An establishment where betting is allowed and is legal, and which may or may not
contain other amenities such as bars, food service, lodging, retail, and so on. From the Latin
word “casa”, or “house,” casino initially meant a public music and dance hall. By the second half
of the 19th century, casino developed into entertainment centers with gambling halls.
Gambling and Gaming
The activity or practice of playing at a game of chance for money or
other stakes. “Gambling” and “gaming” are generally considered to have the same meaning by
the public and gamblers, but distinctions exist for (a) context (informal and/or illegal “gambling”
versus formal and/or legal “gaming”), (b) advertising and (c) entertainment. “Gaming” or
“gambling” are probably derived from the ancient Middle English word “gamen” which meant
“to amuse oneself.”
8 types of Gambling
Lotteries, Charitable Gaming, Parimutuel Wagering, Sports Betting, Casino Gaming, Shipboard Gaming , Native American Gaming, Internet Gaming
3 Elements of gambling
Chance, Consideration, Prize
Gaming regulatory bodies
like the Mississippi Gaming Commission and the Louisiana Gaming Control Board, act in a quasi-legislative role. They promulgate the rules and regulations that govern the operation of the gambling entities in the state. (The statutes, on the other hand, are enacted by the legislature.)
3 elements of gaming regulation
1. Implementation of accounting and audit rules
2. Enforcement of gambling statutes and regulations
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3. Protection of the regulatory process
two principal objectives in regulating accounting and auditing
1. To prevent non-licensed and unsuitable persons from profiting from the casino
2. To ensure that the government properly receives all the taxes it is due
should safeguard the assets of the casino, maintain accountability for transactions, and prevent and detect any errors and irregularities that might occur in a timely manner.
Currency Transaction Reports (“CTRs”)
pursuant to federal regulations, casinos must file a report of each transaction in currency, involving either cash in or cash out, of more than $10,000. CTRs are designed to prevent money laundering.
Suspicious Activity Report by Casinos and Card Clubs (“SAR-C”)
pursuant to federal regulations, casinos must file a report of any suspicious transaction relevant to a possible violation of law or regulation. A transaction must be reported if it is conducted or attempted by, at, or through a casino, and involves or aggregates at least $5,000 in funds or other assets, and the casino knows, suspects, or has reason to suspect that the transaction involves funds derived from illegal activity, is designed to evade financial reporting requirements, or has no business or apparent lawful purpose, or is not the sort in which the particular customer would normally be expected to engage.
To ensure regulatory compliance, regulators may use:
1. Advice or directives
4. Conditions to continued 5. licensing
6. Revocation of the license
gaming regulatory bodies
may deny, revoke or suspend a license for any reason they see fit. And, generally, they are enjoy absolute immunity against civil lawsuits by licensees that may be unhappy with their decisions.
sovereignty of the tribes
The right of Native American tribes to operate legal gambling is based
is the doctrine that recognizes tribes’ inherent rights as independent nations that preexisted the United States and the U.S. Constitution. Because the U.S. now recognizes the tribes as independent sovereign nations, their location within a state does not subject them to state law.
The modern era of tribal gaming began with the passage of the Indian Gaming Regulatory Act, in
The purpose of the Indian Gaming Regulatory Act (IGRA)
was to provide a statutory basis for gaming operations “as a means of promoting tribal economic development, self-sufficiency and strong tribal governments.”
Other IGRA policy goals are:
1.To shield the tribes from organized crime
2. To ensure the tribe is the primary beneficiary of gaming operations
3.To ensure that gaming is conducted fairly and honestly
4.To provide clear standards and regulation for the conduct of gaming on Indian lands
5.To establish an independent federal authority and standards commission to protect gaming as a means of generating tribal revenue
IGRA provides that “Indian gaming”
is to be conducted by an “Indian tribe” on “Indian Lands.” Under IGRA, only federally-recognized tribes may conduct tribal gaming, and only on federally defined Indian lands.
IGRA divides all gambling into three classes:
Class I: Game are low-stakes social, traditional and ceremonial games. Class I gaming remains entirely within the control of the tribes.
Class II: Generally, Class II gaming is bingo, very broadly defined (including electronic games that look and function like slot machines, but are considered “bingo type” games), and non-banking card games, like poker.
Class III: Class III is the residual class – it includes all other forms of gambling, including slot machines, lotteries, pari-mutuel wagering, and table games, including banking card games like blackjack and baccarat.
Tribes may only operate Class ___ or class ___ gambling if the state where the tribe is located also permits that form of gambling “for any purpose” and “by any person.”
Class II or Class III
A tribe may only offer Class III gaming after it enters into a tribal-state compact with the state. Class III gaming is co-regulated by the state and the tribe, and the compact governs how that co-regulation will occur, including governing any revenue sharing with the state. The tribe also must enter into an approve management contract for operation of a Class III casino.
must enter into an approve management contract for operation of a Class III casino.
IGRA requires the states to negotiate compacts in ______
In Seminole Tribe v. Florida
the United States Supreme Court held that Congress does not have the power to allow a tribe to sue a state without the state’s consent. This invalidated IGRA’s mechanism to enforce the states’ obligation of good faith, based on the states’ sovereignty.
States require regulation and licensing of casinos to:
1. Protect the public from abuse
2. Protect the public by assuring that certain people aren’t involved in the gaming industry
3. Prevent the involvement in the industry of persons who could jeopardize the government’s economic stake in the casino
4.Assuring the honesty of the games, to protect public perception of trustworthiness
Licensing is intended to exclude ____ persons from participating in the gaming industry, on a variety of levels.
Licensing systems have five distinct characteristics:
1. Breadth – how many categories of businesses or persons must be licensed to participate in the industry, to prevent unsuitable persons from associating with or profiting from the industry, even through third-party relationships
2.Depth – which persons associated with the applicant/licensee must be licensed
3. Criteria – criteria that the regulatory agency considers when granting a license, including moral character, honesty, location, financial ability, association with unsavory characters, and business experience/suitability
4. Level of Review – the level of review may be full or limited
5. Standards – licensing determinations are the province of the regulatory bodies, and they have significant discretion in determining whether an applicant has met the appropriate standards
A gaming license is not a right – it is a ______. Gaming regulatory bodies have full and absolute power and authority to deny or revoke application.
People reporting five or more of the following experiences might meet the criteria for pathological gambling:
1. Preoccupation with gambling
2. Needing to gamble with increasing amounts of money in order to achieve the desired excitement
3. Repeated unsuccessful efforts to control, cut back, or stop gambling
4. Restless or irritable when attempting to cut down or stop gambling
5. Gambling as a way of escaping from problems
6. After losing money gambling, often returning another day to get even (“chasing” losses)
7. Lying to family members, a therapist, or others to conceal the extent of involvement with gambling
8. Committing illegal acts such as forgery, fraud, theft, or embezzlement to finance gambling
9. Jeopardizing or losing a significant relationship, job, or educational or career opportunity because of gambling
10. Relying on others to provide money to relieve a desperate financial situation caused by gambling
most jurisdictions require casinos to implement problem gambling programs, which may include:
1. Training for employees who directly interact with gaming patrons
2.Requirements that the casinos post or provide in conspicuous places near gaming activity written materials concerning the nature and symptoms of problem gaming, and information on how to contact help lines or other entities that provide information and referral services for problem gamblers
A government-mandated compliance program bridges this gap. It requires (and allows) gaming companies to use their own resources to fashion a compliance plan that fosters compliance by both ______ and _____ regulatory issues.
Compliance plans are intended to:
prevent possible regulatory violations,
monitor activities impacting the licensee’s continuing qualifications as a licensee, and
report those activities to senior management and the gaming regulators.
Unsuitable situations include ____ or _____ business practices. Typically an event or circumstance that may adversely affect public perceptions of the games’ honesty, and the industry’s integrity.
unethical or unlawful
Unlawful business practices
are defined as any activity that contravenes any local, state, or federal laws. Casinos must be particularly vigilant regarding securities laws, the Bank Secrecy Act and anti-money laundering laws, campaign contribution laws, the Foreign Corrupt Practices Act, advertising and marketing policies, and conflicts of interest.
Unethical business practices
are those that involve practices that, if exposed, would jeopardize any specific government policy goal adopted in a jurisdiction. May include deceptive trade practices such as dishonesty or trickery to win or gain money from patrons, paying or accepting bribes, altering or forging documents to avoid taxes or regulatory violation, or, generally, a lack of candor in dealing with regulator or otherwise obstructing a regulatory investigation.
who should establish a working relationship with gaming authorities which those authorities should promote.
The compliance officer, compliance committee, board of directors and senior management
Thus far, three states have opted to license, regulate and tax Internet gaming.
• Nevada • New Jersey • Delaware
The Federal Wire Act
Prohibits the operation of certain types of betting businesses in the United States:
The Federal Wire Act Illegal Gambling Business Act
The Travel Act
Forbids the use of the U.S. mail, or interstate or foreign travel, for the purpose of engaging in certain specified criminal acts.
The Unlawful Internet Gambling Enforcement Act (UIGEA)
The Act prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involve the use of the Internet and that is unlawful under any federal or state law (termed “restricted transactions” in the Act).
offered as a guest convenience.
Credit application review includes:
• Recommendation by the marketing department
• Review by the credit department
• Due diligence checks (Central Credit, source of wealth, exclusion lists)
Generally, casinos offer terms of ___ days from guest departure for repayment of the amount they borrowed. This term may be extended with the approval of executive management, usually for foreign or known guests.
Most casinos have an interest clause in their credit agreement, with percentages set by each individual casino. In Las Vegas, ___ is standard.
When credit is extended, the player can draw on the line of credit to the extent he or she has been approved, by requesting a ____ . A _____ is a negotiable instrument that the casino may
is also a form of credit.
is credit given without a formal document, like a verbal IOU, that is typically given at the table.
Three principal arguments against casino credit are:
• Credit allows casinos to engage in undesirable collection methods
• Credit allows unscrupulous operators to skim funds
• Credit results in players losing more than they can afford
Most player disputes application and interpretation of law and rules to particular facts.
Disputes typically fall into one of three categories
• No malfunction or human error occurs with the device, but a disagreement arises as to the terms of the offer (e.g., disagreement over posted rules)
• No malfunction occurs, but the parties disagree as to whether the patron met the terms of the agreement to be paid (e.g., player did not bet the required amount)
• Machine malfunctions or human error by a casino employee (e.g., no true jackpot, improper verification by slot staff)