No one was able to predict anything about 2020, including the results of the 2020 US election (though many tried – more than $ 1 billion in foreign bets placed on the presidential race outcome). Hoping to bring clarity back to our lives, Dickinson Wright's gaming attorneys have tried to see how a Biden administration will affect the gaming industry.
While Donald Trump owns casinos and currently holds a real estate investment in Las Vegas (Trump Tower), President-elect Biden appears to have no active interest in the gaming industry. Biden's recent and frequent trips to Nevada have been all campaign events where union members have been asked for assistance and argued that his predecessor was holding up stimulus funds. Biden's visits have significantly eased the desperation of the Nevada hotel industry, which has been decimated by resort closures, meetings, and special event cancellations, resulting in a dramatic decline in visitor traffic as well as hotel and gaming revenues.
Lockdown in Lockstep?
Of paramount immediate concern to the gaming industry is whether there will be a mandate to impose a national lockdown on "non-essential" businesses. As readers may recall, the casino industry was not considered "essential" when it was purposely left out of the original $ 2 trillion funding guidelines for the Cares Act. Given the state of the economy, a Biden government is unlikely to lock down casinos across the country, especially as it further affects an entire industry's chances of economic recovery. Instead, any occupancy restrictions or closings would continue to come from guidelines issued by state governors as they recognize the need to address health concerns within their borders. And even when some states banned gambling within their jurisdiction, tribal casinos defied and avoided such orders. For example, California tribal casinos took the position that their sovereign status exempted them from state lockdown orders, and Governor Newsom's shutdown orders prevented a showdown between the state and the tribes by avoiding the reference to tribal games.
Financial relief from the federal government
The American Gaming Association and individual gaming companies have given Washington D.C. has done some vigorous lobbying to enable small and medium-sized gaming companies (500-10,000 employees) to qualify for the basic paycheck protection program ("PPP") payouts. However, any other funding for most operators had to be in the form of repayable, albeit low-interest, loans.
The latest bailout package under review is a proposed post-election bipartite bill of $ 908 billion, far less than in late summer. While the new bill includes some relief in the form of unemployment benefits for workers on leave and an additional grant of $ 300 per week for four months, it does not include a forgivable PPP loan component, except for small businesses with fewer than 300 employees the 30% drop in sales or have suffered more.
Casino revenues have improved slightly on a global basis. However, the sales numbers are dramatically lower than they were in 2019. The most affected is the VIP side of the business. While most travel restrictions between mainland China and Macau have been lifted, given the close relationship between the Trump administration and the PRC, it may take some time for governments in both countries to allow the free flow of visitors. While everyone expects President Biden to try to improve relations between the two countries, travel by VIPs from the PRC is unlikely to resume, at least in the near future. Other worldwide visits will be similarly sluggish as international flights slowly resume.
Minimum wage – maximum impact.
A commitment by the Biden government to raise the minimum wage would have a significant impact on the gaming industry if met. Many casino jobs and those in the service sector are complemented by customer money. A minimum wage of $ 15 would be an immediate jump from the current minimum wage of $ 9 an hour in Nevada ($ 8 for health insurance), making it almost twice as expensive to provide certain levels of service, especially at a resort. In addition to employer contributions for FICA, compensation, health insurance, meals and many other benefits, some of which are based on total wages, the gambling industry would be pressured to either lower profit expectations, lower service levels or automate them.
Effects on the Federal Wire Act and online sports betting.
From 1961 to 2011, the US Department of Justice (“DOJ”) held the Federal Wire Act to apply to all forms of gambling, including betting on “sporting events” and “competitions” in international and international commerce. Even so, the DOJ applied the Wire Act almost exclusively to bookmakers and sports betting. In 2001, the Fifth Circuit Court of Appeals reached agreement with a federal district court in Louisiana that the term "sporting event or competition" in the Federal Wire Act should be interpreted to mean that sport was both events and competitions, changing the Federal Wire Act only for sports betting. In 2011, the DOJ issued a statement in line with the Fifth Circuit's statement that the DOJ believes that the Federal Wire Act only applies to sports betting in interstate and overseas commerce.
While Trump may have understood and had empathy for stationary casino operators like him, he did not support the expansion of online gaming or tribal gaming. In 2018, the DOJ reversed its 2011 opinion, stating that the Wire Act applies to all forms of betting and transactions using electronic communications, even when the bettor and betting company are in the same state. The DOJ expressly stated that state lotteries could no longer rely on the 2011 opinion to conduct distance sales of domestic lottery products. The 2018 opinion was challenged by the New Hampshire state lottery, and a district court ruled that the 2018 opinion was flawed and reiterated that the Wire Act only applies to sports betting, not the domestic online sports offered in New Hampshire Lottery products. The DOJ has since appealed.
We assume that the DOJ, under new leadership with a representative from the Biden Administration, will overturn the 2018 opinion and withdraw its appeal against the decision in the New Hampshire District Court. This should provide a clear path for expanded use of Internet communication for game products such as gaming machines. B. National online gaming, international online gaming (excluding sports) operated by licensed gaming operators in each state, and expanded use of interstate large-scale progressives by commercial and tribal gaming operators.
Enforcement measures against illegal operators.
During the Obama DOJ years, the DOJ set its priorities for the prosecution. The rationale was that with limited resources, the DOJ should focus its efforts on crimes that have the greatest impact on citizens and the economy. Crimes related to terrorism, illicit drug trafficking, market manipulation and human trafficking therefore garnered significant and very public resources, while online gambling crimes were not a high priority.
During the Trump administration, the DOJ openly stated that priorities had changed and signaled that lower-level crimes would also receive significant attention. During the Trump years, these lower-level crimes did not appear to extend to gaming-related crimes. As a result, there has been little obvious enforcement effort for gambling companies regardless of the administration and nothing like the infamous “Black Friday” campaigns of 2011 against illegal online poker operators.
With the expansion of national gambling following New Jersey's successful efforts to invalidate the law to protect professional and amateur sports, the DOJ is under increasing pressure to use its enforcement powers to limit the market presence of illegal bookmakers as the legal operators Economies make a significant contribution to the state, especially in the recent economic downturn. As more and more states legalized this form of gambling, the regulated revenue from sports betting was $ 3 billion in October 2020 alone – the highest ever. We expect the DOJ to step up efforts in the next administration to enforce existing federal laws against foreign sports betting that violate US law at the expense of the US's legitimately regulated gaming markets.
Tribal Gaming under the Biden Administration
Biden's presidential campaign included a promise to appoint Indians to high-level government positions, but as of this writing he has not yet made an election for Interior, which is a central role for the Indian country, or Assistant Secretary-Indian Affairs ( "AS-IA"), a task that also includes heading the Bureau of Indian Affairs. A Native American has never served as a secretary, but Mr. Biden is under great pressure from the Indian country to designate Native American or Alaskan Native Americans for both roles.
The main candidate for Home Secretary is Representative Debra Haaland (D-N.M.), A citizen of the Pueblo of Laguna, a New Mexico tribe. Other candidates are the Senators of New Mexico, Tom Udall and Martin Heinrich, and the Governor of Washington, Jay Inslee. 50 members of the House of Representatives under the leadership of Rep. Raul Grijalva (D-Ariz.) Have signed a letter in which they support Halaand's nomination. Despite her progressive positions, she has good bipartisan working relationships and has been commended by Rep. Don Young (R-AK), who serves with Haaland on the House's Natural Resources Subcommittee for National Parks, Forests and Public Areas.
Regardless of the specific guidance, the Indian country expects the Biden-Harris government to engage in a close and advisory relationship on a number of issues important to Tribes, including Covid-19 aid, pipeline and drilling permits, and resources to combat the increasing violence against Indian women. Biden's stated top priority for the interior is to ban new fossil fuel wells in all federal states and waters of the country as part of a strategy to combat climate change. However, we can expect similar political reversals in relation to the Indian country as well. Former AS-IA and Chickasaw Nation resident Kevin Washburn, the Dean of the University of Iowa College of Law, heads Mr. Biden's Interior Transition Team and is very familiar with Indian Games having previously served as NIGC General Counsel was.
The 2009 Supreme Court ruling, Carcieri v Salazar, prohibited the United States from adopting new Trust Land for many tribes. The decision disqualified tribes who could not document that they were a "recognized Native American tribe now under federal jurisdiction" when the 1934 Indian Reorganization Act was passed. Mr Biden has repeatedly expressed his support for a "clean" law correction that would not impose additional conditions on tribes requesting gaming permits.
The Obama administration accepted 542,000 acres of land as trust for tribes, but the Trump administration only accepted a small fraction of that. Obama's interior accepted land in game trust status for the Cowlitz tribe in 2013 and implemented a policy framework based on that decision to allow other such trust acquisitions. Trump's interior withdrew that policy in March 2020, but in the expected chain of a similar reversal of reversals, Mr Biden has promised to restore it!
The new trust land policy will have an immediate impact on at least one major tribal gaming project. The fate of the Mashpee Wampanoag Tribe's proposed casino project in Taunton, Massachusetts, roughly halfway between Boston and Providence, Rhode Island, is currently in federal court. In 2015, the Obama administration trusted the casino website and declared it eligible to play. In 2018, Trump's insides overturned the decision. The tribe sued the ministry, but earlier this year, Interior said it was planning to record the land transfer out of trust, revoke the reservation statement, and lift the eligibility rules. In June, a federal court ordered a rethink of Interior and issued its decision to remove the trust from the country. The agency will be again under democratic control and will likely relinquish its litigation position and reissue the decision so the project can continue. However, the acquisition of land through administrative trusts is always subject to litigation, and a more "originalist" Supreme Court may find that Interior's interpretation is beyond the limits of its Carcieri ruling.
The policies of the National Indian Gaming Commission under the Trump administration have remained relatively stable as the roles of the independent agency are set by regulations and the most controversial decisions about gambling areas are made in coordination with the Interior. Trump appointed Sequoyah Simermeyer in November 2019 with the unanimous approval of the Senate as the three-year presidency. Mr Biden is likely to appoint two new commissioners to fill vacant and expiring seats, and this selection has not proven controversial in the past. There is consensus that the Commission will continue to support and protect the tribal game as it did in all of the previous government.
* Immediately after this article was published, President-elect Biden selected MP Deb Haaland as his election for Home Secretary.
Effects on Daily Fantasy Sports.
If you ask the Daily Fantasy Sports Industry ("DFS") they will tell you that they are not engaged in gaming. However, the IRS recently released two memos stating that entry fees received by players for DFS activities are taxable because they are gambling. A federal excise tax has long been levied on gambling, with three initial exemptions for table games, slot machines, and pari-mutuel races, and later in the 1980s for state lotteries. For all other gaming activities, in particular sports betting, a consumption tax of 0.25% is levied on the betting handle (bets made). However, if the activity is not approved by the state, the excise tax is 2%, which would eliminate all potential profits. This is what the DFS finds itself in with the IRS, and while there is still a possibility of an agreement or reversal of the tax court, the Biden government is highly unlikely to intervene.
The gaming industry has largely managed not to get caught up in bipartisan feuds and will find a way to work with any administration. The immediate challenges facing the gambling sector have more to do with the health risks posed by COVID-19, its impact on the transportation industry and the ability of people to gather in large groups at events. Equally important is the general economic climate, including employment figures, which is reflected in disposable income for entertainment purposes. There is no doubt that the pent-up demand for gambling is out there, but in the near future, these health and economic factors are not political choices that a Biden government will be in control of.