Nautical charts often refer to the need for “local knowledge” to navigate tricky passages with shifting shoals. When gaming was limited to just a few jurisdictions, and suppliers and support tended to be local as well, gaming businesses likewise could rely on “local knowledge” for professional advice and assistance. But the gaming industry has been hit by not one, but two major changes. Globalization has impacted all industries, including gaming. Gaming, however, experienced simultaneous globalization and proliferation with a rapid, exponential increase in the number of legal gaming venues. This has created the need for a completely new kind of gaming industry professional, the global gaming advisor, who can guide his or her client through the varying requirements of the literally hundreds of regulatory schemes around the world.
Twenty years ago, legalized casino gaming was spreading out from Nevada and New Jersey, through the Midwest and Southern United States, as well as on to tribal lands. Each new U.S. jurisdiction brought its own agency, regulations, standards and licensing requirements. The emerging area for advisors was “gaming compliance.” Gaming advice was localized and primarily offered by attorneys focused on navigating the regulatory process, obtaining product approvals and meeting the application filing burdens in each new jurisdiction.
As gaming continued to grow throughout the United States, the need for cost-efficient and knowledgeable advice increased. Cost efficiencies were not just limited to monetary cost, but also needed to reflect the time and effort to get advisors in different jurisdictions up to speed with the same information. Multi-jurisdictional gaming law practices developed by necessity and client demand, but the focus continued to be on gaming regulatory compliance advice—a specialty for which advisors are and will continue to be required and sought. Crossing the borders meant moving from state to state.
With today’s global gaming expansion, more than ever, the consequences of missteps in one place can greatly impact the ability to do business in another, especially since there are so many more places to keep on one’s radar. Contemporary gaming participants must comply with the least-common denominator and conduct business at each location to meet the highest standard of regulatory scrutiny, even if it is by an agency halfway around the world. Thus, effective compliance requires conforming to the rules of the strictest venue where you will be doing business. A jeopardized license in one jurisdiction can lead to further jeopardy elsewhere. The balance is delicate, therefore emphasizing the necessity for broader oversight and guidance in a widening sea of gaming compliance and business strategies.
East Goes West and West Goes East
With U.S.-based gaming operators like Las Vegas Sands, Wynn Resorts and MGM well established in Asia, Asian operators like Malaysian gaming giant Genting are demonstrating that turnabout is fair play by pursuing gaming footholds in other jurisdictions worldwide. And, with gaming suppliers everywhere expanding operations globally and Internet gaming operators entering the evolving regulatory environment, there is culture shock for all as regulatory requirements, business cultures and corporate strategies simultaneously merge and clash.
Issues related to gaming expansion are not limited to geography, culture and politics. The gaming product itself—the experience provided for the customer—has been transformed thanks to innovation and technology. Alternative investment strategies have emerged and additional governmental regulatory bodies have been formed. New vocabulary has been introduced and embraced. The past decade has seen the creation of idioms now associated with gaming, like “private equity investment,” “racino,” “integrated resort,” “downloadable games,” “TITO,” “i-gaming,” “social media,” and most recently, “international market agents,” each illustrating some of the new issues to consider and additional guidance to acquire.
Global gaming advisors must have the knowledge and appreciation of the increasing subtle situations that may occur in order to properly chart a new course for clients through unfamiliar waters. Coordination of a virtual spider web of advisory disciplines is necessary, as regulatory compliance is now integrated with almost every business decision in gaming. Cross-border consequences must be considered at each phase of business development. Crossing the border today means crossing oceans and spanning the globe.
Although adapting to the global reach of gaming still requires local knowledge, the key today is to successfully coordinate local knowledge with global advisory experience. Consider the example of a well-established gaming supplier in Las Vegas with a long and successful history and a large inventory of licenses in every major U.S. gaming jurisdiction. The addition of Western operators in Asia opens up opportunities for the supplier to sell products there, and the opportunities increase so significantly and rapidly that the supplier clearly needs to establish a permanent presence in the region. The supplier determines that its local office will be in Macau. In considering how to establish that permanent presence in Macau, the supplier needs to draw from a world of advice:
Entity Structure: A local corporate advisor is needed for the supplier to assess whether a local entity should be formed, what form the entity should take, its ownership structure, the necessary level of financial investment, and the proper appointments of officers, directors and members. A more global advisor can assist in assessing the impact of the new corporate entity on the group’s overall entity structure.
Real Estate: A local real estate advisor is needed to help with locating the office space, assessing lease or purchase options, negotiating the lease or purchase, and obtaining necessary permits.
Labor and Human Resources: In Macau, work quotas apply, work permits are required, and labor is in short supply, so local advice on establishing proper employment relationships is a necessity. If the plan is to also hire expats, factor in immigration advice for visas and work authorizations.
Accounting and Finance: A local financial advisor is necessary to establish a banking relationship, set up payroll services and engage an auditing firm. On a corporate level, issues such as international tax planning and foreign financial reporting require further advice.
Gaming Regulatory Compliance: Experienced gaming advice for both legal and compliance issues is necessary to assess vendor issues concerning licensing and product compliance, and is also needed for any customer and vendor due diligence requirements.
This growing framework for global gaming advice is applicable to operators and investors as well as suppliers and is no longer just a special situation. As operations progress, additional advice may be required in areas of litigation, intellectual property, creditors’ rights, debtors’ rights, corporate and securities, entertainment, investment, mergers and acquisitions, and as always, governmental compliance (gaming and otherwise). A multi-disciplinary team must be gathered and coordinated to successfully and continually navigate this global business environment.
Charting a Course to Asia
The evolution of gaming advisors is well-illustrated by the history of the non-profit organization the International Association of Gaming Advisors (IAGA). Originally formed in 1980 as the National Association of Gaming Attorneys, the organization’s early members were lawyers in Nevada and New Jersey. Among the purposes articulated in the organization’s formation documents are “to unite in common organization those professionally engaged in the gaming industry, to facilitate negotiations in the gaming industry and protect and promote the mutual interests of the corporation’s members” and “to promote and encourage education in the gaming industry.” An outstanding network of gaming lawyers began to emerge.
In 1985, as the membership of the group began to increase internationally, the name was changed to the International Association of Gaming Attorneys and the organization held its first annual conference outside of the United States in Monte Carlo. IAGA continued to develop into a premiere organization into the 21st century as its membership ranks drew an increasing number of major opinion leaders. Over the years many industry legends, like Frank Fahrenkopf and William Boyd, chaired the group. Annual conference venues expanded to Europe, Australia, Canada, Puerto Rico and the Bahamas. As gaming expanded around the globe, the associated issues and strategies considered by IAGA began to require more than just legal expertise. IAGA educational and networking events attracted other professionals from the financial and operational segments of the industry. To better reflect the interdisciplinary nature of the topics being addressed by the organization, in 2007, the name was changed to the International Association of Gaming Advisors, and membership has since expanded to include attorneys, financial experts, casino executives and regulators in the gaming industry from around the world.
This year, for the first time in its history, IAGA will venture to Asia host its annual conference, the 2012 IAGA International Gaming Summit, in Singapore from Oct. 23–25. Like the example of the U.S. gaming supplier expanding its presence in Macau, IAGA embraces the opportunity for expansion and growth by offering its members a top-level introduction to the Asian gaming market. Participants in this year’s conference will discuss issues that are unique to operating in a gaming business internationally, the expansion of i-gaming, emerging Asian markets and strategies for investing and funding the gaming industry.
In a global business with operations segmented across lands, on boats and online, the necessity for and role of the gaming advisor continues to evolve in response to the changing marketplace. Gaming advisors are no longer big fish in a small pond. Sound gaming advice, anchored by both local knowledge and global expertise, requires the ability to cross oceans.