Wednesday, June 17, 2009

The Trib Talks Video Poker.

Well the Trib had a piece today about video poker and makes some really good points about the regulatory challenges the state is going to face.

Since you are going to have to at least going to have to basic background check

  • 50 Distributors (Equipment companies)
  • 100 Terminal Operators (Owns, services the equipment) there will have to be at least 20 by law, since no one it seems can have more that 5% of the machines in the state
  • 800 Licensed technicians (Repair folks) -- that's a logical guess. I think the number is low.
  • 1000 Licensed terminal handler (light maintenance) -- Also a logical guess.
  • 9,000 Locations (using the Tribs 45,000 machine number)
The law references 9 entities (og 84) (I have lumped all locations into the 9,000), so by my estimation there will be at least 7,000 background checks required to pull this off. Like the Trib sort of brings up, the gaming board is likely not up to the task.

In many ways the 9,000 number for the background check for the locations and the 11,000 number is low. From page 84

The background
investigation shall include each beneficiary of a trust, each partner of a partnership, and each director and officer and all stockholders of 5% or more in a parent or subsidiary corporation of a video gaming terminal manufacturer, distributor, supplier, operator, or licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment.

That will cover a lot of folks, how many licensed establishments are owned by big corporations? How many shareholders do they have that have over 5% (less than 20, I know but it will be a few). Do they do a background check on a large investor in Chilli's? Also how do you define officers of a veterans establishment (just the Commander, or all 20 or so officers)? Do you have to re-submit to background checks every time you get a new shareholder or a new officer?


(c) Each person seeking and possessing a license as a video a gaming terminal manufacturer, distributor, supplier, operator, handler, licensed establishment, licensed truck stop establishment, licensed fraternal establishment, or licensed veterans establishment shall disclose the identity of every person, association, trust, or corporation having a greater than 1% direct or indirect pecuniary interest in the video gaming terminal operation to which the license is sought. If the disclosed entity is a trust, the application shall disclose the names and addresses of the beneficiaries; if a corporation, the names and addresses of all stockholders and directors; if a partnership, the names and addresses of all partners, both general and limited.

Ok, now I don't really understand the above, is the 1% such that a fraternal organization's members have a indirect pecuniary interest? I wouldn't think so, but who knows?

One of the real risks here is going to be who gets to go first. When this happens there is going to be a rush to the gaming board to get licensed since being the first to be able offer video poker equipment to locations is going to be a huge advantage. If the gaming board is smart they will establish how they decide who goes first and carefully document how they follow that procedure so clout does not come into play.

You think the Trib is being tough on U of I, imagine if they discover someone is pulling strings to get a campaign donor or local guy moved up on the distributor list.


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