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What types of gambling establishment are authorised to operate in your jurisdiction and how are they classified?
There are two broad categories of gambling establishments:
- land-based gaming (ie, casinos); and
- remote gaming (ie, internet gambling).
The types of land-based gaming permitted by the states or tribes vary from the state-sponsored lottery to cardrooms, horse-race wagering, casinos offering house-banked games and slots or sports betting. Remote gaming is more limited – while telephonic and internet pari-mutuel horse-race wagering is available in many states, other forms of remote gaming are still in their nascent stages, with:
- three states (Delaware, New Jersey and Pennsylvania) permitting online casino and poker gaming;
- one state (Nevada) permitting online poker; and
- four states (Nevada, New Jersey, Pennsylvania and West Virginia) permitting mobile or online sports betting.
That list is expected to grow significantly in the near future. The permissibility of either land-based or remote gaming is dependent on a state’s express authorisation of such activity by law. If such activity is permissible, the states’ respective gaming regulators will have oversight and enforcement authority over the activity.
What licensing procedures and requirements apply to gambling establishments (including any fees)?
States will generally limit the number of available licences and the licensing criteria will vary from state to state. For example, in New Jersey, licences or registrations are required for casino owners and operators, certain casino employees and companies that do business with casinos (see for example NJAC 13:69C (Casino Licensees) and NJAC 13:69J (Persons Doing Business with Casino Licensees)). Nevada also has a licensing regime for (among others) gaming employees and locations, like taverns, where gaming is incidental to the main business (known as a ‘restrictive’ licence in Nevada) (see Nev Gaming Reg 3 (Licensing: Qualifications)).
How can licences be renewed, and what terms and fees apply?
Licence renewal varies from state to state. For example, in New Jersey, licences for casino service industry enterprises (CSIEs) and ancillary CSIEs never expire. Therefore, the filing of renewal applications is no longer required. However, five years from the date of licensure a ‘re-submission’ must be filed, demonstrating that the applicant and all associated still meet the criteria for licensure. Re-submission fees for CSIEs and ancillary CSIEs are $5,000 and $2,000, respectively. Other states may apply different fees or have different re-filing requirements.
On what grounds can licences be revoked? Can revocation be challenged in any way?
Licence revocation will vary from state to state. For example, in Nevada, casino licences are granted only if applicants show that they:
- possess adequate business acumen, competence and experience; and
- have secured adequate and appropriate funding (see Nev Rev Stat Section 463.170(3)).
Licences can be revoked if an applicant is shown to no longer be honest and of good character and integrity (eg, by committing fraud). Licence revocation is unlikely to be automatic and occurs through a review process conducted by the regulator – whether and how a decision for revocation can be appealed will depend on state law.
Employees and suppliers
What rules and restrictions govern the hiring and ongoing relationship with employees of and suppliers to gambling establishments?
While the rules vary from state to state, some states require suppliers and their key employees to be separately licensed. For example, in New Jersey, enterprises that provide goods or services directly relating to casino, simulcast wagering, gaming activity, sports pools, online sports pool or internet wagering activity must be licensed as a CSIE (see NJAC 13:69J-1.2).
Are there any zoning or other planning restrictions for gambling establishments?
Zoning considerations will vary between jurisdictions. In a heavily gambling-focused metropolitan area such as Las Vegas, for example, there are few – if any – zoning restrictions that will inhibit resort development within the designated gaming area. However, jurisdictions generally maintain strict rules regarding the areas in which gambling resorts may be located.
What rules, restrictions and ongoing obligations govern the operations of gambling establishments (eg, reporting and monitoring requirements, customer due diligence)? What are the penalties for non-compliance?
Rules, restrictions and ongoing obligations governing the operation of gambling establishments will vary from state to state. As previously discussed, casinos must:
- keep records of cash purchases of negotiable instruments;
- file reports of cash transactions exceeding $10,000 as a daily aggregate amount; and
- report suspicious activity that might signify money laundering, among other activities.
Other obligations include:
- limitations on advertising;
- support for responsible gaming; and
- self-exclusion rules (requiring casinos to exclude patrons who voluntarily identify themselves and ask to be excluded).
Penalties for non-compliance can range from monetary fines to licence revocation.
What taxes and duties apply to gambling establishments?
Gambling activity is generally taxed by states based on gross gaming revenue. The rate varies from jurisdiction to jurisdiction. Although the definition of ‘gross gaming revenue’ also varies, it generally refers to the gross amount received from wagers minus winnings and bonuses or promotional credits offered to the customer.
What best practices are advised in order to ensure compliance with the relevant regulations?
The US gaming industry is heavily regulated. A panoply of rules and regulations govern its activities. As a result, as with other heavily regulated sectors (eg, financial services), robust compliance mechanisms are essential. These include:
- substantial compliance departments;
- regular and extensive training of all key employees; and
- meticulous record keeping and reporting.
Experienced external legal counsel is also advised, particularly for companies operating in multiple jurisdictions or in emerging areas (eg, sports betting or remote gaming).