Alert June 26, 2012

Update: Massachusetts Gaming Commission Holds Weekly Meeting

On June 26, the Massachusetts Gaming Commission convened another public meeting, which was attended by members of Goodwin Procter’s Gaming, Gambling & Sweepstakes Practice. The meeting’s highlights included:

Administration 

Hiring Needs  

  • The Commission debated the merits of establishing a subcommittee to screen initial applicants for executive positions. This system would likely relieve the Commission of needing to reveal every preliminary applicant to the public. The Commission would meet publicly once the subcommittee selects the finalists. 
  • The Commission will announce its Director of Administrative Services, Executive Assistant and Administrator in the next few days.

Next Week’s Meeting

  • The next Commission meeting will be held on Monday, July 2 at 1 p.m. More details will be posted on the Commission website.

Racing Commission

  • Commissioner Cameron held the Commission’s first racing meeting on June 21, which consisted of discussing general track matters as well as hearing three appeals. Commissioner Cameron will have recommendations with regard to those appeals at next week’s Commission meeting.

Informal Comment Period on RFA Phase I

  • The informal comment period on Phase I of the RFA is underway. The Commission has received two sets of comments thus far from individuals. Commissioner McHugh indicated that those individuals are unaffiliated with the gambling industry, but he did not provide any more detail as to their identity.

Gaming Consultant/Legal Consultant Update

Background Checks and Law Enforcement

  • Representatives from the law firm of Michael & Carroll met with the Massachusetts Office of the Attorney General and the state police last week per the Commission’s request. The AG’s office is in the process of assembling its casino prosecution unit. The state police will provide staff for the unit and assist with the RFA1 background checks.

RFA1 Regulations and Proposed Timeline

  • Representatives from Michael & Carroll and Spectrum Gaming are in the process of drafting the RFA regulations for the Commission, and the Commission expects to receive the draft RFA regulations by July 10. The law firm of Anderson & Kreiger is assisting in the drafting process to incorporate Massachusetts-specific legal requirements. 
  • After the Commission receives the proposed RFA regulations, it expects to take three weeks to review and discuss the proposal. The Commission has the authority to decide whether it wants to give the draft to the local advisory committee at the beginning or the end of that three-week period, but the timeline will remain the same no matter which option the Commission chooses.  
  • The Commission is tentatively looking at publishing the RFA1 regulations in the Massachusetts Register on October 12. In order to meet this goal, the Commission needs to hold the public hearing on the regulations on or before September 7. 
  • The Commission will be required to determine the scope of the background checks and financial investigations once it begins receiving applications. The Commission plans to evaluate each applicant’s table of organizations on a case-by-case basis in order to identify which parties affect the integrity of the organization. The consultants indicated that it is standard to evaluate the officers, directors and major shareholders of the applicant company and its subsidiaries. The RFA1 will request all this information, and applicants will have to seek a waiver from the Commission if they believe that a particular party does not have the level of control that merits his or her inclusion in the RFA1 application process. 
  • The Commission pondered how far in advance it should release the RFA1 for the slots license ahead of the RFA1 for the casino licenses. Chairman Crosby reasoned that the Commission need only accept applications for the slots parlor before it accepts applications for the casinos in order to satisfy the statute. He stated that he believes the statute does not implicate when the Commission actually renders a decision with regard to both types of licenses. Commissioner McHugh noted that Chairman Crosby’s interpretation was reasonable but debatable.  

Commission Revenue 

  • Chairman Crosby asked the consulting team to identify the sources of revenue for the Commission contemplated by the Expanded Gaming Act. Aside from the startup financing set forth in Section 94 of the Act, the Commission receives continuing operations funding from a series of fees, including $350,000 from the $400,000 initial application fee (with the remaining $50,000 to go to the host community), slot machine fees of $600 per machine, fees assessed to casino operators for specific violations, employee license fees and vendor license fees. The Act authorizes the Commission to assess casino operators for additional funding if necessary. Michael & Carroll noted that the likelihood the Commission will assess additional fees depends on its budget, although commissions in other states often opt to assess additional fees.  

Communicating with State Agencies

  • The Commission will likely hire a point person to liaise between casino applicants and state agencies as well as between communities and state agencies. Rather than provide specific input to either party, this person will connect applicants and communities with resources to assist with the application and negotiation processes.    
  • The Commission has authorized prospective applicants to meet with state agencies one time between now and the point when an operator becomes an applicant (which occurs when they pay the $400,000 application fee). Once an applicant, operators can meet with state agencies as much as they wish. Both pre-applicants and applicants will need to go through the Commission in order to meet with state agencies. Once the Commission actually grants a license, operators can communicate directly with state agencies without the Commission’s involvement.  

Compulsive Gambling

  • After attending a public forum on compulsive gambling, the Commission has reiterated its commitment to institute safeguards in the casino-licensing process. To that end, the Commission is discussing hiring an executive whose sole task is to oversee problem gambling concerns that may arise during the application process and beyond.  

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