority for this is to be found in the • consistent messaging and a single national fact that the game is popular with older women tify and intervene effectively “where they have introductory provisions of the Danish Gambling gambling hotline that operates consistently na- (younger people, and men, are more likely to concerns that a customer’s behaviour may indi- Act, where some of the more policy-like provi- tionwide. be at-risk gamblers according to relevant 2012 cate harm (or risk of harm) as a result of their sions require that the gambling offered is - of health surveys for England and Scotland[6]); gambling behaviour” (3.4.1). In the light of such fered responsibly. The Danish Gambling Author- In December 2015, the Victorian Government in- the social nature of the game and the fact that guidance, some staff we interviewed were anx- ity seems to be taking the position that if your troduced a voluntary pre-commitment scheme groups of friends or family often came togeth- ious about being held responsible for identify- source of funds research should lead you to in relation to the playing of gaming machines. er; the close bond between players and staff in ing problematic gambling behaviour. conclude that a player is spending more than he However, a recent media release from the Min- traditional hall environments (leading, some ar- can reasonably afford to spend on gambling ser- ister for Consumer Affairs, Gaming and Liquor gue, to better monitoring of potential gambling J. Hofmann: Pursuing the goal of ensuring a vices, then at the operator should not only react Regulation in Victoria revealed a registration problems); the nature of the traditional, paper- high standard in player protection, in particular from an AML point of view but also take action rate of 8,130 in the first 6 months of operation. based main stage game itself (involving time- in relation to the protection of minors and the in regard to problem gambling. At the very least, [4] This was viewed as low[5] and casts doubt bound, sessional play and built-in breaks, and prevention of compulsive gambling, is key in any refrain from tempting such a player with special on the effectiveness of this pre-commitment where stakes are limited by the physical capac- sensible gambling regulation and preventing the offers and bonuses. scheme as a means of achieving harm minimi- ity of the player to mark off tickets); and the fact development of gambling addiction also forms sation resulting from the playing of gaming ma- that not all players regard the game as a form of one of the main objectives of the Interstate Nettleton: A significant proportion of the rec- chines. gambling. Treaty. As per the Interstate Treaty regulations ommendations made in the O’Farrell Report and the regulations set out the Gambling Acts of were directed at achieving greater and more Bedford: A key operational challenge in law and That said, most hall managers had encoun- the respective states, which implement the In- uniform harm minimisation for Australian con- policy around harm prevention in gambling is tered customers who, in their view, gambled terstate Treaty, gambling operators are obliged sumers of licensed Australian online operators. over where to the strike the balance between a too much. There had long been mechanisms for to encourage players to gamble responsibly and This reflects general public concern about the standardised approach across all gambling sec- dealing with this, including ‘having a chat;’ call- to implement suitable measures to tackle gam- harms associated with gambling. tors, versus distinctive approaches to distinctive ing up family members; telling someone to go bling addiction. To this end, they must develop sectors which may have varying harm potential. home or to only come in with a group of family a so called Social Concept, i.e. a comprehensive Importantly, the O’Farrell Report recommends The challenge for bingo specifically is that while or friends; barring someone from the premises written documentation of the companies poli- a series of minimum standards that should it has comparatively low levels of problem gam- as a whole, or from the machine section; refus- cy towards problem gambling and the specific be developed and included in a national con- bling they almost always relate to the ancillary ing to serve alcohol to someone with a gambling measures in place to prevent problem gambling sumer protection framework within the next product (gambling machines) rather than the problem; and ‘letting someone know you are e.g. customer support hotlines, specific infor- 12 months by agreement between the Federal core offering (main stage bingo). Almost unani- keeping an eye.’ mation on the risk of addiction and the exact Government and the States/Territories. This mously, when we asked interviewees from the chances of winning or losing, advice on how to recommendation was accepted by the Federal licensed sector about problem gambling in bin- These mechanisms are being eclipsed by more recognise a problem (e.g. by means of a self- Government in its response. Among the matters formalised measures laid out in the Gambling test), opportunities for the player to determine to be addressed are: 4 Victorians Pre-Commit On YourPlay, 20 May 2016: http:// Commission’s Licensing Conditions and Codes of individual limits or exclude himself/herself from www.premier.vic.gov.au/victorians-pre-commit-on-yourplay/ Practice (LCCP), to which all licensed operators gambling etc. Operators further have to train • consistent nationwide research into prob- 5 Willingham, Richard ‘8000 Victorian pokies punters push the button on must adhere. In 2015 a revision was undertaken their staff in the early detection of problematic pre-commitment’ The Age: lem gambling; http://www.theage.com.au/victoria/8000-victorian-pokies-punters-push-the-button-on- 6 Wardles et al. 2014. Gambling Behaviour in England and gambling behaviour and must have a suitable precommitment-20160519-goz4r2.html#ixzz49YOaQPo5 Scotland, p 2-3.

20 21 Round table: Gaming Law 2016

referral system to help agencies in place. 40/50. European jurisdictions are implementing new keeping gambling largely within establishments legislation that allows online betting and online focused on gambling (a key concern of lawmak- Walberg: In 2002, the IGB launched a Statewide 10. What key trends do you expect to see casinos. However, every jurisdiction seems to ers in debates leading up to the 2005 Act), and Voluntary Self-Exclusion Program for Problem over the coming year and in an ideal world implement slightly different requirements and ensuring that a premises seeking a license for Gamblers that allows persons who have de- what would you like to see implemented or compliance rules making it necessary for the one form of gambling in fact intends to focus its termined they are problem gamblers to self- changed? operators to develop specific systems and pro- operations on that form, rather than using the exclude themselves from all Illinois casinos. cedures for each jurisdiction in which they have license as a ‘flag of convenience’ to offer other, The process requires self-excluded persons to H. Hoffman: Now where the Danish system has a license. This combined with the licensee fees harder gambling forms. agree not to enter the area within the admis- been in operation for almost five years there and license application fees leads to consider- sion turnstiles of any casino and agree to be re- seems to be a trend to loosen up some of the able costs for an operator for each jurisdiction. The regulatory concern with the suitability of moved voluntarily from all mailing, marketing administrative requirements that brings only At some point in time the operators will have to operators, and the suitability of the premises and promotional lists and databases. Individu- very limited contribution to higher transparen- look critically at their return of investment and within which they plan to offer bingo, is key to als may enroll in the Self-Exclusion Program at cy and security for the players but causes major for small markets like Denmark with its lack of the current debate over whether licensed bingo various enrollment sites throughout the state, costs and resources for the operators in an at- volume compared to markets like Germany, Po- should be allowed in pubs. Pubs can already run including at the IGB offices located at all river- tempt to accommodate the operators need for land and France Denmark needs to make itself low-stakes bingo, subject to conditions: there boat casinos. Enrollment sites are not compen- a smoother and more competitive operation. In more attractive on costs or join other countries are no participation fees allowed, and stakes sated by the IGB for participating in the Self- particularly there is a growing awareness that and accept mutual recognition to create a larger are limited to £5 per person per game. But if Exclusion Program, and no fees are charged for the licensed operators still need to consider market for the same amount of costs. The most they able to offer licensed bingo pubs could enrolling in the program. Once a person enrolls the competition from non-licensed operators, obvious first step would be for Scandinavian run games with higher stakes and prizes, with in the Self-Exclusion Program, their name must since they are ready to enter the market, if the countries or even the Nordic countries to make links, and – crucially – with the entitlement to be removed from all mailing lists and market- licensed market loses too much of its competi- a multijurisdictional license system. This- how higher stakes gaming machines. In a recent legal ing databases used by Illinois casinos. The effect tiveness. ever, is unfortunately not likely to happen in the case, the Gambling Commission had its author- of Self-Exclusion is not limited to Illinois casinos. near to midterm future. ity to deny an operator license to a pub chain Casinos operators in Illinois can request they In an ideal world the Danish legislator will go upheld based on concerns about the environ- be allowed to ban Self-Excluded persons from through with a full liberalisation of the Dan- Nettleton: Consistent with the growing inter- ment within which it sought to offer the game. all their properties and operations throughout ish gambling market and abolish the remaining national interest in alternative virtual gambling [7]However the jurisdictional question over who the United States. Currently persons who enroll state owned monopolies. The first five years of models, the Australian market has also seen decides what gambling premises can be present in the IGB’s Self-Exclusion Program are exclud- operation that the state owned monopoly op- growing interest in these products. We expect in a local area will likely rumble on. ed from all Illinois casinos as well as all casinos erator is not in any way more compliant or re- to see this interest continue into the next year. and operations owned by Caesar’s Entertain- sponsible than the private operators rather on As contemplated earlier, Australia’s regulatory J. Hofmann: A key aspect which will continue ment Inc., Boyd Gaming Inc. and Penn Nation- the contrary the state owned monopoly oper- regime relating to online gambling is outdated to keep regulators and operators busy over the al Gaming Inc. The records generated by IGB’s ator has had some very serious cases on non- and thus ill-served to regulate gambling services coming year, in particular in the US, in relation Self-Exclusion Program are strictly confidential, compliance and violation of Danish law in the utilising new and emerging technologies. In this to product types clearly will be fantasy sports and shared only with the IGB, the state’s casinos first five years of operation. A full liberalisation regard, we would hope to see greater clarity in and virtual betting and the question of how to and the enrollee. Because Self-Exclusion is vol- would take the Danish market the last step to respect of how these emerging gambling mod- regulate them. Further, I expect there to be fur- untary, a person cannot be enrolled by another creating a levelled playing field for all operators. els will be treated under existing gambling laws. ther M&A activity among operators in the gam- person, such as a friend or significant other. bling sector which is likely to provide for some Such a scenario is not unlikely, and it is indeed Bedford: The role of the Gambling Commission interesting new alliances. In relation to Germa- In addition, the Video Gaming Act provides that realistic that further steps to full liberalisation in decisions about premises licensing will con- ny I may add that, since Germany desperately 25% of all license fees collected shall be paid, are going to be taken within the next year. tinue to be debated .The Gambling Commission requires a sensible regulation, I would like to subject to appropriation by the General As- have sought to shape local authority decision see the German states creating a completely sembly, to the Illinois Department of Human Another threat that the legislators and regulator making about premises licensing, especially new regulation covering all sectors of gambling Services for administration of programs for the in a small market like the Danish need to take through the concept of ‘primary gambling ac- and taking other European states, which already treatment of compulsive gambling. See 230 ILCS very seriously is the fact that more and more tivity.’ This intends to address two concerns: 7 Gambling Commission v Greene King [2016] UKUT 0050 (AAC)

22 23 Round table: Gaming Law 2016

have experience in regulating gambling success- and Establishments as to the validity pre-licen- fully, as an example when drafting the laws. At sure contracts, this decision will likely serve to the moment such an extensive reform being re-open the proverbial floodgates to litigation enacted within the immediately foreseeable fu- on this topic, and will fuel even more challeng- ture remains wishful thinking. Going forward, if es regarding renewal agreements. Third, most the positive trends continue, this may be real- significantly for the IGB, this decision holds the ised. jurisdiction and authority to adjudicate con- tract disputes between Terminal Operators and Walberg: As discussed, above, the Illinois Su- Establishments lies squarely with the IGB, not preme Court will likely rule in the J&J Ventures with the courts. Interpreted literally, it appears case by the end of 2016. Should the Court affirm to cast a wide net over the types of disputes the Fifth District Appellate Court and find that that fall within the IGB’s purview, and may ex- the IGB has exclusive jurisdiction to adjudicate tend far beyond adjudicating the validity of pre- contract disputes between terminal operators licensure agreements to any dispute concerning and establishments, it will have pervasive ef- any aspect of a location contract at thousands fects of the industry. First, it has the potential of licensed locations in Illinois. The administra- to create uncertainty and resulting chaos in the tive burden on the IGB implicated by this deci- marketplace. Whereas Terminal Operators and sion would be astounding, requiring the IGB to Establishments previously operated under the expend substantial resources to hearing and settled law of Triple 7 regarding the validity of adjudicating issues of pure contract law which pre-licensure contracts, this decision may give require no agency expertise and are properly Establishments and competitor Terminal Opera- within the province of the courts. tors a platform to challenge the holding in Triple 7 that pre-licensure contracts are valid. Estab- For all of the above reasons, the Illinois Su- lishments may improperly view this decision as preme Court should reverse the Fifth District’s “carte blanche” to disregard and breach their decision in J&J Ventures, find that the court, current location agreements with Terminal Op- not the IGB, has jurisdiction to hear and decide erators whose contracts were entered into and, contract disputes between Terminal Operators in some cases, assigned pre-licensure. There are and Establishments, including those involving hundreds, if not thousands, of contracts current- pre-licensure agreements. Ideally, the Illinois ly in place at operating video gaming Establish- Supreme Court would also rule on the merits of ments that may fall into this category. Second, the case, upholding the validity of the pre-licen- whereas Triple 7 appeared to have a chilling ef- sure agreement at issue, thereby creating a uni- fect on litigation, promoting widespread reso- fied in Illinois on the enforceability of lution of disputes between Terminal Operators pre-licensure agreements.

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