April 17, 2012

Update: Massachusetts Gaming Commission Holds Second Public Meeting

On April 17, the Massachusetts Gaming Commission held its second ever public meeting, which was attended by a member of Goodwin Procter’s Gaming, Gambling & Sweepstakes Practice.  This one was shorter than the last (clocking in at around two hours), with fewer administrative matters to tackle.  Commission Cameron was not present.  The major highlights were:

  • Commissioner Stebbins is leading the search for an acting executive director to provide oversight of the Commission’s da- to-day management issues.  The Commission will be hiring an outside consultant to head up the search for the permanent executive director.  The request for applications for that outside consultant was approved at yesterday's meeting. Resumes have already been rolling in for the acting executive director position and Chairman Crosby has been contacted by a former head of the Nevada Gaming Commission who is interested in serving in the role (Chairman Crosby did not share the name of that individual with the group, but did note he has a JD degree).
  • The search for a permanent public information officer (to replace consultant Karen Schwartzman, who is not able to act as a full time communications liaison for the Commission) is well underway.  The job opening has been posted via the Commonwealth's human resources site.
  • As noted last week, the Commission decided not to choose just one of the two finalists for the gaming consultant position.  Instead, the commissioners would like to vet both Spectrum Gaming Group and Michael & Carroll.  Since the last meeting, Chairman Crosby has spoken with both groups who are open to the idea of working together in some sort of coordinated fashion to utilize the specific strengths of each consultancy.  Kathleen O'Toole (the only member of either proposed team who resides in the Commonwealth) will lead the coordination of a work plan that prevents overlap between the two groups.
  • The chosen legal consultant, Anderson & Krieger LLP has already provided Commissioner McHugh (who retired from the Appeals Court in February of this year) with a work plan.  The plan includes what Anderson & Krieger sees as priority items the Commission must address in the short term, along with a timeline for achieving the various milestones laid out in the plan.  The commissioners will be looking at the action items proposed by Anderson & Krieger and self-selecting areas of responsibility to be discussed at next week's public meeting.  Some areas were already noted to be clearly within the purview of one commissioner or another (for example, Commissioner Zuniga will be tasked with issues related to both fiscal and employment policies given that he's already looking into these topics as part of his role as treasurer).
    Anderson & Krieger will also be taking the lead in drafting the various implementing regulations the Commission will need in order to carry out its mandate under the Gaming Act.  So as not to reinvent the wheel, the Commission will look to other gaming commissions nationwide as well as other governmental departments within the Commonwealth to borrow appropriate regulations and policies.

  • The Commission will have its first in a series of trainings from outside gaming experts on May 3.  This training will be open to the public (though advance RSVPs are requested).  Questions for the day-long session can be submitted to the Commission in advance via its website.  The trainings are geared toward bringing gaming professionals to Massachusetts rather than requiring the commissioners to fly around the country to learn about the current state of play and best practices in the gaming industry.
  • Commissioner McHugh raised concerns about how best to deal with the many inquiries from the public and local towns and municipalities currently flowing into the Commission.  The commissioners want to be able to answer general inquiries accurately and transparently without compromising their objectivity when it’s time to make licensing decisions.  The commissioners batted around ideas about the best way to answer these questions as they come in, while keeping all interested parties in the loop.  Some sort of FAQ page will likely be developed for the Commission’s website.  Chairman Crosby is also working on a universal PowerPoint presentation that all the commissioners could use for public speaking engagements that would ensure some uniformity of content during such talks.
    In an interesting slip of the tongue, Chairman Crosby noted that many of the questions coming in to date have been from communities that will be "infected" (quickly corrected to "affected") by casino development.  Thus far, Chairman Crosby noted that none of the inquiries to the Commission have been from parties interested in one of the licenses.  The Commission decided to implement a policy that any meetings with interested parties (such as consultants, local politicians etc.) will be attended by two of the commissioners, to be followed by a report to the full Commission.  Until some sort of formal question and answer process is created, all inquiries from municipalities will be directed to Commissioner McHugh.

  • Chairman Crosby reiterated his belief that the timeline for taking over the responsibilities of the Racing Commission seems too tight to meet.  All commissioners present agreed that postponement would be the best possible option (currently the deadline for the hand off is May 20).  With no postponement at this time, however, the Commission continues to work toward the current deadline.  Commissioner Cameron is taking the lead on the law enforcement aspects of overseeing racing.  The Commission has also put out an RFR (Request for Response) for a racing consultant to help in the transition.  Commissioner McHugh has spoken with the Department of Public Licensure (“DPL”), the current home of the Racing Commission, on ideal timing for the Commission to take the reins.  DPL authorities think transitioning in late November or early December would be optimal given that (i) at that point in the year the plan for the following year's racing season will already be in place and (ii) it will allow some breathing room before the next year's licenses must be awarded.
  • Related to taking over the Racing Commission is the issue of the Racing Stabilization Fund.  The next distribution from the Fund was due on April 11.  The Gaming Act already transferred oversight of the Fund to the Commission.  Commissioner Zuniga, who has taken point on this issue, moved to enter into an interagency service agreement (“ISA”) with DPL and the Office of Consumer Affairs so that payments can be distributed as soon as possible under the formula that has been used since creation of the Fund.  Under the Racing Stabilization Act, former kennel and racing dog owners who lost their livelihoods when a voter referendum banned dog racing in 2008 are entitled to quarterly payments.  The Fund collects revenue from horse tracks and simulcast facilities.  These payments are scheduled to end in 2014, provided the Commission can get back on track with the scheduled disbursements.
  • Charitable gaming returned to this week's agenda.  Chairman Crosby has yet to provide legislators with a letter detailing his recommendations (the letter was initially due on April 1).  Before he provides any recommendations, Chairman Crosby said he needs guidance as to what sorts of recommendations state representatives are looking for.  Chairman Crosby has drafted a letter to key legislators requesting clarification from legislatures, which he intends to send out some time this week.  For now, Commissioner McHugh will be overseeing the Commission's adoption of charitable gaming oversight (the transition is slated for July 31).  Chairman Crosby indicated that given the seemingly vast scope of that project, he would be willing to authorize Commissioner McHugh to hire his own outside consultant.  Commissioner McHugh will see what progress he can make on defining the issues involved in overseeing charitable gaming by next week's meeting before deciding whether he needs the assistance of an outside consultant.
  • Commissioner Stebbins will be the point person on issues of economic development.  Commissioners Stebbins and Zuniga will be meeting with members of UMass's Donahue Institute to discuss key issues pertaining to organization and development of the Commission.  Pending tasks on Commissioner Stebbins and Chairman Crosby's to do list include looking at past research and Chamber of Commerce studies done prior to enactment of the Gaming Act to determine if there are any holes in the available data on projected gaming revenue.  Commissioner Stebbins and Chairman Crosby plan to report on their findings on available studies and need, if any, for supplementation of the available data at next week's meeting.
  • Also on the list of more pressing action items is the need for commissioners to meet with tourist industry experts from each of the three regions.  The Commission wants a more detailed understanding of projected impact on each region and whether industry experts expect casinos to expand the tourist industry in their particular region.
  • In the realm of inter-agency relations, the Commission briefly discussed Internet gaming and tribal casinos (though Chairman Crosby noted that the unwarranted media buzz going into this meeting suggested a misunderstanding as to what exactly was to be discussed as to the two topics).  Chairman Crosby did note that there is possible online gaming legislation being discussed in the Ways and Means and Economic Development and Emerging Technologies Committees.  If online gaming were to be legalized in Massachusetts, such gaming would also fall under the purview of the Commission.
  • As for tribal gaming, Commissioner McHugh provided an update on KG Urban's lawsuit against the Commission.  KG Urban is challenging the licensing head start given to recognized Native American tribes in the southwestern region.  The Gaming Act provides that, if such a recognized tribe is able to enter into a compact with the Commonwealth by July 31 of this year and meet all of the licensee requirements, it will receive the southwestern license.  KG Urban's suit was dismissed by the federal district court and is currently on appeal to the First Circuit.  KG Urban asserts that the compact provision is race-based in violation of the Equal Protection Clause of the 14th Amendment to the U.S. Constitution.
    The Attorney General's office will be filing its response to KG Urban's opening appeal brief on April 25.  According to Commissioner McHugh, the Commonwealth's arguments hinge on its stance that the compact is not race-based but rather is a political provision (allowing the Commonwealth to negotiate with a sovereign tribal government).  The Commonwealth will also argue the issue is not yet ripe given that no compact currently exists.  However, as Commissioner McHugh pointed out, the issue will likely be ripe by the time the First Circuit hears the matter (which is unlikely to before the July 31 compact deadline).  If there is no tribal compact by July 31, the issue will also become moot with the Commission set to open up the application request to all interested parties by October 31 under the Gaming Act.  Of note, Commissioner McHugh stated that the Attorney General has interpreted that October 31 deadline to be directive not mandatory.  Thus, it appears the commissioners are taking the position that they are bound to that October 31 deadline.

    Despite the KG Urban suit, the Commonwealth continues its discussions with the Mashpee Wampanoag tribe.  Also in the mix is the Aquinnah Wampanoag who have approached Fall River, Lakeville and Freetown officials about the possibility of building a casino. The Aquinnah Wampanoag have also recently voiced a belief that, under federal law, they could use existing tribal lands on Martha's Vineyard to open a casino with or without Commonwealth approval should they not manage to enter into a compact with the Commonwealth by the July 31 deadline.

Chairman Crosby wrapped up the meeting by seeking amendment to the mission statement adopted last week.  The Commission unanimously voted to change the mission of creating a "fair, open and transparent" process to creation of one that is "fair, transparent and participatory."  And participatory it will be with the next public meeting scheduled a mere week from now on April 24 (2 pm at the Boston Convention Center).  Chairman Crosby promised a "hefty agenda" for next week's meeting.

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Those interested in learning more about Goodwin Procter’s gaming and gambling expertise and practice, and those interested in learning more about the issues outlined above, should contact David Apfel or Bob Crawford, co-chairs of Goodwin Procter’s Gaming, Gambling & Sweepstakes Practice.