The question posed by Dawn Himel, director of the Louisiana Attorney General office’s Gaming Division, during Global Gaming Expo (G2E) was how can one know if an emerging market is genuine or illegal?
The answer is somewhat complicated.
“The first thing we make sure is that we’re operating lawfully and operating lawfully can mean a lot of different things,” said Antony Geviser, Super Group’s director of legal and regulatory affairs International and Africa. “It can be applying for a license in a clear regulatory market, when failure to get one of those licenses for other stores doing products, casino, or others would be seen as a black market.
“Or in the case of gray markets, where one has a legally defensible position,” Geviser said. “When you talk about a legally defensible position, you’re talking about expert advice from local lawyers within that jurisdiction.”
Himel and Geviser were joined by Cyrus Pitre, Pennsylvania Gaming Control Board’s chief enforcement counsel, Harold Mays, director of the Illinois Department of the Lottery, and Christian Rapani, a partner with Rapani Rechtsanwälte GmbH, for a discussion titled “Illegal and Gray Markets: Consumer Harm and Market-Integrity Risks.”
In Pennsylvania, the answer is somewhat binary. Pitre said markets are either authorized or unauthorized.
“If it’s authorized, that means the government said it’s okay and gave it a thumbs up to operate in our state,” Pitre said. “We have interactive gaming slots, interactive gaming tables, interactive gaming poker, fantasy contests. We have video game terminals at truck stops, land-based casinos, a sports-related equation. It has to fit in one of those boxes in order to operate in the Commonwealth of Pennsylvania. If it doesn’t fit one of those boxes, then I view that as unauthorized gaming or gambling.”
In Austria, the equation is different, according to Rapani.
“We distinguish between betting and games of chance, and betting is regulated on a state level,” Rapani said. “We have nine different state betting laws, even though we only have eight million inhabitants.”
Rapani said there was a case in which a foreign operator was accused of not holding a license in the Austrian state of Styria. But the Austrian Supreme Court, citing a ruling that that Styria amended the law in 2018 and permitted the unregulated state to exist, it was allowed to operate. “So not holding an Austrian license does not necessarily mean it’s illegal.”
Pitre said what is legal in terms of slot machines goes back to 1983 when the Pennsylvania Supreme Court ruled that in order for a machine to be an illegal gambling device, it had to have three factors: consideration, reward, and chance. The Commonwealth Court said that the law didn’t apply to skill games, since the Gaming Act doesn’t apply to unlicensed entities or operations.
“That left me in quite a quandary,” Pitre said. “It made me feel like I wasted my talents in law school.”
But in June this year, the state Supreme Court ruled that skill games are illegal slot machines and the games must be removed by October 13.
“Somewhere between 40,000 and 70,000 skill games operate in Pennsylvania. We only have 25,000 legal slot games,” Pitre said. “You can see that a lot of money is generated by these skill games. It’s estimated that the Commonwealth and the gaming industry lost billions of dollars as a result of these operations over this period of time, which has been roughly 12 years.”
Mays explained that it’s hard for legal operators to compete with illegal operations. He said some truck stop operators surrendered their legal licenses so they could install skill games, which frequently are more lucrative.
“I approached it with some compassion,” Mays said. “Sometimes I had to speak to whoever I was dealing with about the ramifications of what they were doing; other times I had to take action. It was a PIA, which is a pain in the a–.”
