Q: I have been found qualified due to my ownership interest in a casino supplier licensee. I intend to sell my ownership interest to another person when I retire. Do I need to notify the gaming commission when I sell my interest?

A: Transfers of ownership interest in companies that hold a gaming license may require notice or approval of the transfer before the transfer. Other jurisdictions may merely require notice of the transfer within a certain time period after the transfer occurs. It is very important that you review the ownership transfer requirements in every jurisdiction where the company holds a gaming license, as approval requirements may take a considerable amount of time and affect the method of transfer.

Many gaming jurisdictions require prior notice and approval of ownership transfers above a certain ownership threshold. The notification process typically requires the current owner to identify the amount or value of interest transferred, the person to whom the interest will transfer, and the anticipated transfer date. Regulators may also require the submission and review of the contracts or other instruments that govern the transfer. If the amount of interest being transferred triggers a qualification filing, then the transferee will be required to complete a personal disclosure application process and be found qualified and suitable before the gaming regulatory body approves the transfer.

Many jurisdictions offer licensing waivers or exemptions for institutional investors, such as large banking institutions that certify that they will passively hold the ownership interest and not seek to influence the affairs of the company.

Notably, some jurisdictions require that the transfer contracts or instruments contain specific language that limits the ability of the owner to transfer the interest without gaming approval. Therefore, it is important to review and consider the transfer requirements before drafting transfer documents to ensure full compliance with gaming regulations.

Once a transfer approval request has been submitted to the gaming commission, the commission will review the proposed transfer to ensure that it complies with all gaming laws and regulations. Some jurisdictions have delegated the approval of transfer requests to staff members, allowing for a fairly quick and straightforward approval process. Other jurisdictions, however, may require a full commission vote at a regular public meeting which may only occur once a month. If this is the case, the request should be submitted well in advance of the proposed transfer date to ensure that the commission has time to include the request on an upcoming agenda.

Gaming industry advisor Regulatory Management Counselors, P.C. authored this article. Visit the Gaming Advisors section of this website to find out more about gaming licensing and compliance advisors.