April 24, 2012

Update: Massachusetts Gaming Commission Holds Third Public Meeting

On April 24, the Massachusetts Gaming Commission held its third public meeting, which was attended by a member of Goodwin Procter’s Gaming, Gambling & Sweepstakes Practice.  The meeting lasted about 2 hours 45 minutes.  In the near future, transcripts and meeting minutes will be posted on the Commission website.  Video of the meetings may or may not continue to be streamed live but will likely remain available online.  The major highlights of the meeting were as follows:

  • The search for an executive director to help with day-to-day operations of the Commission is still ongoing.  Chairman Crosby hopes that the executive director will run the logistical aspects of the Commission and allow the commissioners to focus solely on policy decisions.  Commissioner Stebbins said there will be an interim hire for this position and then a full search, with an anticipated contract awarded by May 29 for interim director.  The Commission would like someone with state or municipal government experience, as well as excellent communication, research and project management skills.  Commissioner Cameron believes that it is more important for an interim director to have government skills than experience in the gaming industry, though Chairman Crosby would like someone with gaming skills as well as the other necessarily skills.  Dennis Neilander, mentioned last week but unnamed, of the Nevada Gaming Commission, is interested in the job, or at least assisting with certain duties.  The Commission expressed hesitancy that Neilander’s work would overlap with its consultants’ work, but Chairman Crosby thought Neilander could bring a great deal of expertise to the table.  The Commission agreed that it will presume to not hire Neilander because he does not have Massachusetts government experience.
  • Fourteen candidates are being interviewed for the public information officer position.  Commissioner McHugh suggested that Chairman Crosby should have the final say as to who’s hired say because he is the face of the Commission, and the Commission approved such a resolution.  A hire should be made within the next week and a half.
  • Gaming consultants Spectrum Gaming Group and Michael & Carol have a 16-week strategic plan that the Commission reviewed.  Of note, they offered to come up with a hiring plan and job descriptions for new hires and provide recruiting assistance, and will have an overall plan for their next few years at the end of the 16 weeks.  Chairman Crosby noted that the consultants should be acting with the executive director more than the Commission itself, and Commissioner McHugh noted that the Commission needs to be careful not to delegate substantive decisions to the consultants.
  • Commissioner McHugh met with outside counsel Anderson & Krieger.  Phase one of their activities, which primarily involves looking at regulatory policies regarding the Racing Commission and working closely with the Racing Commission itself, should be completed between 30 and 45 days.  Commisioner McHugh spoke highly of the lawyers, calling them familiar with the “nitty gritty” detail and practical issues.
  • Tuesdays at 1 pm will likely be the regular Gaming Commission meeting time, permanent location TBD.  The next public meeting is tentatively May 1 at 1 pm, but because of the educational programming on May 3, this is also TBD.
  • Finance/ Budget Update.  The budget for the fiscal year 2013 is $7 million, but this is tentative.
  • The Public Educational Forum is  Thursday, May 3 at the Convention Center. The public may RSVP on the Commission’s website and submit questions in advance.  The conference will start with remarks by the President of the American Gaming Association.  There will be various panelists from New Jersey and Pennsylvania discussing the ins and outs of launching a new regulatory commission, as well as a “Before Doors Open” session, giving panelists an opportunity to share thoughts regarding the processes that regulators must put in place to seek casino proposals, conduct background checks and regulate licensed operators.  There will also be a focus on crime and compliance enforcement.
  • Commissioner Stebbins said the Economic Development Forum will take place June 7 or 14 at Quinsigamond Community College in Worcester.  There, updated economic research studies generated subsequent to the gaming bill's passage will be presented.  The idea is to have the most up-to-date information in order to make thoughtful decisions about the effects of gaming on the Commonwealth. Panels about problems created by casinos may be presented at the same forum if the Commission can find experts. This needs to be decided soon.
  • Racing Commission. Commissioner Cameron noted that steps are still being made for a smooth transition to assuming duties of the Racing Commission; it is unknown when exactly the transition will take place.  There should be a decision on the Request for Information (“RFR”) for a racing consultant to help in the transition by the end of next week. Chairman Crosby has been speaking with the Governor and Legislature about postponing the date the Gaming Commission will take over these duties.  They are interested in allowing such a postponement, though nothing is set in stone.  Commissioner McHugh expressed concern about the uncertainty Racing Commission employees face. Chairman Crosby suggested that there needs to be a provisional agreement with existing employees that they will work through this racing season regardless of what happens with the transition.
  • Charitable gaming.  Commissioner McHugh, who is overseeing the Commission's adoption of the charitable gaming oversight, along with Commissioner Zuniga, will talk with the various associations currently overseeing charitable gaming at the end of May.  There is currently $75 million in gross revenue from charity gaming, with the Commonwealth taking a 5% cut, $18 million going to charities, and the rest going to prizes and operating expenses.  Commissioners McHugh and Zuniga noted that there is a presumption that not everyone who is conducting gaming for charity purposes is in compliance with the current statute.  Commissioner McHugh suggested that the AG is best left to enforce non-compliance and the Gaming Commission best left to make policy, and everyone appeared to agree.
  • Online gaming. Commissioner Zuniga met with the Treasurer's Office last Friday.  He mentioned the DOJ decision that opened the door to state sanctioned online gaming.  There is a real recognition that if online gaming came to Massachusetts, legislative action would be necessary and both the Commission and the Treasurer's Office need to monitor these developments and any online gaming.

    Chairman Crosby noted that the Commission needs to be vigilant to ensure there is no “turf war” between the Gaming and Lottery Commissions over new forms of gaming. Chairman Crosby thinks everyone needs to look at gaming as one big industry in the Commonwealth, with a principal objective of turning gaming dollars into the most revenue with least negative outcome.  He expressed the sentiment that if it turns out that the lottery generates more money than casinos or vice versa, or if one “cannibalizes” the other, nobody should care as long as the most revenue for the Commonwealth is generated.  Treasurer Grossman apparently “bought into this.”  Chairman Crosby said it is Commissioner Zuniga's responsibility to make sure this philosophy is adopted and that any revenue generated from online gaming maximizes the public good.
  • Tribal gaming. Chairman Crosby shared that the Governor's office is exclusively involved in negotiating the tribal compact.  The Commission told the Governor's office that the Commission needs to be apprised of what is going on with regard to the compact, but with no direct involvement itself.
  • The meeting concluded with a discussion of big picture strategic considerations.  Commissioner McHugh thinks the Commission needs to look at the role surrounding communities will play in putting together proposals before the Commission.  There have been concerns about this role, particularly surrounding communities' inability to have a town vote and the same influence that the host community will have.  Commissioner McHugh noted that the Commission has discretion to make sure surrounding communities are heard.

Another consideration is the permitting that needs to be accomplished before casinos are built, and how the Commission might help liaison with permitting authorities to make the process smoother once a license is awarded.

Chairman Crosby asked his fellow Commissioners how proactive the Commission should be in encouraging competition between proposals and encouraging various communities to get involved in the bidding process — he thinks it is in the public's interest to have as much competition as possible so that people will not believe the outcome of the licensing process is “locked up.”  Commissioner McHugh said that the “regional piece”— where casinos should be located — is not being discussed enough.  For instance, a certain community may not want a casino, but for various reasons it may be in the Commonwealth's best interests for casinos to be located in certain areas over others, and where one license is granted may affect where another is granted.  Chairman Crosby thinks that these are issues that need to be considered and talked about with consultants, various people with expertise in different areas and people from other states, possibly in future conferences or hearings.  Commisioner McHugh would like to see an interactive process with the public to see what considerations are most important to them.  Chairman Crosby finally answered his own question about encouraging competition with the thought that, without biasing the process, it is the Commission's job to “induce creative thinking.” 

At a future meeting the Commission is going to discuss whether it should join the state-wide diversity compact, which asks employers to commit to diversity and inclusion in its workforce.  They appear inclined to join.

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