Official magazine of the International Masters of Gaming Law
®
MALTA MARKET FOCUS
INTERNATIONAL MASTERS of GAMING LAW MAGAZINE
VOLUME 5 | NO. 1 | MARCH 2025
TRIBAL GAMING IN FLORIDA AND TEXAS
PLUS CONTRIBUTIONS FROM FIVE CONTINENTS:
THE REHABILITATION OF CROWN IN AUSTRALIA CELEBRITY GAMBLING ENDORSEMENT THAILAND: SLEEPING TIGER READY TO WAKE EUROPEAN DIGITAL LEGISLATION: THE IMPACT ON GAMING
AND MUCH MORE!
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IMGL MAGAZINE | JULY 2023 IMGL MAGAZINE | JANUARY 2023
MALTA’S FATF GREY-LISTING IMGL OFFICERS 2025
Officers of IMGL for 2025
MARC DUNBAR President JONES WALKER TALLAHASSEE, FLORIDA +1 850 214 5080 MDUNBAR@JONESWALKER.COM
PHIL SICUSO Assistant Treasurer BOSE MCKINNEY & EVANS, LLP INDIANAPOLIS +1 317 684 5265 PSICUSO@BOSELAW.COM
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IMGL MAGAZINE | JANUARY 2023 IMGL MAGAZINE | MARCH 2025
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PRESIDENT’S WELCOME
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MARC DUNBAR President INTERNATIONAL MASTERS OF GAMING LAW
Welcome to the future
It’s a strange and unfamiliar pleasure to pen this, my first Magazine editorial, but it does give me the opportunity to let you know some of the things that have been going on with IMGL. Firstly, however, it would be remiss of me not to mention Quirino Mancini’s stellar stewardship over the past two years. I am extremely grateful to him for handing on an organization in great shape. Like all our past presidents, he will be a tough act to follow, but I will endeavor to do my best. Before I get into some of the details of our plans for the next period, I would like to encourage you to join me in Vancouver for our spring conference in April. Along with Ron Segev, the conference organizing team and I have worked hard to craft an exceptional event that will deliver top-flight education and networking in a superb location. We have focused on creating an event that is as inclusive as possible, with sessions dedicated to younger lawyers, a focus on indigenous and first nation participation and an occasion that cements our relationships with regulators. I am very much looking forward to meeting every one of you, to sharing time together and to hearing your vision for our future, so please do make every effort to attend. You can discover more details in these pages and, of course, online at our website www.IMGL.org. In my early days as president, I have focused on what more the IMGL can do for members. With that in mind, our committees have been reviewed and, in some cases, revamped with our members in mind to make sure we deliver for you across all our
activities. Our Masterclass Committee is working on an exciting schedule of events where IMGL members will take to the stage to share the benefit of their wisdom and experience with audiences in the US and Canada, in Rome, Cyprus, Czechia, Italy and Lisbon. To support these opportunities, we are putting in place marketing support to highlight members’ involvement together with materials pointing people to our online member directory. Our Membership, New Jurisdictions and Publications & Marketing Committees are developing ways to both attract new members and to give all members greater exposure through our publications and social media platforms. We can expect to see greater use of our website and media partnerships to deliver a range of new opportunities in the coming months. Our Education Committee is looking at reshaping our Student Writing Competition to give greater incentives to potential entrants and valuable experience and exposure to the next generation of gaming lawyers. I believe this is an exciting time to be an IMGL member and I hope you will make the most of the plans and opportunities we are working on. Above all I look forward to working with you at industry events around the world, to listening to your ideas for where we can go together and to securing the position of the IMGL as the pre-eminent association for gaming lawyers, regulators and advisors. Marc Dunbar
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IMGL MAGAZINE | MARCH 2025
EDITORIAL
Context is everything
Since the launch of the IMGL Magazine, it has been a top priority of mine to aim for as broad a geographical spread as possible. This, I believe, reflects the global aspiration and membership of IMGL as well as the nature of the gaming industry. In this edition, we have gone above and beyond with contributions from five continents and on indigenous cultures, too. As tribal gaming continues to occupy judges in U.S. courts, we feature two pieces on tribal gaming in this issue: one charting the course of the Seminole Tribe in Florida, the other looking at the possibility that the Choktaw Nation Tribe could be the first to test the waters of sports betting in Texas. In this context, please note that there will be a first nation strand running through the upcoming IMGL Vancouver conference, manifesting our desire for diverse educational programing. I am a strong believer in the value of learning from colleagues around the world. Certainly, there are lessons to be learned from the investigations
carried out by Andrew Scott and his colleagues into the Crown casino scandal. At the same time, Mr Scott humbly notes in our One-on One interview that “I wouldn’t presume for a second to say that ours was the only process that could be done to arrive at such an important decision.” In fact, it is not an exaggeration that the decision he is referring to was one of the most momentous ever taken in the Australian casino industry and we really can learn a great deal from the thoughtful and methodical approach he and his colleagues took in this complex matter. We have an interesting opportunity in this issue to read how different jurisdictions wrestle with familiar issues. The issues themselves may be universal, but how they are tackled reveals subtle and important differences. Whether those stem from the societal principles underlying their laws, the impact of politics and geopolitics involved, or the culture in which those decisions have to be effective - context is everything.
SIMON PLANZER PHD, Editor in Chief IMGL MAGAZINE
Contents 6
The Seminole Tribe of Florida’s “hub-and-spoke” model for mobile gaming How a ‘disgraceful’ casino rebuilt itself: 1-on-1 with VGCCC’s Andrew Scott
12 18 24
The legalization of casino & online gambling in Thailand
Legislative and regulatory powers over lottery, gaming and betting in Nigeria
30 Navigating the future of gaming: the impact of European digital regulations on the industry 34 Everything is bigger in Texas 38 A global analysis of celebrity gambling endorsement laws 45 Macau’s gaming law: when national security trumps the house 50 Vancouver conference preview
IMGL MAGAZINE | JANUARY 2023 IMGL MAGAZINE | MARCH 2025
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EDITORIAL
How Thailand shapes its gaming laws, how Macau reflects its unique position in its priorities, how Nigeria’s constitution impacts its lottery regulation – these questions are not least subject to the specific jurisdictional context. Part of what makes the IMGL network unique is the opportunity to learn from colleagues from so many different jurisdictions whose initial legal training may have been similar to one’s own, but whose experiences have been molded by the environment in which they practice. Talking of training, it is good to see the return of student- authored manuscripts submitted for review and publication in the IMGL Magazine. I often find the student-authored pieces thoroughly researched, and the smart students of today, are the excellent gaming lawyers of tomorrow. Our two student authors have both been able to unpack topics in different ways and from different perspectives. I hope you enjoy our tour d’horizon around the world and into diverse legal cultures.
Yours sincerely,
Simon planzer@planzer-law.com
To access our extensive archive of expert gaming law articles visit www.IMGL.org/publications
IMGL Magazine is owned, published and distributed by: The International Masters of Gaming Law PO Box 27106, Las Vegas, NV 89126 USA The IMGL is a domestic non-profit corporation registered in Nevada, U.S. with registration number NV20121147120 Editor in Chief: Simon Planzer PhD, planzer@planzer-law.com Publication & Marketing Committee: Co-chairs , Simon Planzer (Publications), Ali Bartlett (Social Networks & Digital) Members : Luiz Felipe Maia, Staff : Phil Savage, Brien Van Dyke Head of Publications: Phil Savage phil@IMGL.org Design and production: SportBusiness Communications. Copyright: All rights reserved to IMGL. No part of this publication may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior permission from the publisher. The articles expressed in this publication do not necessarily reflect the views of IMGL but those of the authors. The publisher and editor do not accept any liability for the contents of the authors’ contributions.
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IMGL MAGAZINE | JANUARY 2023 IMGL MAGAZINE | MARCH 2025
TRIBAL GAMING
The Seminole Tribe of Florida’s “hub-and-spoke” model for mobile gaming – opportunities and unresolved questions
Overview For many Native American Tribes, gaming revenue has long been a key resource for government services, economic development, and community investment. With the gaming industry’s inexorable shift to the internet, Tribes must find ways to remain competitive by participating in online markets. The uniquely complex legal and regulatory landscape governing Indian gaming demands creative solutions to achieve this. The Seminole Tribe of Florida has developed just such a solution, which is attracting interest from Tribes around the country. In June 2024, the U.S. Supreme Court removed any remaining legal uncertainty about the approach to state-wide mobile gaming advanced by the Seminole Tribe of Florida and the State
of Florida in their landmark 2021 Class III Gaming Compact. The Court declined to take up a commercial operators’ challenge to the D.C. Circuit’s decision in West Flagler Associates, Ltd. v. Haaland , which upheld the validity of the Department of the Interior’s decision to allow the agreement to take effect. The approach involves a combination of state law and federal law pursuant to the Indian Gaming Regulatory Act (IGRA), and can now provide a potential blueprint for Tribes in other states to follow a “hub-and-spoke” model in which online sports betting wagers placed anywhere within a state are received and processed at servers on a Tribe’s Indian lands. But key questions remain about how to adapt this approach to fit the varied political and legal realities faced by Tribes in states other than Florida.
IMGL MAGAZINE | MARCH 2025
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TRIBAL GAMING
Introduction: IGRA, the promise of Tribal economic development Nearly 40 years ago, the U.S. Supreme Court recognized the right of federally recognized Tribes to conduct gaming on their own lands. 1 Some states strongly opposed this outcome, desiring complete regulatory control over gaming within their borders. In 1988, Congress enacted the Indian Gaming Regulatory Act (IGRA) as a sort of compromise that both codified Tribes’ right to engage in gaming while also returning some regulatory control to the states. IGRA only governs gaming that takes place on Indian lands, and Tribes may only engage in Class III, or casino-style, gaming (including sports betting) by negotiating compacts with states. An IGRA compact must also be approved by the U.S. Department of the Interior (Interior) before taking effect. To ensure IGRA could fulfill its purpose of “promoting Tribal economic development, self-sufficiency, and strong Tribal governments,” 2 Congress mandated that states negotiate compacts with Tribes in good faith. IGRA further requires that Tribes are the primary beneficiaries of their gaming operations. Additionally, IGRA prohibits states from imposing taxes or fees on Tribal gaming, though courts have upheld revenue-sharing payments to states under IGRA compacts as long as the state offers something of significant value in return, such as a negotiated, exclusive right of the Tribe to conduct a particular type of gaming. 3
address any other matters that are “directly related to” gaming (sometimes referred to as IGRA’s “catchall” provision).
The Seminole Tribe of Florida – leaders in Tribal gaming The Seminole Tribe of Florida (the Tribe or Seminole) has long been on the cutting edge of Indian gaming, from its bingo operations in the 1970s to online sports betting today. While the Tribe and the State of Florida (the State) now have a groundbreaking IGRA compact in place, this relationship took many decades to build. The first attempt at negotiating a compact led to a 1991 lawsuit over the State’s refusal to negotiate in good faith, as required by IGRA. However, the U.S. Supreme Court held that Congress lacked the authority to abrogate state Eleventh Amendment immunity, rendering IGRA’s good-faith mandate unenforceable against the State. 5 Years of further litigation and negotiations ensued, all under the direction of Jim Shore, the Tribe’s General Counsel, until the Tribe and State at last agreed to a compact in 2010. 6 Among other things, this agreement authorized the Tribe’s exclusive right to conduct banked card games, such as blackjack, in exchange for an unprecedented US$1 billion in shared revenue with the State over the first five years. However, shortly after the compact was approved, the State began allowing state- licensed cardrooms to offer a form of card game that the Tribe argued violated its exclusive right to offer banked card games. In 2016, a Florida federal court agreed that these so-called “designated player games” were banked card games as defined in the compact. 7 When the State still failed to halt the activity, the Tribe exercised its right to suspend revenue sharing payments to the State. Finally, in 2021, the Tribe and State emerged from another round of lengthy negotiations with a new gaming compact
IGRA compacts can authorize Tribes to engage in any type of Class III gaming that is permitted, in some form, under state law. 4 While IGRA limits the scope of compact terms to certain topics, there is still great flexibility, including the ability of Tribes and states to allocate regulatory jurisdiction over gaming between their respective authorities, and to 1 California v. Cabazon Band of Mission Indians , 480 U.S. 202 (1987) 2 25 U.S.C. § 2702(1). 3 See Rincon Band of Luiseño Mission Indians v. Schwarzenegger , 602 F.3d 1019, 1033 (9th Cir. 2010). 4 25 U.S.C. § 2710(d)(1)(B). 5 Seminole Tribe of Fla. v. Florida , 517 U.S. 44, 72–73 (1996).
6 The Tribe and Florida Governor Charlie Crist had agreed to a compact in 2007 that was deemed approved by Interior, but the Florida Supreme Court ruled that the Governor lacked the authority to enter into a compact without authorization by the Florida Legislature. Fla. House of Repre- sentatives v. Crist , 999 So.2d 601 (Fla. 2008). 7 Seminole Tribe of Fla. v. Florida , 219 F. Supp. 3d 1177, 1188 (N.D. Fla. 2016).
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Procedural history – the West Flagler parties push back Just five days after the 2021 Compact went into effect, two Florida pari-mutuels — West Flagler Associates, Ltd., which then operated Magic City Casino in Miami, and Bonita–Fort Myers Corp., operator of Bonita Springs Poker Room (together, West Flagler) — sued Interior in the U.S. District Court for the District of Columbia. A Florida anti-gambling expansion group called No Casinos led another lawsuit against Interior. The court considered the two suits together, with West Flagler Associates, Ltd. v. Haaland (West Flagler) as the lead case. West Flagler argued the 2021 Compact’s online sports betting provisions were invalid not only under IGRA, but also under the Interstate Wire Communications Act (Wire Act), 9 the Unlawful Internet Gambling Enforcement Act (UIGEA), 10 and Fifth Amendment equal protection principles. Therefore, West Flagler asserted, Interior’s deemed approval of the agreement violated the Administrative Procedure Act. By attacking the 2021 Compact in this circumspect manner, West Flagler attempted to avoid naming as defendants the actual parties to the agreement — i.e., the Tribe and the State, each cloaked in sovereign immunity. 11 The Tribe sought to assert its sovereign immunity, seeking to intervene for the limited purpose of moving to dismiss the case. Meanwhile, as permitted by the 2021 Compact, the Tribe prepared to launch online sports betting, which went live through the Tribe’s Hard Rock Bet platform on November 1, 2021. On November 22, 2021, Judge Dabney Friedrich of the D.C. District Court ruled in favor of West Flagler and denied the Tribe’s motion as moot. 12 Deriding the “deeming” language in the 2021 Compact and Implementing Law, Judge Friedrich determined that an IGRA compact could not include off-
(the 2021 Compact), agreed to in conjunction with State law amendments ratifying and implementing the agreement (the Implementing Law). 8 Together, the Implementing Law and the 2021 Compact authorized the Tribe to conduct new forms of gaming with substantial exclusivity, including a first-of-its-kind arrangement for the Tribe to conduct statewide online sports betting operated from servers based on the Tribe’s Indian lands. In exchange, the Tribe agreed to resume and increase its revenue sharing payments, with US$2.5 billion guaranteed to the State over the first five years. Because the Secretary did not affirmatively approve or disapprove the agreement within 45 days, the 2021 Compact took effect by operation of law, or “deemed approval,” on August 11, 2021. The Implementing Law was a necessary component of this online sports betting model, sometimes called a “hub-and- spoke” model, in which the bettors — users placing wagers from mobile devices physically located throughout the State — are the “spokes,” and the Tribe — where those wagers are received and processed by the Tribe’s servers, physically located on Indian lands — is the “hub.” In the hub-and- spoke model, IGRA, which can only authorize gaming on Indian lands, authorized the “hub” activities of receiving and processing wagers, while the Implementing Law authorized the “spoke” activities of placing those wagers off Indian lands. Further, both the 2021 Compact and Implementing Law deemed the “spoke” activities —placing wagers — to occur on Indian lands for regulatory purposes. Using IGRA, this then shifted regulatory jurisdiction over the “spoke” activities to the Tribe, allowing the Tribe to regulate both the “hub” and “spoke” activities — meaning, the entire online sports wagering transaction — from start to finish. This allowed the Tribe to apply its Indian gaming expertise as the primary regulatory authority for its online sports betting operations.
8 Codified at Fla. Stat. § 285.710. 9 18 U.S.C. §§ 1081–1084. 10 31 U.S.C. §§ 5361–5367.
11 West Flagler’s separate suit over the 2021 Compact against the Governor and other state officials was dismissed. W. Flagler, Assocs., Ltd. v. De- Santis , 568 F. Supp. 3d 1277 (N.D. Fla. 2021), voluntarily dismissed on appeal sub nom. W. Flagler Assocs., Ltd. v. Governor of Fla ., No. 21-14141, 2021 WL 7209340 (11th Cir. Dec. 20, 2021). 12 W. Flagler Assocs., Ltd. v. Haaland , 573 F. Supp. 3d 260 (D.D.C. 2021).
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TRIBAL GAMING
IGRA
reservation gaming activities and, therefore, Interior should not have allowed the agreement to go into effect. Though West Flagler sought only to invalidate the 2021 Compact’s online sports betting provisions, Judge Friedrich struck down the entire agreement. The Tribe immediately appealed, but, after attempts to stay the D.C. District Court’s order failed, suspended its online sports betting operation just a few weeks after the launch. Interior appealed the decision on the merits and the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments about a year later, in December 2022. On June 30, 2023, the D.C. Circuit unanimously reversed Judge Friedrich’s decision, finding the 2021 Compact and its online sports betting provisions lawful under IGRA. West Flagler’s requests for rehearing en banc and a stay from the U.S. Supreme Court were both denied. With the 2021 Compact thus reinstated, the Tribe relaunched online sports betting in November 2023 — nearly two years after suspending its initial operations. In February 2024, West Flagler filed a petition for a writ of certiorari with the U.S. Supreme Court. In June 2024, the U.S. Supreme Court declined to take up the case, upholding the D.C. Circuit’s opinion and putting an end to West Flagler’s available appeals. Analysis: key legal issues decided in West Flagler Writing for the unanimous D.C. Circuit, Judge Wilkins rejected each of West Flagler’s arguments, accepting the 2021 Compact’s framework that “consider[s] all bets placed through the Tribe’s sports book, regardless of where the person placing the bet is physically located within the state, to occur where the sports book servers are located — in other words, on Tribal land.” 13 From this premise, the West Flagler opinion decided major issues for Tribal internet gaming under IGRA, the Wire Act, UIGEA, and constitutional equal protection principles.
The D.C. Circuit explained that IGRA can only provide authorization for a Tribe’s conduct of gaming activities on Indian lands; IGRA cannot, on its own, authorize gaming activities conducted off Indian lands. Under the 2021 Compact, IGRA could authorize the receipt and processing of a sports betting wager at the servers on the Tribe’s Indian lands, while placement of the wager off Indian lands was separately authorized under State law. This, as the D.C. Circuit noted, is consistent with Michigan v. Bay Mills Indian Community , in which the U.S. Supreme Court ruled that IGRA’s scope of authorization could not extend to a Tribe’s gaming facility off Indian lands, where state law instead would govern. While IGRA does not reach beyond Indian lands, there is nothing in IGRA that prohibits a compact from addressing activities that occur off Indian lands. The D.C. Circuit held that the 2021 Compact could include provisions that address all aspects of the sports betting transaction because the placement of the wager is, as IGRA’s catchall provision requires, “directly related to the operation of” the Tribe’s sportsbook, including the receipt and processing of the wager on Indian lands. This is also consistent with Bay Mills , in which the U.S. Supreme Court acknowledged that IGRA compacts can discuss topics covering state or Tribal activity off Indian lands. Finally, the 2021 Compact could “deem” the placement of the wager to occur on Indian lands because IGRA allows parties to allocate jurisdiction in this manner, and corresponding “deeming” language was built into State law. The 2021 Compact “simply allocates jurisdiction between Florida and the Tribe, as permitted by [IGRA],” thus allowing the Tribe to regulate online sports betting transactions from start to finish.
Wire Act, UIGEA, and equal protection
The D.C. Circuit further determined that West Flagler’s challenges to the 2021 Compact based on the Wire Act, UIGEA, and equal protection principles “lack[ed] merit as matter of law.”
13 W. Flagler Assocs., Ltd. v. Haaland , 71 F.4th 1059, 1063 (D.C. Cir. 2023), cert. denied , 144 S. Ct. 2671 (2024).
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TRIBAL GAMING
The Wire Act prohibits knowingly using wire communications for the interstate transmission of bets or wagers, 14 while UIGEA prohibits knowingly accepting payments in connection with unlawful internet gambling. 15 The D.C. Circuit rejected the idea that Tribally operated online sports betting would, by definition, violate either of these federal laws, noting instead that any issue would require factual case-by-case review. The court noted that following this argument “to its logical end” would mean Wire Act violations could arise from “even online betting by patrons who are physically located on Indian lands... because some of those bets may be routed off of Indian lands into a state, and then back.” The court balked at this “novel and sweeping argument that the Wire Act poses such a broad obstacle to an Indian tribe’s ability to offer online gambling on its own lands.” The D.C. Circuit similarly dismissed West Flagler’s argument that the 2021 Compact violated the Fifth Amendment’s equal protection requirements, rejecting the notion that the Tribe’s exclusive right to operate statewide online sports betting could constitute a suspect form of discrimination. Relying on well-established precedent that Indian-specific federal laws and policies are based on the political government- to-government relationship between Tribes and the United States, the D.C. Circuit explained that the 2021 Compact’s exclusivity rights promoted the legitimate purpose of Tribal economic development and were rationally related to IGRA’s goal of ensuring that Tribes are the primary beneficiaries of their gaming operations. West Flagler’s significance for Indian country West Flagler set a nationwide precedent for Tribes to operate statewide mobile sports betting and broadened prospective opportunities for expansion into online casino gaming (igaming) and other markets. In March 2024, the Seminole “hub-and-spoke” model became formal federal regulatory
guidance as well as codified into Interior’s new IGRA regulations. 16 Together, West Flagler and the regulations position Tribes on a more equal footing to negotiate with states and compete with commercial gaming operators. Still, the nature of IGRA is that Tribes must navigate legal and political nuances state by state. For many Tribes, West Flagler leads back to the negotiating table — with their respective states and among themselves. While Seminole is just one of two federally recognized Tribes based in Florida, states like Washington, with 29 Tribes, and California, with more than 100, require more of a coalition approach. Relative to California, Washington Tribes are fewer in number and already have the exclusive right to operate retail sports betting in the state (though even this right was recently subject to a West Flagler-like challenge). 17 California, however, with its 100+ Tribes and absence of legal sports betting is an entirely different story. The West Flagler decision may provide precedent for Tribes in states that have already legalized commercial online sports betting, like Arizona and Michigan, to renegotiate compacts with more favorable terms and to incorporate IGRA into future Tribal gaming expansion efforts. Tribes conducting online sports betting under general state licenses do not have the benefit of IGRA’s protections and are pitted against, or must partner with, large commercial operators. Such arrangements have resulted in relatively little profit for Tribal governments and communities.
Unresolved issues State Law Nuances
As a federal court decision, West Flagler did not decide any issues of state law. But many Tribes face state constitutional and other restrictions on what types of gaming can be allowed, and even where that gaming can take place.
While the D.C. Circuit agreed that IGRA allows the parties
14 18 U.S.C. § 1084(a). 15 31 U.S.C. § 5363. 16 See 25 C.F.R. Part 293.
17 Maverick Gaming, a commercial operator, challenged IGRA compacts and associated state law that authorized Tribes, and no one else, to engage in retail sports betting in the state. The district court dismissed the suit on the basis that such exclusivity was allowed under IGRA. Further, the court ruled the suit had to be dismissed for failure to join a required party that could not be joined due to its sovereign immunity—the Shoalwater Bay Indian Tribe, which sought to intervene. The U.S. Court of Appeals for the Ninth Circuit upheld this result in December 2024. Maverick Gam- ing LLC v. United States , 658 F. Supp. 3d 966 (W.D. Wash. 2023), aff’d, 123 F.4th 960 (9th Cir. 2024).
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Good Faith
to treat an entire online sports betting transaction as occurring on Indian lands, it is not clear whether specific “deeming” language is required in every circumstance or whether it was only necessary in West Flagler due to a quirk of state constitutional law. 18 The Southern Ute and Ute Mountain Ute Indian Tribes are testing this question in litigation against Colorado, where statewide online sports betting is legal for commercial operators. 19 The state law that authorized online sports betting is silent as to Tribal operators. The Ute Tribes argue that their existing IGRA compact language is broad enough to encompass online sports betting, and therefore passage of the state law authorizing sports betting for commercial operators triggered the Ute Tribes’ ability to engage in online sports betting as well. The Ute Tribes sued after state regulators sought to shut down their online sports betting operations. The question this case raises is what precisely is required before Tribes can engage in online sports betting and whether IGRA compacts need to be renegotiated to allow for online sports betting in every circumstance. Equal Protection In denying West Flagler’s application for a stay from the U.S. Supreme Court, Justice Brett Kavanaugh noted his concern that the case could implicate “serious equal protection issues” to the extent state law authorized the Tribe’s exclusive right to statewide online sports betting. 20 Justice Kavanaugh would also have granted West Flagler’s petition for certiorari. 21 Notably, however, no other Supreme Court Justice — even the Court’s most conservative — shared Justice Kavanaugh’s view.
It is unclear whether IGRA’s requirement that states negotiate compacts in good faith would extend to allowing Tribes to accept wagers from players located off Indian lands, especially if allowing such wagers would require changes to state law. While there is a good argument that the good-faith requirement would apply if a state otherwise permits mobile gaming, it is also unclear how a tribe would enforce this right. Most states would assert their Eleventh Amendment immunity to foreclose any lawsuits. While in some cases Tribes may be able to request Class III gaming procedures directly from Interior 22 to remedy such situations, two federal circuit courts have held that the regulations for these procedures are invalid. 23 Moreover, a significant question remains as to whether such procedures could authorize a tribe to accept wagers from off Indian lands, since the placement of those wagers is governed by state law. Conclusion The groundbreaking West Flagler opinion provides an important new framework for Tribes as Tribal gaming continues to evolve in the twenty-first century. While the framework may not work for all Tribes, and there are a number of unresolved questions, it is likely to serve as a critical component for upcoming compact negotiations in a number of states.
JOSEPH H. WEBSTER Managing Partner, Hobbs, Straus, Dean & Walker, LLP For information contact: JWebster@hobbsstraus.com 001 202 822 8282 TAYLOUR A. BOBOLTZ Associate, Hobbs, Straus, Dean & Walker, LLP
18 An amendment to the Florida Constitution, often referred to as “Amendment 3” after its 2018 ballot initiative, pro- hibits gambling expansion without prior voter approval. As acknowledged by the D.C. Circuit, however, Amendment 3 “contains an exception for ‘casino gambling on tribal lands’ pursuant to an IGRA compact.” W. Flagler , 71 F.4th at 1068. In March 2024, the Florida Supreme Court dismissed West Flagler’s collateral attack on the 2021 Compact under Amendment 3. W. Flagler Assocs., Ltd. v. DeSantis , 382 So. 3d 1284 (Fla. 2024). 19 S. Ute Indian Tribe v. Poli s, No. 1:24-cv-01886 (D. Col. filed July 9, 2024). 20 W. Flagler Assocs., Ltd. v. Haaland , 601 U.S., 144 S. Ct. 2671 (2023) (statement of Kavanaugh, J.). 21 W. Flagler Assocs., Ltd. v. Haaland, 144 S. Ct. 2671 (2024) 22 See 25 C.F.R. Part 291; 25 U.S.C. § 2710(d)(7)(B). 23 Texas v. United States, 497 F.3d 491 (5th Cir. 2007); New Mexico v. Dep’t of Interior , 854 F.3d 1207 (10th Cir. 2017).
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IMGL MAGAZINE | MARCH 2025
ONE-ON-ONE
How a ‘disgraceful’ casino was rebuilt ANDREW SCOTT , DEPUTY CHAIR AND A COMMISSIONER OF THE VICTORIAN GAMBLING AND CASINO CONTROL COMMISSION, TALKED TO EDITOR-IN CHIEF SIMON PLANZER AND EXPLAINED HOW HE AND HIS COLLEAGUES CLEARED UP CROWN CASINO IN MELBOURNE. Introduction When a Victoria Royal Commission submitted a report of its investigations into Melbourne’s Crown Casino in 2021, it could easily have justified shutting the organization down. Instead, it recommended Crown be given a period of time to mend its ways. Now, nearly four years later, Crown’s name is still above the door in Melbourne as well as in Sydney and Perth. But beyond that, almost everything else about the business has changed. Our 1-on-1 interviewee this edition was one of the team at the Victorian Gambling and Casino Control Commission (VGCCC) tasked with deciding whether Crown was suitable to continue to hold a casino license in Victoria. Parallel investigations were also held into Crown’s casinos in Sydney and Perth, but it was widely seen that the VGCCC’s decision would be the test case and applied to all the company’s casino operations. Simon Planzer discovers the litany of license condition failures, how Crown was rehabilitated and how a final decision was made to allow the business to continue.
since then even though it’s over six years later, because of everything that’s happened. Back in 2016 there was one glaring shortcoming at Crown, which was that it mismanaged its risk assessment so badly that it allowed some of its employees in China to be arrested and imprisoned for trying to promote Crown to Chinese nationals. This was against Chinese law and Crown had been alerted to that as a risk, so it really represented an egregious error of risk management. The VCGLR commenced an investigation into the situation, but Crown claimed legal professional privilege meaning reams of vital material was withheld. This frustrated the regulator who wasn’t able to look properly into the situation when it conducted its 2018 5-yearly review, stating therein that it could not take the “China Arrests”
Simon Planzer: By now the story of the Crown scandal is well known, but how, in your view, did we get to this point? How was Crown able to slip so far from the regulatory standard that it was supposed to be working to? Andrew Scott: That’s what everybody wanted to know, and the reality is that the Victorian Commission for Gambling and Liquor Regulation, which was the predecessor commission to the Gaming and Casino Control Commission, the VGCCC, had been continually thwarted in its job of regulating Crown. It had the task every five years of reviewing Crown’s suitability and whether it was in the public interest. The most recent review was back in 2018: there has still not been a 5-yearly review
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conduct into account. It also delayed things so that its separate disciplinary action into these arrests, which turned out to be one of the worst aspects of the casino’s behavior, was not able to be fully finalized until 2021, when a fine of AU$1 million was imposed. That figure, which was the maximum available to the VCGLR at the time, was indicative of the other key factor behind your “how did we get there” question: Our penalties were inadequate and amounted to little more than Crown’s cost of doing business. SP: From what I know from my jurisdiction, legal privilege only applies to communication between the client and their external council. Is that the same in Australia? AS: Pretty much. As the VCGLR found in its “China Arrests” investigation Crown had advice from their external lawyers, and the advice was to the effect: “If you get your China-based promoters to say A rather than B, they should be able to argue that they are not committing a breach of the law” . Now apart from the advice itself, it’s the way the advice is sought and what the brief is to the external lawyers. If, for example, they had asked: “How we can avoid our staff getting arrested in the first place” , one answer could have been to stop doing any marketing at all. And what the Royal Commission concluded – whether the advice was right or wrong - was that Crown relied on a particular legal interpretation of the law which would enable the employees to argue the toss if arrested. And, when it came to applying that advice, Crown decided to permit them to continue operating. The Royal Commission found that it did so notwithstanding that the Chinese government had, at that time, announced a crackdown on foreign casinos soliciting Chinese citizens to gamble abroad and notwithstanding that Crown’s relevant executives decided to defer their own personal travel to China for a period. SP: What else did the Royal Commission bring to light? AS : I think probably the most flagrant behavior of Crown was to enable continuous play on EGMs by letting patrons put plastic
picks into the sides of the machines. As you know, continuous play is a very harmful way of playing for certain people, but when we formally directed them to stop the behavior, their response was baffling. Having given the direction to them, they came back and effectively said, “Ah, okay, we will interpret that as applying only to some picks, not to others. The Crown picks that we give to EGM players, with the company logo on, we’ll stop doing that. If they want to put another device which serves the same purpose in a machine, we’re not going to see that as something we’ve been directed to stop.” That example goes to the heart of what they considered compliance to be, yet even post the Royal Commission findings, they were still making that argument for a time. Another very egregious example was the fabrication of invoices to increase the amount of cash that a Chinese player could use to gamble with. This got around the fact that Chinese nationals weren’t allowed to bring as much cash as they wanted from mainland China. The Royal Commission found that: Crown Melbourne “happily assisted its wealthy Chinese patrons to breach the currency laws of their country…. [who] transferred up to $160 million from accounts in China to the Crown Towers Hotel. Purportedly this was to pay for hotel services but in reality it was to spend at the gambling tables…what occurred also contravened local laws and likely allowed money laundering to take place.” The other issue that we discovered was that junket operators had connections with organized crime which was obviously very concerning. SP : What do you see as the main reasons behind these failures? Different factors may have contributed, but what were the main ones. AS: In my personal opinion, there was one thing above all else and the Bergin inquiry’s own recommendations go some way to supporting this; the presence of James Packer as the largest shareholder of Crown. He had started selling down his stake, but I think he still had about 35 percent when the Royal
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AS: The Royal Commission was led by an eminent retired Federal Court judge, the Honorable Ray Finkelstein. He described Crown’s conduct as a disgrace, elaborating that this was shorthand for illegal, dishonest, unethical and exploitative. Based on that description, it was no surprise that the Royal Commission found Crown Melbourne unfit to hold a casino license. But instead of recommending that the license be canceled, the Commission recommended that Crown be given an opportunity to reform itself. Part of the consideration was no doubt the substantial harm that canceling the license would have caused to the Victorian economy and to innocent third parties. It also took into account that Crown had already begun a significant reform program. In late 2021, the government accepted the recommendation and, under the supervision of a special manager, gave Crown two years to undertake a program of reform and remediation to overhaul its operations and demonstrate a genuine commitment to and progress towards becoming a casino that would meet the highest standards of integrity. At the end of the following two years the newly established VGCCC would be responsible for deciding Crown’s fate. SP: You mentioned the impact that canceling the Crown license would have on the local economy. As I understand it, Crown was Victoria’s largest local employer and contributed hundreds of millions of dollars a year to the state in taxes. Did the sense that Crown was too big to fail put pressure on you as regulator? AS: No. In fact, the opposite was true. We set up a decision- making process which enabled us to completely turn our attention away from the possible consequences. Our decision would be based purely on the evidence. Possible consequences could have absolutely zero impact on whether they were suitable or not. It’s not as if this was a decision that would say there’s not going to be a casino in Melbourne. There would be someone else, just not that operator. Having said that, I don’t want to give the impression that we ignored the possibility that Crown would fail. In fact, there was an implicit assumption within the new legislation that it would. The 2021 legislation set out that Crown’s casino license would
Commission was called. He was a very powerful personality, he had an influence over the management team, he was able to get private shareholder briefings on financial performance that was not available to the market and he was certainly prioritizing profit over compliance and everything else. What came out very clearly in the Bergin inquiry 1 was that senior people, including board members, were looking to do what Packer wanted done, rather than what was necessary for normal business compliance. Bergin actually put it quite colorfully: “… the real power was exercised by Mr Packer both by reason of his personality and also the somewhat supine attitude adopted by Crown’s operatives.” There was a very telling email produced in the Bergin inquiry from Andrew Demetriou, the former chief executive of the Australian Football League who was chair of Crown Melbourne at the time and a significant director of Crown Resorts. In his email to Packer, he said: “I remain committed to serving the best interests of Crown and, most importantly, you.” That’s not the kind of behavior any director would ever learn in governance 101. SP: So actually, we could call this a toxic demand from Packer. “I’m not interested how you do it, but you have to increase profits no matter what.” AS: I think it did come to the point where I imagine there were Crown executives who were afraid to come up with bad financial news for fear of Packer’s response. It’s very important to realize just how much direct input the Bergin inquiry found Packer had. SP: Thinking about the culture that pervaded Crown, the company culture had reached such a questionable level do you think it would ever have been possible to continue without replacing various individuals? AS: I think initially Patricia Bergin thought some key individuals might be able to remain. But subsequent events proved otherwise, so I think the observation you make is probably correct. It’s incredibly hard to change the tone at the
top with the people who set that tone still in place. SP: What did the Royal Commission conclude?
1 The 2021 Report of the Inquiry under section 143 of the Casino Control Act 1992 (NSW) (aka the Bergin Inquiry Report) is a comprehensive investigation conducted by former Supreme Court Judge, Patricia Bergin SC, into Crown Resorts Limited, the parent company of Crown Sydney Gaming Pty Ltd (Crown Casino). https://www.parliament.nsw.gov.au/la/papers/Pages/tabled-paper-details.aspx?pk=79129
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SP: So of those three strands, the penalties, the suitability decision and the Plan B, which was the most challenging? AS: I think they all had their challenges, and obviously they were not entirely independent of each other. Among the many things that arose during the two years, one had the potential to be a showstopper for Crown: it was at risk of running out of money. In his 2021 report, Commissioner Finkelstein commented that of all the suitability criteria for a casino license holder, financial stability was perhaps the most important. 18 months later, and less than a year before our suitability decision was due, Crown gave evidence to the Federal Court of Australia during anti-money laundering proceedings brought by AUSTRAC our national money laundering enforcement agency. It claimed that a looming AUS$450 million fine could affect its solvency if immediate payment was required. Because this matter so obviously affected Crown’s suitability, we undertook an investigation so that we could then take that report into account in the evidence that we were looking at to make our suitability decision. Our investigation itself found Crown’s financial situation was stable in the context of the wider corporate group. But without the investigations, highly relevant questions about Crown’s suitability would not have been answered or been part of our suitability considerations. The Royal Commission’s findings signposted which matters would underpin our disciplinary actions. Our remit was to hold Crown accountable for its failures which, let’s not forget, were either serious misconduct or criminal conduct. They had made AUS$ tens of millions in profits from these activities, so any fine could not just neutralize the profit made. It had to be more than that, because it was serving both as a deterrent for Crown as the gambling leader in the state, and a general deterrent for all other gambling licensees. We also had to take into account as one of the considerations in fixing the size of the penalties that they should not be something that would financially cripple Crown. In the end, by mid 2023, we issued fines totaling AUS$250 million and ensured that there was clear air between imposing the fines and our assessment of the operator’s suitability. Perhaps the most difficult part of preparing for the suitability decision was determining the criteria by which we would assess whether Crown had reformed its operations and culture. Two years is a short time in which to achieve such major change in
be automatically canceled after the two-year reprieve, unless the VGCCC was clearly satisfied they were suitable to continue operating. So, we effectively had three strands of work: first we had to hold Crown accountable for its past misdemeanors, those classified by the Royal Commission as serious or criminal misconduct. The VGCCC determined that these disciplinary actions should be kept separate from the suitability decision itself. It was important to complete the disciplinary actions well ahead of the April 2024 suitability decision to avoid any confusion that one had any bearing on the other. After all, the disciplinary actions were as a result of Crown’s actions up to 2021; the suitability decision was based on whether the 2024 version of Crown was sufficiently better. Second was establishing the necessary foundations to enable us to make the decision as to Crown’s suitability and here the legislation gave the VGCCC a binary decision-making power. We could either say ‘yes’, Crown is suitable, or ‘no’, Crown is not suitable. As you have mentioned, the possibility that Crown would receive a ‘no’ decision had huge ramifications for the State of Victoria and this led to what became known as the Plan B project. We collaborated closely with the state’s Department of Justice to amend the Casino Control Act to give the VGCCC the power to appoint an independent manager to step in and take over the running of the casino at the end of the two years, if required. We then negotiated contractually binding agreements to enable the government and Crown to work together to achieve an orderly transition should Crown lose its casino license. The Melbourne casino forms part of a large entertainment complex that includes dozens of high-end retail shops, restaurants, bars, cinemas and conference facilities. These are not run or controlled by the casino itself, but by its parent company, Crown Resorts, as well as numerous independent business owners. The legally enforceable transition agreements were a critical component in preparing for the suitability decision, protecting Victoria’s economy and community from potentially dire consequences, primarily the loss of 1000s of jobs in the event that Crown had to shut down in a hurry. Lastly there was working out just what the suitability decision itself would be, and here we relied on the update reports of the Special Manager, Stephen O’Bryan, a very senior lawyer installed by the government and backed by a sizable support team.
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