In the early 2000s, when Martha Sabol was in-house legal counsel for Hyatt Gaming Management, she routinely worked across borders, in multiple jurisdictions, and with clients around the world. The job was gratifying. But it had its frustrations—among them, dealing with different outside law firms in each jurisdiction, some with little to no experience in the gaming industry.
“Every time we entered into a transaction to buy or sell a casino or did business with any casino around the world, I had to educate people about the industry before I could even get started,” says Sabol, now co-chair of the Global Gaming Practice at Greenberg Traurig LLP. “It was an incredibly inefficient use of time and money, paying professionals to get up to speed on gaming-related issues.”
Leveling the Field
To Sabol, the solution was obvious but ambitious: the gaming law equivalent of a one-stop shop, with a presence in established and emerging markets, staffed by a team of professionals steeped in the industry who could readily advise operators, manufacturers, suppliers and regulators.
“When people think of a gaming attorney, they think of regulatory and licensing counseling,” says Sabol, named 2015’s Gaming Lawyer of the Year in Chicago by Best Lawyers in America. “What I hoped to develop was a group of lawyers in all the disciplines that support this industry: general corporate and transactional law, real estate litigation, employment law, entertainment, corporate finance, intellectual property, tax, etc.”
In November 2006, she joined Greenberg Traurig LLP, an international law firm known for a corps of lawyers specializing in multiple industries, including real estate, hospitality, technology, entertainment, advertising and insurance, to name just a few. Within two months, with the blessing and support of former corporate practice chief Gary Epstein and then-CEO Cesar Alvarez, Sabol launched GT’s Global Gaming Practice. Not surprisingly, she says, “much of the early momentum came from our Las Vegas office. We have a very talented group of lawyers there; they were an incredible foundation for what we were trying to accomplish.”
Today, GT’s gaming law team is 40 members strong and based in key jurisdictions, state capitals and financial centers in the U.S. and around the world.
“Other law firms have attempted to establish a similar platform,” Sabol says. “But the breadth of our coverage is unrivaled.”
Stateside, GT has offices in 29 locations relevant to the industry—not just Nevada and New Jersey, but Philadelphia, Houston, Los Angeles, New York City, Albany, Chicago, Delaware, Denver and elsewhere. This geographic footprint is meaningful in an industry that continues to grow. The firm also has a substantial presence in Washington, D.C., which monitors the gaming landscape from a federal legislative and government affairs perspective, as well as on a state-by-state basis.
In the past decade alone, including state lotteries, gaming in the U.S. has spread from a handful of jurisdictions to 48 states, with more waiting in the wings. As companies enter new jurisdictions, collaborate across markets and expand internationally, a limited presence limits opportunity. And managing numerous and overlapping local counsel becomes more inefficient, time-consuming and costly.
Sabol cites the example of an international gaming device manufacturer looking to acquire a similar firm. By the end of the transaction, six Greenberg Traurig offices domestically and across the globe had weighed in on the transaction.
“I received the first call in Chicago,” says Sabol. “I connected with one of our gaming corporate finance colleagues in Florida, one in Las Vegas and one in London. We then connected with two others from our international offices, and all this happened in a matter of 10 minutes.”
In that case and others, she notes, “everybody starts with a high level of experience in the industry, which controls costs and keeps budgets down. In this very large, complex world of international business transactions, it just makes life easier.”
Veteran gaming attorney Mark Clayton, who is based in Las Vegas, agrees. “It can be difficult when you’re dealing with a fast-moving situation that involves a corporate lawyer, a gaming lawyer, a tax lawyer and a real estate lawyer,” he says. “Maybe some are from the same firm, maybe not. But for all these people to ordinate seamlessly and communicate effectively is difficult in the best of times—much less when you’re working across different platforms.
“If my client needs an environmental lawyer,” he says, “I can walk down the hall or call a colleague. In my prior practice I would have had to look for a lawyer to refer them to.”
In another scenario, one of Clayton’s clients needed some legal advice about a transaction in Mexico. “I was able to coordinate with our Mexico City office, brief them on what had been done and what needed to be done, and get them up to speed on the administrative concerns”—all before the next client consultation.
Working across jurisdictions demands specialized knowledge; it also requires expertise across specialties, says Lorne Cantor, co-chairman of the firm’s Global Gaming Practice who works in mergers and acquisitions. “When you enter into an acquisition transaction with an entity that’s regulated by gaming regulators in numerous jurisdictions, you have to guide the client and provide them not just the traditional transactional advice but also the regulatory advice to bring the acquisition to a successful conclusion. That is what we provide—the industry expertise and the know-how to do it on a seamless basis.
“We do it efficiently and we do it quickly, because we’ve done it before.”
Lawyers without Borders
Such a broad network potentially can reduce the cost of doing business in every jurisdiction. Take Massachusetts, where the gaming market is poised to explode with MGM Resorts’ $800 million gaming hall in Springfield, Wynn Resorts’ planned $1.6 billion development in Everett, and one more license up for grabs in the southeastern section of the state. Greenberg Traurig’s Boston office has gaming attorneys licensed in the Bay State whose expertise—in the state’s regulatory structure, tax code and political landscape—can be especially significant for businesses eyeing that market.
These practitioners not only know the playing field, says Clayton. They know the players.
“To have a good continual working relationship with the regulators gives you almost a daily reason to be interfacing with them,” he says. “There is no substitute for knowing when the time is right to deliver a message” to regulators and policy makers, he says. “Otherwise, you can waste time and political capital.”
Internationally, Greenberg Traurig’s reach is similarly widespread. In addition to Mexico City and London, it has offices in Seoul, Shanghai, Warsaw and Tel Aviv. GT also has forged a strategic alliance with a law firm based in Rome and Milan. And in January, the firm opened a base in Tokyo.
That’s a meaningful development as Japanese lawmakers ponder legal casinos, with the approval of Prime Minister Shinzo Abe and the active endorsement of the American Gaming Association. A number of international operators have shown interest in the nascent market, and no wonder. Investment analysts predict that Japan could eventually become the second-largest casino market in Asia based on gross gaming revenue, surpassed only by Macau.
Koji Ishikawa, managing shareholder of GT’s Tokyo office, is one of few gaming lawyers in Japan, and works with a variety of national and international institutions, issuers, underwriters and banking investors. With the Japanese Diet, or parliament, expected to act on casino legislation in the current extended session, “We are receiving a lot of inquiries from our U.S. gaming clients,” he says.
In order to succeed in Japan, Ishikawa adds, incoming investors must understand the differences in culture. “Korea or China are more American; Japan might look ‘Westernized’ on its surface, but actually it is still a very traditional and conservative country. That is why I recommend that my clients first learn a bit about how to communicate with Japanese business partners.
“It is nuanced, but the nuance is important. They do not have to change what they are going to say, but they may have to change how they say it.”
Other Asian jurisdictions—South Korea, Vietnam, Thailand, the Philippines—are also in expansion mode. “Having the international component to do what we do is very helpful to us and our clients, who have appreciated the ability to work with one firm,” observes Sabol.
Those clients include Fortune 500 companies, startups, private equity firms, investment banks and most of the major operators, along with manufacturers and suppliers, lottery providers, horse racing entities, online gaming companies—“anyone who is interested in investing in the gaming space,” says Sabol. “If it’s gaming-related, we do it.”
Founded in the late 1960s in Miami, the firm first known as Greenberg Traurig Hoffman has swelled beyond its South Florida roots to become a worldwide juggernaut with some 1,800 attorneys, government law professionals and policy experts. In 2007, it was named USA Law Firm of the Year by Chambers and Partners, whose Global Awards Program honors excellence in legal services in markets around the world.
In 2014, the firm earned the Corporate/ Mergers & Acquisitions Law Firm of the Year designation for Latin America by the same group. At the time, CEO Richard A. Rosenbaum said Greenberg Traurig was able to deliver not only because of its in-house team but also its “geographical platform and operational efficiencies.”
Clayton, who joined the ranks last August, is a former member of the Nevada State Gaming Control Board and a onetime professor of gaming law. He has served as counsel for some of the leading companies in the industry, and in 2012, was named one of the Top 10 Gaming Attorneys by the Las Vegas Business Press. He was also listed among the Best Lawyers in America in gaming law in 2013.
He says he joined GT to better serve Nevada clients who wanted to grow beyond the Silver State. “It became apparent to me they needed a broader support from their outside legal counsel, and that was the impetus,” he says. “The depth of the organization, the international reach, the commitment to the gaming practice all are very strong and very impressive; the firm already understood the industry both domestically and internationally.”
Simply put, Greenberg Traurig has “an incredibly deep bench,” adds John Pappalardo, co-chairman of the firm’s Global White Collar Criminal Defense Practice.
Pappalardo is a good example of the cross-practice starting lineup. He may be best known for representing Yukos Oil Company CEO Mikhail Khodorkovsky, whom Forbes magazine called “Vladimir Putin’s greatest enemy,” who was tried for fraud and tax evasion in the former Soviet Union.
“I get a lot of big marquee cases,” Pappalardo says, “but we have a tremendously high number of knowledgeable people with incredible skill sets.” Their shared goal, he says, is to ensure their gaming clients are “compliant citizens on the world stage.”
Playing by the Book
Last December, Massachusetts announced the launch of a statewide corruption tip line, 800-NO-BRIBE. At the time, Special Agent Vincent Lisi of the FBI’s Boston office told reporters that the rapid proliferation of the casino industry has created a potential breeding ground for bribery, fraud and abuse.
“When you look at legalized gaming, you have a heavy amount of regulation along with a lucrative business,” Lisi said. “Those two factors combined make for pretty fertile grounds for corruption of public officials.”
Pappalardo and his team are there to steer gaming companies clear of conflicts in the U.S. and abroad. With 40 years of litigation practice, the practice leader has worked in federal white collar criminal defense, FCPA issues, SEC investigations, fraud, money laundering, insider trading and other white-collar crimes. Prior to joining the firm, he was the U.S. attorney for the district of Massachusetts and a commissioner with the Massachusetts State Ethics Commission. He says assiduous, ongoing oversight is vital in an industry that is as heavily regulated as banking.
In the U.S., “casinos are basically rated as banks, and have been considered financial institutions since 1985,” says Pappalardo. As such, they’re subject to the Bank Secrecy Act, must file Suspicious Activity Reports, and must constantly monitor transactions, corporate policies, codes of conduct—every facet of the business at every level of operation.
Casinos are required to have risk-based anti-money laundering programs and train staff to identify the clues that that may indicate illicit activity, such as multiple small transactions that avoid threshold reporting requirements, or a high volume of wire transfers from foreign countries. They must be sure that potential business partners adhere to the same high standards.
Because of the nature of the business and the patrons, casinos are sometimes viewed as particularly vulnerable to become portals for money laundering, says Pappalardo. They are also vulnerable to insider complicity.
“The point is you need to pay attention, utilizing a strong compliance program with clear triggers for investigation and additional due diligence,” he says, along with thorough risk analyses to ferret out vulnerabilities, and prophylactic measures to ward off trouble before it starts.
“Compliance is not a one-shot deal that you put into place in 2013 and then put on a shelf,” Pappalardo adds. “It’s a living, breathing vehicle for protecting the company, and it has to be changed and tweaked” to reflect evolving rules and regulations.
Needless to say, the rules may differ among markets, and a U.S. company doing business in Europe or Asia must observe all the applicable mandates.
Perhaps more than any other enterprise, casino gaming has enabled many American Indian tribes in the U.S. to build new economies, lift the standard of living among their members, and in some cases create billion-dollar casinos that have helped to underwrite other ventures. In 2013, tribal gaming generated $28 billion in revenue, an all-time high, though growth has slowed considerably—reportedly about 3 percent in that same year, compared to pre-2007, when Indian casinos routinely recorded double-digit increases.
The task for tribes now is to safeguard that hard-earned progress by diversifying their portfolios. For some, this means harnessing wind and solar power for renewable energy. For others, it means investing in real estate, getting into ecommerce and digital gaming, and exploring other business endeavors.
Casinos in many cases have given tribes “an economic base or access to capital, which creates new economic development opportunities,” says Loretta Tuell, a tribal gaming lawyer who joined Greenberg Traurig in 2014. “Tribes today are trying to diversify and do what makes sense for where they’re located, utilizing the resources available to them.”
A member of the Nez Perce tribe who grew up on the reservation in Idaho, Tuell is former chief counsel for the Senate Committee on Indian Affairs and a former senior official at the Department of the Interior, where she was appointed director of the Office of American Indian Trust by President Bill Clinton. She has two decades of experience in land-into-trust matters, gaming compacts, tribal sovereignty, taxation and other issues of critical importance to tribes. It all comes back to one foundation, she says.
“All gaming opportunities start with the land. Is the land we have or need to acquire eligible for gaming? Are we looking for expansion or renovation of an existing gaming facility? What’s the infrastructure, and what are the laws and codes? Do we have to work with federal agencies to expand any new rules and regulations? Do we need to renegotiate a tribal-state compact?”
Many tribes are looking farther afield for opportunities—in other states and in collaboration with commercial operators. Perhaps most interestingly in a crowded domestic market, they’re looking at opportunities outside the U.S. (case in point: a decision by the Mohegan Tribal Gaming Authority to partner on a resort near Incheon International Airport, considered the gateway to Seoul, South Korea).
“That’s why I really appreciate the global outreach of GT,” says Tuell. “Our expertise and experience and contacts can help create opportunities for partnerships for tribes, as well as people that want to do business with Indian Country.
“To me,” she says, “the sky’s the limit.”
As the industry expands not just globally through new bricks-and-mortar resorts but into cyberspace, industry experts are speculating on what will be the next best thing. Internet gaming hasn’t proven the gold rush some hoped for; limited to three states and with no federal legislation in the offing, it likely will not grow appreciably until bigger states—New York, California, even Texas—get into the games.
The latest “leading-edge area of interest” is around fantasy sports (FanDuels, DraftKings) and social games (Angry Birds, Words with Friends), says Clayton. “We’ve seen the success of those platforms; there’s interest to see if can we monetize them and make them gambling games. That facet of the industry begets a whole slew of questions—the applicable state laws where they operate and where the players reside, as well as whether there are federal gaming law implications.”
Also on the docket: skill-based gaming, which some believe must increase to create a new, younger player demographic. With the passage of Nevada’s Senate Bill 9, that state is now starting to adopt regulations that would allow player skill to affect the outcome of a gambling game, says Clayton.
“Another initiative that’s a bit more nuanced but potentially more valuable is recalibrating loyalty points to accrue like airline frequent-flier miles,” an approach that would allow casinos to adjust hold percentages to reward premium players. “It will be interesting to see if manufacturers can get more creative around those areas and further invigorate the gambling device market,” says Clayton. “I think you’ll probably see other states pursuing this.”
As the landscape changes, says Sabol, the gaming practitioners at Greenberg Traurig plan to be the front line of expertise for operators and others looking to grow and prosper in an evolving industry.
“When we started, we wanted to provide a greater level of seamless, high-quality, dynamic services to our clients,” says Sabol. “Through innovation and collaboration, that’s what we’ll continue to do.”