“ Treat them as you would wish to be treated if the roles were reversed … Do the research and analysis before you meet with the regulators .”
— Tommy Shepherd , Partner , Jones Walker
MULTIPLE RULES & REGS
International companies seeking to do business in the U . S . got a shock when it was explained to them the depths of the licensing investigations and the individual jurisdictions , which usually have slightly or widely different regs . Di Chio disputes that view , however .
“ The beauty of having experienced the growth of iGaming across Europe is that we as a business have already grown accustomed to different types of regulatory approaches across our operational markets ,” he says . “ So , in effect , we treat each individual state as its own separate regulated market with different standards , regulations and responsibilities .
“ At the same time , we ’ ve encouraged dialogue between regulators across these states and maintained open lines of communication with them . Until the U . S . market regulation is harmonized and consistent across all the states , this is the approach we ’ ll continue to take .”
Staudenmaier says it ’ s not only commercial jurisdictions that operators and suppliers must consider .
“ It is incumbent on the operator to do their homework for each jurisdiction ,” she says , “ including tribal jurisdictions . Each tribal jurisdiction , like states , is unique in terms of its regulatory requirements . Conducting careful due diligence on the regulatory requirements is essential . This can be done by engaging outside counsel in each jurisdiction , or targeting specific jurisdictions for initial market entry .”
Educating your client on the U . S . regulatory landscape is crucial , according to Scherer .
“ You try to tell them and prepare them up front ,” he says , “ but it is natural for companies and their executives to assume that because they have been licensed in multiple jurisdictions , they will have no trouble getting licensed in the next jurisdiction . All of us tend to overlook our weaknesses , and if we fail to understand how the concerns or approaches of a particular jurisdiction might apply to those weaknesses and deal with them up front , we do so at our peril .”
Shepherd says a gentle suggestion that an issue could be handled more effectively sometimes works .
“ You have to be patient and be willing to put in the work to help a new regulator understand your company and your products .”
— Scott Sherer , Partner , Brownstein law firm
34 Global Gaming Business OCTOBER 2024
“ Depending upon the jurisdiction and the issue , I sometimes will say to jurisdiction X that jurisdiction Y handled it a certain way , just to give jurisdiction X an idea that what we are proposing is not out of the mainstream of regulatory thought ,” he explains . “ That becomes particularly helpful if the example you are providing is Nevada or another major jurisdiction .”
Foreign companies that resist the regulatory structure in the U . S . often need to be given a dose of reality .
“ You have to be frank on the front end and mold expectations ,” says Shepherd . “ I had a European client undergoing a licensing investigation in the U . S . The general counsel objected to certain information requests from the regulators and wanted to push back hard . We had to have that difficult discussion : Do you want a license or not ? If so , you need to provide the information or offer a reasonable alternative .”
Russell says international companies entering the U . S . market would be smart to work with a law firm that has relationships in many jurisdictions , saving time and money .
“ There are many firms across the U . S ., such as Brownstein , Bose McKinney , etc ., that have navigated multi-jurisdictional licensing process ,” he says . “ It is my recommendation that an in-house counsel find a centralized law firm to work with and have them coordinate with local state advisers when needed . This approach will ensure good representation without duplicate efforts and will reduce costs .”
For companies considering entering the U . S . market , Scherer has some suggestions .
“ Understand how your products and services fit in the market ,” he recommends . “ Really learn the applicable rules , consulting knowledgeable outside experts where necessary , and perform a gap analysis to determine what it is going to take to get your system or methodology approved in each jurisdiction . Understand the time it will take to get licensed and get your products approved .
“ If time and immediate revenue are critical , seek those jurisdictions where you can get to market sooner , but understand that you will need to change your compliance approach as you move from markets with lower regulatory hurdles to larger , more well-established markets with higher regulatory expectations . If you have adequate capitalization and time , consider starting in those larger , more well-established markets , creating compliance processes that will serve you well wherever you go in the United States .” Schrier concurs . “ When new clients contact us about U . S . opportunities , we spend a substantial amount of time understanding their product , and their role , whether that is sports , iGaming , esports , sweeps or lottery ,” he says . “ We talk through their business plan and relationships they will form with operators , regulators , suppliers .
“ We also create a plan for their potential licensing needs , evaluating whether they have the most efficient corporate structure for licensing , what their organization looks like , and who are their UBOs ( ultimate beneficial owner ). Then we review the plan of attack for the U . S . launch . The goal is to comply with U . S . requirements with the least amount of persons and entities having to obtain licensing .