Are the emerging or less sophisticated
jurisdictions going to jeopardize their own existence and the existence of
gaming today? The lack of experienced investigators, top-level leadership, and
political environments that are insensitive to strong regulatory control raise
these legitimate and worrisome concerns.
I think it will generally be agreed that in
order to participate in the gaming industry, it is necessary to go through a
strict suitability or licensing investigation in order to maintain the
integrity of the system. Each respective gaming regulatory agency will dictate
specific levels of participation in a gaming enterprise by either an individual
or an entity that will trigger a suitability or licensing review.
The early years in Nevada made it very clear
that without strict regulatory oversight the gambling world would very quickly
become overrun by elements not suitable to participate in this, a privileged
industry.
The gaming environment has continued to evolve
from the early Nevada days. Today gaming jurisdictions are constantly
challenged by creative financing schemes, complex corporate structures, and
foreign investors - and with them a plethora of cross-cultural issues.
Gaming investigators must be creative and
think “out of the box” if they are going to adequately address the
aforementioned challenges. This is not an easy task even for the
well-established jurisdictions, and is impossible for those gaming
jurisdictions that have not created gaming agencies that maintain full time
investigative staff and support personnel.
It is very difficult for an agency to employ
part time gaming investigators and expect to maintain an efficient, effective
gaming board. The learning curve on how to conduct complex gaming
investigations is very steep. The experienced gaming investigator has learned
that to simply run NCIC checks, or to get a basic understanding of a
company’s financial statement, is not sufficient to determine whether the
complex corporate organizations entering today’s gaming marketplace are
suitable for licensing.
Trained peace officers and auditors are
readily available for hire, but they are not immediately up to the task of
performing such complex investigations. Without proper training, guidance and
time on the job, these personnel will not properly perform their tasks and the
regulatory system will fail. As a side note, those gaming jurisdictions that
derive substantial benefits from gaming revenues, yet are unable to or refuse
to maintain qualified personnel on a full time basis to regulate their
industry, are jeopardizing the gaming industry as a whole. This statement is
qualified and excludes those gaming jurisdictions that understand their
shortcomings and rely on the more experienced jurisdictions such as Nevada,
when there is commonality in their investigations. Unfortunately, far too many
gaming investigators allow their egos to get in the way and refuse to seek
assistance from experienced regulatory bodies.
In my opinion, the most difficult challenge
today for any gaming jurisdiction is to effectively and efficiently identify
those issues that a particular gaming applicant might have which could pose a
threat to that respective gaming jurisdiction and the gaming industry as a
whole. Lack of regulatory leadership and experience at the top, coupled with a
lack of experience and qualified investigators, has turned the investigative
process in many jurisdictions into an inflexible, ineffective, timely and
costly process. Some gaming jurisdictions have adequate leadership and staff.
Additionally, these jurisdictions have demonstrated the foresight to keep up
with the demands of an ever changing industry by taking proactive measure, such
as introducing legislation, amending regulations and incorporating the
necessary changes in to the regulatory system to meet those demands.
Contrast this with those jurisdictions without
permanent qualified investigators: How many gaming jurisdictions still use the
same applications for both private and public companies? Most gaming
jurisdictions still use antiquated forms that do not work for many gaming
applicants, such as publicly traded corporations. The frustration lies in the
fact these regulators insist on having the applicant fill out forms that are
outdated or not properly designed, then become upset or delay the licensing
process, because in their minds the forms are not accurately filled out. For
example, an application will ask for a list of all shareholders. This is a
reasonable request unless the corporation is a publicly traded corporation with
hundreds or even thousands of shareholders. Nevada, however, had the foresight
to create a Corporate Securities Division and staff it with lawyers and
investigators who are trained experts in matters involving publicly traded
corporations.
Qualified and experienced investigators are
going to remain flexible, address and attack red flag areas, move beyond that
wonderful checklist that every investigator has plagiarized, and will rely on
the experience and knowledge gained from years of experience. Most importantly,
these experienced investigators will maintain some common sense throughout the
investigative process. The gaming lawyer who has conducted the proper due
diligence and understands the issues of the client will welcome the experienced
investigator who has a reputation for addressing the issues, making informed
decisions, and operating “outside of the box” instead of getting
bogged down in mindless minutia. Such experienced investigators are a pleasure
to work with, but are not often encountered outside of those jurisdictions that
have years of gaming experience or where there is proper regulatory oversight
in place.
The inexperienced investigator is most
frustrating to the gaming lawyer in the area of international investigations.
During an international investigation the investigator will have to deal with
complex corporate structures, gain an understanding of local accounting
standards and tax laws, understand the corporate environment, negotiate the
customs and cultural issues, and work through difficult time zone changes. This
is not an easy task. In many instances, there are situations that are a case of
first impression and require the investigator to deviate from the norms
encountered during a domestic investigation and use his/her best judgment and
apply it to that particular situation. This is where the gaming lawyer prays
for a small bit of common sense.
Simple things like birth certificates and
marriage licenses that are on every investigator’s checklist might not be
available, but instead an equivalent document can be provided. The experienced
investigator will use common sense and accept the equivalent document.
The most common inconvenience for applicants
seems to be the issue of fingerprint cards. Many jurisdictions refuse to look
common sense in the eye when it comes to fingerprint cards. One example is the
applicant who never visited the United States or traveled internationally, and
can provide investigators with a certified copy of a national police clearance
certificate that states the individual has no criminal history in his/her home
country, is still not reason enough for some jurisdictions to waive the
fingerprint requirement. This seems to be the result of common sense being
trumped by the seemingly all-important checklist that requires fingerprint
cards.
Further, if a statute or compact is dictating
this requirement, why is there not discretion in the statute or compact that
will enable the regulators to address such problems and make reasonable
decisions and stay in step with this constantly changing industry? What is
equally frustrating is that each separate gaming jurisdiction, with a few
exceptions, require their own fingerprint cards to be completed and will not
rely on those jurisdictions that have already fingerprinted the applicant. This
is understandable if there are substantial gaps in the time periods between
fingerprint checks of the applicant; however, many times this scenario can
occur within a few days or weeks since the applicant's fingerprints were last
taken by another gaming jurisdiction. The end result is the applicant will
spend hours being fingerprinted by each respective gaming jurisdiction, which
becomes more than just a simple inconvenience when the applicant resides in a
foreign country.
The onslaught of new gaming jurisdictions has
created a serious challenge to the integrity and maintenance of the system
today. It is hoped that those jurisdictions that lack an extensive regulatory
background, while slowly gaining knowledge and experience, will look to and
rely on the guidance of those more sophisticated, experienced jurisdictions
like Nevada. If not, they threaten their own existence and the existence of
gaming today.