NEVADA GAMING UPDATE - March 2011
February 28, 2011 5:54 PM
Merging of the State Gaming Control Board’s Investigations and Corporate Securities Divisions
On February 14, 2011, the Investigations and Corporate Securities Divisions of the State Gaming Control Board (“Board”) merged and now operate as the Investigations Division. Mike LaBadie, the former chief of the Corporate Securities Division, serves as Chief of the Investigations Division. LaBadie has worked at the Board for almost 24 years and served as Chief of the Corporate Securities Division since May 2003. Marc Warren joined the Investigations Division as Deputy Chief for the Corporate Securities section. Immediately prior to assuming his new role, Warren, a licensed attorney, was the Board’s Senior Research Specialist.
As a result of the combination of the divisions, the Corporate Securities staff became a section within the Investigations Division. In his notice to licensees on February 8, 2011 related to this organizational change at the Board, Board Chairman Mark Lipparelli noted that the Board does not anticipate any additional changes pertaining to the Board’s divisions.
Adoption of Amendments to Nevada Gaming Commission Regulation 22
On January 27, 2011, the Nevada Gaming Commission (“Commission”) approved and adopted amendments to Regulation 22 that allow Nevada casino patrons to wager on events other than horse races, greyhound races or athletic sports events. Regulation 22.120 now allows Nevada casinos to offer their customers the ability to wager on non-sporting events such as The Academy Awards or American Idol.
In order to offer patrons the opportunity to wager on such events, a Nevada licensee must seek administrative approval from the Chairman of the State Gaming Control Board. (See Regulation 22.120(e)(1).) Requests for administrative approval sent to the Chairman must include the following:
(a) A full description of the event and the manner in which wagers would be placed and winning wagers would be determined;
(b) A full description of any technology which would be utilized to offer the event;
(c) Such other information which demonstrates that:
(1) The event could be effectively supervised;
(2) The outcome of the event would be verifiable;
(3) The outcome of the event would be generated by a reliable and independent process; (4) The outcome of the event would not be affected by any wager placed;
(5) The event could be conducted in compliance with any applicable laws; and
(6) The granting of the request for approval would be consistent with the public policy of the state.
(d) Such additional or supplemental information as the chairman may require.
(Regulation 22.120(2).)
The amended Regulation allows the Chairman to refer a request for approval to the full Board and Commission for consideration. (See Regulation 22.120(3).) Once referred by the Chairman, the request will be deemed an application which must be accompanied by a $500.00 nonrefundable application fee. (See Regulation 22.120(5).) The application will be scheduled “on the agenda of the next regularly scheduled meeting of the board occurring more than 10 working days after receipt of the application fee and, thereafter, on the agenda of the next regularly scheduled meeting of the commission.” (See Regulation 22.120(5).) The decision of the Commission will be final and will not be subject to any further administrative or judicial review. (See Regulation 22.120(5).)
Once approved by the Chairman, or in the event the request is referred to the Board and Commission, by the Board and Commission, the Board must provide public notice of the approval which needs to include any conditions or limitations placed on the approval. (See Regulation 22.120(6). Once notice is published on the Board’s website “as close as practicable to the time” at which the Chairman, Board, or commission approves wagering on the event, any book may accept wagers on the other event. (See Regulation 22.120(6).) The recently adopted language in Regulation 22 provides the Chairman with the ability to grant an interlocutory order to revoke or suspend any administrative approval granted under the new provisions for any reasonable cause. (See Regulation 22.120(3)-(4).)
Proposed Legislative Amendment to Nevada Gaming Control Act
The 76th Regular Session of the Nevada Legislature began on February 7, 2011. On February 25, 2011, Assembly Bill 213 was read for the first time in the Assembly. If enacted in its present form, AB 213 would amend the Nevada Gaming Control Act to include provisions authorizing the Commission to adopt regulations relating to the issuance of a preliminary finding of suitability. The proposed text of the pertinent provision adding language to the Nevada Gaming Control Act is as follows:
1. The Commission may, with the advice and assistance of the Board, adopt regulations governing the issuance of a preliminary finding of suitability to a person.
2. The regulations adopted by the Commission pursuant to this section must:
(a) Provide that a person must demonstrate to the satisfaction of the Commission that the person has the suitability to become involved as a licensee but has not otherwise entered into a position
or transaction which would require licensing pursuant to this chapter.
(b) Provide that a preliminary finding of suitability expires not more than 2 years after issuance by the Commission but may be renewed for additional periods of not more than 2 years as the Commission deems appropriate.
(c) Set forth standards for a person to be issued a preliminary finding of suitability that are as stringent as the standards for a person to be issued a nonrestricted license.
(d) Establish the fees for a person to apply for, to be investigated for and to hold a preliminary finding of suitability.
(e) Provide that no person may be issued a preliminary finding of suitability unless the person agrees that, for the duration of the period in which the person holds the preliminary finding of suitability, the person will not seek or in any way engage in a corporate acquisition opposed by management.
(f) Define “preliminary finding of suitability” as the term is used in this section.
3. As used in this section:
(a) “Acquire control” or “acquiring control” means any act or conduct by a person whereby the person obtains control, whether accomplished through the ownership of equity or voting securities, ownership of rights to acquire equity or voting securities, by management or consulting agreements or other contract, by proxy or power of attorney, by statutory mergers, by consummation of a tender offer, by acquisition of assets, or otherwise.
(b) “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person.
(c) “Corporate acquisition opposed by management” means an attempt to acquire control of a publicly traded corporation that is an affiliated company by means of a tender offer that is opposed by the board of directors of the affiliated company.
(d) “Tender offer” means a public offer by a person other than the issuer to purchase voting securities of a publicly traded corporation that is an affiliated company, made directly to security holders for the purpose of acquiring control of the affiliated company.
(e) “Voting security” means a security the holder of which is entitled to vote for the election of a member or members of the board of directors or board of trustees of a corporation or a comparable person or persons in the case of a partnership, trust, or other form of business organization other than a corporation.
After being read, AB 213 was referred to the Assembly Committee on Judiciary on February 25, 2011.
The Gaming group at Brownstein Hyatt Farber Schreck represents businesses and individuals seeking gaming licenses, liquor licenses and related approvals. We render advice on the structuring of major transactions to minimize gaming issues and assist in obtaining necessary approvals for public offerings, financings, business restructurings and mergers and acquisitions.
www.bhfs.com/Practices/GamingLaw