Opponents of gambling in the U.S. have become critical of the way that some new state jurisdictions are employing consultants who – they say – have hidden agendas and are often employed by pro-gambling lobbies.
Too Close for Comfort
Cash-strapped states are turning to industry consultants to advise them about whether to legalize gambling in order to bolster their coffers. These companies will often draft legislation, set up commissions and make decisions about which operators might be suitable licensees.
But many of these consultants’ industry connections are just a little too close to the casino business for the comfort of the anti-gambling brigade, which has declared that private companies that are hired to vet operators should not have a “cozy relationship” with the casinos they are meant to be scrutinizing, nor should they be acting as gambling industry regulators.
This week, the issue was brought to light in the case of law consulting firm Shefsky & Froelich (which recently became part of Taft) – hired by Massachusetts to help the state decide who should build its first casino in Springfield. Shefsky & Froelich recommended MGM Resorts International, for which it was already working as a registered lobbyist in Illinois.
It’s believed that at least 16 states across the U.S. rely on private companies as consultants. So, could it be that these states, looking for a quick fix, and desperate to get their new casinos up and running as quickly as possible, are moving towards a form of semi-privatization of gambling? It’s certainly not the way things are done in states in which gambling is more established, such as Nevada, New Jersey and Delaware, where regulation is famously stringent.
That being said, Massachusetts regulators – still relatively new to the land casino game – have been, if anything, roundly criticized by industry executives as being far too stringent and nitpicky, rather than the opposite; taking away some credence from anti-gaming critics’ arguments.
Who’s Watching Who?
Illinois Gaming Board spokesman Gene O’Shea recently measured into the debate, saying: “How do you vet your consultants? If a lot of these consultants, at one time or another, have worked for the people that you’re in charge of regulating, at some point, you’re going to have issues with the purity of the investigation.”
Meanwhile, spokesman for the Florida non-profit organization No Casinos, John Sowinski, attacked the practice in the state of Florida, which is currently seeking to expand its casino offerings beyond tribal gaming and racing, saying: “The gambling industry is the one industry that seems to get away with this conflict of interest carte blanche.”
Managing director of Spectrum Gaming Michael Pollock – who represents one of the biggest gambling consultant firms in the U.S., which recently completed a study for Florida – negated the claims, however, saying, “You cannot be in this business if you’re willing to entertain conflicts of interest or even an appearance of a conflict.
“We make it clear from the outset that we are not necessarily going to tell you what you want to hear, we’re going to tell you what you need to know. And we will not entertain an engagement in which a client seeks a particular outcome,” Pollock added.
MGM CEO Jim Murren says the allegations are based on an outsider’s misconception of the gambling industry, which he says is close-knit:
“This is not a huge industry, and gaming law is highly specialized,” he said. “There are only maybe four or five firms that are experts in gaming law, and we know them all, and we’ve probably used them all.”
It seems that the casino consulting business is somewhat incestuous, but whether that’s simply the nature of the industry or something more sinister, is up for debate depending on your views. What is clear, however, is that it’s big business. Spectrum Gaming began life in a New Jersey basement back in 1996 and has since been named one of the fastest-growing private companies in the U.S. Its website declares that: “Governments, gaming operators, developers and investors in five continents have retained Spectrum, and we stand ready to serve clients through our offices in Atlantic City, Bangkok, Guangzhou, Hong Kong, Las Vegas, Macau, Manila and Tokyo.”