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Canada's Premier Gaming Industry Magazine

Vol. 8 No. 3

www.CanadianGamingBusiness.com

Fall 2013

The Next Step for Canadian iGaming Offshore operators… It’s a taxing issue

Inside: Leveraging Cage and Count Room Solutions Executive Q & A with AGLC’s Bill Robinson

PM 40063056

Playing to Win: The Latest in Slot Machines 2013 Canadian Gaming Summit Highlights

June 23-25, 2014 Vancouver, B.C. See pages 35-38


INNOVATION. RESULTS. REVENUE. Driving performance for lottery and regulated gaming worldwide

• Instant, Interactive & Draw Games • Instant Game Product Management • Lottery Systems • Retail Technology • Video Gaming Terminals & Systems • Lottery & Operations Management • Marketing Research & Analytics • Licensed Properties • Loyalty & Rewards Programs • Internet, Mobile & Social Gaming

NORTH AMERICA | LATIN AMERICA | EUROPE | ASIA PACIFIC | AFRICA

2 |  Fall 2013

www.scientificgames.com


Fall 2013 Volume 8 Number 3 Publisher

Richard Swayze richards@mediaedge.ca 416.512.8186 ext. 246

contents 30

www.CanadianGamingBusiness.com

16

36

Editor Matthew Bradford matthewb@mediaedge.ca Advertising Sales Richard Swayze richards@mediaedge.ca Senior Designer

Annette Carlucci

annettec@mediaedge.ca

Designer

Jennifer Carter

jenc@mediaedge.ca

Production Manager

Rachel Selbie

6

EDITOR’S NOTE

linat@mediaedge.ca

8

MESSAGE FROM THE CGA

Proudly owned and published by:

10

COVER STORY

14

GAMING TRENDS

16

GAMING TECHNOLOGY

21

EXECUTIVE Q&A

rachels@mediaedge.ca

Circulation Manager

President Kevin Brown

Lina Trunina

President & CEO Bill Rutsey

kevinb@mediaedge.ca wrutsey@canadiangaming.ca

Senior Vice President Chuck Nervick

Vice President, Public Affairs Paul Burns

chuckn@mediaedge.ca pburns@canadiangaming.ca

Canadian Gaming Business is published four times a year as a joint venture between MediaEdge Communications and The Canadian Gaming Association To advertise: For information on CGB’s print or digital advertising opportunities: Richard Swayze 416-512-8186 ext. 246 richards@mediaedge.ca

The Next Step for Canadian iGaming: Offshore operators…It’s a taxing issue Rolling the Dice: Leveraging new cage and count room solutions Playing to Win: The latest in slot machines

Bill Robinson President and CEO of the Alberta Gaming and Liquor Commission

22 MARKETING

The Changing Definition of Community Relations: Giving new meaning to “giving back”

24

SPECIAL SUPPLEMENT

Copyright 2013 Canada Post Canadian Publications Mail Publications Mail Agreement No. 40063056 ISSN 1911-2378

28

CORPORATE PROFILE

Guest editorials or columns do not necessarily reflect the opinion of Canadian Gaming Business magazine's advisory board or staff. No part of this issue may be reproduced by any mechanical, photographic or electronic process without written permission by the publisher. Subscription rates: Canada $40* 1 yr, $70* 2 yrs. USA $65 yr, $120* 2 yrs. International $90* 1 yr, $160* 2 yrs. *Plus applicable taxes. Postmaster send address changes to: Canadian Gaming Business Magazine 5255 Yonge Street Suite 1000, Toronto, Ontario M2N 6P4

30

FACILITY PROFILE

New Horizons Conference Returns to Vancouver in 2014 Pure Canadian Gaming

Caesars Windsor Celebrates Five Years of Win

34 FINANCE

Outsourcing is Changing the Gaming Industry

35

CANADIAN GAMING SUMMIT HIGHLIGHTS

SPECIAL INSERT:

Official Publication of the Canadian Gaming Summit

Canadian Gaming Lawyer Fall 2013 Edition

Canadian Gaming Business | 3


TRANSFORMING THE GAME. The world is changing. The games have to change with it. With play expanding to mobile, social and online platforms, innovation is no longer a luxury. It is essential. From our gameplay mechanics and bonus rounds on classic games, to our E-SERIES™ and immersive themes like Batman™ classic TV series, Flashdance™ and The Walking Dead™ , we’re finding new ways to keep the games fresh, the excitement intense and the engagement high. Stop by booth 1141 to experience the games and meet the minds behind the innovations.

aristocrat-us.com


editor'snote

5 Draw Poker easy as 1-2-3

Lunar PokerTM is ideal for players of all skill levels. Exciting game features include ‘Instant Ante Payout Feature’ giving the chance to win on the first five cards, as well as the ‘Double Combination Feature’ where players get paid on two Poker combinations in one hand. For players looking for even greater rewards, the optional ‘Super Bet’ offers a greatly enhanced pay table regardless of whether the dealer subsequently qualifies with Ace-King or higher or not.

Building on Montreal's momentum It's been some time since we bid adieu to the 17th Canadian Gaming Summit in Montreal in June, but it seems like just yesterday that we were putting the wraps on yet another landmark year. A special thanks to our partners at the Canadian Gaming Association and our provincial agencies for their role in helping make this a hugely successful event; and for the speakers, guests, sponsors and exhibitors who have fuelled us with new ideas and inspiration to fill these pages for issues to come. With the Summit behind us, it's time to shift our focus to the many gaming developments on the horizon. In our cover story, “The Next Step for Canadian iGaming”, provided by Amanda Brewer with the Interactive Gaming Council, we discuss the issue of offshore gaming and its future. In “Rolling the Dice”, Cummins Allison’s Harry Patrinos leads us through a tour of modern cage and count room solutions; and in our Gaming Technology feature, “Playing to Win: The latest in slot machines”, we showcase some of the latest innovations in slot machines, many of which you'll find on the floor at G2E 2013. What does it really mean to “give back”? Marshall Fenn’s Jim Kabrajee discusses how casinos can take a new approach to community involvement in, “The Changing Definition of Community Relations”. Michael Lipton and his team of legal experts also return to tackle another slate of Canadian and US issues in the Fall 2013 edition of IMGL's Canadian Gaming Lawyer. This is an essential read for anyone aiming to stay ahead of the regulatory changes and trends affecting the North American Industry. Check out our photo spread from the 2013 Summit in Montreal. We hope you enjoyed it and we look forward to an even more successful event next year in Vancouver. In the meantime, we're always open to new story ideas, suggestions and comments, so please feel free to contact myself at matthewb@mediaedge.ca and CGB's Publisher, Richard Swayze, at richards@mediaedge.ca. Matthew Bradford Editor matthewb@mediaedge.ca

To receive further information on this product: Call JP Symeonidis on: (514) 829 2929 or E-mail: jp.symeonidis@tcsjohnhuxley.com For more information on our award winning product portfolio visit www.tcsjohnhuxley.com

Corrections:

The Executive Q&A with François Hanchay featured in our Summer 2013 issue, incorrectly displayed a duplicate image of François-Patrick Allard from the Charitable Gaming Q&A article within the same issue. The corrected photo and feature can be found online at www.canadiangamingbusiness.com under 'Gaming Profiles'. A profile on Caesars Windsor's Glen Sawhill incorrectly referred to Caesars Windsor as being located in Manitoba, rather than Ontario. 6 |  Fall 2013


messagefromtheCGA

Montreal Summit Success Story By Bill Rutsey, President & CEO of the Canadian Gaming Association

As Chair of the Canadian Gaming Summit, I am proud of the fact that, year after year, the Summit continues to evolve and grow in terms of both content and attendance. The working partnerships with the British Columbia Lottery Corporation, Alberta Gaming and Liquor Commission, Saskatchewan Gaming Corporation, Manitoba Lotteries Corporation, Ontario Lottery and Gaming Corporation and Gaming, Loto Quebec, and Atlantic Lottery Corporation for the development and delivery of the gaming education component ensured the high quality of content this year in Montreal, and going forward for 2014 in Vancouver and thereafter. I’d like to congratulate and thank our co-host and lead sponsor, L oto - Quebec, a nd especia lly Ly n ne Roiter, Vice President of Legal Affairs and Corporate Secretary, for her tireless contribution in the planning and development of the Summit; as well as Kevin Taylor, Chef de l”Exploitation, Casinos du Quebec, for his stellar representation of Loto-Quebec throughout the event. Additionally, Loto-Quebec, together with Platinum sponsor, Scientif ic Ga mes; Gold sponsors, Spielo International and Bally Technologies; and all our other sponsors were fundamental to the Summit’s success. Two outstanding plenar y sessions—Paul Lauzon’s (Sen ior V ice President , Ipsos Reid) Focus on t he Future Players, sponsored by K PMG; and the Lottery and Gaming Senior Executive Roundtable, sponsored by Great Canadian Gaming, which was my honour to moderate—set the stage for this year’s theme, 'Focus on the Customer'. The infor mation and education programs included tracks dealing with charitable gaming, corporate social responsibilit y, gaming business and operations, iGaming, legal and regulatory, marketing and communications, security and surveillance, and gaming operations. Manufacturers and suppliers also had all the latest products and services on display during the Canadian Gaming Summit Exhibition. 8 |  Fall 2013

There were also great opportunities to get together, i nclud i n g t he G ol f Cl a s sic s p on s ore d b y AGE M and TCSJOHNHU X L E Y, the jam-packed opening reception, and numerous parties and receptions. Our closing event, the Canadian Gaming Awards Reception and Char it y Gala, sponsored by Rogers Business Solutions, raised $7,500 for la Maison du Père and was a celebration of excellence. It formally recognized First Nations Canadian Gaming Award winners Angela Higgins (Caldwell First Nation), Charles Ryder (Carry the Kettle First Nation), Tammy Whitney (Tsuu T’ina First Nation) and Lorne Paudash (Ojibwa-Hiawatha First Nation) together with Industr y Leadership and Outstanding Contribution winners Tw yla Meredith (Saskatchewan Gaming Corporation), Luc Morin (Casino de Montreal) and Glen Sawhill (Caesars Windsor), and Volunteerism and Communit y Ser vice winner JeanPierre Curtat (Casino de Montreal). On a personal note, as a proud Torontonian, I have to reluctantly admit that Montreal is still Canada’s best place to have a party, as was proven by the gala's entertainers, Montreal Rhapsody Orchestra, who rocked the joint. The success of the Summit really speaks to the depth and breadth of our industry and its ability to continue to function profitably and grow—the success that we will be celebrating again next year in Vancouver. Looking forward, as always, the next twelve months should prove to be interesting times for our industry. From all appearances and announcements to date from the new Liberal government in Ontario, the OLG Modernization process will continue, with some potential modifications regarding horse racing. At the Federal level, we anticipate further proposed amendments from the Department of Justice to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and FINTR AC (the Federal agency charged with combating money laundering), and that Bill C290 will be dealt with by the Senate after the resumption of Parliament in October.


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coverstory

The Next Step for Canadian iGaming

Offshore operators…It’s a taxing issue BY AMANDA BREWER, INTERACTIVE GAMING COUNCIL CANADA (IGC)

10 |  Fall 2013 10 | Fall


coverstory

The offshore gaming industry, exemplified by big name operators who are licensed and regulated in European jurisdictions such as the United Kingdom, Spain, Italy, and Denmark, are successful companies because of ongoing investments made in product development, technology, fraud detection, and player protection. They have loyal customers that number in the tens of thousands (if not millions), massive liquidity, and employ some of the best and brightest minds in the high tech sector. In Europe, paying tax in these individual jurisdictions is the cost of doing business in a regulated environment. In exchange for access to a country’s market via a license, operators and regulators agree on how much tax (Gross Gaming Revenue or Gross Profit Tax) will be paid. Taxation of offshore gambling can provide an important source of revenue for governments if it is properly designed—a point worth underscoring with Canadian provinces. A case for offshore taxation The Remote Gaming Association (RGA), the largest trade association for remote gambling operators in the world, summarizes the key aspects of a properly designed tax system for remote gambling as follows: “[T]he choice of an efficiently structured tax can have benefits for consumers, operators, and governments. A Gross Profit Tax (GPT) is the best option for the remote gambling sector because it has the highest potential to provide better value, entertainment, and choice for the consumer. GPT is levied directly on the operator’s revenues. It creates a level playing field between operators, permitting the freedom to provide consumers with greater choice and value without concern for the margin of specific offerings.“ A study issued by Ipsos Reid in 2010 revealed that the idea of internet gambling was gaining acceptance in North America, with more people expressing an interest to see it legalized with proper regulation. More than half of Canadians (55%) are willing to permit internet gambling as long as government regulations are in place. This is not surprising, as the first Ipsos poll on the topic, conducted almost seven years ago in September 2007, showed that over 70% of Canadians believe gambling over the internet is considered to be legal. The irrefutable truth is that Canadians are playing online. H2 Gambling Capital estimates the size of the Canadian market to be in excess of $870 million for 2013 (including sports betting, casino, poker, and bingo). This is not an issue that will go away if ignored, or disappear underground. Online gambling is mainstream, popular, and getting bigger every year. In Canada, we expect to welcome another provincial lottery corporation, the Ontario Lottery and Gaming

Corporation, online in 2014. There is an absolute need to have governments involved with iGaming sites as they play an important regulatory role in setting standards and offering a safe and secure environment for players who wish to try online gaming. But what about the thousands of Canadians who have offshore accounts? Anecdotal evidence does not suggest they will simply migrate over to a lottery corporation’s iGaming site. The big operators effectively launched this industry and have been in business for a decade or longer, and have a very loyal player base. Here’s a thought for consideration: reputable offshore operators are willing to seek licenses in jurisdictions that offer them, and we at the interactive Gaming Council (iGC) submit that partnering with those operators via a licensing system is better public policy that simply pretending they don’t exist. If we use Ontario as an example, H2 Gambling Capital has forecasted the possible development of the regulated online market for online casino, poker, and bingo in Ontario, if the province were to introduce a licensing system for these products. The underlying assumption is that there are sufficient onshore licenses available in order to ensure a commercial and competitive market. A model that fits Here’s the “but”: we recognize that lottery corporations and provincial governments may not currently have the political appetite to launch a full licensing or regulatory model. However, we believe that there is an alternative to the traditional monopoly model that governments should view as the evolution of iGaming in Canada: a vendor of record (VOR) model with a reasonable rate of taxation for offshore operators. This would allow governments to obtain a maximum financial return as well as provide the appropriate consumer protections expected by the public. This model stops short of a full regulatory or licensing component, in acknowledgement of the legal hurdle posed by the current interpretation of “conduct and manage”. As more clarity is achieved, a VOR model plus tax could eventually evolve to include full licensing and regulation. One thing is certain: based on the Canadian Gaming Business  |  11


coverstory The only investment required is in processing and reviewing applications and collecting payments. This avoids issues with “conduct and manage” but does allow for the introduction of consumer protection standards. Looking at the table to the left, that equates to almost half a billion dollars over five years.

exponential growth of this industry in the past five years, there’s no telling where it will be in the next 10. It is worth taking a deeper look at why taxing offshore operators makes sense for provincial governments. Based on H2 Gambling Capital’s estimates for the Ontario regulated online market, if the government was so inclined it would be able to collect $19.5 million in Year 1 from taxing online casino, poker and bingo at 5% of Gross Win, and $164.4 million in the first five years. If the tax rate were to increase to 15%, then the government would collect $58.5 million in Year 1 and $493.1 million in the first five years. This is not an argument in favour of an expansion of gambling—no new products are being developed. By taxing offshore play, governments are dealing with only the existing activity. Governments would shoulder no responsibility for building games, marketing or advertising, or managing the play.

Protecting the player Of greater importance is player protection, because not all offshore operators are created equal. Membership in the IGC has increased significantly since its establishment in 1996 and today counts the largest and most respected online gaming companies in the world, including PokerStars, Microgaming, and Full Tilt Gaming; who together comprise a significant percentage of the online market in terms of revenue. IGC members are strictly regulated in first tier jurisdictions that include the Isle of Man, Gibraltar, Alderney, France, and Italy, which are recognized by the United Kingdom as having acceptable regulatory standards. Members are obliged to follow a strict Code of Conduct that outlines the terms and conditions for conducting and managing online gaming operations. This Code ensures that IGC members are at all times acting with integrity, accountability, and transparency, and that player protection is paramount. IGC members must also adhere to an advertising code and responsible gambling guidelines, which are available for review on its website at www.igcouncil.org. These are the standards that European regulators endorse, and that would be brought to bear on any partnerships with provincial lottery corporations and governments. Running a successful online operation that is able to compete with offshore operators requires a constant investment in technology, development of the product offering, and huge spending on marketing. Providing multiplayer games such as poker or single player games typical of an online casino is technically challenging and the exemplary products currently available in the market are the result of many years’ research, development, and experience. Partnering with reputable operators would leave operational risks to the companies while bringing in more revenue to Ontario’s government via an online gambling tax. When choosing which operator to play with, consumers are looking for value (i.e. product, choice, prices, etc.) A competitive local system (a mix of lottery corporation and offshore products) would ensure that consumers do not have to look offshore for value, which means partnering with online gaming operators would also be better for player protection as governments could control who is approved for taxation—and people are more likely to play at locally-regulated gaming sites. A competitive market and a gross profits taxation model with reasonable tax rates would provide a reliable source of income for Ontario’s government, value for consumers in a safe environment, and a healthy competitive environment for the online gaming industry. Put another way: why reinvent the wheel when you can partner with the best in the business instead? For provincial governments, turning to the private sector just makes sense: more money (more quickly) and less operational risk for the government, and a safer playing environment for consumers. Amanda Brewer is the spokesperson for IGC Canada. She can be reached at amanda@igccanada.com.

12 |  Fall 2013


gamingtrends

Rolling the Dice Leveraging new cage and count room solutions

By Harry Patrinos

In today’s business climate, casinos must do all they can to get a leg up on the competition in order to attract patrons and keep them coming back. The recent recession has left consumers with less discretionary income, causing them to become more discerning about where they spend their dollars. The recession has also forced businesses—including casinos — to rethink how they view and embrace technology to help them bolster efficiency and streamline dayto-day functions. So what actions can casinos take to better position themselves to provide the best customer-facing experience, while aligning with compliance mandates and improving productivity? They can invest in cost-efficient, back-room technology, like currency and coin handling solutions which elevate time-consuming mandatory processes into more efficient tasks. As a result, the casino can then dedicate more 14 |  Fall 2013


gamingtrends

time and resources to revenue-generating front-house activities. House benefits Handling large quantities of cash and tickets is a fact of life for casino operations, but how a casino chooses to deal with this daily task can make a difference in efficiency and effectiveness. Whether it's smaller batch sorting and counting in the cage area, in the banks, or in the soft count room where slot machine contents are sorted and counted, today’s currency and coin handling solutions can streamline the process for faster and accurate results. Casinos are exceptionally tech-friendly. Although this investment in technology is typically more visible and considered to increase revenue on the customerfacing side of the business, it extends to the operational side if it provides a clear benefit to a casino and its bottom line. Currency processing technology that offers multiple capabilities in a single machine is a perfect example. With an all-inclusive solution, casinos can not only prepare their deposits quickly and easily, but they can process currency, and all on one machine. Costs associated with maintaining multiple pieces of equipment are eliminated and, by maximizing the equipments' footprint, casinos can make more productive use of employees’ time. W ith most budget a nd at tention doled out to the front of the house, it’s imperative that any back-room technology implemented be an affordable and justif iable expenditure—whether it’s a first-time investment or upgrade of existing equipment. It’s important to select a currency and ticket-handling solution that is flexible in its configuration to allow the casino to scale up or down depending on the space restrictions common in soft count rooms, yet offer cutting-edge features. By improving eff iciency, employees spend less time counting, allowing them to end shifts on time, thereby reducing overtime expenses. Employee morale also improves, which can be a key factor in minimizing costly turnover. A dva nced ca sh, t icket , a nd coin handling solutions also benefit front-ofthe-house areas; most notably, the cage. Many of the advanced technologies found in larger systems are also available in more modular, scalable devices that provide the

same results in a compact, economical way. Cage areas now have the capability to process cash and tickets on a single device, which makes employees more eff icient and, by extension, able to spend more face-time with patrons. In addition, ticket ima g ing capabilities help casinos comply with some gaming regulations for the storage of their redeemed tickets. By producing digital images for each ticket that can easily be f iled and stored, casinos no longer need to store paper tickets in offsite storage facilities, further reducing costs and streamlining the processes of locating a ticket should an audit occur. Additionally, today’s technolog y allows for the creation of an online database of transaction f iles with records that can be shared with other areas of the casino and better track cash handling to identify a chain of custody. Ca sinos on the frontline of improving service for their patrons h ave e x t ende d b a ck- of f ice a nd

attended coin counting technology improvements to the front of the house by installing self-service coin machines. Popular with local patrons, these machines offer customers a faster, more streamlined alternative to having casino cage employees count their coins. In addition to benefitting customers, self-service machines with on-screen advertising capabilities give casinos another way promote their games, restaurants, and other services. W hether in the cage area, soft count room, or elsewhere, investing in the latest currenc y and ticket handling technology can minimize cash handling processes, improve employee efficiency, and allow casinos to leverage the cost and time savings to front-house upgrades to draw more patrons in and keep them coming back. Harry Patrinos is Managing Director, Canada, at Cummins Allison. He can be reached at hpatrinos@cumminsallison.ca.

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Canadian Gaming Business | 15


gamingtechnology

Playing to Win: The Latest in Slot Machines It's 'game on' in casinos across Canada where manufacturers and suppliers are drawing from the latest trends and technologies to give players the ultimate slot machine experience. For this issue, Canadian Gaming Business asked some of the major players in this category to show us what they're doing to evolve the gaming floor. AINSWORTH GAME TECHNOLOGY The gaming sector remains one of the most competitive industries, with many manufacturers developing slot machines that give players an unlimited amount of games to choose from. The ex perience a player has at a game is what keeps them consistently playing the same machine. This has been the mantra for Ainsworth and the driving force behind its innovative and cuttingedge designs. Ainsworth focuses on math’s models f irst and foremost when it comes to developing games. Progressive Jackpots and volatility are also key factors as Ainsworth understands that player experience and excitement is fuelled by the player’s ability to win in multiple ways and to experience large wins. “Ainsworth builds games for true local gamblers giving the player an experience that may play out over months of playing a game as opposed to just one session,” says Jason Babler, Ainsworth’s Product Marketing Administrator. Ainsworth’s latest release, Reels of Wheels™, incorporates a unique multi wheel feature and continuously rewards players with four levels of rapid triggering progressive jackpots. Linking five wheels to five reels, the Reels of Wheels™ feature wheels spin to determine special wild symbols linked to reels one through to five. Reels of Wheels™ builds anticipation for the player with eight exhilarating free games, providing guaranteed wild symbols and accumulating wild multipliers, multiplying wins up to five times on reel three. Reels of Wheels™ is truly built for the player experience. Adds Babler, “Ainsworth will remain at the forefront of the 16 |  Fall 2013

gaming industry as it is committed to producing the best in the class games to meet the demands of today’s players.” For more information, visit www.ainsworth.com.au. AMAYA GAMING GROUP Cadillac Jack, a subsidiary of Amaya Gaming, designs, develops, and markets high performing, featurerich video slot products designed for premium player experiences. Each product suite is designed to raise the bar with thrilling payouts and exciting bonus features. Players are attracted to Cadillac Jack ’s games because they offer the perfect combination of dynamic graphics, mesmerizing entertainment, and unique game mechanics that increase a player's seat time. Cadillac Jack 's newest g a me, D r a g on’s L a i r, a pp e a l s t o t he player's sense of nostalgia, fun, and desire for challenge. Based on the legendary skill-based arcade videogame, Dragon’s Lair features original and new animation created by renowned Dragon’s Lair animator Don Bluth. Whether a longtime fan or a new player, Dragon’s Lair appeals to all as they join Dirk the Daring, a bumbling knight attempting to rescue Princess Daphne from the evil dragon Singe, who has locked the princess in the foul wizard Mordroc’s castle. Players are challenged to participate in four energizing bonus games and four rewarding multi-level progressives. Rewarding game features include Symbol Stacking Animation, where animated videos from the original Dragon’s Lair game play inside the frame; Mystery Wild Substitutions that can appear anytime, awarding players single, double, or stacked Wilds; and Mystery Multipliers that appear throughout


gamingtechnology

the base game when the player has a win. Four bonus games engage players as Dirk enters a variety of challenges against arch enemies attempting to thwart his rescue of Daphne. For further information on Cadillac Jack, Dragon’s Lair, or other Amaya slot products, visit www.cadillacjack.com. ARISTOCRAT TECHNOLOGIES Today’s slot players are a varied bunch. A ristocrat has always specialized in catering to the core gambler, the player looking to chase a big win. But what about those other players? The casual player—that is, the player looking to maximize their time playing—seeks out the most beautiful ar t work f irst. That player stays on a lower volatility machine because the glittering win celebrations feel like lots of wins are happening. Aristocrat's new E*SERIES™ meets all of those needs. Working with the best talent in the industry, it is bringing games to the market that fit this description exactly. Aristocrat's first family of games, Sky Rider, boasts some amazing, eye-catching graphics. The startling gaze of Golden Amulet and Silver Treasure will call to the player from across the room. Individually, both Golden Amulet and Silver Treasure look stunning; but combined, they tell an intriguing story. That mystery adds to the entertainment of these games. Every bit of these games has been designed with this casual slot player in mind—from the new user interface, to the unique win sounds, and the lower volatility math. Additionally, Aristocrat's new topper lighting matches its E*SERIES specific purple edge lighting. From the bold look of this new packaging to the games' gorgeous artwork, Aristocrat has created a visual destination players will be drawn to. For more information, visit www.aristocrattechnologies.com BALLY TECHNOLOGIES Today’s slot players want more interaction with games and— of course—more excitement. Bally delivers both with the new NASCAR video slots. For fans of NASCAR, it’s all about the driver, and this new slot doesn't disappoint. The lineup is a who’s-who of current racing royalty, including Dale Earnhardt, Jr., Jimmie Johnson, Kevin Harvick, Jeff Gordon, and Clint Bowyer. Not only can players theme the slot based on their favourite driver, but they’ll also enjoy audio and video featuring these stars of the oval. The game is delivered on Bally’s ALPHA 2™ Pro Series™ V32 cabinet, with a stunning 32-inch vertical touch-screen

display, game-synchronized side lighting, Pro Digital Topper, and Super Candle. Rounding out the cockpit is the Pro Surround Chair, enveloping players in awesome audio. From the roar of 850-horsepower engines to the cheers of the crowd, players will have no doubt they’re in the driver’s seat. NASCA R features three, highoctane bonuses, including the Pit Stop Bonus, Burnout Free Games, and U-Race Bonus. During the Pit Stop Bonus, players can touch the screen to pick a lug nut, with each choice awarding various credit amounts. Burnout Free Games takes advantage of Bally’s award-winning U-Spin™ play mechanic. This time, though, players spin a fresh race tire to discover which free game theme they’ll be awarded. In addition, the U-Race Bonus means it’s time to get in the race. Featuring Bally’s new U-Race™ play mechanic, the bonus awards five free games while the player takes part in a race at the world famous Daytona International Speedway. Each of these bonuses promise players a chance to touch the screen and win while riding with a famous NASCAR driver. For more information, visit www.ballytech.com. IGT W hen pl ayer s set out to t he ca sino f loor for a gaming experience, they are often drawn to two thing s: incredible entertainment and big win potential. IGT’s newly released Triple Red Hot 7’s® Free Games Slots provides just that, offering a lively gaming experience with a variety of ways to win big. The latest addition to one of IGT’s top-performing game series, this red-hot fan favourite draws players to the familiarity of IGT’s Triple Red Hot 7’s® brand, while newer players are captivated by the dynamic audiovisual gaming experience. With over-the-top lights and winning alerts, there will be no question when a player is on a hot streak. Triple Red Hot 7’s® Free Games Slots offers t wo configurations including a 5-payline high denomination option and a 25-payline low denomination option. Players delight in the industry first Spitfire MultipliersTM feature, in which seven initial free games are awarded with the possibilities of retriggers. Each bonus spin is awarded a random multiplier, ranging from 2X to 7X, giving slot enthusiasts even more ways to win. Available on both IGT’s classic S AVP® mechanical spinning reel and IGT’s MLD® spinning reel, the gaming pioneers provide a version perfect for every player preference. The spinning reel version boasts a traditional, familiar symbol set Canadian Gaming Business | 17


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while the MLD® version features symbols that really pop with 3D animation and vivid graphics. For a full list of IGT gaming products and systems solutions visit www.IGT.com, find IGT on Facebook or follow news via @IGTNews. KONAMI GAMING The gaming industry has come a long way from the days of the single-line three-reel mechanical slot machine. Changes in gaming devices have, in many ways, paralleled changes that consumers have experienced with most forms of entertainment. Consumers today have access to high-definition 3D digital televisions and cinemas, surround sound, a seemingly unlimited array of media choices in the palms of their hands via smartphones, and the ability to play videogames on consoles with strangers around the globe via internet connections. The net result of these largely technology-driven developments is the creation of an expectation that similar experiences should also be available in the casino. Therefore, the slot manufacturer who can offer a layered and compelling entertainment experience in addition to a gaming transaction wherein the consumer has a mathematical chance to hit a jackpot will win the battle to attract today’s slot players. Konami Gaming, Inc. has experienced unparalleled growth over the past six years because it has delivered products that meet the evolving needs of today’s slot players. Konami Gaming, Inc. has experienced unparalleled growth over the past six years because it have delivered products that meet the evolving needs of today’s slot players. Konami has tapped its Born From FunTM roots as a leading videogame and entertainment provider in order to develop some of today’s highest performing games. A clear example of this can be seen with the Konami KP3™ platform. This new platform was designed to offer the type of lifelike 3D imagery, integrated graphics on multiple game screens, synchronized lighting effects, and powerful sound experience that today’s consumers expect in exchange for their discretionary entertainment spend. In Konami’s Mystical Pharaoh™ game, for example, customers can witness the video slot reels magically transforming before their eyes into three-dimensional rotating reels that virtually pop off the screen. Or, the reels can be laid flat by a magical sphinx who then converts individual symbols into “wild” symbols via mystical lasers in order to add to the richness of the player’s overall entertainment experience. Players today understand that with each spin, slot machines still represent a “chance” to win, but now they also expect these games to deliver entertainment that is guaranteed. Konami is uniquely positioned to deliver the type of real entertainment value that today’s slot player demands. For more information, www.konamigaming.com. 18 |  Fall 2013

MULTIMEDIA GAMES As Multimedia Games introduces their products to the Canadian market, they bring w ith them their own brand of creativity and technology to gaming, resulting in the Play Louder™ experience that brings a player back to a game time and time again. “With the players of today, you need to enter tain them for an extended period of time and give them that Play Louder experience with a variet y of gameplay and bonus features, so that they’re at their machine long enough to hit those significant wins,” says Brad Johnson, VP of Product Management and Marketing.” This keeps them coming back to that game. That combination of entertainment and winnings creates the loyal player that every manufacturer and casino wants.” Multimedia Games feels their wildly popular and successful 5-Reel, 50-Line video game Carnival in Rio® will deliver that Play Louder experience that keeps bringing players back for more variety and big wins. With its great animation, such as the gyrating Dancer symbols; colourful Carnival-inspired graphics; straight-fromBrazil background music; and hot Free Spin Bonus, Carnival in Rio immerses the player in the festival atmosphere as they try their hand at winning more than 300,000 credits and 70 free spins. Says Johnson, “Carnival in Rio is a great example of an MGAM game that delivers everything a player is looking for these days when they sit down at a machine— a fun time with no risk of getting bored, because there’s so much going on between the graphics, music, and animations. Then you add in the big wins, and you have an experience that will draw the player back to that title.” For more information, visit www.multimediagames.com. SPIELO INTERNATIONAL Licensed brands are a big draw for slot players, but many of the licensed games on today’s casino f loor can lack game functionality that matches the fun of the brand. SPIELO International is changing that with licensed slots that not only go to great lengths to stay true to the feel of the original, but enter an entirely new niche: the booming market of casual gaming—a segment that, up until now, has been missed in the world of licensed slots—with Plants vs. Zombies™ from casual gaming giant PopCap Games®. With the current ubiquity of tablets and smartphones, casual gaming is rising in popularity for Canadians. We’ve addressed this branded license niche by bringing casual gaming to the casino f loor with our first

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PopCap-themed slot machine, Plants vs. Zombies. It’s distinct enough to stand out in the midst of the more traditional brands, while remaining recognizable as a license and holding appeal for a new type of gamer, one who hasn’t traditionally played slots. For those who already know the brand, the interest in Plants vs. Zombies borders on fanatical, with millions of downloads of the casual game. We’ve incorporated popular and easily recognizable elements from the casual games into two spinning reel slot games. Fans will readily recognize the familiar sound effects and music. Even players not familiar with Plants vs. Zombies will quickly become converts as they experience the appeal of the accessible yet rewarding gameplay mechanics. There’s nothing like it on the casino f loor. Just beware of those zombies – they want to eat your brains! For more information, visit www. spielo.com. WMS GAMING The stunning, sleek BLADE cabinet, honed by player insights and casino operator feedback, is WMS' nextg eneration for-sa le cabinet. The BL A DE integrates a cutting-edge cabinet design, the amazingly fast CPUNXT®3processor, and a diverse library of content. Its entire suite of content and play mechanics is tailored to the cabinet’s tighter, more connected set of highresolution displays, which are designed to be highly effective in grabbing players’ attention. Among its features include seamless 23" displays with minimal space between high-def inition wide screen LCDs (1920x1080; 16:9); next generation "Halo" lighting that combines direct and i n d i r e c t i l lu m i n at ion; exclusive game content; premium digital sound system with enhanced clarit y; and a CPU-N X T3 Processor, W MS’ fastest CPU platform e ver. Pl a y er s

and casinos will also benefit from a new interior machine layout; the support for current peripherals and common player tracking systems; a modular de si g n appro a ch t h at a l low s for future modifications and upgrades; a refined, programmable button panel; and an integrated purse hook and mini-storage nook. The WMS BLADE™ cabinet's robust library of dynamic gameplay are also

all available with the player-focused Bonus Guarantee™ and Wager Saver™ mechanics, developed exclusively for the CPU-NXT®3 through extensive player and customer research. The BLADE cabinet is only one of the latest examples of WMS products that have exceeded expectations in unique ways and is delivering strong performance. For more information, visit www.wms.com.

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Volume 6 Number 2 September 2013

Self Exclusion Programs No Good Deed Goes Unpunished Regulator and Industry Collaboration The Limited Use of the First Nations Gaming Proceeds The Rise (and Rise) of Bitcoin


MESSAGE FROM THE PRESIDENT As my second and final year as President of the International Masters of Gaming Law winds down, I am very encouraged by the progress that I see in the relationship between gaming regulators and the industry that they regulate. The invitation by the International Association of Gaming Regulators to the IMGL to co-locate their conferences in Oslo was enthusiastically received. The co-location of these preeminent organizations' conferences presents our respective members with an unprecedented opportunity not only to meet and discuss in both professional and social settings significant issues facing the ever changing global gaming industry, but to seek actual agreement relative to long-discussed regulatory reforms. The 2013 IAGR and IMGL Conferences in Oslo are a reflection of the mutual interest of regulators and the regulated in not only improving their communication, but also identifying and implementing investigation, enforcement, and compliance practices that are reasonably and rationally designed to ensure the integrity of the gaming industry. Several of the sessions at the IMGL Autumn Conference will specifically focus on regulatory reform. A forum on Cross-Border Regulatory Reform relative to online gaming will analyze regulatory models that should be considered in this fast growing area of the gaming industry that demands a harmonious regulatory regime designed to ensure cross-border reciprocity of laws and standards. A panel on Internet Gaming in Developing Markets will address regulatory approaches in established online gaming jurisdictions to nascent ones in, for example, the United States, and a panel on the EU Action Plan will address the challenges in the EU regulating online gaming. I am equally excited about our panel on Regulatory Reform & Implementation. This panel will address some of the regulatory reforms discussed in the past and more importantly, the prospects for implementation. Panels reflecting the evolution of the gaming industry worldwide will focus on Mobile Gaming, Social Gaming, Binary Options, and trends in the liberalization of gaming laws in Europe and the United States, while others will address developments in more traditional forms of gaming, including Sports Betting and Lotteries. Finally, with U.S. jurisdictions coming online, poker liquidity - whether achieved by state-tostate compacts or sharing of liquidity with established European jurisdictions will be examined. Based on the foregoing, I cannot think of a better final Autumn Conference during my tenure as IMGL President. I look forward to seeing many of you in Oslo. Best Regards,

Publisher Richard Swayze richards@mediaedge.ca Editor

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2 |  Canadian Gaming Lawyer Magazine


Lawyer

J. Kelly Duncan President Jones Walker LLP New Orleans, Louisiana, USA +1 504 582 8218 kduncan@joneswalker.com Joerg Hofmann Vice President MELCHERS law firm Heidelberg, Germany +49 6221 1850 0 j.hofmann@melchers-law.com

J. Kelly Duncan

Joerg Hofmann

President

Vice President

Jamie Nettleton

Michael E. Zatezalo

Secretary

Treasurer

Jamie Nettleton Secretary Addisons Lawyers Sydney, Australia +612 8915 1030 jamie.nettleton@addisonslawyers.com.au Michael E. Zatezalo Treasurer Kegler, Brown, Hill & Ritter Co., L.P.A. Columbus, Ohio, USA +1 614 462 5400 mzatezalo@keglerbrown.com Douglas Florence Sr. Vice President, Affiliate Members Avigilon Las Vegas, Nevada, USA +1 702 683 6016 Douglas.florence@avigilon.com Keith C. Miller Vice President, Affiliated Educators Drake University Law School Des Moines, Iowa, USA +1 515 271 2071 keith.miller@drake.edu

Douglas Florence Sr.

Keith C. Miller

Vice President, Affiliate Members Vice President, Affiliated Educators

Tony Coles Immediate Past President Jeffrey Green Russell Limited London, United Kingdom +44 20 7339 7000 arc@jgrlaw.co.uk Melissa Triplett Executive Director International Masters of Gaming Law Boulder, Colorado, USA +1 303 449 9955 IMGLDirector@aol.com Tony Coles

Melissa Triplett

Immediate Past President

Executive Director September 2013  | 3


cover story

By Mordy Mednick

Self-Exclusion Programs

No Good Deed Goes Unpunished Many provinces in Canada as well as other commonwealth countries, including New Zealand and Australia, have offered voluntary self-exclusion programs for the benefit of its gamblers. Voluntary self-exclusion programs are designed to assist casino patrons who have concluded that it is in their best interests not to participate in gaming and to prevent such individuals from entering gaming facilities. Every individual who enrolls in a self-exclusion program is required to sign a self-exclusion form which sets out specific conditions of the program. Although self-exclusion programs and corresponding forms may vary amongst jurisdictions, the general principle is always the same: individuals who enter into self-exclusion programs cannot attend any gaming facility during the term of the self-exclusion program. In spite of the good-intentions and obvious benef its of self-exclusion programs, in recent years, casinos have faced innumerable lawsuits due to the 4  |  Canadian Gaming Lawyer Magazine 4 | 

implementation of these self-exclusion programs. Specifically, individuals who have or are enrolled in self-exclusion programs have sued the casinos for their failure to stop them from entering gaming facilities and gambling away large sums of money. Although cases of this nature have previously been litigated (see the Ontario Court of Appeal decision Dennis v. Ontario Lottery and Gaming Corporation and the Court of Alberta decision in R. v. Trins) the following two cases are novel and highlight the different ways in which individuals have attacked the validity of self-exclusion programs and the problems casinos can face. The first case, Haghdust v. British Columbia Lottery Corporation, currently before the British Columbia Supreme Court, addresses the obligations of the

British Columbia Lottery Corporation (the “BCLC”) to remit unpaid jackpots to individuals who won these jackpots while they were enrolled in selfexclusion programs. If the British Columbia Supreme Court rules in the Plaintiffs’ favour, it could have enormous consequential effects in British Columbia, as over 300 jackpot prizes were withheld from ineligible excluded gamblers between 2009 and mid-2012. The second case, Kakavas v. Crown Melbourne Limited, is an Australian case which also addresses the problems of selfexclusion programs albeit in a different context. In this case, the Court was asked to address the casino’s obligations to remove an individual from the casino, when the individual had previously been enrolled in a self-exclusion program but


cover story

“In spite of the good-intentions and obvious benefits of self-exclusion programs, in recent years, casinos have faced innumerable lawsuits due to the implementation of these self-exclusion programs.” was subsequently declared fit to return. Although the facts of this case are slightly more complicated, the Court analyzed whether the casino acted unconscionably when it allowed the individual to gamble at its premises and lose over 20 million (Australian) dollars, when it knew the individual had been enrolled in a selfexclusion program and previously admitted to having a gambling program. Haghdust v. British Columbia Lottery Corporation In 2006, Hamidreza Haghdust and Michael Lee (the “Plaintiffs”) enrolled in a self-exclusion program (the “SelfExclusion Program”) and each signed self-exclusion forms (the “Self-Exclusion Forms”). The Self-Exclusion Forms did not provide any notice that a participant would forfeit any winnings won during the period of the Self-Exclusion Program. In April, 2009, the BCLC adopted the Rules and Regulations Respecting Jackpot Entitlement for Individuals Who are Voluntarily Excluded or Prohibited by BCLC From Entering Gaming Facilities (the “VSE Rules”). The VSE Rules provide that “a person who is a participant in the Self-Exclusion Program is ineligible to receive a jackpot prize”. Following the adoption of the VSE Rules, the Plaintiffs entered into gaming facilities and won jackpots o f $ 3 5 , 0 0 0 . 0 0 a n d $ 4 2 , 4 8 4 . 6 7, respectively, which to date remain unpaid (on the basis that they were

participants in the Self-Exclusion Program). In an effort to win these jack pot s, however, the Pla int if fs a l leg e t h at t hey ent ered g a m i n g facilities between 2006 and 2009 on a number of occasions, and incurred losses in excess of $200,000.00. As such, they state that the denial of these jackpots by BCLC “amounts to an unfair policy of if you lose, you lose, and if you win, you lose, too”. In 2011, BCLC brought a motion for summary judgment attempting to dismiss the Plaintiffs’ action (summary judgment motions are brought on the basis that there is no genuine issue requiring a trial. If successful, it ends the action then and there). During this motion, BCLC advanced two arguments: 1. since the VSE Rules became effective on April 1, 2009, and the Plaintiffs, as members of the Self-Exclusion Program, won their jackpots after April 1, 2009, they are not entitled to keep their jackpots; and, 2. the Plaintiffs are precluded from recovering their jackpots because the jackpots were won when the Plaintiffs were prohibited from attending the gaming facilities pursuant to their Self-Exclusion Forms. As such, because the Plaintiffs were on the premises illegally, the principle of ex turpi causa non oritur actio applies, which states that no action can be founded on any illegal act. In response, the Plaintiffs advanced

several arguments, the most compelling of which, are as follows: 1. Since the Self-Exclusion Forms (which the Plaintiffs signed in 2006) were not governed by the VSE Rules (which were only adopted in 2009), the VSE Rules should not apply; 2. the VSE Rules are unconscionable and thus, unenforceable; 3. the Self-E xclusion Forms are inoperative because they conf lict w ith recent prov isions under sections 92 and 93 of the Act. These provisions require that “a person under the Self-Exclusion Program receive written notice [emphasis added] forbidding him or her from entering the premises of the gaming facility [emphasis added]” and that “a person is not entitled to any prize or winnings…if written notice…has been delivered”. The Plaintiffs allege that: i. t h e u s e o f t h e w o r d “ t h e ” contemplates notice for a specific gaming facilit y and does not contemplate notice for any gaming facility. Thus, unless the Plaintiffs received notice with respect to a specific gaming facility, the Plaintiffs did not receive notice under the Act; and, ii. although BCLC amended the SelfExclusion Form in January, 2009 to include “…If I win the game, and BCLC determines that I was playing while self-excluded, BCLC agrees to

1 Volume 5 Number 2, authors Michael Lipton & Jack Tadman

September 2013  | 5


cover story pay the prize money to a third party instead of to me, as set out in the rules and regulations”, the version of the Self-Exclusion Form that the Plaintiffs signed did not include this amendment. Therefore the Plaintiffs did not receive written notice under the Act; 4. Even if the Plaintiffs’ did receive written notice under the Act, failing to reward them with their jackpot prizes would be harsh and disproportionate pursuant to the provisions under the Act. In light of the foregoing, Justice Savage dismissed BCLC’s motion for summary judgment on the basis that there were genuine issues requiring a trial. As a result, he refrained from providing any opinion with respect to the merits of these arguments in order to ensure procedural fairness for the trial. Given that the motion for summary judgment was denied, the British Columbia Supreme Court is of the view that there is a genuine issue for trial. At its core, the issue is whether the Plaintiffs, who signed older versions of the SelfExclusion Forms, ought to receive their jackpot prizes when they were forbidden from entering the gaming facilities. On the surface, it is difficult to agree with the Plaintiffs’ contention. If the Plaintiffs were prevented from entering gaming facilities, which was set out in their Self-Exclusion Forms, then they knew or ought to have known that any monies received as a result of entering into gaming facilities would not be returned (note that this analysis has little meaning in the event the British Columbia Supreme Court finds the Self-Exclusion Form unconscionable. For a fulsome analysis of unconsionability, please see De-fine-ing the Problem in Canadian Gaming Lawyer Magazine.1). Otherwise, the BCLC would be rewarding and thus encouraging individuals to breach the conditions of their Self-Exclusion Forms in order to receive various prizes. Clearly, this is not the purpose of the Self-Exclusion Program, which is to deter individuals from entering into gaming 6 |  Canadian Gaming Lawyer Magazine

facilities, and this is why the BCLC spelled out its policy more specifically in the 2009 Self-Exclusion Form to leave no room for doubt. What makes this situation complex, however, is that many of these individuals have lost substantial sums of money which the BCLC has not returned. As such, it seems like a windfall for the BCLC because the BCLC is benefiting from its inability to detect these individuals by keeping these individuals’ gambling losses, and benefiting again when they detect these individuals and refuse to remit their jackpot prizes. Ideally, the BCLC would return the Plaintiffs’ losses and refuse to remit any prizes. However, practically speaking, it would be near impossible to monitor the transactions of each individual. Going for ward, the BCLC has amended the Self-Exclusion Form so that individuals who receive jackpot prizes know in advance that any prizes won will now be paid to third parties. Considering it was implicit that notice was provided under the Act, the British Columbia Supreme Court may want to consider adopting a similar strategy, i.e., have the gaming facilities pay the jackpot prizes to a charity of the Plaintiffs’ choosing. While not ideal, it accomplishes two important goals; it does not reward these individuals for wrongfully entering into gaming facilities, while at the same time, does not allow the BCLC to keep the prizes, forcing them to donate it to third parties. Although there is no clear solution, what is evident is that the arguments advanced by both the Plaintiffs and BCLC have merit, and it is not certain what the British Columbia Supreme Court will decide. Kakavas v. Crown Melbourne Limited In the High Court of Australia decision Kakavas v. Crown Melbourne Limited, Mr. Kakavas was an admitted problem gambler, who signed a self-exclusion form prohibiting him from entering the Melbourne casino. In 1998, Mr. Kakavas applied to have his self-exclusion form removed, and as part of that application,

included an expert opinion from a physiologist declaring that he “had the skills necessary to operate as nothing more than a recreational gambler”. Notwithstanding the subsequent release of his self-exclusion, the casino still prevented Mr. Kakavas from attending the casino until 2005, as a result of an unrelated armed robbery conviction. However, in order for Mr. Kakavas to re-attend the casino in 2005, he was again required to submit an opinion from a psychiatrist which stated that “he had conquered his past demons, but if he had a relapse again he would self-exclude”. The report also stated that Mr. Kakavas was “an intelligent, highly motived, and goal driven individual” who “would not hesitate to implement” the relapse plan. Between June, 2005 and August, 2006, Mr. Kakavas attended the casino on 28 occasions and lost over 20 million (Australian) dollars. During this time, he did not attempt to employ the selfexclusion mechanism and always presented himself as “a successful businessman who enjoyed gambling, but with an appropriate awareness of the need for balance”. In 2007, Mr. Kakavas issued proceedings against the casino for unconscionable conduct claiming compensation for the losses he had suffered. Specif ically, Mr. Kakavas alleged that the casino exploited his special disadvantage of allowing him to gamble while knowing that he was “unable to make worthwhile decisions in his own interests while gambling at the casino”. Mr. Kakavas’s claim was not successful. In rejecting Mr. Kakava’s claim, the High Court of Australia made the following findings: 1. A lthough Mr. K a k avas had a pathological gaming condition, he was able to stop gambling when it suited him and make worthwhile decisions in his own self-interest. T h i s w a s e v ident w hen M r. Kakavas refrained from gambling for long periods of time; 2 . M r. K a k ava s a l w ay s went t o considerable lengths to assure


cover story the casino that his troubles with gambling were now behind him. Only after his final visit to the casino did Mr. Kakavas express concern to casino employees about his losses; 3. Mr. Kakavas knew he could selfexclude at any time; 4. The gambling activities took place in a commercial context in which the “unmistakable purpose of each party was to inflict loss upon the other party in the transaction. To deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind”. With this decision, the High Court of Australia has sent a strong message to pathological high roller gamblers who elect to re-instate themselves into casinos: it is not the casino’s responsibility to protect you from your own bad decisions

if you are fully aware of the decisions you are making. In this case, Mr. Kakavas understood the consequences of his actions, knew he could self-exclude, always represented that his troubles were behind him and continuously advised he could afford his losses. As such, the Court correctly found that he was not the victim of exploitation but rather a regular high roller gambler who had lost considerable amounts of money. Going forward, it is not perfectly clear whether this same line of reasoning will apply to all cases. For example, if an individual is poor or intoxicated, and gambles again, having been reinstated from a self-exclusion program, the casino may have an obligation to remove that individual to avoid any perception of exploitation. This situation, arguably, is different since the individual may not be aware of his actions or have the ability to control his actions. What is clear, however, is that barring special

circumstances, the Court will not bail out or throw a life-jacket to individuals who have re-instated themselves from selfexclusion programs, and subsequently lose money gambling. Gambling is an inherently risky business which is conducted in the context of a commercial setting. Thus, if individuals elect to re-instate themselves (notwithstanding their prior history), those individuals must accept the consequences of their own decisions, and cannot look to the court for relief. This is not a case of exploitation. As a result of the above-referenced cases, it is clear that the case law continues to evolve and casinos will begin to receive the clarification they need. CGL Mordy Mednick is an associate at the law f irm of Dickinson Wright LLP, specializing in commercial litigation. Mr. Mednick can be contacted at mmednick@ dickinsonwright.com.

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September 2013  | 7


Feature

By Susan Hensel

Regulator and Industry Collaboration

Changing the Dynamic

In October, my second term as President of the International Association of Gaming Regulators (IAGR) will expire and Lau Peet Meng, Chief Executive, Singapore Casino Regulatory Authority, will take over the helm. In my time as president, thanks to the work of a dedicated Board of Trustees, IAGR has made significant progress in establishing itself as the premier international regulators association in the world. In coming years, the association will continue to play an important role in the future of gaming as the industry and regulators increasingly recognize the importance of communication between the regulator and the regulated. Driving this recognition are factors such as globalization and technological change that have put the gaming industry in an accelerated state of evolution. There is no longer the luxury of time to resolve emerging issues. The advent of mobile phones, tablets, and social media is raising new questions. Today, those questions are moving to the forefront of regulator responsibility and industry opportunity. While we all recognize that we are operating in a very different gaming environment than even a few years ago, the question is how can regulators and the industry move beyond the long talked about need for collaboration to actual collaboration? How can we advance industry and regulatory initiatives independently underway to achieve results? While there may not be ready answers to these questions, there are factors at play in the industry today that set the stage for exploring new approaches. With more of the same companies operating in multiple gambling jurisdictions, there are more chances for regulators to work together in their investigation and evaluation of gaming companies. Informally through professional relationships developed as a result of organizations such as IAGR, and formally through memorandums of understanding, regulators are able to share information with one another and cut down on duplication of effort. We will see more occasions for cooperation as the concept 8 |  Canadian Gaming Lawyer Magazine

of inter-jurisdictional gambling compacts grows and participants gain experience in how to efficiently regulate multi-jurisdictional relationships. Also helping to drive smarter regulation is the very technology that is bringing about change. These advances have given us tools that simply were not available before. Thanks to technology, we are better able to develop targeted, risk based regulation that provides public protection assurances while saving time and money. Today, we can see what we couldn’t see. We can control what we couldn’t control. We can send data around the world with a speed that is near instantaneous, and we can communicate across continents as if we were sitting next to one another. These abilities are transformative. Compare a jackpot dispute in the days of crude slot machines with one that occurs today. Then, it was a matter of player versus operator—a he said, she said. Today, there is a digital audit trail of all machine activity that puts an end to any dispute. Then, regulatory staff was mandated to oversee the slot count. Today, central control computer systems keep track of every penny eliminating the necessity for regulators in the slot count room. Then, there was fear that online and mobile capability would be a loophole for underage gamers. Today, fingerprint technology and other biometrics offer the prospect of immediate verification that the player is who the player says he is and is not an underage gamer. These assurances ease regulator worries and help open new markets. Then, casino staff memorized thousands of faces on exclusion lists with the hope of being able to spot an intruder. Today, facial recognition software is being explored. And then, investigators had no alternative but to travel in order


feature

“The challenge for the regulator and industry is to find and exploit opportunities to think differently about how we interact with one another—to find a way to change the dynamic.” to ensure applicant suitability. Today, some jurisdictions are experimenting with video conferencing to reduce the time and travel expense of some background investigations. IAGR has set a goal for itself to be a thought leader in improving gaming regulation and has undertaken new initiatives as we work to accomplish that goal. We are launching a pilot of our multijurisdictional business form so that operators can use the same material for applications in different member jurisdictions and can simultaneously update the information when necessary. We are exploring opportunities for making remote gaming test results transferable across jurisdictions reducing cost and time to market for new games. We are also considering what can be done to develop standards in the non-remote sphere. Within our portal, we are developing an IAGR knowledge module so regulators can share best practices, discuss emerging issues and collaborate on solutions, and we are undertaking creation of a statistical database providing a knowledge asset available to regulators and those advising the industry. Finally, we are recognizing the important role IAGR can play in acting as a focal point for industry bodies such as the Gaming Standards Association and the American Gaming Association (AGA) and for regional bodies such as the regional gambling regulator associations like GREF and NAGRA. By establishing these relationships we are putting interested people or organizations in touch with the people who can help make things happen. But IAGR, just like the industry, can only do so much by itself to achieve a smarter regulatory environment. In order to truly make a difference, we need to be working together. There are very real difficulties in getting a sustained effort underway to improve the way in which we work. Part of this is the reality of pressing job demands that provide little opportunity for abstract thinking about how to accomplish long talked about objectives. Part of it is that despite good intentions, it is just plain hard work to deliver on lofty goals of cooperation and collaboration that are made from conference podiums. The challenge for the regulator and industry is to find and exploit opportunities to think differently about how we interact with one another—to find a way to change the dynamic. We need, for instance, to be talking to one another about how we can promote discussion between conferences. It sounds good, but how do we actually set about making those conversations a reality?

We also need to think differently about how we use technology. How can we leverage the exploding technological options to do things better? Can we, for instance, leverage webinars, blogs, and social media sites to efficiently share information and learn without having to book a flight or leave our offices? Instead of our primary focus being on knowledge sharing from our colleagues, whether regulator or industry, can we tap into one another across classifications? Can organizations like IMGL, IAGA, and AGA share information with associations like IAGR, GREF, and NAGRA? Can we, for instance, establish knowledge banks across organizations rather than just within associations? And if so, how exactly do we set about making that work? As I prepare to end my term as IAGR’s President and transition to an IAGR trustee, I leave you with these questions. IAGR looks forward to working collaboratively on the answers that will lead both industry and regulator to a place of better regulation in the future. CGL Susan Hensel was named Director of Li censing for the Pennsylvania Gaming Control Board in November 2005 after previously serving as Acting Director and as a Special Assistant to the Board. Hensel oversees the licensing of the state’s casinos and other gaming related companies doing business in the state as well as the employees working in and supporting the gaming industry. Hensel is the President of the International Association of Gaming Regulators having previously served as Vice-President and Secretary of the association. She also serves on the association’s Board of Trustees. Hensel is a member of the International Masters of Gaming Law. Before joining the Gaming Board, Hensel worked on gaming implementation issues as a Special Assistant to the Pennsylvania Secretary of Revenue, who is an ex-officio member of the Board. Previously, Hensel served in executive level positions with Pennsylvania state government, including serving an A ssistant General Counsel in the Governor's Office of General Counsel. Before entering state government, Hensel was a television news reporter in Harrisburg, Pennsylvania. She earned her J.D. degree from Widener University Law School in Harrisburg, where she graduated cum laude from the evening division and was on the staff of the Law Review. Hensel earned a bachelor’s degree in broadcast journalism from the University of WisconsinMilwaukee. September 2013  | 9


FEature

By Michael Lipton, Kevin Weber, and Jack Tadman

The Limited Use of First Nations Gaming Proceeds

Under Section 207(1)(b) of the Criminal Code

The federal government regulates gaming through Part VII of the Criminal Code (the “Code”), which sets forth prohibitions against gaming and exceptions to those prohibitions. Where gaming occurs within the ambit of the Code’s exceptions, that gaming is regulated by the provincial governments.1 As a general rule, casino gaming is prohibited in Canada other than as permitted by the exceptions in s. 207 of the Code.

Use of Gaming Proceeds Under 207(1)(a) & 207(1)(b) of the Code Among the numerous exemptions to the gaming prohibitions in the Code, the most notable are (i) the exception for state-sponsored gaming conducted and managed by a provincial government (s-s. 207(1)(a)) and (ii) the exception for gaming conducted and managed by a charitable or religious organization licensed by a provincial government (s-s. 207(1)(b)). Provincial governments are also able to delegate their authority to grant licences to charitable or religious organizations to conduct and manage gaming under s-s. 207(1)(b), to “such other person or authority in the province as may be specified” by the provincial government. Generally, First Nations groups that are involved in casino gaming in Canada do so in accordance with s-s. 207(1)(b) of the Code. In Alberta, and in the case of the Great Blue Heron Charity Casino in Port Perry, Ontario, an individual First Nation will form a charitable organization and apply to the provincial government for a licence authorizing it to conduct and manage various forms of non-electronic gaming (e.g. table games). In Saskatchewan and Manitoba, the provincial government has granted authority to a First Nations gaming regulatory body, which in turn grants licences to conduct and manage non-electronic gaming to charitable organizations formed by First Nations people. In both cases, the gaming is conducted and managed by a charitable organization, not a purely private sector entity, pursuant to s-s. 207(1)(b) of the Code. This structure results in a clear distinction between how s. 207 of the Code allows a provincial government to use the proceeds of gaming, and how a First Nation may do so. S-s. 207(1)(a) 10 |  Canadian Gaming Lawyer Magazine

allows a provincial government to treat the proceeds of gaming as general government revenue that may be applied to whatever ends the government sees fit. First Nations gaming conducted and managed under s-s. 207(1)(b) of the Code is conducted and managed by a charity, not by the First Nations government, and accordingly the use of the proceeds of such gaming is restricted, both by s-s. 207(1)(b) of the Code and by the common law as it relates to charities. S-s. 207(1)(b) provides that the proceeds from gaming must be “used for a charitable or religious object or purpose,” and therefore a First Nation charity licensed to conduct and manage gaming could be called upon to account for its use of gaming proceeds to ensure they fall into the recognized common law categories of “charitable purpose”. The recognized common law categories of “charitable purpose” are (i) relief of poverty; (ii) advancement of education; (iii) advancement of religion; and (iv) other purposes “beneficial to the community”. Accordingly, a First Nation that conducts and manages gaming through a charitable organization formed for that purpose, by way of a license granted either by an agency of the provincial government or by a First Nations regulatory body that has received its authority from the provincial government, cannot treat the proceeds of such gaming as general revenue of the government of that First Nation. All uses of that revenue must correspond to a charitable purpose. This model obviously imposes restrictions upon First Nation gaming conducted pursuant to s. 207(1)(b) of the Code to which provincial governments themselves are not subject when they conduct and manage gaming pursuant to the Code.


FEature Use of Gaming Proceeds Under Section 35 2 The restrictions imposed upon First Nations gaming by s. 207 of the Code would not apply if the legal authority for the gaming conducted on First Nations land arose from a section 35 right, and such right was recognized by the provincial and federal governments. If a First Nation could establish that it has a right of self-government that extends to the regulation, conduct, management and operation of gaming conducted on a commercial scale, it could assume authority over gaming within its territory on a basis other than s. 207 of the Code. Under these circumstances, the First Nation could conduct and manage gaming directly, using private sector gaming companies to handle day-to-day operations, without the need for a charitable organization to act as an intermediary. The proceeds of gaming could flow directly into the general revenues of the government of the First Nation, such that it could be spent without the restrictions imposed upon charitable funds. Section 35 & Self-Government in Relation to Gaming In R. v. Pamajewon,3 the Supreme Court of Canada addressed a claim for self-government in relation to gaming. However, at that time the courts had not yet set out the test to be met by those claiming a section 35 right. As the claimants in Pamajewon did not know what evidentiary test would be applied to their claim, it is not surprising that they did not have the evidence necessary to satisfy the test eventually formulated by the court. The Supreme Court in Pamajewon did not take the position that no Aboriginal group could ever succeed in claiming modern gaming to be part of a practice, custom or tradition integral to its distinctive culture.4 Writing for the majority, Lamer C.J. stated: “Aboriginal rights, including any asserted right to selfgovernment, must be looked at in light of the specific history and culture of the aboriginal group claiming the right.”5 Claimants seeking to claim entitlement to an Aboriginal right under section 35 of the Act must meet a rigorous four-part test.6 First, claimants must show that the right in question is an Aboriginal right protected by section 35, either because of a treaty or because the right existed as part of an integral Aboriginal practice, custom or tradition prior to first contact with European society (“pre-Contact”). There must be continuity between the traditional practice and the modern activity claimed as an Aboriginal right. If the practice arose solely in response to contact with Europeans, it cannot be claimed as an Aboriginal right. In the context of gaming, a First Nation would have to establish that the conduct, facilitation and regulation of such gaming existed as a practice, custom or tradition of its society, pre-Contact. It would then be necessary to establish that the conduct, facilitation and regulation of gaming was integral to the society of the First Nation in the pre-Contact era. 1. R. v. Furtney, [1991] 3 S.C.R. 89. 2. A “section 35 right” refers to section 35 of the Constitution Act, 1982, Schedule B to the Canada Act 1982 (UK), 1982, c. 11, (the “Act”) which states that “the existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed”. 3. [1996] 2 S.C.R. 821; 138 D.L.R. (4th) 204 (hereinafter Pamajewon). 4. R. v. Van der Peet, [1996] 2 S.C.R. 507 (hereinafter Van der Peet), at paras. 44 – 46.

Second, claimants must show that the right was an “existing” right, meaning a right that had not clearly and properly been extinguished by the Crown before 1982. In the context of gaming, this right could be extinguished, for example, in the context of a treaty in which the First Nation agreed to obey the law of the Crown. Third, claimants must show that there has been an infringement of the right. Part VII of the Code imposes an absolute prohibition on the activities that would form the basis of the Aboriginal right of self-government in the context of the regulation, conduct, management and operation of gaming conducted on a commercial scale. Accordingly, an infringement exists. Fourth, the infringement cannot be justified. It must be determined whether Part VII of the Code, acting as it does as an infringement of an Aboriginal right to self-government in the regulation of gaming, is a “justified impairment” of the Aboriginal right. The more competently a First Nations is able to demonstrate that it is able to regulate gaming on its lands in a manner which protects the public interest, the less likely infringement will be justified. If a First Nation can meet all four parts of this test, it will establish a section 35 right. Establishing a section 35 right has never been done in the context of the regulation, conduct, management and operation of gaming conducted on a commercial scale, and any First Nation attempting to do so would face an uphill battle. However, at this point in time, it is the only way for a First Nation to allocate gaming revenue as part of its general revenue. CGL Michael Lipton has served as senior counsel on gaming law matters for over 20 years, regularly representing governments, lottery corporations, and gaming equipment suppliers/manufacturers and counseling licensees throughout North America on gaming compliance issues. Michael Lipton is a Senior Partner at Dickinson Wright LLP and Head of the Canadian Gaming Law Group and can be reached at 416.866.2929 or mdliptonqc@ dickinsonwright.com. Kevin Weber has practiced gaming law for his entire 15-year career. In his practice, he guides clients through compliance issues with gaming regulators, and provides opinions on all matters relating to the lawful operation of gaming, both land-based and online. He can be reached at 416.367.0899 or kweber@dickinsonwright.com. Jack Tadman is a lawyer at Dickinson Wright LLP and a member of the Gaming Law Group where his practice is dedicated to gaming law and gaming regulatory compliance issues. Jack can be reached at 416.777.4018 or Jtadman@dickinsonwright.com. 5. Pamajewon, supra note 2 at para. 27. 6. Test established in R. v. Sparrow, [1990] 1 S.C.R. 1075 (hereinafter Sparrow), and refined in Van der Peet, supra note 3. See also R. v. Gladstone, [1996] 2 S.C.R. 723 (hereinafter Gladstone) at paras. 20 – 21, which identifies the four stages of the Sparrow test. The following section provides an overview of the test from 30,000 feet, and does not describe the nuances and additional details concerning the test.

September 2013  | 11


FEature

By Stu Hoegner

The Rise

(and Rise) of Bitcoin One of the big news stories of 2013 has been the rise of a virtual currency called bitcoin. After consistently trading for years after its invention at less than $20 per bitcoin, the price jumped this year to an all-time high of $266 per bitcoin. At the time of writing, one bitcoin is worth approximately $105 and the entire market capitalization of bitcoin is greater than $1B. In this article, I want to briefly set out what bitcoin is, its legal status in Canada and the United States vis-à-vis internet gaming, and its strong advantages in internet wagering. I also want to look at some of the public policy challenges that bitcoin presents and who can expect to exploit this technology in i-gaming. What is Bitcoin? Bitcoin is a completely decentralized,

12 |  Canadian Gaming Lawyer Magazine

virtual currency that was invented in 2009.1 Bitcoins are generated at a constant rate by ‘miners’ using opensource software. It allows for the holding and transmission of value anywhere, to any one, at any time, irreversibly, with a high degree of privacy. Bitcoins can be transferred very quickly at little or no cost. There is minimal or zero counterparty risk in bitcoin transactions. This definition is cumbersome but it

shows how truly revolutionary bitcoin is. In a matter of seconds I can transfer any amount of bitcoin—limited only by my own resources—directly to another party on the other side of the globe with no reliance on an intermediary. No other form of money yet invented offers this combination of flexibility, autonomy, and security. International bank wires can take days to be received. Physical gold transfers can take weeks. Both rely on


FEature individuals and institutions to make good on their promises. Bitcoin is instant and, at its most basic, requires only the person sending a nd the person receiving the currency. Is Bitcoin Legal? Generally, it is legal to hold, mine, buy, sell, and send and receive bitcoins for goods and services. 2 In the United States, FinCEN has indicated that certain participants in the bitcoin economy (e.g., exchanges) are money transmitters and, as such, subject to the Bank Secrecy Act3 and sundry registration, reporting, and other compliance requirements. FinTRAC, Canada’s financial intelligence unit, has indicated that bitcoin exchanges in Canada will not be regulated as money services businesses under some federal money laundering rules.4 (Regardless of the jurisdiction, and depending on the bitcoin business model, other applicable laws—securities, financial institutions, and criminal proceeds of crime rules— will still apply.) Things get somewhat less clear at the intersection of bitcoin and gaming and betting laws, but some things about bitcoin are already known. In the United States, operating an unregulated gaming business denominated in bitcoin will not save an operator from the application of gaming laws. The Unlawful Internet Gambling Enforcement Act (“UIGEA”), for example, applies to unlawful internet gambling, i.e., where a bet or wager is unlawful under a predicate state or federal law. In Nevada, the definition of “game” or “gambling game” includes “any representative of value,”5 which should be broad enough to capture bitcoin, so the UIGEA would apply to an unregulated gaming business in Nevada. I n Ca n a d a , t he def i n it ion s of “property”6 in the federal Criminal Code and “money’s worth”7 in the case

law would certainly encompass bitcoin stakes and prizes. Accordingly, a bitcoindenominated gaming business in Canada that is otherwise offends the gaming provisions of the Criminal Code will not be cleansed of its illegality by the fact that it accepts wagers and sends out winnings exclusively in bitcoins. In both Canada and the US, bitcoin is generally not a get out of jail free card when it comes to unlawful gaming. Advantages and Challenges of Bitcoin Bitcoin offers internet gaming operators (and other merchants) a number of huge advantages over other payment systems. Possibly the biggest single attraction is the low transaction costs. Transaction fees are either zero or nominal. On one popular Android bitcoin wallet, the standard transaction fee is 0.0001 BTC, currently equal to $0.10. Lower transaction costs are great for both consumers and merchants. A nother benef it is how quick ly deposits and withdrawals are processed. A currently prominent casino roulettetype site gaming site allows you to deposit to a unique wallet identifier in under one minute. Withdrawals, after two authentications on the transfer to the site, are similarly immediate. Transfers are also not reversible, eliminating the risk of chargebacks to the operator. At the same time, bitcoin raises serious consumer protection and regulatory issues. Bitcoin vests total control of one’s bitcoin wallet with its creator and those having access to it; its owner must carefully safeguard her bitcoins and guard against loss or theft. In this context, we can add concerns about use of a bitcoin wallet by underage or at-risk gamblers. FinCEN has indicated that the irreversibility of transactions in the event of fraud is troubling.8 The anonymity of bitcoin worries anti-money laundering regulators, however suitable bitcoin

1. Bitcoin is a virtual currency (“bitcoin”) like many other fiat currencies, e.g., Canadian and US dollars and Euros. It is also an international payment system (“Bitcoin”), like PayPal (note that PayPal does not have its own currency—it is just a payment system). Perhaps unhelpfully, both the payment system and the currency are called “Bitcoin” (“bitcoin”), but the distinction between the two is important. 2. Recently it was reported that Thailand had “banned” bitcoin by making the buying and selling of bitcoins, among other things, illegal under applicable laws there. See, e.g. Matt Clinch, Bitcoin banned in Thailand, cnbc, available at http://www.cnbc.com/id/100923551. However, other reporting suggests that this stance might be only preliminary and not as broad as first reported. See, e.g. Jake Maxwell Watts, Thailand’s Bitcoin ban is not quite what it seems, Quartz, available at http://qz.com/110164/thailands-infamous-bitcoin-crackdown-is-not-quite-what-it-seems/. 3. FinCEN Guidance FIN-2013-G001 (March 18, 2013), available at http://fincen.gov/statutes_regs/guidance/

protocols can be built into existing robust AML standards for regulated internet gaming operators. Who Wins? At present, gaming regulators might believe that there are simply too many question marks about bitcoin to allow their respective licensees to accept it as a form of deposit or withdrawal. Bitcoin can co-exist with other payment and receipt options in a well-regulated internet gaming environment, but it might still be too new, too strange, or too niche a product to interest regulators. Accordingly, the ones that can enter the bitcoin gaming space and exploit this technology will be those who have regulators—or, possibly, who are not regulated at all, or under-regulated—willing to engage in a discussion about how bitcoin can be implemented consistent with the regulators’ goals, policies, and procedures, while redounding to the benefit of players and internet gaming businesses. Operators and regulators ignore bitcoin at their peril. Bitcoin is a harbinger of things to come; the way people think about, hold, and spend money is changing. Many have noted that the ‘Bitcoin Experiment’ may ultimately fail, and this is axiomatic. However, astute observers have also suggested that if bitcoin does fail, it will likely be because something even better comes along. That’s an exciting prospect for everyone—not just for players and businesses in internet gaming. CGL

Stuart Hoegner is a gaming attorney, a c co un t an t , an d I MGL m e m b e r in Toronto, Canada. He writes a regular blog on gaming law and has been widely published in tax and gaming journals in Canada and internationally. He can be reached at stu@gamingcounsel.co.

html/FIN-2013-G001.html. See also, e.g. Ryan Straus, The Last Straw for Bitcoin, American Banker, available at http://www.americanbanker.com/bankthink/the-last-straw-for-bitcoin-1059608-1.html. 4. See, e.g. Stuart Hoegner, Canada becomes bitcoin-friendly, Pokerati, available at http://pokerati.com/2013/05/ canada-becomes-bitcoin-friendly/. 5. Nev. Rev. Stat. § 463.0152. 6.Criminal Code, R.S.C. ch. C-46 § 2 (1985) (definition of “property”). 7.See, e.g. R. v. DiPietro (1986), 25 C.C.C. (3d) 100 at 107 (S.C.C.) (Can.); R. v. Irwin (1982), 3 O.R. (2d) 314 at 319-320 (C.A.) (Can.). 8.See, e.g. Straus, supra note 3. Straus points out that “the loss of irrevocability could be fatal for bitcoin as it would result in increased transaction costs and slower remittances.”

September 2013  | 13


FEature

Dr. Max Barrett

IRELAND’S

BIG BET In July, the Government of Ireland announced its intention to reform Ireland’s gambling legislation. The aim of the reform is to replace decades-old legislation that is broadly informed by the outdated notion of gambling as a vice and establish instead a regime that accepts gambling as a legitimate pastime, albeit one that can have adverse consequences. Online and remote gambling The legislation will apply equally to land-based, online and remote gambling. Notably, online providers, wherever situated, will have to obtain an Irish licence if they offer a gambling service to anyone in Ireland. A key objective of the legislation is that it be ‘technologyneutral’ so that current and future technologies will be capable of operation under the new regime without the need for amending legislation. Casinos Under the proposed legislation, Ireland will for the first time allow casinos to be established. However, in the legislation as proposed, the Irish Government appears to have set its mind against resort-style 14  |  Canadian Gaming Lawyer Magazine 14 | 

casinos. Instead, up to 40 casinos with a maximum of 15 tables and 25 gaming machines will be licensed to operate. Licences will be issued for 10 years and will be capable of renewal. The legislation will require that there be a regional spread of casinos and will not allow casinos to be located near sensitive venues such as schools, colleges and hospitals. Sale of alcohol at casinos will be permitted but ordinary bar hours will apply.

overheads and minimum percentages of bingo proceeds will be required to be allocated as prize money. Separate provision will be made for the licensing of remote bingo. Ireland’s already robust lotteries regime will not be amended significantly. However, remote lotteries and scratch card games will be brought within the regime and prize levels will be increased and provision made allowing for further increases in the future.

Bingo and lotteries Significant changes to Ireland’s bingo legislation are planned. Bingo will be regulated separately from lotteries and will no longer need to serve a charitable or philanthropic purpose. Caps will be placed on the amount to be allocated to

Licensing and supervision Under the new regime, the Minister for Justice, Equality and Defence will be the regulator for gambling. However, the Minister’s role will be confined to general policy. Licensing, compliance and enforcement will be done by a


FEature

to-be-established executive entity, the Office for Gambling Control, Ireland (OGCI). The OGCI will sit within the Minister’s Department and will fund it self by mea ns of fees a nd charges to be levied on the gambling industry. OGCI off icers will enjoy search and seizure powers and will be empowered to cooperate w ith the Irish police and other regulatory bodies, as well as foreign regulators. Prohibitions Fixed Odds Betting Terminals will be prohibited under the proposed legislation and there will be related of fences for the use, supply a nd repair of such terminals. This may b e r ef le c t i ve of t he c ont i nu i n g cont rover s y i n t he U K over t he allegedly addictive nature of such t e r m i n a l s . It c e r t a i n l y r e f l e c t s what the Irish Minister for Justice, Equality and Defence has described as ‘the level of concern felt by the Gover nment at the ver y har mful ef fe c t s of t he se t er m i n a l s’. T he proposed leg islation w ill also empower the Minister to prohibit or restrict any other game, machine or class of machine that is considered t o b e h a r m f u l. C on si st ent w it h the ‘technolog y-neutral’ thrust of the new legislation the Minister’s powers will be drafted in such a way as to ensure that harmful games and devices that do not currently exist will be capable of being prohibited or restricted. Tax Perhaps the greatest deficiency in the proposed legislation is that it will not address tax issues even though tax is a key driver for many companies when making commercial decisions about where to trade or locate. That

said, a 2010 Report from within the Irish Government acknowledges that ‘There would appear to be little point in developing a nd maint aining a comprehensive regulatory framework for gambling if through its taxation polic y a St ate put s compa nies at a disi ncent ive f rom est ablish i n g themselves in or selling into the market.’ So there is clearly sensitivity within the Irish Government as to the importance of tax policy in this regard. It is to be hoped that the Government’s intentions as regards taxation will be made clearer as the proposed gambling reforms proceed through the legislative process. Social Protection The proposed legislation has the twin aims of effectively regulating what is a dynamic business sector, while at the same time protecting young people and vulnerable adults. These are challenging goals to reconcile and the extent to which the proposed legislation will succeed in attaining these goals, both in its own terms a nd a s implemented in prac t ice, remains to be seen. A number of consumer a nd social protection measures are to be included in the proposed legislation: age restrictions will be introduced; controls on advertising, promotions and sponsorship will be established; a new compla i nt s pro cedu re for con su mer s w i l l b e put i n pl a c e and ar rangements made to assist consumers seek ing compensation from a licence-holder. H o w e v e r, t h e m o s t n o t a b l e social protection measure w ill be the creation of a ‘Social Gambling Fund’ which will be funded by way of a lev y on indust r y operators. This fund will assist with treatment

ser vices and with information and education. It will be administered by a board of which the majority will be non-industry members. Despite the Government facilitating gambling by means of its proposed legislation and the State enjoying any increase in associated tax revenues that may arise, it does not appear that the State itself will be subject to an express st at utor y oblig at ion to fund a ny social protection measures. Betting-shops, bars and ‘take-away’ restaurants Under t he proposed leg islat ion, limited gaming will be permitted in betting shops but will be confined to non-cash transactions. In addition, bars and ‘take-away’ restaurants will be allowed to have small numbers of gaming machines. Indeed the vendors of g aming machines may benef it signif icantly from the liberalization of Ireland’s gaming regime. What next? The Gover nment has announced the general scheme of its intended legislation. A detailed Bill will now be drafted and introduced before the Irish Parliament, possibly in late2013, with enactment to follow, most likely in 2014, if not sooner. As the current Irish Government enjoys a substantial majorit y in the Irish Parliament it can be anticipated that the eventual legislation will closely ref lect the terms of the Government’s recent announcement. CGL Dr. Max Barrett is a practicing Irish solicitor and has a particular interest in gambling law and regulation. All opinions expressed in this ar ticle are personal. Any comments may be addressed to drmaxbarrett@gmail.com. September 2013  | 15


executiveq&a

Bill Robinson President and CEO of the Alberta Gaming and Liquor Commission

In August 2012, Bill Robinson assumed his role as president and CEO of the Alberta Gaming and Liquor Commission (AGLC) after over three decades of service with the Royal Canadian Mounted Police (RCMP). Now with over a year under his belt, Canadian Gaming Business reached out to Robinson to find out where the AGLC is heading and what this means for Alberta players. You spent 34 years in the RCMP prior to joining the AGlC. how did that prepare you for your work within Alberta's gaming industry? In addition to giving me experience leading a large org anization, my ca reer w it h t he RCM P inst illed a strong appreciation of the need to work closely with stakeholders. The AGLC work s w ith hundreds of liquor agencies and thousands of liquor licensees to maintain an inventory of more than 19,000 liquor products available to Albertans. It also works with about 14,000 groups t h at conduc t ch a r it a ble g a m i n g activities and thousands of businesses who deliver gaming products and ser vices to A lbertans. I k now the key to success for an organization like the AGLC is working effectively w it h ou r st a k eholder s, bu i ld i n g relationships with communities, and understanding the business needs of our retailers and licensees. What is your vision for the AGLC? It is impor t ant that we continue t o i nc r e a s e ou r k now le d g e a n d understanding of the products and s er v ic e s t h at A lb er t a n s e x p e c t . W hether it is accessing a licensing service or buying a Lotto 6/49 lottery

ticket, we need to meet Albertans’ doing and assessing this opportunity expectations. We will need to make from a social responsibility, consumer, better use of technolog y to meet and financial viability perspective. Responding to consumers’ these needs. ex pect ations is ver y impor t ant What are the greatest challenges facing fo r t h e f ut u r e o f g a m i n g i n ou r Alberta's gaming industry? What is the province. We’re keeping a close eye on the developments related to online AGLC doing to address these? There is ever-evolving competition gaming and see this offering as part of for consumer entertainment dollars. our future. While we have made many advances to support the gaming industr y in What do you believe are the biggest Alberta, we perhaps have not kept in trends affecting gaming in Alberta? line with ensuring the most modern Technolog y continues to play a key gaming offerings are available to role. Gaming enter tainment needs consumers. This presents a g reat t o b e con ven ient for pl ayer s a nd opportunit y for the AGLC in the accessible wherever and whenever they coming years as we look to f ind want to participate. Albertans look to w a y s t o mo d er n i z e t he g a m i n g their mobile devices for entertainment, experience in Alberta. It also allows connection, and for smooth customer us to ensure that responsible gaming service. We need to keep pace with this best practices are considered as we trend to meet the needs of consumers ponder this future state of gaming in their twenties. for Alberta. What’s next for gaming in Alberta? Innovation w ill be the main focus What are the most significant trends as we consider ways to ex pand affecting gaming in Alberta? W i t h m o s t p r o v i n c i a l g a m i n g gaming entertainment for Albertans. j u r i s d i c t i o n s a l r e a d y o f f e r i n g Ultimately, our focus is to ensure i n t e r n e t g a m i n g , a n d o t h e r s sustainable revenue grow th for the having announced their intent to A lberta Lotter y Fund and continue participate, this is certainly on the to support charities and non-prof it AGLC’s radar. We have been actively organizations for the benef it of all monitoring what other provinces are Albertans. Canadian Gaming Business | 21


marketing

The Changing Definition of Community Relations

Giving new meaning to “giving back”

By Jim Kabrajee

Defining community relations for a casino was once an easy task. It was usually called “giving back” and it meant providing financial contributions for local charities and service organizations. Today, however, casinos are trending toward more direct community involvement because local communities are beginning to expect more from local businesses. So what does that mean to you and why does it matter? The traditional practice of writing cheques as a way of “giving back to the communit y” doesn’t apply the same way anymore. It doesn’t have as much impact. Your donations are being taken for granted. Today, the communit y wants your casino to 22 |  Fall 2013

become more actively involved in local activities. The results of a recent study by the Universit y of M a ssachuset t s D a r t m out h ’s C ent er fo r Pol i c y Analysis were published earlier this yea r. T hey d iscovered a qu ick ly growing trend at some casinos where 20% of visitors were not gambling

at all. Principally, those 2 0% were looking for dining and entertainment options. They further realized that most of those 20% were locals. This makes sense since we k now that the number of new casinos built during the past ten years has increased dramatically and means that fewer people are travelling long distances


marketing

to visit casinos. Therefore, locals visiting a casino, as a percentage of total visits, have gone up, and this creates expectations that the local casino become a more active member in community events. Using dining as an example, it means that a property’s restaurants are being seen as direct competition for local eateries. The casino’s dining facilities are not there just for gaming patrons, they are competing with regional establishments so your casino is being considered a part of the community also. W hat can you do? There is a strong trend across Canada for restaurants to source more of their fare locally, supporting local farmers, wineries, bakeries, and producers of specialty packaged foods. Farmers’ m a rk et s a re p oppi n g up i n c it ie s i n su r pr i si n g numbers. A nd it’s not just the public demanding fresher produce; it’s also a strong desire to support local producers. W hen communities shift in this direction, it is incumbent upon your casino to look at the opportunity to grow your restaurant offerings, support your surrounding communities, and by all means promote your actions within the casino. Another opportunity for some properties lies right outside in the parking lot. There are times when the parking lots are under-used, particularly earlier in the day. They make ideal venues for a farmers’ market. It brings locals to the property and it does more than “give back” to the community; it becomes a part of it. Take it a step further and many of the items sold by local producers can be incorporated into your menus at the property while changing with the seasons. It’s a simple way to not only draw people to the property but to also demonstrate tangible community involvement. After all, not everyone is the recipient of a cheque from your casino, but by hosting a local event like a farmer’s market on your property, you manage to touch many locals. W hat's more, local involvement is the future of ef fect ive a nd long-la st ing com mun it y relat ions. Cheques come and go, and they are often just expected by local organizations, which is why maintaining and strengthening roots in the communit y results in greater community visibility and greater value for your community relations program. We’re not say i n g you shou ld stop w r it i n g t he cheques, but look at some relatively inex pensive ways to branch out into your community on a more regular basis. Simple things like a farmers’ market or offering the products of local businesses for sale can accomplish just that. If the Massachusetts results are an indicator, being more of a truly local business in the future and integrating into the local community is not just a short term public relations initiative, it should be an essential part of your business plan. Marshall Fenn is an integrated marketing and advertising agency located in Toronto specializing in casinos. Marshall Fenn has worked with over 20 casinos throughout the U.S. and Canada. For further information, contact: Jim Kabrajee at jimk@marshall-fenn.com

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New Horizons Conference conference returns to Vancouver in 2014 After a successful first year, BCLC (British Columbia Lottery Corporation)’s New Horizons in Responsible Gambling Conference returns January 27-29, 2014. This second annual conference welcomes problem and responsible gambling experts and gaming industry professionals to Vancouver, British Columbia to learn and share new ideas, network with other professionals, and discuss what responsible gambling really means for the industry and its players. Over two days, the conference brings together academics, students, and industry leaders in responsible gambling research and policy to hear from over 15 industry professionals from across the globe. Tremendous developments continue to be made in responsible gambling practices around the world and New Horizons 24 |  Fall 2013

provides opportunities to meet professionals in the responsible gambling field and share best practices and innovations, and network in a focused, industry-specific environment. “I anticipate this conference will build upon last year’s thought-provoking and insightful discussions, resulting in more connections and shared development amongst responsible gambling researchers, policy makers, and industry representatives from across the globe,” says Michael Graydon, President and CEO of BCLC. “The field of problem gambling and prevention and treatment is continually evolving and this event promises to provide a showcase of many recent developments.” For 2014, the New Horizons team has developed an exciting program of speakers and sessions packed with insight, information, and education.


specialsupplement These include presentations geared towards problem gambling treatment providers, prevention specialists, and those committed to delivering exceptional responsible gambling programming within their gaming operations. Returning to this year’s conference is Dr. Mark Griffiths of Nottingham Trent University with his presentation, ‘Social Responsibility in Gambling Marketing and Advertising’. “Mark was an insightful and very well received speaker at last year’s con ference. I ’m so plea se d he’s joining us again to build upon his 2013 presentation and share his latest research”, says Paul Smith, Director of Corporate Social Responsibility at BCLC. “Alongside Mark are some first time speakers that I think will really impress our delegates. I’m humbled to welcome them to our conference and our City. At BCLC, we are so serious about responsible gambling and it’s a treat to spend a few days with others from around the world that share that interest and passion.” First time speakers include Dr. Claudia Steinke from the University of Lethbridge who will present ‘The Psychological and Behavioural Impacts of Casino Design’. Steinke’s expertise merges the fields of organizational theory and design, health care management, service management and operations and architecture for insightful findings on the effects of design.

Bringing her experience in corporate social responsibility and the history and culture of Las Vegas, Dr. Jessalynn Strauss from Elon University will discuss ‘Exceeding Expectations: Social Responsibility in Gaming’. Several other Canadian and international speakers will round out the impressive line up of presenters.

John Luff, Founder of Sustainable Marketing, provides the keynote address at the 2013 conference.

Also returning is Mr. Don Feeney, Director of Research and Planning at Minnesota State Lottery, discussing ‘What the Public Thinks (and Why it Matters)’. “The response from the delegates in 2013 was incredible,” exclaimed Smith. “There was no doubt we would do another conference and put the feedback we gathered into making the second year even more valuable for delegates. We’ve come up with some new ideas for 2014 that I think will be popular additions to the program.” For the first time this year, New Horizons is inviting delegates to take part in a series of poster sessions. Posters will display research theories, methods, and outcomes and authors will be on hand to answer questions and discuss their studies. These sessions offer an opportunity for both delegates and presenters to share project initiatives and research (including preliminary findings), and gain valuable feedback and insight from other professionals. Submissions are now being accepted through the HorizonsRG website. One of the most talked about sessions in 2013 was the focus group, which asked seniors for their insights and experience gambling. This live session allowed delegates to watch a focus group being conducted. The result generated genuine and real-time Canadian Gaming Business | 25


specialsupplement

2013 speaker Don Feeny, Director of Research and Planning for Minnesota State Lottery, is slated to return in 2014.

feedback from senior gamblers and non-gamblers as they were led in a conversation on gambling practices and experiences. Building on this popularity, this session style is back in 2014 with a different focus group that will no doubt generate the same lively discussion. Also this year, New Horizons is trying a new method of note taking and display during a keynote session, called graphic facilitation. An artist will attend the session, listening and synthesizing main ideas and themes into drawings using a combination of images and words. These are captured on a huge sheet of paper, which is visible to participants in real-time throughout the session. Delegates can use the graphic recording as a discussion piece, a take-away to remember the session, a summary, or as a visual aid for absorbing the session content as it happens. The intention in 2014 is to further socialize the conference, using Twitter and a conference blog on HorizonsRG.com. The blog will serve to fuel responsible gambling discussion in the months leading up to the conference, as well as keep delegates and speakers up to date on conference planning progress and deadlines. Conference highlights will be shared as they are announced, guest speakers will divulge previews of their presentations, and responsible gambling conversations from around the globe will be discussed. The blog sets the tone for the conference early, giving delegates an idea of what to expect in January. Organizers are already promoting the twitter hashtag #HorizonsRG, encouraging delegates to begin the discussion online prior to their arrival in Vancouver. A tweet-up will be hosted late November, 2013 to generate further socialization with conference participants. Watch for details on the conference blog and @HorizonsRG. An enhanced trade show and exhibition f loor will again showcase state-of-the-art programs and products while the social and refreshment areas will allow for comfortable networking and work stations. Sponsors such as Bally and WMS will be showcasing their latest innovations with delegates throughout the conference. In addition to presentations and sessions, social events are offered, encouraging industry professionals to network, mingle and connect with others that are passionate about the responsible gambling industry, all on the backdrop of the beautiful Vancouver skyline. The New Horizons conference is located in the heart of Vancouver, British Columbia, in close proximity to the city centre and a variety of tourist attractions. During their visit, delegates are encouraged to spend some time exploring Vancouver’s world-renowned sights and attractions, many within a short distance of the conference location. For more information and to register for the New Horizons in Responsible Gambling Conference please visit www.horizonsrg.com. Follow us on twitter @HorizonsRG 26 |  Fall 2013


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PURE Canadian Gaming

The Alberta gaming market has a brand new game in town. Formerly known as Casino ABS, the new PURE Canadian Gaming (PCG) brand reflects the passion that George Goldhoff, President and CEO, has for PCG’s service promise: “PURE service, PURE Rewards and PURE Entertainment.” 28 |  Fall 2013


corporateprofile

“We have listened to what our guests and staff want and have responded to their desires by enhancing the appearance of our properties, strengthening our service standards and improving our Players Club; The all new PURE Rewards—the most generous and easy to use casino Loyalty Club in Alberta!” says Goldhoff. PCG's family of casinos live all across communities in A lber t a. It employs over 1,0 0 0 person nel a nd operates four full service casinos in Alberta—Casino Calgary, Casino Lethbridge, Casino Edmonton, and Casino Yellowhead—with over 2,900 slot machines and VLT’s, over 80 live-action table games, and 4 poker rooms. It is an experienced Canadian casino operator and the largest of its kind in the province. A s pione er s i n t he we st er n C a n a d i a n g a m i n g business since 1973, PCG continues to evolve to serve its loyal guests, which it has done for 40 years. And although the company was renamed in 2013, PCG's history goes back to 1973 with the inception of Alberta Bingo Supplies, which became known as Casino ABS. Heinz Oldach built Casino ABS into one of Alberta’s best gaming companies and the current leadership is committed to carrying his legacy into a new era. PCG offers Albertans better customer service, a higher level of entertainment, one of Alberta’s most popular player's club rewards program, and a strong commitment to the communities in which PCG lives and works. I n a dd it ion , P C G 's c a si no s i n E d mont on a nd Calgary features fresh new updates with new f looring, renovated restrooms, new wall coverings, new table felts and bumpers, and new gaming chips. The Food and Beverage department offerings are enhanced with new menus and a fresh new Noodle Bar concept designed in contemporary Asian décor and theme. The slot floor has also been redesigned for player comfort, making it easier to move around and find their favourite machines. PCG's new entertainment lineup features the classics in Canadian rock with the Rockin’ Alberta Tour and—what's more— entertainment at PCG casinos is offered free to Players Club members. “Everything that makes our guests feel welcome and entertained is our focus. We are continuing to update our image to ref lect our new brand, and improve our players’ experience,” says Goldhoff, “PURE Canadian Gaming is committed to offering the best in service, loyalty rewards and entertaining experiences at our Casinos in Alberta. Our customers expect us to grow

“As pioneers in the western Canadian gaming business since 1973, PCG continues to evolve to serve its loyal guests.” w ith the industr y and we have listened. A ll of our changes are designed with our guests in mind.” For more, visit PCG's new website at www.purecanadiangaming.com

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Canadian Gaming Business | 29


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Caesars Windsor Celebrates Five Years of Win

It's glasses up at Caesars Windsor where staff and patrons of the popular southern Ontario casino are raising a toast to the gaming facility's fifth anniversary and its exciting additions to come. This summer, the all-in-one resort kicked off its quinquennial with news it is pursuing new amenities for its guests, including a Johnny Rockets “Original Hamburger” restaurant, the Italian pizzeria Trattoria Uno, a renovated Artist Cafe, and a brand new bar in its casino floor.
 30 |  Fall 2013

“ We a r e p r o u d t o m a k e t h i s announcement as we celebrate our 5 year anniversary as a Caesars branded property,” said Kevin Laforet, President and CEO of Caesars Windsor. “As we pay homage to our past, we also look to the future and continually strive to remain competitive by offering our

guests exciting new experiences and amenities.” C a e s a r s W i n d s o r 's a n n i ver s a r y festivities included its deliver y of a $25,000 donation to local charities and a pledge to donate a percentage of its slot revenues on June 15, 2013. These charitable initiatives mark the casino's


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“Entertainment is a major unique selling point for us versus our competition and has helped us drive traffic, drive trial and support the Caesars brand.” latest contributions to the charitable sector and its continuing goal to serve an active role in its community. “Since the beginning, it has been important for Caesars Windsor to be a responsible corporate citizen by contributing to the health and vibrancy of our community, over and above our role as a major employer and significant tourism driver in the region. Caesars Windsor has donated more than $10 million to hard-working, worthy non-profit organizations that improve the health, diversity and environment in the Windsor-Essex region,” said Laforet. While the Caesars Windsor brand may be turning five, the legacy of the Caesars Windsor facility stretches back beyond its 2008 origins. In 1994, the Ontario government joined Caesars World, Circus Circus Enterprises, and Hilton Hotels to open Casino Windsor, the province's first casino in the renovated Art Gallery of Windsor on Riverside drive. The response from both Canadian and US gamers was immediate, motivating the Ontario Lottery and Gaming Corporation to up its ante with the introduction of The Northern Belle riverboat casino, which ran from December 1995 to July 1998. In 1998, the casino was relocated from its temporary location to a permanent home on the former Windsor Market site. Seven years later in 2005, the Ontario Government, OLG, and Caesars Windsor's staff embarked on a $400 million expansion project which set the stage for a 2008 relaunch showcasing the facility's new Caesars Windsor name, as well as 100,000 square feet of convention space, the Augustus Tower, new restaurants and bars, exhibition space, and a wealth of other amenities.

32 |  Fall 2013

The relaunch also included the opening of a Colosseum entertainment centre which has played host to hundreds of celebrity performances. “The opening of the Colosseum in 2008 allowed Caesars Windsor to provide a world-class, state of the art venue to host some of the biggest names in music and entertainment,” noted Laforet, adding, “The 5,000 seat theatre allows avid music lovers to see and hear their favourite bands play live and up close including KISS, Billy Joel, The Tragically Hip, Celine Dion, Maroon 5, Bruno Mars, Reba, BB King, Journey, Jay Leno, Chris Rock, Chelsea Handler and Ke$ha just to name a few. Entertainment is a major unique selling point for us versus our competition and has helped us drive traffic, drive trial and support the Caesars brand.” Leading the way Catering to players and entertainment seekers from both sides the border, Caesars Windsor remains a major player in the Ontario gaming scene. Its management remains focused on building upon the world-renowned Caesars Entertainment brand, while serving as a positive force for change and growth within the WindsorEssex region. “Caesars Windsor continues to deliver what is most important to our guests,” said Laforet, “The best service in the Detroit region, world-class luxury amenities, and exciting entertainment. Continuing to focus on these elements allows our property to succeed in retaining loyal customers and attracting new business despite external economic challenges.” For more information, visit: www.caesarswindsor.com


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Outsourcing is Changing the Gaming Industry Early planning and stakeholder cooperation are critical By Erik Niemi and Abby Hakim Organizations e verywhere are increasingly turning to outsourcing to drive innovation and eff iciency. The gaming industr y is no different. W hat is different is the regulatory environment and spread of outsourcing due to the growth of internet gaming and the level of strategic partnering between industry peers (versus traditional retailersupplier relationships). For gaming industry organizations on both sides— users and providers—being upfront and proactive in addressing your audit and reporting requirements is critical. F r o m a r e g u l a t o r y a n d a u d it standpoint, management and boards of outsourcing user organizations rema in responsible for ensur ing ser vice providers maintain ef fec t ive cont rol env i ron ment s. This traditionally focused purely on performance; however, control failures in high-prof ile industries, increased regulation, and demand by management, auditors and boards for controls assurance have exploded the demand for Service Organization Controls (SOC) audits. The recent introduction of global standards for SOC reporting (including CASE 3416 in Canada and SSA E 16 in the US) have made them ubiquitous across geographies, and service providers are increasingly seeking SOC reporting to gain a competitive advantage. T h e r e a r e d i f f e r e nt t y p e s o f SO C repor t s cover i n g sec u r it y, processing integrit y, privacy, and systems availabilit y. SOC1 is the most commonly used. It pertains to f inancial reporting and is designed 34 |  Fall 2013

for external audit needs. It covers initiation, authorization, recording, processing, and reporting of relevant f i n a nc i a l t r a n s a c t io n s /d at a a n d associated system access, changes, and computer operations. There are two types of SOC1 reports, depending on the signif icance of outsourced operations to the user organization and the level of assurance required: • Type 1: A simplif ied report with a n opinion from a qualif ied independent auditor on design and implementation of controls at a specific point in time; enables user organizations and their auditors to assess risks and controls. • Type 2: An expanded report with a full audit of control design and operating effectiveness over a 6 to 12 month period, and details on control testing and results; enables user auditors to rely on controls to reduce testing and avoid visiting the service organization. Although it is common for service organizations to start with Type 1 and then expand to Type 2, it is essential for user org anizations to discuss what t y pe of report(s) is required w it h t h ei r b o a r d a n d au d it o r s . Traditional “right to audit” clauses don’t cover SOC1 reporting, and if you need privacy assurance, which isn’t covered by SOC1, another SOC report may be necessary. Users and providers should agree up -front on repor t t y pe, t im ing a nd s cop e. T he more rep or t i n g requested, the greater cost, so focus on what you really need and ensure

cost responsibilities are also clear in the agreement. In the gaming industr y, there is a complexity involved with SOC audits that shouldn’t be underestimated by users or providers. Get advice from ex per ienced profession a ls to help n av ig ate st a keholder ex pec t at ions around repor t content, scope, and timing. Signif icant effort is involved in effectively documenting controls in the required format—and even more in testing and f ixing any issues—due to the necessary commitment by auditors and staff. Ex perienced practitioners can provide strategies and assistance to ease the process. W hile this prov ides just an o v e r v i e w o f t h e c o m pl e x it i e s o f out s ou rc i n g a nd SO C rep or t i n g , it is clea r t h at proa c t iv it y is k ey. Leaders in the gaming industr y are for ming deeper pa r t nerships w ith vendors and each other. If controls assurance requirements are neglected or ignored, the resulting operational and governance issues will be more dif f icult a nd costly a fter the fact. To avoid t h is m isstep, ma ke your reporting needs clear from the start and, if you’re a service organization, begin planning the audit process—and talking to your advisers—as soon as possible. To learn more about the effects of outsourcing and reporting on your organization, please contact Erik Niemi (erniemi@kpmg.ca), Partner, Risk Consulting, Systems Assurance, KPMG; or Abby Hakim (aahakim@kpmg. ca), Senior Manager, Risk Consulting, KPM.


18 Annual Event 18 Annual Event th

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1. It was standing room only at the Monday Opening Reception in the stunning Ruelle des fortifications atrium in Old Montréal. 2. On the practice tee at the Monday ‘Golf Classic’ tournament at the Summerlea Golf & Country Club. 3. Savouring victory at the post-tournament BBQ and Awards Presentation. 4. Enjoying the Opening Reception with some ‘colourful’ friends. 5. Jim Trask, Scientific Games Assistant to the CEO, Global Operations, speaks at the Tuesday Opening Breakfast and Welcome. 6. Attendees received a warm welcome at the Summit’s Exhibition Floor entrance. 7. Delegates hear about the latest product offerings on the exhibition floor. 8. Enjoying the ambience and the view from the roof top at the Tuesday Delegate and Exhibitor Reception. 9. It was all smiles at the Awards Gala Reception at the Hyatt Regency Montreal. 10. The Wednesday Lottery and Gaming CEO Roundtable and Breakfast featured a lively discussion from a panel of industry CEO’s and senior executives. 11. 2013 Gala Charity donation cheque is presented to Daniel Dumont (centre) of La Maison du Père. 12. Sedalia Kawennotas Fazio leads the First Nations Welcome to begin the Awards Gala. 13. Twyla Meredith, President and CEO, Saskatchewan Gaming Corporation, accepts her award for Industry Leadership and Outstanding Contribution. 14. Winner of the First Nations Award for Leadership, Charles Ryder of the Carry the Kettle First Nation, Director of Casino Operations, SIGA. 15. Glen Sawhill, Senior VP Gaming Operations, Caesars Windsor, winner of the Industry Leadership and Outstanding Contribution Award. 16. Priscilla Whitney accepts the First Nations Award for Leadership on behalf of Tammy Whitney of the Tsuu T’ina Nation, Director of Dit’onik’odza Charities, Grey Eagle Casino. 17. Industry Leadership and Outstanding Contribution award winner Luc Morin, Director, Product Development, Société des casinos du Québec, has his award accepted on his behalf by Marie-Josée Parent, Senior Manager, Product Development. 18. The 14 piece Montréal Rhapsody Orchestra kept everyone on their feet with their covers of classic hits. 19. François-Patrick Allard, Managing Director of the Société des bingos du Québec, leads a session at the Charitable Gaming Conference in the Summit. 20. Winner of the First Nations Employee of the Year Award, Angela Higgins of the Caldwell First Nation, EMR Security Officer, Great Blue Heron Charity Casino. 21. Sonya Le Houillier, Director, Restaurants, Casino de Montréal, accepts Volunteerism and Community Service Award on behalf of Jean-Pierre Curtat, Executive Chef, Casino de Montréal. 22. Lorne Paudash of the Ojibwa – Hiawatha First Nation, Security Shift Manager, Great Blue Heron Casino, winner of the First Nations Award for Community Service.


2013 SUMMIT HIGHLIGHTS

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It was a meeting of the minds in Quebec this summer as gaming delegates from across North America rendezvoused in Montreal for the 17th Annual Canadian Gaming Summit, held June 17-19 at the Palais des congrès de Montréal. The event catered to all facets of the gaming industry with a diverse slate of sessions and presentations, a jam-packed industry exhibition, the Canadian Gaming Summit Golf Classic, and memorable networking events.

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Among the many Summit highlights were the 14th annual Charitable 9.

Gaming Conference, the Summit Welcome Breakfast Keynote from Paul Lauzon, Senior Vice President and Managing Director of Ipsos Reid West, and the Lottery and Gaming CEO Roundtable hosted by Bill Rutsey, President & CEO of the Canadian Gaming Association, which featured Jim Lightbody, Vice Presdient, Casino and Community Gaming of BCLC; Bob MacKinnon, President & CEO of Nova Scotia Provincial Lotteries and Casino Corporation; Twyla Meredith, CMA, FCMA, President & CEO of Saskatchewan Gaming Corporation; Dan Sanscartier, Vice President, Gaming Operations of Manitoba Liquor & Lotteries; Brent Scrimshaw,

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President & CEO of Atlantic Lottery; and Kent Verlik, Vice President, Lottery & Gaming of the Alberta Gaming and Liquor Commission. Guests were also treated to a number of valuable networking opportunities. These included a beautiful Opening Reception at the historic Ruelle des fortifications at the World Trade Centre, a view of the city from the rooftop of the Palais des congrès de Montréal during the Delegate and Exhibitor Reception, and a night of fun, food, and live entertainment during the Awards Reception and Charity Gala at the Hyatt Regency Montreal. We look forward to doing it all again during the 18th Annual Summit in Vancouver! 18.

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We look forward to welcoming you to 'sea to sky' country for the 18th Annual Canadian Gaming Summit on June 23-25, 2014, at the Vancouver Convention Centre in Vancouver, British Columbia. See you there! For more details visit www.CanadianGamingSummit.com


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