a publication of the international masters of gaming … · casino in southern california....

Supplement to Casino Enterprise Management magazine

VOL. 2 NO. 5 FALL ISSUE 2006

A P U B L I C AT I O N O F T H E I N T E R N AT I O N A L M A S T E R S O F G A M I N G L AW

VOLUME 2 NUMBER 5 FALL 2006Casino Lawyer is published four times a year by Casino Services Publishing, LLC . Copyright ©2006 IMGL Inc. This material may not be reproduced without written permission.

PresidentMichael Lipton

Elkind & Lipton, LLPToronto, Ontario, Canada

(416) 367-0871

Vice PresidentRobert Stocker, ll

Dickinson Wright, PLCCLansing, Michigan, USA

(517) 487-4715

SecretaryAnthony R. Coles

Jeffrey Green RussellLondon, England

011 44 207 339 7000

Treasurer & Membership DirectorJames B. Deutsch

Blitz, Bardgett & Deutsch, L.C.Jefferson City, Missouri, USA

(573) 634-2500

Vice President Affiliate MembersJohn Sullivan

Territory IncorporatedLas Vegas, Nevada, USA

(702) 222-1402

President 2002Frank Catania

Catania Consulting GroupNorth Haledon, New Jersey, USA

(973) 427-2500

President 2004-2005Anthony N. Cabot

Lewis & Roca, LLPLas Vegas, Nevada, USA

(702) 949-8280

President 2003Heidi McNeil Staudenmaier

Snell & Willmer, LLPPhoenix, Arizona, USA

(602) 382-6366

IMGL Executive DirectorMelissa Lurie

International Masters of Gaming LawBoulder, CO, USA(303) 449-9955

Fall 2006 Casino Lawyer 11 Casino Lawyer Summer 2006

2 Casino Lawyer Fall 2006

ContentsVOLUME 2 NUMBER 5 Fall 2006

page 6

DEPARTMENTS

1 Officers

4 Message from the President

6 Notes from the Editor

8 Members in the News

New Developments in the EUU.S. Gambling Prosecutions from the UK Perspective

By Tony Coles and Mark Spragg10

New Developments: Native American GamingCan IGRA Weather the Congressional Storm?

By Heidi Staudenmaier12

Gaming Lawyers & EthicsWho is the Client – The Organization or the Organization’s Agent,Officer, Director, Shareholder or Employee? By Martha Moore

14

Excluding Problem Gamblers from CommercialCasinos By Robert W. Stocker II and Peter J. Kulick17

Thomas N. Auriemma, Director, New JerseyGaming Enforcement How Thomas Auriemma Shaped New Jersey Gaming By Chuck Davis

20

INDEX OF ADVERTISERS

Austrian Gaming Industries....................................................................................................................3Dickinson Wright ................................................................................................................................9Elkind & Lipton ..................................................................................................................................13Global Intelligence Network ................................................................................................................23Lewin International ............................................................................................................................19Lewis & Roca ......................................................................................................................................11Jeffrey Green Russell ............................................................................................................................15Jones Walker ....................................................................................................................................CV2Meadows, Owens, Collier, Reed, Cousins & Blau ..................................................................................25Miller Malone & Tellefson ......................................................................................................................9Sneed Lang ........................................................................................................................................23Snell & Wilmer ....................................................................................................................................25IMGL Winter Conference ..................................................................................................................CV4

page 10

page 20

page 24

page 27

On the Cover: Thomas N. Auriemma – Director of Gaming Enforcement, New Jersey

Gambling and Risk-Taking By Sue McNabb24

Enron, International Gambling, and Fast-TrackExtradition

By Greg Gemignani

27

MEMBER ARTICLES

FEATURE

Fulfilling Our Mission:We’re EverywhereSince its inception, the IMGL hasdevoted considerable time, energy, andresources to educating its members aswell as the general public, and there areseveral signs that we are making greatstrides toward fulfilling our mission.

Success in Ljubljana The IMGL Slovenia Conference was atremendous success. Members from 21countries attended the Fifth AnnualIMGL Gaming Law Conference, June21-23 in Ljubljana, Slovenia.

We effectively advanced our educationmission in Slovenia, where speakersand panelists helped provide insightinto how the future of the industry willunfold, from the perspective of privateindustry, public officials, and lawyersin both private and public practice.

We discussed the interplay betweenNorth American and European regulatory regimes, and we heardabout and debated topical issues thathave an international impact on gaming law. Slovenia showed us onceagain that compliance issues in anyone jurisdiction are of vital concern togaming industry actors in all jurisdictions.

Thanks to John Maloney, Bob Stocker,and the Program Committee for theiroutstanding efforts.

Success at CasinoFest 2Casino Enterprise Management staged itsSecond Annual CasinoFest Sept. 11-13at Barona Valley Ranch Resort andCasino in Southern California.CasinoFest puts a premium on trulyvaluable educational content, andIMGL was pleased to play a key role inCasinoFest 2’s success.

The IMGL assumed responsibility forthe Gaming Law track at the confer-ence. Fifteen IMGL members wereamong the presenters in the GamingLaw track, which offered attendees over20 hours of college-level coursework ingaming law topics such as licensing,enforcement, and compliance. Among

the attendees were lawyers, in-houseconsultants, prospective investors, anddepartment managers.

Our thanks to these IMGL members fortheir contributions: Anthony Cabot,Norm DesRosiers, Gordon Dickie, Dan Friedberg, Victor Gallo, HarlanGoodson, Jerry Levine, MichaelLipton, John Maloney, Sanford Millar,John Roberts, Heidi Staudenmaier, BobStocker, Robert Tabor, and Jane Zerbi.Members Anthony Cabot, HeidiStaudenmaier, and Bob Stocker wereresponsible for organizing the agendaand moderating the legal track.

A Dynamic Winter Conference PlannedThe IMGL Winter Conference is devel-oping into a truly remarkable event. Setfor Nov. 30-Dec. 1 at the Wyndham NewOrleans at Canal Place, roughly half ofthe sessions will be dedicated to thegaming and economic landscape alongthe Gulf Coast in a post-Katrina world.

Anyone who has ever had to respondto a major crisis, or who has the fore-sight to try to plan for such an event,will appreciate the perspective of thesemen and women who lived throughKatrina and are helping to rebuild theircommunities. Among the highlightswill be the Awards Luncheon Nov. 30honoring the co-recipients of theIMGL Gaming Executives of the Yearaward, W. Owen Nitz and Jeffrey M.Cooper, co-trustees of IP Biloxi.

I am pleased that IMGL is playing suchan active role in supporting theregion’s rebirth by offering this timelyand relevant dialogue, and by holdingour meeting in the heart of historicNew Orleans – the French Quarter.

River City GroupThose in attendance at the conferencesin Rome, Paris, and Ljubljana, willhave noted that the administrative andorganizational efforts were faithfullycarried out by the River City Group(RCG) under the strong leadership ofSue Schneider, who was ably assistedby Mariah Echele. With the sale ofRCG, it has decided to move on.


Commencing with the New Orleansconference, Melissa Lurie, our executivedirector, will spearhead the activitiesformerly carried out by RCG. IMGL verymuch appreciates the great efforts ofSue, Mariah, and the entire staff at RCG.We wish you well.

A Major Presence at Global Gaming ExpoGaming executives and vendors fromaround the world will converge at theindustry’s premier event, GlobalGaming Expo, Nov. 14-16 at the LasVegas Convention Center. This mammoth gathering features 700-plusexhibitors, more than 20,000 attendees,and a staggering 100 seminars. The con-ference’s Research, Law, and Regulationtrack features ten sessions, and IMGLwill be well-represented among thespeakers and panelists.

IMGL will have a notable presence onthe expo floor, too. Be sure to stop byour booth, no. 426, and pick up thenewest literature, reports, and marketingmaterial promoting your organization.

For many of us, the highlight of G2Ewill happen away from the bustle of theconvention center, when we gather tohonor IMGL Regulator of the Year, PeterDean. The IMGL member reception isfrom 6 p.m. to 8 p.m. Nov. 14 at theStirling Club, 2827 Paradise Road.

Dean chaired the Gaming Board forGreat Britain from July 1998 untilOctober 2005, and will serve as the firstchair of the new Gambling Commission,which was set up under the GamblingAct 2005. Join us Nov. 14 to help us paytribute to Dean, and to enjoy your gaming law colleagues away from thebustle of the convention center.

Help us plan for the event by sendingyour RSVP to Melissa Lurie,[email protected].

Casino Lawyer is GrowingOne of the most traditional forms ofcommunication and education is printmedia, and IMGL is well-served by ourquarterly news and features magazine,Casino Lawyer. Thousands of gaming

executives read our magazine, thanks toour partnership with Casino EnterpriseManagement. The IMGL membershiphas always had reason to be proud of its publication’s quality efforts in educating and stimulating membersand the the gaming industry at large.

I’m proud to report the rest of the gaming world is taking notice of ourefforts. Beginning with last month’sspecial post-Katrina edition of CasinoLawyer, and continuing with this issue, advertising revenue has grownsignificantly over previous issues.That’s no small feat at a time whenboth consumer and business-to-business magazines around the worldare struggling with revenue growth.

A Bold New Web PresenceToday, the most efficient and popularform of communication is the Internet.Our web site is our most powerful edu-cation and marketing tool. I’m pleasedto announce that we have begun amajor transformation of the web site,with a complete redesign that will utilize a simple, clean, attractive designintended to make navigation much easier, and make the site more invitingto casual observers. You can get a preview of the new site by visitingwww.gaminglawmasters.com.

When the redesign is completed, it willcontain all the valuable informationyou currently find, plus new featuresand categories currently under develop-ment. If you have suggestions for thenew web site, please contact the chair ofthe web site committee, D. MichaelMcBride III, (918) 583 3145, or e-mailhim at [email protected]. Oryou can send your suggestions to ourexecutive director, Melissa Lurie, [email protected].

Michael Lipton,

President

Our Ranks are SwellingIMGL has welcomed 19 new members since June 1, nearly half of whom are in the Regulatorclass. Please join us in welcoming:

General Members• Arthur G.B. Thomas

Thomas, John & Co., St. John’s, Antigua

• Dr. Thomas TalosBrandl & Talos, Vienna, Austria

• Miles Benham, DirectorMann Benham Limited, Douglas, Isle of Man

• Wai Ming YapStamford Law Corporation, Singapore

• Gabriel S. GalandaWilliams, Kastner & Gibbs PLLC, Seattle, WA

Affiliated – Consultants• Peter R. Maheu, Managing Partner

Global Intelligence Network, Las Vegas, NV

Affiliated – Counsel• Daniel S. Friedberg, General Counsel

Excapsa Services Inc., Toronto, Ontario

• Bengt PalmgrenAB Svenska Spel, Stockholm, Sweden

• Ian J. Imrich, CEO / PresidentLaw Offices of Ian J. Imrich, A.P.C., Los Angeles, CA

• Glenn E. WichinskyAttorney at Law, Las Vegas, NV & Boca Raton, FL

Affiliated – Regulator• Dale J. Fuga, Chief Operating Officer

Manitoba Gaming Control Commission, Winnipeg, Manitoba

• Alicia M. Gibson, AdvocateWestern Cape Gambling & Racing Board, Cape Town, South Africa

• Thiebedi Majake, Chief Executive OfficerNational Gambling Board – South Africa, Sunnyside, South Africa

• Dr. Jason Lane, Director of Regulatory ServicesThe States of Jersey, Department for Economic Development, St. Helier, Jersey, Great Britain

• Dennis K. Neilander, ChairmanNevada Gaming Control Board, Carson City, NV

• Thomas N. Auriemma, Director/AssistantAttorney General, New Jersey Division of Gaming Enforcement, Trenton, NJ

• Gary A. Ehrlich, Attorney Administrator/Assistant Attorney GeneralNew Jersey Division of Gaming Enforcement,Trenton, NJ

• Michelle Afragola, Deputy Director of Regulatory ReviewPennsylvania Gaming Control Board,Conchohocken, PA

• Hon. Mary D. Colins, CommissionerPennsylvania Gaming Control Board,Conshohocken, PA

To all our members, thank you for playing anactive role in the success of our organization, and for helping us to advance the cause of gaming law education.

Fall 2006 Casino Lawyer 5

Like most persons who pursue a profes-sion, gaming attorneys strive to meet alevel of excellence in what they do. ThisI know to be true of the members ofIMGL. When I taught gaming law toprospective lawyers, I tried to impart myobservations on what is required to bean outstanding gaming attorney.

As a reflection on what I’ve observedthrough years of study and experi-ence, the following criteria outline theten most crucial qualities of a goodgaming attorney.

KnowledgeGaming law is a discipline like anyother specialty of the law, not unlike taxor securities work.

While my fellow non-gaming attorneysoften question what I do for a living,the truth is that gaming laws and regulations are complex and oftenvoluminous. For example, in Nevada,the gaming laws and regulations number several hundred pages. Onecan add about 20 or so federal laws ongambling to this total.

The first thing a young gaming attorneyneeds to understand is the rules of his orher trade. This is time-consuming andtedious, but requires the student toread, reread, and process the gaminglaws and regulations.

If one is lucky enough to live in astate where literature has been writ-ten on gaming laws, one should readthose materials as well. Law reviews,while once devoid of materials ongaming law, are a significant source of

information. I found that writingabout a subject, as opposed to merelystudying it, gives even greater insight.Therefore, authoring a law reviewarticle is both a service to the profes-sion and a terrific way to actuallylearn the subject.

Finally, learn from the old guys in thefraternity by attending conferences, asking questions, and simply watching.

Dedication I do not know a competent gamingattorney that is not dedicated tohis craft.

Gaming attorneys often have longnights and short weekends. One comesto understand that the early morningsare time for conference calls withEurope and evenings are devoted toAsia and Australia. Moreover, thenights before major licensing hearingsare for preparation of the applicantsand the presentation and not for sleeping. One gets a good sense that anew attorney will not make a goodgaming attorney if the experiencedgaming attorney is regularly in theoffice before the new attorney arrivesand is there after he or she leaves.

This is not an ordinary job where youput in your seven hours and go home.One needs to understand the goals ofthe client and be dedicated to achievingthese goals.

Creativity Not all gaming attorneys are creative,but it sure helps.

Looking at a client’s problem and tellingthem what they cannot do is really simple. Looking at a client’s problemand letting them know how it might bedone can be a tremendous value to theclient. You need to do this, however,with the knowledge that the latter isalmost always the harder result toachieve and is the less safe route to takeas an attorney because it risks failure.

Ability to Create Order The most challenging and often themost fun aspect of gaming law is being faced with problems that have noprecedent.

This is very different from criminal orcontract law, where often hundreds of years of common law define theframework for resolution of disputes.Often, questions in gaming law have noprecedent. For example, should the sonof a person who was associated withorganized crime be denied a gaminglicense? Because this is likely to be aquestion of first impression, the challenge is to first create (and defend)the analytical framework for how thequestion should be resolved and thenapply the facts to the analytical frame-work. These challenges come up frequently in gaming law.

Respect and Honesty The best gaming attorneys respect process.

A good gaming regulatory system isdesigned to meet important stategoals like assuring the honesty andintegrity of the games and assuringthat unsuitable persons are notinvolved in gaming operations.

By Anthony Cabot, Lewis & Roca


Government employees involved in theregulatory process are, by and large,dedicated civil servants who aspire tomeeting the worthy goals and objectivesof the system.

The best gaming attorneys respect theseregulatory goals and regulators from topto bottom. The best attorneys workwithin the system to achieve the client’sgoals consistent with recognized regulatory objects.

In contrast, a gaming attorney whoinsinuates he or she can achieve betterresults – particularly for a questionableapplicant or cause – because of factorslike political connections denigratesthe system and will eventually stainthe reputation of the attorney andinjure the process.

Likewise, a good gaming attorneyrespects gaming agents and thework that they do. One does notalways have to agree with thecourse of action or position takenby agents, but one needs to berespectful in dealing with theagents and work within the systemto address disagreements.

One blatant example of what not todo is continually “going over thehead” of gaming control agents.This will garner the attorney a reputation that will make it moredifficult to traverse the regulatorylandscape in the future.

HumilityWhile I have learned quite a bit in practicing for 20 years, one thing Iknow is how much I do not know.

The gaming agents that work in thegaming laboratory know much morethan I do about technology, the auditagents know more about accounting,and the enforcement division aboutlaw enforcement.

Not surprisingly, if the agents perceive a lawyer as a person whoboth respects and works within thesystem, they are almost withoutexception willing to help you learnand work through problems.

I have heard on many occasionsfrom agents and regulators some-thing to the effect that “you maywant to consider this approach …”Moreover, on several occasions, Ihave asked gaming agents and regulators to read articles on issueslike technology, advantage play, andlicensing investigations. In everycase these suggestions not onlyhelped but provided valuableinsights that improved the article.

PreparationPrepare, prepare, prepare… for hearings,interviews, meetings.

Actually, prepare for everything.

MarketNo one will know how good you areunless they know you exist.

A new attorney needs to build a reputation. Take the small cases forsmall bar licenses, employee licenses,or the like, to obtain experience.Become involved in the gaming lawsections of the local, state, and nation-al bar associations. Go to conferencesand meet other gaming attorneys. Letthose in the fraternity know yourinterest in taking matters that areminor or where a conflict exists.Participate in law conferences, lawreviews, and other law related projects.

Most of all: be prepared to pay your dues.

Network Gaming law is quickly becoming a specialty with many specialties.

Gaming is different between countries,states, and Tribes. Some gaminglawyers better understand capital markets, others technology, and stillothers, tax law. The ability to have anetwork of gaming attorneys to call on to provide formal or informal assistance is incredibly valuable.

Be like the BobsWatch either Bob Faiss or Bob Stocker inaction. Do what they do. They are theepitome of what good gaming attorneysare all about.

The best gaming attorneys

respect process.



Antonia Cowan, formerly with theAttorney General’s office in Nevada, wasappointed vice president of regulatorycompliance for the Americas forAristocrat Technologies Inc. as of Sept.12, 2006.

Gordon Dickie joined Cadillac Jack assenior vice president of business devel-opment and government affairs. In thisrole, Dickie oversees the company’sCorporate Compliance Department. Hejoins Cadillac Jack from Shuffle Master,where he served as vice president ofcompliance and government affairssince early 2004.

Gabriel “Gabe” Galanda, a SeattleIndian gaming lawyer with Williams,Kastner & Gibbs, was recently recog-nized as one of the Best Lawyers inAmerica in the arena of Indian law. Thishonor follows Galanda’s recognition asa Rising Star by Washington Law &Politics in five of the last six years.

D. Michael McBride III, chair of theIndian Law and Gaming Practice Groupof Sneed Lang P.C. in Tulsa, Okla., spokeat the Fourth Annual JusticeSymposium at the Mississippi ChoctawIndian Reservation at the Silver StarCasino on recent developments inIndian Gaming. “Super Lawyers” namedMcBride their new compilation of peerreviewed lawyers for Oklahoma.

Sue McNabb won the NationalGovernment award from the NationalAssociation on Problem Gambling forthe Gambling Treatment ReferralProgram that she created while she waswith the Attorney General’s office inLouisiana. The program is designed toplace non-violent first and secondoffenders into treatment rather thanincarceration. McNabb also developed aprobation and parole component to theprogram. McNabb now assists otherjurisdictions with implementing thisprogram.

Sanford I. Millar joined the UltimateBlackjack Tour, LLC in April 2006 aschief operating officer, secretary, andgeneral counsel. The Ultimate BlackjackTour is a media and entertainment company with its corporate offices inLos Angeles. The company developed anew and unique, patent pending, form

of tournament blackjack, which isknown as Elimination Blackjack™. Thecompany developed a land based tourdivision, a media/television division,and a licensing division.

Martin Sychold has been appointedto the post of head of the legal divisionof the Swiss Institute of ComparativeLaw, for an interim period of 18 monthsas of June 1, 2006. Sychold neverthelesscontinues to be personally in charge ofwork on the Study of Gambling Servicesin the Internal Market, which the SwissInstitute is preparing for the EuropeanCommission.

Alan Silver, academic director of thecasino resort studies program in theSchool of Continuing Studies at TulaneUniversity, was appointed a judge bythe American Gaming Association forthe sixth annual Gaming Voice Awards,recognizing excellence in financial andcorporate gaming communications.

Heidi McNeil Staudenmaier hasbeen selected to the 2007 edition of TheBest Lawyers in America for bothGaming Law and Native American Law.Staudenmaier is a senior partner withthe law firm of Snell & Wilmer,Phoenix, Ariz., where she heads thefirm’s Indian Law Practice Group.

Thibault Verbiest’s firm, ULYs, hasbeen awarded “Best Technology, Media& Telecom Law Firm” in Belgium. Seewww.ulys.net/publications/winners%202006.pdf.

Lawrence Walters(www.GameAttorney.com) was quotedon several occasions on the recentarrests of David Carruthers and PeterDicks, including: “Arrest of SecondMajor Online Gambling Figure Is a Firstfor State Officials,” New York Times(Sept. 8, 2006) and “U.S. CrackingDown on Offshore Betting Industry,”USA Today (July 19, 2006).

Arnie Wexler spoke at the YouthGambling Prevention Summit lunch-eon, Oct. 3. The event was hosted by theNova Scotia Gaming Corporation(NSGC) held at the World Trade &Convention Centre in Halifax, NovaScotia, Canada.

Dale Fuga, chief operating officer of the Manitoba Gaming ControlCommission, was elected president ofthe North American Gaming RegulatorsAssociation (NAGRA) at the organiza-tion’s recent annual conference inScottsdale, Ariz. He began his term onJuly 1, 2006.

Glenn E. Wichinsky, completed histenure as general counsel and compli-ance officer for Quest Entertainment inHouston, Tex. Wichinsky opened a private legal practice focusing primarilyon Gaming Law, Gaming IndustryConsulting, Regulatory Compliance,and Government Relations in Las Vegas,Nev. and Boca Raton, Fla.

Jerome L. Levin of Holland & Knightin Los Angeles has been named to the following lists: Best Lawyers of America,2007 edition, Chambers USA –America’s Leading Lawyers for Business,2006 edition; the Los Angeles Area’sBest Lawyers; and Lawdragon’s 500Leading Lawyers and 2006 guide toleading lawyers in America.

Michael Atkins

Phillip M. Becker

Samuel L. Begley

Leonard A.Blackwell II

Charles Blau

Anthony N. Cabot

Nicholas Casiello, Jr.

Frank Catania, Jr.

James B. Deutsch

Robert A. Dill

J. Kelly Duncan

Peter H. Ellsworth

Robert D. Faiss

Michael A. Ficaro

Thomas L. Flynn

Tom Foley

Gabriel S. Galanda

Harlan W. Goodson

Ben J. Hayes

Jerome L. Levine

John K. Maloney

Frank Miller

Britt Singletary

Daniel Schiffman

Heidi McNeilStaudenmaier

Robert W. Stocker II

Robert S. Tabor

Robert D. Tobin

Michael E. Zatezalo

CONGRATULATIONSto these IMGL Members

for being named the Best Lawyers in America,

2007 edition


The difference between the regulation of gambling in theUK and in the United States continues to attract significant attention.

Although gambling is a highly regulated activity in the UK, itis permitted commercially and (with the exception of theUK’s National Lottery itself and of pari-mutuel betting on UKhorse racing) is not subject to any kind of state monopoly. Inthis regard, regulation in the UK differs from that in a number of other European countries.

Certainly there is no pan-European regulation of gamblingany more than there is any pan-U.S. regulation.

The UK authorities take the attitude that, so long as the gambling is properly conducted in accordance with the relevant laws and rules (including those protecting children andthe vulnerable), and so long as all taxes are duly paid, the commercial exploitation of gambling is permitted. In this regardthe UK adopts an attitude which seems to be similar to that ina number of states in the U.S. but, obviously, not all of them.

The UK also takes the view that Internet gambling should bepermitted so long as it is properly regulated. Thus, with thepassage of the Gambling Act 2005, the UK Parliament has setin place a structure which is intended to achieve this.Currently the new Gambling Commission is working throughthe details of the new regulatory regime, which will cover notonly terrestrial but also all types of online gambling.

It is here that the UK approach is so different from that in theUnited States. Indeed it appears from the UK that the UnitedStates’ authorities have turned their backs on the regulationof online gambling.

How, then, is a reputable and properly regulated businessoperating lawfully in the UK, and paying taxes here, to assessthe position in the U.S.? Clearly it needs the very best adviceand must structure its business so as to operate in accordancewith that advice. These days it is trite to suggest that merelybecause a business is physically located in one jurisdiction itdoes not need to assess the impact of regulations in othercountries, especially where business is conducted online.

One issue which has recently attracted attention is the relationship between the UK and the U.S. in terms of extradition. If, despite operating in accordance with the bestadvice, it is suggested that a UK business has potentially fallen foul of U.S. law, it is necessary to look at the possibilityof extradition from the UK to the U.S. under the ExtraditionAct 2003. This can commence either by the UK HomeSecretary issuing a certificate, if he receives a valid requestfrom the U.S., or by the issue of a Provisional Warrant.

The request has to contain a statement that the person isaccused of an offence in the U.S.. This is followed by the arrestof the individual and his appearance within two monthsbefore a UK Court. Apart from ensuring that the person is

By Tony Coles and Mark Spragg


correctly identified, the UK Court must decide whether theoffence specified in the request is an extradition offence andwhether the extradition will be compatible with the individual’s rights under the UK’s Human Rights Act.

Having gone through these hurdles, the UK Court then sendsthe case to the Home Secretary for his direction that theindividual should be extradited. Apart from death penaltyconsiderations, the Home Secretary, who has no discretion inthe matter, has merely to ensure that there are specialtyarrangements in place, which means that the person extradited can only be charged in the US with the offence forwhich he is to be extradited.

There is a statutory appeal to the UK High Court and then,provided a question of general public importance is involved,to the House of Lords as the UK’s Supreme Court.

Even under the relatively relaxed regime in the 2003 Act, thealleged conduct has to be punishable by 12 months or moreimprisonment in both the requesting and the requestedcountry before extradition applies.

Herein lies an issue: it is unlikely that any alleged gamingoffence will be so punishable in the UK. But it is not uncommon in the US to take one set of circumstances andcreate different labels for the same alleged criminal action inorder to enhance the penalties.

In the US, composite crimes and continuing criminal activitycan be alleged in one single count, whereas under UK law,only individual acts or omissions will generally appear ineach count. There are therefore difficulties in translating a UScharge of, say, racketeering, wire fraud, or mail fraud.

But it is not necessary under the 2003 Act for the crime tobe described in the same way in the UK, or that the scopeof liability is the same in each country. It is generallyenough that the particular activity for which extradition issought is extraditable in both countries. The US Indictmentwill often allege tax evasion or money laundering to getover any such problems.

Under the 2003 Act, the US is a designated territory (as areAustralia, Canada, New Zealand, most of Europe, most ofSouth America, and some other countries) and thus does notneed to show a prima facie case.

This means that, in practice, evidence of the alleged wrong-doing is collected and assessed in the US and when the case isbefore the UK Court there is no opportunity to challenge theevidence, cross-examine witnesses, or bring defence witnessesin order to prove that no offence has been committed.

Thus, in the gaming industry the issue is likely to be whetheror not the alleged offence in the US can be translated into aUK offence which is punishable by 12 months or moreimprisonment. This will be tested on the individual facts ofeach case but it would seem to be necessary for the alleged

wrongdoing to go beyond the mere commission of a gambling offence.

This is, however, an area of law yet to be fully tested in theCourts in a gaming situation. It was heavily argued in the UKin the case of the “NatWest three” (in which one of theauthors was involved) but the facts in that case were not comparable with those which might apply to mere gambling.

In the US an Indictment can be under seal or not, publiclyavailable or not. This means that by going public the USauthorities can affect a business many thousands of milesaway without any real effort or right of reply.

What is clear is that the different approaches in the two countries will continue to present commercial problems inthe industry and will require the most special attention toensure that businesses are lawfully conducted and that companies and their officers are not at risk of breaking thelaw or being in a position where allegations can be made.


Based on the Jack Abramoff lobbying scandal and heightenedpublic concern over the proliferation of tribal gaming, manyfolks would have bet good money that 2006 would be theyear for rewriting the Indian Gaming Regulatory Act (IGRA).

Since the passage of IGRA in 1988, tribal gaming has exploded into a $23 billion industry. In these waning days ofthe Congressional session, however, IGRA amendments nolonger appear to be a safe bet, at least for 2006.

The legislation aimed to stop “reservation shopping” was halted on Sept. 13 when it failed to muster the necessary votesin the House of Representatives for expedited passage.

Representative Richard Pombo (R.-Cali.) had been working on HR 4893 for two years. The bill, titled “RestrictingIndian Gaming to Homelands of Tribes Act of 2006,” or“RIGHT,” was brought up for a vote under a suspension of theHouse rules, which requires a two-thirds vote. GOP leaderswere taken aback at the results, believing that the bill had sufficient support. The Pombo bill had been overwhelminglyapproved by the Resources Committee over the summer andalso appeared to have sufficient support from the Democrats.

The September setback may not be the end of the story for thePombo bill. There is some chance that the bill will be revivedthrough the regular rules process before the Congressionalsession ends. Nevertheless, the closer it gets to the fall elections, and distractions abound for both parties, the less ofa chance there is for passage of the legislation.

Proposed IGRA amendments in the Senate similarly havebeen stalled since the summer. Senator John McCain (R.-Ariz.) was a lead author on the original legislation creatingthe IGRA in 1988. He has been promoting sweeping changesto Indian gaming since last year. McCain introduced SB 2078in November of 2005, claiming that the tribal gaming indus-try has changed significantly in the nearly 20 years sinceIGRA was first passed. McCain charged that the IGRA neededa facelift in order to protect the “integrity of Indian gaming.”Notwithstanding the seemingly political momentum for theIGRA revisions, numerous tribes launched aggressive campaigns in opposition and the usual election-year politicsalso crept into the mix. As a result, a cluster of holds havebeen placed on the McCain bill. Any senator can place a hold

anonymously on any bill, so the precise number of holds isuncertain. However, it has been reliably reported that at leasta half dozen lawmakers of both parties have put their holdson the proposed legislation for varying reasons.

With time running out for the 109th Congress, it will take asmall miracle for any significant amendments to go throughthis year. And, McCain will step down as chair of the SenateIndian Affairs Committee at the end of 2006, so it remains tobe seen whether a new champion will take the baton and con-tinue the IGRA rewrite in 2007.

Most people agree that the IGRA is far from perfect, but is the product of considerable compromise among tribes, the states,and the federal government. Both supporters and detractorsof tribal gaming can find numerous flaws in the IGRA.Nevertheless, the IGRA has weathered countless attempts to“fix” and revise the law. Most tribes oppose any amendmentson the basis that it threatens their sovereignty. States contendthat the tribes are becoming too powerful, and the tribal gaming industry is exploding out of control. The federal government claims it needs greater authority and enforcement powers in light of the burgeoning industry.

To better illustrate the growth of the tribal gaming industry,the following National Indian Gaming Commission (NIGC)statistics are telling: In 2005, tribal gaming revenues garnered approximately $22.6 billion for 409 casinos. In2004, the revenues were $19.5 billion for 375 casinos; in2002, $14.7 billion for 349 casinos; and in 2000, $11 billionfor 311 casinos. As such, the tribal gaming industry saw anincrease of 14 percent between 2004 and 2005, and since2000, revenues have doubled.

It was against this backdrop that McCain and Pombo believedthe time was ripe for overhauling the IGRA. The McCainamendments are wide-ranging, targeting not only “reserva-tion shopping” but also addressing expansion of the NIGCauthority and jurisdiction over gaming contract approval,Class III gaming, suitability determinations of gaming-relatedcontractors, and enforcement actions for IGRA violations.

“Reservation shopping” is the catch phrase used in instanceswhere tribes are seeking to have land taken into trust so thelands will then qualify as “Indian Lands” under the IGRA and,

By Heidi McNeil StaudenmaierPartner, Snell & Wilmer

as a result, permit the conduct of a tribal gaming operation.The IGRA prohibits tribal gaming on any lands taken intotrust after 1988 unless such lands fall within certain exceptions. These exceptions include land claim settlements,initial reservations designated to newly federally-recognizedtribes, and “restored” lands to “landless” tribes.

This issue has been predominant in California. There, numerous “landless” tribes are attempting to have land“restored” to them or initial reservations designated.Senator McCain has criticized many of these tribes as looking for the “best place to place a casino” as opposed toa “location that meets the cultural and social needs” of thetribe’s members. McCain voiced his concern during hearingsearlier this year that the “proliferation of proposals by tribeswith existing reservations, and their developer backers tosite casinos off-reservation on lands on which the tribesoften bear no historic relationship is fostering opposition toall Indian gaming.”

The McCain bill would eliminate the existing two-part determination permitting post-IGRA land acquisitions. Thetwo-part determination allows tribes to acquire off reservation lands for gaming if: (1) the secretary determinesthe acquisition is in the tribe’s best interest; and (2) the governor of the state where the land is located concurs. TheMcCain Amendments are intended to further limit the exceptions already set forth in the IGRA, and require that thetribes prove a “temporal, cultural, geographic nexus” to theland sought to be acquired. Under this scenario, before a tribecould take land into trust next to Disneyland, the tribe wouldhave to prove its historical connection to such lands.

The Pombo bill concentrates solely on off-reservation gaming. Like McCain’s bill, this legislation also aims to curbproposed land acquisitions having no significant relationshipto the tribe’s historical and traditional lands. The Pombo billwould prohibit any land acquisitions for any newly-recog-nized, restored or landless tribes unless certain criteria aremet. Specifically: (1) the secretary must determine that suchlands are within the “primary geographic, social, historicaland temporal nexus” of the tribe; (2) the secretary concludesthat the proposed gaming would not be detrimental to thesurrounding community and nearby tribes; (3) the governorof the state concurs; and (4) the tribe complies with certainmitigation requirements. The bill also would generally prohibit a tribe from conducting gaming outside its state ofprimary residence.

There are certain “grandfather” exceptions in the Pombo billpermitting the consideration of any fee-to-trust applicationspending as of March 7, 2006 (so long as certain conditionsare met), as well as any tribal lands deemed eligible for gaming as determined by the NIGC, secretary of the interior, or a federal court.

The Pombo bill also would permit Indian tribes with land eligible for IGRA gaming to host one or more other Indiantribes to participate in or benefit from gaming conducted onthe host Indian tribe’s land. The proposed vehicle for conducting this “cluster” gaming would be a lease subject toreview and approval by the secretary of the interior.

When the Pombo bill failed to receive the requisite supporton the House suspension calendar in the September vote, theNational Indian Gaming Association (NIGA) — a non-profit

trade association comprised of over 180 tribes — issued astatement promoting the bill’s failure. NIGA espoused threereasons why the bill should not pass: (1) It is unnecessarybecause the secretary of the Interior is working on regulationsto better define the current land-into-trust process; (2) itwrongly subordinates tribes to local governments concerningthe use of tribal lands; and (3) it “threatens existing Indianland and property rights.”

Due to the uncertainties and vagaries of politics, it is certainly possible that the ill winds of fate will change for thepositive for both the McCain and Pombo IGRA rewrites. But,let’s just say that, as of Sept. 15th (when this article was submitted for publication), if Las Vegas were posting odds onthe likelihood of the IGRA amendments in 2006, the oddswould be slim to none in favor of a rewrite. It will be interesting to see how the gamble turns out.

Heidi McNeil Staudenmaier is partner coordinator of the Snell &Wilmer Indian and Gaming Law Practice Group, where she islocated in the firm’s Phoenix, Arizona office. She is past presidentof the International Masters of Gaming Law and a founding member. She also serves as associate editor of “Gaming Law Review.” She can be contacted at (602) 382-6366 or [email protected].


[email protected]


Organizations are fictitious legal entities that can only speakand act through authorized agents, shareholders, officers,directors, or other employees.

In representing organizations, lawyers must necessarily interact with people acting on behalf of the organizations.However, lawyers must be mindful that these individualsmerely serve as proxies or representatives of the organization.Invariably, the lawyer’s frequent interaction with the organizations’ representatives often results in mistakenassumptions by the representatives that they are the clientrather than the organization itself.

It is this faulty assumption that leads to frequent controversies regarding the identity of the actual client.

Obviously, in cases when the interests of the organization andthe organization’s representative are compatible, there is noproblem. However, all too often the interests of the organiza-tion and the organization’s representative are conflicting. Tomake matters worse, the conflicts are frequently not readilydiscernable at the outset of the representation. As a result, bythe time the friction is realized, the lawyer is deeply

entrenched in the representation. The emerging conflicts giverise to a disconcerting dilemma for the lawyer. That is, whodoes the lawyer represent — the organization or the individual(s) acting on behalf of the organization [hereinafter“individual constituent”].

Whose interests should the lawyer advocate? How should thelawyer resolve this predicament? It is longstanding law that the organization’s lawyer indeed represents the organization, notthe organization’s individual constituent. 2 The organization’s lawyer is obligated to advocate in the best interest of the organization. In this regard, the lawyer owes the organizationthe duty of confidentiality, diligence, and loyalty — even tothe detriment of the organization’s individual constituents.

The lawyer’s special duties in representing organizations areplainly enumerated in ABA Model Rule of ProfessionalConduct 1.13.3 Organizations include, but are not limited to,profit and non-profit corporations, limited liability compa-nies, labor unions, trade associations, unincorporated associ-ations, general and limited partnerships, “joint venture[s],trust[s], estate[s], or similar entit[ies] with a recognizableform, internal organization, and relative permanence.” 4

By Martha D. Moore1


Notwithstanding the plain language of Model Rule 1.13defining the lawyer’s role, there are frequent challenges in thepractical application of this rule. It is not unusual for a lawyer,in the routine course of dealing with an individual constituent on behalf of an organization, to learn or uncovernegative information about the individual constituent. Theindividual constituent may have unwittingly supplied thisinformation to the lawyer under the mistaken belief that theinformation would be protected from disclosure to the organization by virtue of the ethical duty of confidentiality.

Thus, in representing organizations, lawyers must be ever vig-ilant of adverse consequences to the lawyer if the lawyer failsto clarify the lawyer’s role at the outset of the representation.

A constituent may mistakenly assume that the lawyer will actto further the personal interests of the constituent, perhapseven against the interest of the organization. Such a mistakeon the part of the constituent can occur after an extendedperiod working with the lawyer on matters of common interest to the organization and the constituent, particularlyif the lawyer has formerly provided personal counsel to theconstituent, and may be more likely to occur with inside legalcounsel due to greater personal acquaintanceship.

Such an assumption, although erroneous, may be harmless solong as the interests of the constituent and the organizationdo not materially conflict. However, when those interests domaterially conflict, the lawyer’s failure to warn the constituent of the nature of the lawyer’s role could prejudicially mislead the constituent, impair the interests ofthe organization, or both.

An adequate clarification may, in some instances, be requiredto protect the interest of the organization client in unencumbered representation. Failing to clarify the lawyer’srole and the client’s interests may redound to the disadvantageof the organization if the lawyer, even if unwittingly, therebyundertakes concurrent representation of both the organizationand the constituent.5

If a conflict develops between an organization and the individual constituent, and the lawyer failed to clarify thelawyer’s role at the outset of the representation, causing theindividual to reveal what the individual believed was confidential information to the lawyer, the lawyer may berequired to withdraw from the representation of the organization and the individual.

For this reason, it is prudent for lawyers to inform the organization’s agents, officers, directors, shareholders, oremployees to retain independent counsel at the beginning ofthe representation. This early disclosure serves to dodge anyconflict that may subsequently develop.

Lawyers should also identify and clarify the lawyer’s role,emphasizing to the organization’s agents, officers, directors, or employees that the lawyer represents theorganization rather than the individual. This initial earlyclarification of the lawyer’s role, along with advice that theindividual constituent secure separate counsel, obviatesthe need for the lawyer to forfeit both clients should a conflict later materialize.

In situations where the lawyer fully clarified his role at thecommencement of the representation and subsequently

learns of adverse information about an individual constituentthat may cause substantial harm to the organization, thelawyer is absolutely obligated to act in the best interests of theorganization, which may require disclosure of the informa-tion albeit to the detriment of the individual constituent.

Not only does the organization’s lawyer have a duty to actin the best interests of the organization, but the lawyer alsohas an affirmative duty to report wrongdoing by individualconstituents. Breaches of fiduciary duty or illegal activitylikely to result in substantial injury to the organization mustbe reported up the organizational ladder, beginning withthe chief legal officer, the chief executive officer, or theequivalent thereof.

In fact, the lawyer is obligated to report the wrongdoing tothe highest authority in the organization if necessary. If anyrung of the organizational ladder refuses or fails to take appropriate action after being advised of the transgression,the lawyer is required, to put it bluntly, to “squeal” up theorganizational ladder. However, the lawyer need only discloseinformation to the extent that the lawyer reasonably believesnecessary to prevent substantial injury to the organization.

Indubitably, lawyers find reporting individual constituentsto the organization distasteful and burdensome. In all likelihood the lawyer has enjoyed frequent and often friendly contact with the individual in question. It is no easyfeat to expose one with whom one has developed an amiableand cooperative relationship. In fact, often these are the very


1 Martha D. Moore is a Thomas M. Cooley Law School Associate Professor. She is a 1983 graduate of the University of North Carolina School of Law-Chapel Hill and practiced law forover 20 years before joining the faculty at Thomas M. Cooley Law School. Professor Mooreteaches Civil Procedure and Professional Responsibility. Moore concentrated her practice in the area of professional ethics and responsibility, having served as a prosecutor for the Michigan Attorney Grievance Commission and thereafter formed a firm, which defended lawyers in attorney disciplinary proceedings. The author received her M.P.A. and B.A. from North Carolina State University.

2 See Upjohn Co. v. United States, 449 U.S. 383 (1981).

3 Model Rules of Prof’l Conduct R. 1.13 (2005). Organization as Client. (a) A lawyer employed or retained by an

organization represents the organization acting through its duly authorized constituents.

(b) If a lawyer for an organization knows that an officer, employee, or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher

authority in the organization, including, if warranted by the circumstances, to the highest authority that can act on behalf of the organization as determined by applicable law.

(c) Except as provided in paragraph (d), if,(1) despite the lawyer’s efforts in

accordance with paragraph (b), the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and the lawyer reasonably believes that the violation is reasonably certain to result insubstantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

(d) Paragraph (c) shall not apply with respect to information relating to a lawyer’s representation of an organization to investigate an alleged violation of law, or todefend the organization or an officer, employee, or other constituent associated with the organization against a claim arising out of an alleged violation of law.

(e) A lawyer who reasonably believes that he orshe has been discharged because of the lawyer’s actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes necessary to assure that the organization’s highest authority is informed of the lawyer’s discharge or withdrawal.

(f) In dealing with an organization’s directors, officers, employees, members, shareholders,or other constituents, a lawyer shall explainthe identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.

(g) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization’s consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.

4 Restatement (Third) of the Law Governing Lawyers § 131 cmt. a (2000).

5 Restatement (Third) of the Law Governing Lawyers § 103 cmt. e (2000).

6 See generally William O. Douglas, The Court Years 1939-1975: The Autobiography of William O. Douglas 187-88 (Random House 1980).

7 Model Rules of Prof’l Conduct R. 1.7(2005); Restatement (Third) of the Law Governing Lawyers § 131 cmt. e (2000).

8 Restatement (Third) of the Law Governing Lawyers § 131 (2000).

individuals who serve as the lawyer’s supervisors within theorganization.6

Thus, lawyers may fear that disclosure of the transgressionmay result in termination of the representation. In any event,lawyers must not disregard wrongdoing to protect jobs or toassuage lucrative clients.

Notwithstanding the above, under limited circumstances, alawyer may indeed represent the organization and its employees, officers, directors, or shareholders. However, thisdual/multiple representation is a potential minefield. In carrying out the dual/multiple representation, the lawyermust be cognizant of and comport with the constraints of theapplicable conflict rules.7

In addition, the lawyer must obtain the written, informedconsent of all clients to the representation. The lawyer mustalso advise each client that any information received in thecourse of the dual/multiple representation will be sharedwith the other client(s) and that such information is not protected by the ethical duty of confidentiality betweenthem. Further, the lawyer must keep each client adequatelyinformed, enabling each client to make informed decisionsabout the representation.

“Unless all affected clients consent to the representationunder the limitations and conditions provided..., a lawyermay not represent both an organization and a director, officer, employee, shareholder, owner, partner, member, orother individual or organization associated with the organization if there is a substantial risk that the lawyer’s representation of either would be materially [limited] andadversely affected by the lawyer’s duties to the other.”8

Obviously, representing an organization and its individualconstituent(s) is a minefield riddled with potential boobytraps. As with any minefield, such dual/multiple representa-tion is a treacherous venture, which must be maneuveredwith rigorous scrutiny and vigilance. Indeed, the prudentcourse of action would be to avoid the minefield altogether.Therefore, lawyers must be painstakingly cognizant of theidentity of the actual client and attendant obligations.

In conclusion, the lawyer represents the organization, notthe organization’s representative or individual constituent.Accordingly, the lawyer is obligated to advocate zealouslyand loyally on behalf of the organization, notwithstandingany ensuing detriment to individual constituents of theorganization.


By Robert W. Stocker II and Peter J. Kulick1

EXCLUDING PROBLEM GAMBLERS FROM COMMERCIAL CASINOS

In its June 18, 1999 report, the National Gambling Impact StudyCommission (NGISC) reached a number of conclusions andmade numerous recommendations, including: (1) states are bestequipped to regulate gambling within their borders except fortribal gaming and Internet gaming; (2) legal gambling should berestricted to persons who are at least 21 years of age.

Moreover, the National Gambling Impact Study Commissionalso asserted the following: (3) warnings about the dangers andrisks of gambling and information on how help can be obtainedfor a gambling problem should be posted in prominent locations in all casinos; (4) state gambling regulatory agenciesshould require licensed commercial casinos to adopt a clear mission statement regarding the establishment’s policy on problem and pathological gambling and train management andstaff to recognize and address compulsive gambling behavior.

Finally, the NGISC also concluded that: (5) states shouldenact “hold harmless” statutes permitting licensed commer-cial casinos to refuse service to any customer whose gamblingbehavior “convincingly exhibits indications of a gamblingdisorder” without fear of litigation by the customer; and (6) gambling facilities should implement procedures for self-exclusion that enable gamblers to ban themselves fromthe gambling facility.

Exclusion from commercial casinos has, in turn, evolved intotwo fundamentally different forms of exclusion: state man-dated exclusion and self-exclusion.

As noted by the chart set forth below, all 12 states that havelegalized commercial casino style gambling have adoptedstate mandated exclusion procedures, and nine out of the 12jurisdictions have adopted state regulatory procedures forself-exclusion by problem gamblers.2 The remaining threejurisdictions, Nevada, Colorado, and South Dakota, permitthe individual commercial casino to adopt and implementself-exclusion procedures.

Jurisdictions with State Mandated Exclusion ProgramsJurisdiction: Excluded Persons: Self-Exclusion:Colorado XIllinois X XIndiana X XIowa X XLouisiana X XMichigan X XMississippi X XMissouri X X

Jurisdiction: Excluded Persons: Self-Exclusion:Nevada XNew Jersey X XPennsylvania X XSouth Dakota X

State Mandated ExclusionAll 12 commercial casino jurisdictions grant the state regulatory agency the power to exclude (i.e. ban) individualsfrom the state’s commercial casinos. While the regulatoryframework of each jurisdiction varies to a limited degree,there are common elements in the exclusion regulatoryframework in all the jurisdictions. They each establish criteriawhich uniformly include the power to exclude a person if theperson’s presence in the commercial casinos would adverselyaffect public confidence and trust that the gambling industryis free of criminal and corruptive influences.

In addition, persons convicted of various crimes, persons whohave been excluded from other gambling jurisdictions, andpersons who violate the statutory and regulatory rules of thegambling jurisdiction are also typically subject to exclusion.

Under all the statutory and regulatory schemes, the gamblingregulatory authority of the jurisdiction must take affirmativeaction to exclude an individual. In deference to fundamentaldue process rights, a person who is the subject of an exclusionaction is required to receive notice of the proposed exclusion.The person then has the right to contest his or her proposedexclusion, usually via an administrative hearing process. Theburden of proof that the person is indeed an appropriate person for state mandated exclusion rests with the gamblingregulatory agency. The final decision of the gambling regulatory authority is subject to appeal in the state courts.Typically the appeal is on the administrative record before theregulatory agency and not a de novo trial in the court system.

The burden placed upon the appellant is significant. In mostcases, an exclusion order will be reversed only if: (1) there hasbeen a violation of the constitution or a statute; (2) the exclusion order is in excess of the statutory authority of theagency; (3) the exclusion order was made upon unlawful procedure resulting in material prejudice to the appellant; (4) the exclusion order is not supported by competent, material, and substantial evidence in the administrativerecord; or (5) the exclusion order is arbitrary, capricious, orclearly an abuse or unwarranted exercise of discretion or isaffected by other substantial and material error of law.

Once an exclusion order entered against a person becomesfinal, it remains in effect until it is affirmatively revoked,rescinded, or otherwise terminated. Thereafter, if an excludedperson enters a commercial casino in the state, the person issubject to immediate eviction from the premises. In severalstates, the person’s entry into the commercial casino constitutes either a misdemeanor or a felony. In addition, thecommercial casino is subject to sanctions and penalties in theevent that it permits an excluded person to enter the premises.

Self-ExclusionNine of the 12 states that permit commercial casinos withintheir borders have express statutory or regulatory proceduresestablishing the process by which a person can seek self-exclusion from commercial casinos within the state.3 Thisis a self-driven process.

In 1996, Missouri became the first state to adopt specific self-exclusion procedures. The one common denominatorthat exists with all of the self-exclusion statutes and regula-tions is that the individual who seeks to be self-excluded mustbe the person seeking and obtaining the self-exclusion.Spouses, parents, brothers, sisters, and other family members,family friends, and business associates do not have the poweror authority to initiate or impose self-exclusion on an individual. This is consistent with case law that has declaredthat commercial casinos can not be required to ban a personfrom the casino at the request of a family member.4

Most of the states that have adopted and implemented self-exclusion procedures have followed the National GamblingImpact Study Commission’s recommendation and adoptedprocesses that release the commercial casino from any liability associated with the enforcement of a self-exclusionorder, including protection from liability in the event a self-excluded person nonetheless enters a casino and gambles.The length of the self-exclusion varies from state to state andranges from one year to a lifetime exclusion. Some states permit subsequent removal from a self-exclusion list, whileothers do not permit removal from the list even where theself-exclusion is a lifetime exclusion. Inherent in the self-exclusion process is the recognition that a person who has a

gambling problem must recognize that the problem existsand must have internal motivation to address the problem.

Violation of the self-exclusion order by the self-excluded person exposes the individual to a variety of penalties ranging placement on the state’s Excluded Person List (theinvoluntary list initiated by state action), forfeiture of winnings, and being charged with criminal trespass. In addition, the commercial casino is exposed to state gamblingagency sanctions.

Exclusion and the Plaintiff’s BarWe live in an era where it is common for a person to place theblame for financial losses on a third party, which in theinstant context is the commercial casino. Hence, a personwho initiates self-exclusion from commercial casinos andthen violates the self-exclusion by entering a commercial casino and gambling and losing again is quick to point thefinger of blame at the casino.

The plaintiff’s bar is, in turn, eager to pick up the cause of theproblem gambler in the hope of achieving a rich judgmentagainst the commercial casino. Nevermind that the totalnumber of self-excluded persons in a given state may be manythousands of individuals. Nevermind that the self-excludedindividual has voluntarily committed to the state gamblingregulatory agency that he/she wants to be self-excluded fromthe commercial casinos.

Recognizing the certainty of the blame game, the NationalGambling Impact Study Commission specifically recommended that states adopt “hold harmless” release


Self-Exclusion Process and Procedures by StateIL IN IA LA MI MS MO NJ PA

Procedures to Self-Exclude:Appear in Person X X X X X X XFile Application X X X X X X X X

IL IN IA LA MI MS MO NJ PARegulatory Authority Verification of Application X X

Written Acknowledgment, X X X X XAffirmation, or Affidavit

Waiver and Release X X X X X X X X

Surrender Player Club Cards X

Length of Self-Exclusion 5 yr. 1 yr. 5 yr. life 5 yr. life 1 yr. 1 yr.min. 5 yr. min. min. 5 yr. 5 yr.

or life up to or life or lifelife

Removal from X X X XSelf-Exclusion List

Sanctions Against Self-Excluded Person:Criminal Trespass X X X X X

Forfeiture of Winnings X> or =$1,200

Forfeiture of Chips and Credits X X X X X

Placement on Involuntary XExcluded Persons List


procedures that hold both the state and the commercial casino harmless from the self-excluded person’s violation ofthe self-exclusion order. The self-exclusion states have, inturn, incorporated waivers of any duty on the part of thestate, the gambling agency, and the commercial casinos to theself-excluded person, thereby providing substantive insulation from liability to the self-excluded person forbreaches of the self-exclusion.

The implementation of such a waiver process is consistentwith the results of recent litigation in which gamblerswho have lost money have sought redress by assertingthat the casino should have barred them from the casino,cut off their credit, or otherwise stopped their gamblingbecause they were problem gamblers, drinking, and/orgambling excessively. Notwithstanding a litany of factualassertions designed to invoke the sympathy of the courtsagainst the commercial casino, these claims have typically been rejected by the courts.5

Compulsive Gambling PreventionThe commercial casino industry and its national association, the American Gaming Association, are activefunders and supporters of studies of problem gambling andthe educational and self-help programs designed to identifyand provide access to treatment for the problem gambler. Inaddition, the emerging commercial casino jurisdictions, following the recommendations made by the NationalGambling Impact Study Commission in its 1999 report, areestablishing funding mechanisms for the identification andtreatment of problem gamblers.

The establishment of problem gambler hotlines and aggressive advertising of the hotline’s existence is the typicalfirst step in assisting problem gamblers and their families. Thehotline directs the problem gambler and concerned familymembers to both state and private treatment resources.

Emerging commercial casino jurisdictions are going a stepfurther and becoming actively involved in the establishmentand funding of treatment programs. By way of example, theMichigan Gaming Control and Revenue Act6 and Michigan’srelated Compulsive Gaming Prevention Act7 establish statecompulsive gambling programs overseen by the director ofthe Michigan Department of Community Health that arefunded by Detroit’s three commercial casinos, the MichiganBureau of Lottery, and Michigan’s pari-mutuel horse racingindustry. This funding process is an implicit recognition ofthe fact that gambling addiction is not endemic solely to thecommercial casino industry. It cuts across all forms of gambling, including the legal numbers games aggressivelymarketed by today’s state lotteries.8

State sponsored compulsive gambling programs, state mandated exclusion programs, state and casino sponsoredself-exclusion programs, and the publicly and privately funded studies of the identification and treatment of compulsive gambling behavior, taken in their totality, represent a formidable public and private effort to identifypersons suffering from compulsive gambling addiction, provide access to treatment, and, in addition, provide mechanisms to minimize access to commercial gambling venues.

1. Robert W. Stocker II is a Founding Member and Vice President of the International Masters of Gaming Law and a Member of Dickinson Wright PLLC, which has offices throughout Michigan and in Washington, D.C. Peter J. Kulick is an Associate with Dickinson Wright PLLC. They may be contacted at [email protected] and [email protected], respectively.

2. This article focuses on traditional commercial casino operations. It is not intended to anddoes not address pari-mutuel operations, racinos, card rooms, or tribal gaming facilities.

3. Nevada, Colorado, and South Dakota do not have state sponsored self-exclusion programs. However, the commercial casinos in each of these states have the right to implement and enforce a casino specific self-exclusion program.

4. See Brown v. Argosy, 2003 WL 133266 (2003) and Merrill v. Trump Indiana, Inc., 2002 WL 1307304 (N.D. Ind. 2002), affirmed at 320 F.3d 729 (7th Cir. 2003).

5. Logan v. Ameristar Casino Council Bluffs, Inc., 185 F. Supp. 2d 1021 (S.D. Iowa 2002).

6. MCL 432.201 et seq.

7. MCL 432.251 et seq.

8. The National Gambling Impact Study Commission report is critical of state lotteries being heavily marketed in low-income neighborhoods which historically have been thetraditional location for illegal numbers games, noting that states with lotteries should “reduce their sales dependence on low-income neighborhoods and heavy players in a variety of ways, including limiting advertising and number of sales in low-income areas.” NGISC Report Recommendations, Chapter 3, Recommendation 3-19.


When it comes to the gaming industry inAtlantic City, Thomas N. Auriemma hasseen it all and done it all.

As a gaming regulator for almost hisentire 30-year legal career, Auriemma hasgone from helping draft the legislationthat authorizes and regulates gaming, toinvestigating and licensing the manycasino and service companies that nowparticipate, to rooting out organizedcrime, to overseeing the technologicalexpansion that is currently changing theface of the industry. For the past fouryears, Auriemma has been Director of theNew Jersey Division of GamingEnforcement (DGE), one of the premiercasino regulatory agencies in the world.

After 28 years at both the Casino Control Commission (“theCommission”) and DGE, Auriemma hasacquired the experience and savvy tohandle almost every crisis.

This past year is a prime example. He waspart of an unprecedented action that wit-nessed the closing of the casino doors tothe gambling public. Unable to reach abudget agreement with the state legisla-ture, New Jersey Governor Jon Corzineissued an executive order shutting downall but essential state services from July 5-7. By state law, government regulatorsmust be present around the clock at all 12casinos.

Absent the regulators, the casinos wereforced to close their doors until a budgetwas adopted, and legalized gaming washalted for 71 hours.

Working closely with the state police andmembers of the Commission, Auriemmadispatched DGE agents and state police toeach casino to oversee all safety and security concerns, ensure the safe evacuation of all patrons, protect casinoassets such as money and chips, andsecure all 43,000 slot machines.

“This was the first time it was done, sosome unforeseen problems could havecropped up, but everyone worked togeth-er very closely and no problems wereencountered. I think that was due to thelevel of experience and professionalism ofeveryone involved,” Auriemma said.

What could have been an industry andregulator’s worst nightmare was averted.

Upon resolution of the budget impasse,Auriemma assisted in the smooth reopen-ing of casino operations in a very rapidmanner.

A Twist of FateAuriemma is well-prepared tohandle any crisis as a result ofhis many years of govern-ment service. Working inthe public sector andlaw enforcement wasalways Auriemma’s firstchoice as a career, butgetting involved in thecasino gaming industrywas unforeseen, since itdidn’t exist when hegraduated from lawschool.

It was a twist of fate that launched hiscareer in gaming. After receiving aBachelor’s Degree in History from SetonHall University, Auriemma had plannedto attend graduate school and eventuallybecome a history professor. In a lastminute change of plans, he applied toand entered law school at Seton Hall.

During the summers and school years, heworked as a law clerk in the Essex CountyProsecutor’s Office in Newark, New Jersey.

“I worked for two excellent lawyers,Prosecutor Joseph Lordi, and his assistant,R. Benjamin Cohen. That’s when I reallybecame interested in public service. I sawthe impact you could have on a commu-nity. In fact, Cohen became a mentor andI modeled my career after him,”Auriemma said.

In 1975, after graduating lawschool second in his class,


Auriemma served as a judicial law clerkbefore joining the New Jersey AttorneyGeneral’s Office, where he was assignedto handle appeals.

Then, in 1976, voters passed a referen-dum approving legalized gaming inAtlantic City, making the city the sec-ond jurisdiction in the United States toallow gambling. A previous referendumhad failed in 1974, when voters, fearingthe influence of organized crime,rejected gambling.

The person chosen to establish and regulate gaming in Atlantic City wasAuriemma’s former boss, Lordi, whohad a reputation as a tough but fairprosecutor. He was appointed the firstever chair of the Commission.

“Joe Lordi was the perfect man for thejob to get gambling up and running inAtlantic City. He is the standard bywhich all other Casino ControlCommissioners are measured. He wasan excellent administrator and a firstclass man. He knew both the govern-mental and political aspects statewide,and was highly respected. We wouldnot have the strict and efficient regula-tory system we now enjoy withouthim,” Auriemma said.

Immediately following Lordi’s appoint-ment, a task force was created to over-see the writing of the Casino ControlAct, the legislation establishing andregulating the gaming industry.

Auriemma quickly accepted a job offerwithin the task force.

“I was approached by Cohen, whocame into my office and asked me tojoin the task force,” he said.

The main objective of the Task Forcewas to incorporate strict standards intothe law. Two critical areas were institut-ing tough procedures for backgroundinvestigations and installing strictaccounting and internal controls.

Background investigations were to beconducted on all employees, from theCEO of the casino, to the floor workers,to all hotel employees. The Task Forcealso wanted to ensure that regulatorshad access to all pertinent accountingrecords, which gave the DGE oversightunparalleled in the gaming industry.

“The key for both the Task Force andthe Commission was to keep organized

crime out of Atlantic City. The only history we had to rely on was Nevada,where there had been significant tiesbetween the casinos and organizedcrime in the past. We all realized that ifgambling were to flourish in AtlanticCity, the public had to be assured thatlegalized gaming and wagering couldbe conducted in an honest and openatmosphere, free of the influence oforganized crime,” Auriemma said.

“It was a great learning experience.When we began, we didn’t know muchabout gaming, but we went to Nevadaand England and learned a great deal.We did everything from writing all theregulations to processing the applica-tions,” he added.

The Casino Control Act constructed abifurcated system, splitting casinoindustry oversight between the DGEand Commission. The DGE is respon-sible for conducting all casino investi-gations and prosecutions—both civiland criminal—and with conductingbackground investigations on all individual and corporate applicants for a casino-related license. TheCommission conducts hearings onlicensing, registration, and permitapplications, as well as proceedings forthe violation of operational regulationsand casino exclusions.

In the early days of the Commission,Auriemma was a lead attorney, handling many of its major cases andcritical issues. One significant case wasthe 1982 disqualification of PlayboyEnterprises, Inc., and its orderly divestiture from Atlantic City.

The DGE was established in 1978, witha contingent of 20 investigators withaccounting and financial backgroundsand 15 state police officials with experience in organized crime investi-gations. Teams of lawyers, investiga-tors, and police conducted intensivefield investigations, especially into anyorganized crime affiliations, and muchof their training was hands-on in the casinos, listening and learning.Immediately, the DGE began to carryout its mission, as applications fromcompanies large and small wanting toown and operate casinos, as well as byindividuals seeking employment,flooded into the agency.

Revival of FortunesBy the mid-1980s, ten major casino


hotel facilities had been built and openedin the Boardwalk and Marina areas ofAtlantic City, providing employment fortens of thousands of people.

Auriemma, who joined the DGE in 1986as its deputy director, was involved inmany of the most significant investiga-tions of casino operators, includingMirage Resorts, Inc., Sun International,and Steve Wynn, as well as the monitor-ing of the financial status of the TrumpOrganization.

Resorts International Hotel Casinoopened in 1978, which began the revivalof the fortunes of a fading city. Sincethen, Atlantic City has become home to athriving multi-billion dollar industrywhich includes twelve casinos.

In August, Pinnacle Entertainmentannounced plans to construct a $1.5 bil-lion resort. Due in part to the work of theDGE under the direction of Auriemma,the casino industry has come to be viewedby Wall Street as a legitimate, well-regulat-ed leisure time industry, which routinelyqualifies for millions of dollars in loansand which is publicly owned and tradedon the New York Stock Exchange.

The industry employs more than 45,000people in New Jersey and generates nearly $5 billion in casino revenue.

The past three years have witnessed a substantial building boom in AtlanticCity. The $1 billion Borgata Casino Hoteland Spa opened in 2003, and Resorts followed with an 879-room hotel towerand an additional 22,000 square feet ofcasino space. The Showboat Casino Hoteladded a 544-room tower, and Borgataannounced a $200 million expansionprogram involving casino, food, and beverage additions. Soon after, Borgataannounced yet another significant project, including 800 guest rooms, andadditional retail, dining, and gamingspace.

As the industry has grown and changed,the DGE too has matured, going from theinitial modest group of 50 employees to acomplement of 551 employees in the late1980s to its present level of 370 person-nel, with offices in both Trenton andAtlantic City, to keep pace with the inves-tigations and oversight. In an effort tostreamline the DGE, Auriemma has con-solidated many functions and operations,making the agency more efficient indelivering its services.

Saying Goodbye to One-Armed BanditsToday, the DGE is recognized as one ofthe premier casino regulatory agencies inthe world. Many jurisdictions look to theDGE for leadership and guidance on gam-ing and licensing-related issues. Theagency is comprised of seven bureaus:Casino Entity Licensing, EmployeeLicensing, Regulatory Enforcement,Service Industry Licensing, TechnicalServices, Regulatory Prosecutions, andAdministrative Services. The DGE hasplaced significant emphasis in recentyears on technical services, as that areahas become the cornerstone of the indus-try.

Like the rest of the world, gaming hasseen an explosion in technology over thepast decade. With each new computersoftware program announced and eachnew technical product presented, theDivision’s Technical Services Bureau andits engineers and gaming specialists mustapprove each product before it is allowedon the gaming floor. The TechnicalServices Bureau also must assure that eachof the 43,000 slot machines in AtlanticCity complies with applicable laws andregulations.

Gone is the one-armed bandit, replacedwith a highly technical, computerizedslot machine. Gone is the clanking of thecoins striking the bottom of a tin cup,replaced with a sophisticated ticketin/ticket out (TITO) system.

Downloadable technology will soon berevolutionizing the casino floors, allow-ing managers to reconfigure slot floors bydeleting the existing software on a partic-ular machine and installing new softwarefrom a central server. Hand-held devicessimilar to the BlackBerry will allowpatrons to gamble from various areas ofthe casino, such as bars and restaurants.

Online and Underage Gambling AwarenessOn another front, Internet gaming hasraised many novel issues, Auriemma said.The DGE continues to monitor Internetgambling, a worldwide phenomenonthat is illegal in the United States.

In an effort to prevent online gamblingsites from offering wagers to New Jerseyresidents, DGE filed a series of civil com-plaints in 2001 against ten such offshorewebsites. The complaints sought toenjoin the companies from offering

wagers to residents, particularly underagegamblers, and to prevent the operationsfrom advertising in New Jersey.

In conjunction with the litigation,Auriemma has been charged by the NewJersey Legislature with developing anInternet gambling public awareness cam-paign to expose the illegality and otherissues relating to Internet gambling. Hehas appeared on television to explain thedangers of betting online. The DGE is alsodeveloping, in conjunction with theCouncil on Compulsive Gambling, avideo on Internet gambling. The videowill be disseminated to all high schools inNew Jersey, to instruct students on thedangers and pitfalls of online gambling.

Secure and Prepared

Another critical area for the DGE isresponding to terrorism. Auriemma saidthat the DGE is the liaison to the gamingindustry in Atlantic City. Along withState Police, the Atlantic City PoliceDepartment, and the Domestic SecurityPreparedness Task Force, it has developeda series of best practices designed torespond to any act of terrorism or terrorist related acts affecting the operating casinos.

A Job Well DoneAuriemma also is a charter member of theInternational Association of GamingRegulators (IAGR), a voluntary organiza-tion of gaming regulators from over 30nations. The association meets annuallyto share information on significant issuesthat affect the regulation of casino gam-ing. Auriemma served as its chair in 2005,and presided over the conference held inVancouver, British Columbia, Canada. Hepreviously served as secretary and vice-chair. He is currently a member of itssteering committee.

Over the last three decades, casino gaming in Atlantic City has evolved froma mere experiment into a vibrant industry which has become the majoreconomic engine of southern New Jersey.Auriemma has been a vital force in thatdynamic. As a person born, raised, andeducated in New Jersey, who has devotedhis professional career to gaming regulation, Auriemma takes immense satisfaction from the development andgrowth of the casino industry, and all ithas done for the state and its people.


The Louisiana Civil Code contains anarticle that states:

A hope may be the object of a contractof sale. Thus, a fisherman may sell ahaul of his net before he throws it. Inthat case the buyer is entitled to what-ever is caught in the net, according tothe parties’ expectations, and even ifnothing is caught the sale is valid.

La. Civil Code article 2451

It is this hope—this expectation—ofcatching the big win that fuels gambling. The majority of gamblers“buy” the chance with their bets and“if nothing is caught,” they eventuallyquit. But the addicted gambler cannotstop. He will often chase one bet withanother and another until all hisresources are depleted.

A famous gambler once said that heonly lost one dollar gambling but spentanother six million trying to get it back.

The drug that fuels a gambling addic-tion is neither alcohol nor cocaine;rather, it is money. As gambling prob-lems escalate, the compulsive gamblerwill seek out funds from any sourceavailable, including his employers, his

co-workers, and his family—even hischildren’s college savings account.

Ultimately, as his desperation mounts,the gambling addict will convertclient funds, or he may commit insurance fraud, embezzlement, theft,or even murder.

Examples abound. In Louisiana, ayoung woman gambled away her entireinheritance of $500,000.00 before seeking treatment. An attorney in theAcadiana parish area lost his license topractice law and the firm his fatherfounded after stealing client funds tosupport his habit. An ex-state trooperembezzled over a million dollars fromhis wealthy philanthropist-employer.

Other states have similar cases.

Headlines such as these are numerous andconnect gambling addiction to economiccriminal activity. But the cases of parentswho fail to pay child support, elderly couples who gamble away their life’s savings, parents who deplete their children’s college savings, and childrenwho gamble on the Internet with theirparents’ credit cards, rarely reach theheadlines.

An article by the Florida Council onCompulsive Gambling states:

“Drug addicts and alcoholics wouldmost likely pass out, overdose, or die ifthey utilized the same sums of moneyto feed their addiction in the same period of time as a compulsive gambler.Compulsive gamblers have no limita-tions, other than their ability to accessmoney. They can go through hundredsto hundreds of thousands of dollars in a24-hour period and repeat this patternnon-stop for days on end without everreaching a saturation point.

Compulsive gamblers have an enor-mous need for money to continue plac-ing bets or paying off gambling debtsand will go to extremes to manipulateanyone or any source to gain access.

The financial impact of this costlyaddiction reaches far beyond just thecompulsive gambler and family orfriends. This cost impacts the communi-ty on many different levels and in avariety of forms, some of which areoften hard to identify or quantify. … Itcould be in the form of increased coststhat all of us pay, such as insurance orinterest rates, due to fraud committed

By Sue McNabb


by the compulsive gambler while tryingto acquire funds. It might be inincreased bankruptcy or criminal justicecosts associated with crimes committedby a considerable percentage of compul-sive gamblers.”1

The connection between gamblingaddiction and economic crimes is aresult of the gambling addict’s over-whelming craving for funds to supportthe habit. In “Money: A Drug ofChoice,” the Florida Council states:

“Without money, there is no actionand without action there is no eupho-ria or escape. Since having money toplace bets is what keeps the action inprogress, anything or anyone that getsin the way is in danger of being compromised. …Though it is true thatcompulsive gamblers do not overdoselike drug addicts or alcoholics, andhave no ‘saturation point,’ the highrate of suicide, divorce, spousal abuse,ill health, and bankruptcy are solidindicators of an illness that is just asserious and very costly.”2

“A Benefit-Cost Analysis of Indiana’sRiverboat Casinos for FY 2005” states:

Pathological and problem gamblers mayresort to crime to cover gambling relateddebts or to fund their gambling activity.Pathological and problem gamblers intreatment have admitted to a variety ofcrimes to finance their gambling activi-ty, including: passing bad checks,shoplifting, check forgery, theft fromemployers, tax evasion and tax fraud,loan fraud, embezzlement, larceny,bookmaking, hustling, and fencingstolen goods. About 46 percent ofGambling Anonymous (GA) participantsin Wisconsin admit to stealing to fundgambling (Thompson et al. 1996) while56 percent of GA participants in Illinoisadmitted to stealing to gamble (Lesieurand Anderson 1995). The NORC studyreports that an estimated 23 percent ofpathological gamblers and 13 percent ofproblem gamblers have been arrestedcompared to only four percent and 0.3percent of low-risk gamblers and non-gamblers. The individual level evidenceclearly suggests a direct link betweengambling behavior and crime, especiallylarceny.3

Keith Whyte of the National Council onProblem Gambling provided statistics tosupport the connections between gam-bling addiction and economic crimes.

In a sample of 109 problem gamblersseeking treatment, 55 percent reportedcommitting a crime to get money forgambling, and 21 percent had beencharged with a crime (Blaszczynski1989).

Two-thirds of non-incarcerated and 97percent of incarcerated pathologicalgamblers admitted engaging in illegalbehavior to finance gambling. An estimated ten percent to 30 percent ofprisoners are pathological gamblers,with 13 percent of prisoners stating theywere in prison as a result of gamblingrelated debt (Lesieur).

Of 107 GA members—33 percent hadcriminal convictions, theft and fraudaccounted for 94 percent of these convictions (Ian Brown).

Gaming in Louisiana, as in other stateswhere gaming is legal, has a tremendouseconomic impact. Since the legalization ofgaming in 1991, gaming has become thefourth largest source of revenue for theState of Louisiana, accounting for $763million or almost seven percent of thestate’s budget. According to the CasinoAssociation of Louisiana, the riverboatgaming industry pays more than all other


corporations combined, paying 21.5 percent in franchise fees plus other taxes.

Combined with other forms of gaming,such as video poker, the land casino inNew Orleans, slots at the race tracks,and the lottery, the total economicimpact to the State of Louisiana is conservatively over $2.5 billion. In the months immediately followingHurricanes Katrina and Rita, monthlygaming revenue in Louisiana increasedover 20 percent even though manygaming venues were closed in southLouisiana. That increase is not reflectedin the provided revenue figures.

In 1999, the societal costs of pathologi-cal gambling were calculated to be $5billion per year.4 According to theNational Gambling Impact StudyCommission Report, this cost “did notattempt to estimate the financial costsof any gambling related incidences oftheft, embezzlement, suicide, domesticviolence, child abuse and neglect, andthe non-legal costs of divorce.”5 Legalgaming in the US is a $51 billion peryear industry. Indeed, the revenue produced through gaming is ten timesgreater than that of the movie industry.Considering these enormous sums ofmoney and the concomitant influencewielded thereby, it is imperative thatevery effort to minimize the negativeeffects of gambling on society be made.

Among the chief negative effects ofcompulsive and problem gambling iscriminal activity, a virtual growth industry in the United States. Accordingto research provided by the DixonCorrectional Institute in Louisiana, overtwo million people are incarcerated inthe United States at this time. InLouisiana, the average cost to house theinmates is approximately $35,000-40,000 per year. This cost does notinclude the cost of family support, losttime and wages, or victim loss. Of incarcerated offenders, ten to 30 percent are pathological gamblers and13 percent are in prison as a result oftheir gambling debts (Lesieur).

In order to minimize the negative socialcosts resulting from the criminal activity related to problem gambling,Louisiana has an evolving GamblingTreatment Referral Program. This program puts first and second non-violent offenders into treatment ratherthan incarceration. The treatment is freeto state residents and is paid for by theCompulsive and Problem Gambling

Fund with revenue from the gamingindustry. Since the initiation of the program in early 2005, the programincludes participation by 11 districtattorneys serving 19 parishes, withmany more awaiting training.Approximately a dozen other states areinterested in duplicating the pre-trialprogram and have requested the materials which I readily share.

There is no doubt that gambling addiction can lead to financial devastation and criminal activity tosupport the habit. Financial devastationis often the motivator for compulsivegamblers to seek help. As the number ofgaming venues increase, we must acceptthe responsibility to reduce the negativeimpact of criminal activity resultingfrom gambling addiction.

Judicial Intervention (“TherapeuticJustice”) or pre-trial intervention can bethe solution. Judicial Interventionshould be patterned after the GamblingCourt that Judge Mark Farrell overseesin Amherst, New York. Pre-trial intervention should be modeled afterthe Gambling Treatment ReferralProgram. Both should work to interruptthe cycle of criminal activity.

In addition to the societal costs result-ing from the small percent of gamblerswho have a gambling problem or addic-tion, there are potential costs to thelicensees. As stated earlier, the gamblingaddict will go to any ends to obtain thefuel for his gambling habit; that fuel ismoney. The casino industry is seen as adeep pocket and is not immune to theaddicted gambler’s quest for funds. Thetobacco industry litigation is indicativeof the steps which a person will oftentake to avoid accepting personal responsibility for his actions.

Illustrative of this point is the recentLouisiana case of a problem gamblerwho violated his exclusion from tworiverboat casinos. In this case, a problem gambler signed a State Self-Excluded Person’s Form and thencollected abundant evidence to supporthis claim that the casinos did notenforce the restraints on his entrancerequired by the law and the form.

Not only did he have evidence that hecontinued to lose money in the casino,he also supported his claim withCashier’s Cage receipts and IRS receiptswhen he won jackpots. Furthermore, hehad many ATM receipts proving that he

had entered the properties, and he produced evidence that the casinos hadsent out “marketing enticements.” Thecasino licensees had clearly failed tomeet the statutory responsibility tomonitor the activity of a self-excludedperson, and the regulatory authorityfound the licensees in violation of thestate’s rules and statutes regarding problem gambling.

Bolstered by the Gaming Control Boardruling and fine, the gambling addictcould take his case to a civil districtcourt where the burden of proof is lessstringent and file a suit against thelicensee for damages. Thus, the burdenon the licensee to monitor the activitiesof potential problem gamblers becomesa “bottom line” issue.

Though the fines for violation of theResponsible Gaming Programs have notyet reached enormous proportions inLouisiana, in some jurisdictions, thefines are in the hundreds of thousands.In a recent Illinois case, a casino wasfined $600,000 in an excluded person’scase.6

The negative publicity created by criminal activity of those with a gambling addiction combined with thedanger of impairing the licensee’s suitability to continue his gaming operation makes the examples clear:abiding by the respective responsiblegaming programs in gaming jurisdic-tions is a necessary risk managementand public relations practice.

1 FOCUS, Florida Council on CompulsiveGambling. “The Deep Hole of CompulsiveGambling,” Paul Ashe, President, and Pat Fowler,Executive Director; page 2, Summer 2005.

2 FOCUS. Page 6.

3 A Report to the Indiana Legislative Council andthe Indiana Gaming Commission. January 17,2006.

4 National Opinion Research Center at theUniversity of Chicago, Gemini Research, and TheLewin Group. Gambling Impact and BehaviorStudy. Report to the National Gambling ImpactStudy Commission. April 1, 1999, p.53.

5 NORC, p 52.

6 Daily Herald. Arlington Heights, Illinois. July27, 2005.


By Gregory Gemignani, Lionel Sawyer & Collins, Las Vegas

On July 12, 2006,Giles Darby, Gary

Mulgrew, and DavidBermingham (the

“NatWest three”), formeremployees of National

Westminster Bank Plc, wereextradited from Great Britain to

the United States to face charges ofwire fraud stemming from a series of

financial transactions related to thedemise of the Enron Corporation.

For those unfamiliar with Enron, it wasthe largest energy company in theUnited States prior to December 2001

when it filed for bankruptcy. It was thebiggest corporate bankruptcy in United

States history.

The NatWest three were reportedly extraditedunder the Extradition Treaty with Great Britain

and Northern Ireland negotiated and finalizedin 2003 (U.S. Treaty 108-23). The 2003 Extradition

Treaty was negotiated in the wake of the Sept. 11, 2001 terrorist attacks in the United States and was heralded as a key

component in the war on terror.

The 2003 Extradition Treaty has reportedly been incorporated into thelaws of Great Britain, but has yet to be ratified in the United States. It hasbeen the subject of United States Senate committees since it was submit-

ted for ratification, and was the subject of a committee hearing as recentlyas July 21, 2006.

Under the 2003 Extradition Treaty, members of the Treaty are obligated to extra-dite to another member country persons who have been accused of a crime that

is an offense punishable under the laws of both countries. The extradition requestmust be supported by a warrant or a charging document based on probable cause.

The 2003 Extradition Treaty is designed to replace the 1972 Extradition Treaty and the1985 Extradition Treaty between the United States and Great Britain. The 2003 Treaty dif-

fers from the prior Treaties in many ways, but there are two primary changes that may cause


concern for operators of internationalgambling businesses in Great Britain,namely: (i) the standard for extraditionis lowered from a “prima facie” standardto a lower “probable cause” standard;and (ii) rather than a list of categories ofextraditable offenses, the 2003 Treatyuses a “dual criminality” standard. Thislower standard for extradition com-bined with a general “dual criminality”standard is commonly referred to as afast-track extradition procedure.Because the 2003 Extradition Treaty hasbeen incorporated in the laws of GreatBritain, it provides law enforcementofficials in the United States with a pow-erful tool to more easily extradite Britishcitizens to stand trial for offenses com-mitted in the United States.

Prior to July 16, 2006, conventional wis-dom in most print publications was thatthe 2003 Extradition Treaty was inappli-cable to gambling operators from GreatBritain so long as such operators wereoperating within the laws and regula-tions of Great Britain. This conclusion isbased primarily on the “dual criminali-ty” standard.

While online gambling may be illegal inthe United States, licensed and regulat-ed online gambling in Great Britain isnot illegal.

Because operating an online gamblingbusiness within the parameters of thelaws of Great Britain is not a criminaloffense in Great Britain, online gam-bling offenses appear to fail the “dualcriminality” standard.

On July 16, 2006, the United States, forthe first time on record, detained andarrested a citizen of Great Britain prima-rily for violating federal and state gam-bling prohibitions in the United Statesbased on the conduct of his companythat accepted sports wagers from gam-blers in the United States. The companyat issue apparently operates within thelaws and regulations of Great Britain,and its subsidiary sports books arelicensed in the jurisdictions in whichthe books have a physical location.

While the primary charges are relatedto operating an online gambling busi-ness, which was apparently legal inGreat Britain, the complete list ofcharges also included mail fraud andtax evasion. The mail fraud charge isbased upon the company’s transmis-sion of brochures, magazines, and flyerspromoting its online gambling business

through the mail. The advertisementsare alleged to indicate that the onlinegaming site was “legal and licensed,”and it is alleged that this characteriza-tion of the business and its operationswas fraudulent and defrauded gamblersin the United States.

The tax evasion charges are basedupon a failure of the company to fileany wagering excise tax returns, failingto pay the United States InternalRevenue Service wagering excise taxes,and causing funds to be sent outsidethe United States.

It is clear that the mail fraud chargesand tax evasion charges all stem frompromoting and operating online sportsbooks. Additionally, it is a natural partof an international online business toadvertise and to have funds sent to itsphysical place of business. Therefore, itis likely that every online gaming sitethat accepts wagers internationally (par-ticularly from gamblers in the UnitedStates) is engaged in the activities listedin the current charges against the com-pany and its executives in Great Britain.

As reported in the Times Online U.K. onJuly 20, 2006, a U.S. Department ofJustice spokesman stated that “Internetgambling companies in Britain, and anycountry, anywhere, if they do businessin the United States they do so at theirown risk. This is a crime and it can beprosecuted.”

In the current case, the indictmentsagainst the British company and its keypeople were handed down in June, butremained under seal for over a month.The indictment was only revealed afterthe arrest of the British chief executiveofficer of the online betting company.The preexisting nature of the indict-ment, and the precision with which U.S.law enforcement officials detained theBritish executive during a brief changeof planes in Dallas while he was enroute from London to Costa Rica, mayindicate the new zeal with which U.S.law enforcement will seek to enforceexisting laws against foreign interna-tional gaming business operators thattake wagers from gamblers in theUnited States.

It is now clear that the United States willenforce its online gaming prohibitionlaws against foreign nationals that itcan find within its borders. The imme-diate impact of the arrest of the Britishexecutive is that online gambling exec-

utives, officers, board members, owners,employees, and agents who are locatedoutside of the United States are likely toavoid traveling to the United States, inorder to avoid the risk of arrest uponentering the United States.

The risk of being apprehended withinthe United States apparently prompt-ed the last minute cancellation of amarketing conference sponsored byan online gaming site that was sched-uled to take place in Las Vegas on July23, 2006.

What is unclear is whether the UnitedStates will seek to enforce its onlinegaming prohibition laws against foreignnationals involved in online gambling,through extraditing such people to theUnited States. While British officialshave reportedly stated that Great Britainwould refuse to extradite suspects forviolating United States laws regardingonline gambling since the practice isnot illegal in Britain, such statementsnever addressed issues of mail fraud andtax evasion. If either mail fraud or taxevasion (or other activities ancillary toan online gaming operation) are illegalin Great Britain, then there is a risk thatthe United States may be able to extra-dite those involved with online gam-bling even though the underlying act ofconducting an online gambling busi-ness may be performed within theparameters of the law in Great Britain.

If United States law enforcement offi-cials begin extraditing those associatedwith online gaming businesses in GreatBritain, it will undoubtedly limit thefuture growth of the industry in GreatBritain and may cause current Britishbusinesses to relocate to jurisdictionsthat do not have such favorable extradi-tion treaties with the United States.

The unintended beneficiaries of suchincreased enforcement from the UnitedStates may be the jurisdictions that wereonce likely to lose their online gamingbusinesses because of expected moves tothe United Kingdom. Should GreatBritain decide to protect its online gam-bling industry, the other unintendedconsequence may be the repeal or limi-tations on the use of the “fast-track”extradition laws that have been hailedas key tools in the war on terror andhave been effective in extraditing sus-pects such as the NatWest three.

1. Describe your position with the firm or organization.

___________________________________________________________

___________________________________________________________

___________________________________________________________

___________________________________________________________

2. How long have you been associated/employed by thisfirm/organization? _______________________(If less than fiveyears, please list your former relationships and positions on aseparate sheet).

3. When were you called to the Bar or admitted to yourProfessional Body? _____________________

4. How long have you been involved in the gaming industryor practicing gaming law? _________

5. Are you a member in good standing of the Bar or yourProfessional Body? __________________________

6. How long have you been associated/employed by thisfirm/organization? _______________________(If less than fiveyears, please list your former relationships and positions on aseparate sheet).

7. List all gaming clients, contact persons and the nature ofwork that you undertake for them (provide details on a separate sheet – if client confidentiality demands otherwise,notify membership committee).

8. Describe whether you have participated in any educationalseminars relating to gaming and if so, in what capacity.(provide details on a separate sheet).

9. Have you written any articles/books/treatises relating togaming? (provide details on a separate sheet).

10. Describe whether you have participated in any philan-thropic or charitable programs relating to gaming and if so, in what capacity? (provide details on a separate sheet).

11. Describe briefly why you desire to be a member of theIMGL and what contributions do you believe you canmake to the association? (provide details on a separate sheet).

12. Name of IMGL general member who is sponsoring

this application.

Sponsor ___________________________________________________

Date ______________________________________________________

Signature __________________________________________________

Melissa Lurie, Executive DirectorInternational Masters of Gaming LawBoulder, CO USA(303) 449-9955 office(303) 449-9977 fax(303) 641-8980 cell

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( ) General Affiliated ( ) Accountancy ( ) Consultant ( ) Educator ( ) In-House Counsel ( ) Regulator

Application for MembershipFax completed form to (504) 589-8218 or mail to:J. Kelly Duncan c/o Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP201 St. Charles Avenue, 48th FloorNew Orleans, LA [email protected]

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