Many in the Las Vegas gaming industry who are eyeing Florida were surprised when the bill put forward by Miami-Dade Republican State Rep. Erik Fresen included regulations based on the model of New Jersey, which is considered to be the toughest and most comprehensive casino control statute in the country if not the world.
It requires stringent background checks, voluminous past financial records, and finding of “good character” as well as financial stability. The legislation regulation is substantially more stringent than the current regulation of Florida’s pari-mutuel gaming facilities which have slot machines at racetracks and Jai-Ali fronton.
Fresen and staff lawyers spent hours fashioning regulatory authority for would-be casino regulators without violating the constitution by usurping the authority of other law enforcement agencies and taking full advantage of the resource and experience of FDLE instead of building a parallel bureaucracy to screen applicants and license holders.
No one had it more dead on on this than Mary Ellen Klas of the Miami Herald so we are here at the Florida reprint her piece in toto.
TOUGH REGULATION IN CASINO BILL
By Mary Ellen Klas
TALLAHASSEE — If Florida is going to be home to Las Vegas-style casinos, it has also got to have Las Vegas-style regulations, say the authors of a massive bill to bring resort casinos to South Florida.
That includes creation of a state gaming commission and a rule that casino operators give the state access to almost everything — from bank accounts to marital records, safe-deposit boxes, computers and even their homes.
But, as with every element of this high-stakes debate, a tug-of-war has ensued between the two most powerful international players, Las Vegas Sands and Genting Malaysia. Each wants to use the Florida regulations to put the other at a disadvantage, and each wants to distance itself from the organized-crime elements of the Chinese casinos to keep its regulatory record clean.
The bills expected to be filed this week by state Rep. Erik Fresen, R-Miami, and state Sen. Ellyn Bogdanoff, R-Fort Lauderdale, would allow three $2 billion resort casinos in Miami-Dade and Broward counties and create an independent gambling commission patterned after the strict regulatory boards of Nevada and New Jersey.
If approved, the proposals will put everything from horse and dog tracks, jai-alai frontons and poker rooms to Internet cafés, sweepstakes games and full casinos — now regulated by three different state agencies — under a single appointed board. The Florida Lottery would not be regulated by the commission, nor would the Indian tribal casinos, which are not governed by state law.
Drafts of the proposals indicate that members of the five-person gaming commission would have staggered terms and be appointed by the governor. They would have the power to decide which companies will be granted licenses for each of the three resort casinos, and the rules they will need to meet in order to qualify.
The commission would license casino owners, register anyone who works in a casino and keep out anyone who has a troubled record in another state or country. It would conduct elaborate financial and criminal background checks on owners and key employees, and prosecute and fine anyone for violating state gambling laws.
A separate board would have the power to police the casinos, conduct investigations and monitor finances.
The regulatory structure is “actually probably more important than anything else,” said Bogdanoff, a lawyer who researched casino regulations in other states.
The result is a hybrid of Nevada’s and New Jersey’s regulations, she said. Both states are considered the strongest in the nation, and use a two-tired system, with an independent gaming commission to license casinos and set policy and a separate division to enforce and investigate. Both states ban gaming commission members from being involved in political campaigns or contributions.
The Nevada process is so intense that casino applicants “refer to the investigation as the most trying experience of their lives,” said Robert Faiss and Gregory Gemignani, authors of a new paper from the Center for Gaming Research at the University of Nevada, Las Vegas.
Casino applicants in Nevada must agree to waive some legal rights, the report says. They are asked to disclose personal, financial, marital, legal, and criminal information, and to sign a release that says they won’t sue state regulators because of conflicts arising out of the application process. They also must reveal assets, liabilities, tax information, business experience and bankruptcy history, and disclose where they are getting their investment money.
The Nevada gambling investigation also gets personal, the authors say. Investigators determine whom the casino owners associate with — from friends and family members to business acquaintances. They have the power to inspect homes, businesses and computer files. They can dig deep into the past and disqualify any applicant who shows any sign that they have been untruthful, associated with a criminal, or has ties to organized crime.
“I thought it was overkill,” Bogdanoff said at first. But after her review, she said, she came to realize “it’s standard in the industry and one of the most important things we can do.”
Officials of both the Las Vegas Sands and Genting, the two most powerful casino companies seeking to move into Florida, say they support strict regulations, but privately doubt the sincerity of their competitor to want tight scrutiny.
“We want something at least as comprehensive as the Nevada regulatory law,” said Nick Iarossi, lobbyist for the Sands. “We wouldn’t want to put billions of dollars of capital at risk in an environment that wasn’t heavily regulated.”
Genting officials originally urged Bogdanoff and Fresen to leave the state Department of Business and Professional Regulation in charge of regulating gambling, but now say they also support the vigorous regulation of a Nevada-style gaming commission.
“Genting supports a strict regulation process in Florida,” said Jessica Hoppe, general counsel and vice president of government affairs for Genting’s Resorts World Miami in a statement. “Whether it’s DBPR or a Florida gaming commission, or any other regulatory body or measure, we will comply with whatever is set in place, and look forward to doing so.”
But both Sands and Genting, which operate giant casino operations in Singapore and China’s Macau region, may have to proceed carefully if Florida adopts the same strict features of New Jersey and Nevada.
A company caught violating a gambling law anywhere in the world could lose its license in those states, said Marc Dunbar, a lobbyist and gambling law expert. “Once you are bounced out of New Jersey and Nevada, you can’t get a license anywhere else,” he warned.
Genting has invested more than $400 million in downtown Miami property, including the Miami Herald building and the Omni Center. But 10 days before purchasing the Herald property, Genting was fined $425,000 by Singapore’s Casino Regulatory Authority for violating that country’s gambling regulations.
Genting also came under fire in 2007 by Singapore’s gaming officials, who forced the company to pull out of a partnership to build a casino in Macau because its partner, Stanley Ho Hung-sun, had been named by the U.S. Justice Department as a money launderer for the Chinese Triads’ organized-crime syndicate.
Las Vegas Sands has had its own regulatory challenges. The company announced in February that it was being investigated by the U.S. Securities and Exchange Commission and the Justice Department for violating the Foreign Corrupt Practices Act, which prohibits bribes to officers of foreign governments.
Sands official said they believe the investigation stems from allegations by the former head of its Sands Macau operation, Steven Jacobs, who is suing the company for breach of contract after he was fired in 2010. Sands denies any wrong- doing.