1. Introduction

I have been asked to present a paper today answering a number of questions concerning compliance and the manner in which regulators deal with compliance issues in multiple jurisdictions around the World. Before I do that a little background information about Aristocrat.

Aristocrat Leisure Limited (“Aristocrat”) is a publicly listed Company based in Sydney, Australia. The Company has market capitalisation of approximately AUD 7 billion and annual turnover of AUD 1.4 billion. Last year the Company reported an after tax profit of AUD 244 million. Aristocrat is licensed in over 200 jurisdictions, and is a ‘Top 50’ Company on the Australian Stock Exchange and one of the largest suppliers of gaming solutions to global gaming venues. I am also pleased to say that Aristocrat is the owner of 50% of Elektroncek one of the sponsors for this conference.

Aristocrat’s gaming licences are critical to its success and the Company devotes considerable resources to ensuring that its licences are properly protected by ensuring that its compliance practices are world class. Aristocrat has always recognised that gaming licences are a privilege, not a right, and Aristocrat accordingly goes to great lengths to ensure that the requirements and requests of gaming regulators are met, and met promptly, by its compliance teams.

Aristocrat’s global compliance team comprises teams in three principal locations, Sydney, Las Vegas, and London. The internal standards that Aristocrat has set for its directors, executives and contractors are rigorous and follow closely the compliance plan which has been developed to ensure adherence to the myriad of regulatory requirements with which Aristocrat is required to comply.

This paper seeks to focus on licensing issues from the perspective of a global supplier of gaming products, systems and services. The issues identified by me in this paper are issues which relate to the operational challenges of licensing compliance in the context of a large company in the global gaming industry with multiple licenses. I do recognise and acknowledge that the demands placed on regulators by operations of the size of Aristocrat are by no means insignificant. The issues that I have identified and the suggested solutions are intended to facilitate the conduct of regulatory activities without in any way detracting form the rigour, intensity or quality of the current activities of regulators. As the presentation, which I believe has been included in your conference materials indicates, I have broken the paper into distinct areas and will deal with each separately.

2. Licensing Forms

Aristocrat carries out rigorous staff probity checks on 21 of its senior executives on an on going basis. This includes obtaining affidavits, checking criminal and credit records, fingerprinting, obtaining detailed personal histories and financial checks. Aristocrat has developed its own licensing forms following on from the extensive work Aristocrat has carried out with regulators around the World.

(i) Multi-jurisdictional forms

Different jurisdictions have different licensing requirements and different licensing forms. I suggest that consideration should be given to developing a global multi-jurisdictional personal licensing and a global multi-jurisdictional corporate form (which could be up-dated on regular basis).

A multi-jurisdictional form has been available for use in the United States for some time and other uniform forms have been prepared and proposed by prominent organisations but, despite these initiatives, many regulators still require that use be made of specific forms relevant to those regulators only.

The principal benefit of multi-jurisdictional forms is that regulators from different jurisdictions could easily and simply review corresponding forms completed for other jurisdictions and carry out comparisons and checks in a far more effective and efficient manner than the current multiplicity of licensing documentation permits.

Any such multi-jurisdictional licensing forms could be bar coded in such a manner that forms could be easily scanned and results analysed for inconsistencies in a far more intensive manner than is currently permitted.

The introduction of the multi-jurisdictional forms would reduce administrative time currently spent on completing different forms and should also assist regulators as over time there would be a far greater familiarity with the forms used and the information that should be supplied in response. To me, the most significant advantage of such an innovation would be a significant improvement in the quality of global regulatory oversight.

In particular, it should become significantly easier for regulators to obtain criminal histories and criminal intelligence from other jurisdictions. The reason for this is that many foreign law enforcement agencies do not officially recognise gaming regulators outside their jurisdictions. A uniform multi-jurisdictional form may assist in overcoming such difficulties as it may improve the prospects of information sharing among regulatory bodies.

A uniform licensing form should also facilitate and expedite the current requirement for a comprehensive financial background investigation if all jurisdictions use the same basic form for establishing financial data as this would make the initial verification and subsequent cross-jurisdictional verification a much easier and simpler process.

(ii) Uniform Licensing Periods

In relation to Uniform Licensing Periods, consideration could be given, perhaps as a second stage in the process of developing a uniform licensing form, to developing uniform licensing periods so that the licensing procedures can be conducted at the same time in multiple jurisdictions. This would require giving consideration to a uniform licensing period. In this regard, it is suggested, that to reduce paperwork and improve efficiencies, the Nevada model be followed. As John Maloney points out in his an article in the Gaming Law Review:

“Nevada is one of the only licensing jurisdictions that will grant a gaming license or finding of suitability for an unrestricted period of time. For example, if the Nevada Gaming Commission issues a non-restricted gaming licence, without any limitation, the licensee is entitled to maintain that licence so long as it remains in good standing with the regulators and maintains the licence for the specific purpose for which it was issued. It is not necessary to file renewal applications on a periodic basis so long as the licence remains in good standing.”

If this model was followed by other jurisdictions, it would again significantly improve administrative efficiencies in terms of the licensing process.

(iii) Uniform Waiver Forms for Institutional Investors

Aristocrat has many large financial institutions as investors. If any such institution holds more than 5% of the issued capital of Aristocrat, the institution is required to complete a waiver form. Such institutions are frequently confused by the waiver forms that are required to be signed by different jurisdictions. In addition, more often than not, such institutions are unable to comply with the deadlines for completion of such waiver forms. It would be appropriate if a uniform waiver form could be devised and endorsed for multi-jurisdictional use.

(iv) Format of Forms

The format of licensing forms can also present difficulties. Although PDF forms are very popular, it is often very difficult to amend PDF™ forms to permit additional responses to questions to be included. Word™ format should be the preferred format for licensing forms to allow the inclusion of relevant information.

(v) Version Control

A further issue arises in relation to licensing forms. Licensing forms should include a footnote indicating the version number of the form and the year to which it applies (i.e. V23; 2006 Applications) as this would assist licensees to be satisfied that they are requesting executives to complete the current version of the relevant forms. In this regard, it would also be helpful if regulators adopted a process of notifying all licensees when a new version of a licensing form replaced an earlier version.

(vi) Electronic Submission

It would also assist all other licensees if all jurisdictions adopted similar electronic submission procedures so that forms and supporting information used for one jurisdiction could be used in others jurisdictions.

(vii) Notaries

Many jurisdictions still require the signing of licensing documents before notaries. Although notaries are clearly appropriately qualified individuals for this purpose, consideration could be given to extending the qualification of such individuals to include qualified solicitors, attorneys and justices of the peace. It is suggested that, for licensees licensed across multiple jurisdictions, it would be appropriate for an “approved company representative” to be permitted to fulfil this role. Normally this would be the principal administrative officer of the Company – known in Australia and the United Kingdom as the Company Secretary.

3. Fingerprinting

While this is not such an issue in Europe, it is a real issue in the United States and other parts of the World. Fingerprinting technology has advanced considerably in recent years. Digitally scanned fingerprints taken through “Live Scan” technology in nearly all US jurisdictions permits fingerprints to be submitted electronically to the Department of Justice within a matter of minutes and allows criminal background checks to be processed usually within seventy two hours.

There should be at the wider deployment of such technology combined with the adoption of a uniform fingerprinting process with identical recording cards (ideally the standard FBI card ).

It would also be helpful if the electronic fingerprinting technique adopted or endorsed by regulators specifically recommended electronic fingerprinting machines that accept the FBI card. Aristocrat has encountered, on many occasions, situations where it could not use electronic fingerprinting techniques ‘because the card did not fit the machine’.

Given that fingerprints do not change, the number of occasions that senior executives of Aristocrat are required to give fingerprints is significant and at this stage an ongoing requirement. The adoption of a uniform fingerprinting regime would assist both regulators and licensees.

One of the issues that frequently confront licensees in this area is the question of which government authority can take the fingerprints. Different jurisdictions have different requirements in this regard. Some only permit police officers to take fingerprints. Others permit licensed agents to do so. It is suggested that an internationally recognised licensing program permitting reciprocal recognition of accredited fingerprinting agents would be helpful in this regard.

4. Interviews

Regular interviews of licensed individuals is an essential part of gaming regulation and such interviews are usually conducted by regulators on the basis of a personal history form and a personal financial form which sets out all the relevant details in a manner which permits appropriate questions to be raised. It is suggested that a uniform personal history form (and uniform release forms) would facilitate interviews by multiple regulators at the same time. This would not only be helpful in terms of saving time as far as applicants are concerned but would also benefit regulators by permitting them to hear questions posed by other regulators who may have additional information of which they were not aware.

5. General Suggestions

One of the most helpful reforms that could be adopted by regulators is the possibility of aligning regulator visits so that several regulators can interview applicants at the same time. This practice is already followed by Canadian regulators.

6. Information Sharing Between Jurisdictions: Shared Databases?

Although the Gaming Regulators’ European Forum (“GREF” ) permits sharing of information between regulators, it is suggested that such information sharing could be expanded significantly – with the endorsement of licensees - with positive results for both regulators and licensees.

This would permit the practices adopted in one jurisdiction to be explained and, to some extent, justified on a regulator to regulator basis.

The difficulty faced by such regulators is identifying the manner in which appropriate information can be obtained about a specific product. This difficulty could perhaps be partially resolved through establishment of ‘regulator access only’ shared databases updated monthly regarding new products licensed in different jurisdictions. This could significantly reduce the delays that licensees and equipment providers are currently encountering as regulators individually evaluate products.

Perhaps this is a matter that could be considered by the GREF Working Group on Technical Issues .

7. Video Conferencing

The availability of video conferencing technology could significantly expedite interview processes and permit more frequent and less costly interviews as well as interviews by multiple jurisdictions simultaneously. This would also obviate the necessity for regulators to require investigating agents to actually attend in person what for most regulators are remote locations.

8. New Gaming Jurisdictions

New Licensing Jurisdictions present significant challenges for licensees as the establishment of a gaming licensing regime is never an easy process. However, it would be facilitated through assistance from other regulators and it would be helpful to the whole industry.

As an example, Russian and Czech regulators have been reluctant to accept BMM or GLI reports. In Greece, a casino committee meets to ratify GLI reports. It is suggested that these issues give rise to considerable delays and these could, perhaps, be avoided through an appropriate mentoring processes being adopted.

9. Conclusion

The proposals set out in this paper are intended to be helpful and constructive suggestions. I hope that no participants will take offence at any of the observations and suggestions. Aristocrat is very aware that gaming licenses are a privilege and not a right and wishes to develop and build on the excellent relationship it currently has with global regulators around the World.