Louisiana Gaming Supplier Regulatory Overview

Introduction

In July 1991, Louisiana passed a law which made no-limit stakes riverboat gambling legal, making it the fourth state to approve riverboat gambling casinos. Although excursion riverboat gaming was the original intent, it was quickly found that dockside casinos were where gamblers wanted to be. Most of the riverboats in the state stay moored at the waterside. Currently there are 13 riverboats in operation.

In 1992, the state passed a law which allowed New Orleans to build a land-based casino. There are also three land-based Indian casinos in Louisiana. Louisiana also has four racetrack casinos. These casinos employ over 17,000 people.

In 2009, visitor volume to Louisiana casinos was 35.6 million, generating more than $2.4 billion in revenue.

Manufacturer Permit Requirements

A Manufacturer Permit is required of all individuals and entities that manufacture any gaming device, supplies, or equipment for use at licensed gaming facilities within the state.¹ Permits are nontransferable.² There are two types of manufacturer permits, one for manufacturers of slot machines and video poker devices and one for manufacturers of all other gaming equipment.

In addition to other requirements, the Louisiana Gaming Control Board ("Board") will consider the viability of the applicant's business, including the number of years in business, number of employees, sales volume, warehouse facilities, business facilities, and registration with other regulatory agencies.³

Duration

Both types of manufacturer permits are valid for five years.⁴

Fees

Manufacturers of slot machines and video draw poker machines must pay a $15,000 licensing fee when submitting an application and, once issued, annually based on the date of issuance.⁵

Manufacturers of all other gaming equipment must pay a $7,500 licensing fee when submitting an application and, once issued, annually based on the date of issuance.⁶

Application

Entities applying for a Manufacturer of Slot Machines or Video Draw Poker Devices Permit, or a Manufacturer of Gaming Equipment other than Slot Machines and Video Devices Permit, must complete a Level II Business Application.⁷

Information requested in the application includes:

1. Gaming licenses or licensing applications in other states;
2. Criminal charges in any jurisdiction;
3. Civil lawsuits in which the applicant was a defendant in the past five years;
4. Subpoenas for testimony in any jurisdiction;
5. Any work as a lobbyist in Louisiana;
6. Regulatory actions in any jurisdiction;
7. Identity of operator with whom the applicant will conduct business;
8. Location of warehouses and storage facilities;
9. Number and identification of commercial delivery vehicles;
10. Financial history, including interest holders and bankruptcy proceedings;
11. Location of records and books; and
12. Statements of assets and liabilities.⁸

Also required of each applicant are several attached documents. These documents include the following:

1. Certified copies of charters and other corporate governance documents;
2. Proof of Registration with the Louisiana Secretary of State if domiciled outside the state;
3. Signature Authorization Cards for each operating account of the applicant;
4. The most recent annual report sent to shareholders and to all states;
5. If applicable, the most recent Securities and Exchange Commission ("SEC") Form10-K, 10-Q, and 8-K filings;
6. Organizational chart noting control over the applicant;
7. Organizational chart noting directors, officers, managers, partners, and other key personnel;
8. State, federal, and local tax returns for the past year;
9. IRS 1099 receipts for the past year;
10. Photographs of the exterior of the business, warehouse, and storage facilities;
11. Current Title 15 certificates of registration;
12. List of locations and account numbers for all UCC filings; and
13. Affidavit of Full Disclosure.⁹

Gaming Supplier Permit Requirements

"Gaming Supplier" is defined as a person or entity that supplies, sells or leases, or contracts to sell or lease, gaming devices, equipment, or supplies to a casino gaming facility.¹⁰ All persons falling within this definition are required to obtain a Gaming Supplier Permit before conducting business with a licensed operator.¹¹ Permits are nontransferable.¹²

In addition to other requirements, the Board will consider the viability of the applicant's business, including the number of years in business, number of employees, sales volume, warehouse facilities, business facilities, and registration with other regulatory agencies.¹³

Duration

Gaming Supplier Permits are valid for five years.¹⁴

Fees

Gaming suppliers must pay a $3,000 licensing fee at the time of the application and, once issued, annually based on the date of issuance.¹⁵ Distributors of video draw poker devices must pay an annual licensing fee of $10,000.¹⁶

Application

Entities applying for a Gaming Supplier Permit must complete a Level II Business Application.¹⁷

Information requested in the application includes:

1. Gaming licenses or licensing applications in other states;
2. Criminal charges in any jurisdiction;
3. Civil lawsuits in which the applicant was a defendant in the past five years;
4. Subpoenas for testimony in any jurisdiction;
5. Any work as a lobbyist in Louisiana;
6. Regulatory actions in any jurisdiction;
7. Identity of operator with whom the applicant will conduct business;
8. Location of warehouses and storage facilities;
9. Number and identification of commercial delivery vehicles;
10. Financial history, including interest holders and bankruptcy proceedings;
11. Location of records and books; and
12. Statements of assets and liabilities.¹⁸

Also required of each applicant are several attached documents. These documents include the following:

1. Certified copies of charters and other corporate governance documents;
2. Proof of Registration with the Louisiana Secretary of State if domiciled outside the state;
3. Signature Authorization Cards for each operating account of the applicant;
4. The most recent annual report sent to shareholders and to all states;
5. If applicable, the most recent 10-K, 10-Q, and 8-K filings;
6. Organizational chart noting control over the applicant;
7. Organizational chart noting directors, officers, managers, partners, and other key personnel;
8. State, federal, and local tax returns for the past year;
9. IRS 1099 receipts for the past year;
10. Photographs of the exterior of the business, warehouse, and storage facilities; and
11. Affidavit of Full Disclosure.¹⁹

Non-Gaming Supplier Permit Requirements

Any person or entity that furnishes services or goods and receives compensation or remuneration from a casino operator in excess of $200,000 must also obtain a Non-Gaming Supplier Permit from the Board.²⁰ The Board also has the authority to require those suppliers of non-gaming goods or services who fall below the $200,000 threshold to obtain a Non-Gaming Supplier Permit.²¹ Permits are nontransferable.²²

Any person or entity that provides maritime crew, staff, or maritime services, including consulting related to maritime issues, directly related to the maintenance and operation of a riverboat must receive a permit from the Board.²³

Each permit applicant must disclose a financial statement, historical background for the past 10 years, statements regarding financing, an affidavit of full disclosure, an authorization to release information to the Board, a standard bank confirmation form, a release of all claims, a security statement, and other items requested by the Board.²⁴

In addition to other requirements, the Board will consider the viability of the applicant's business, including the number of years in business, number of employees, sales volume, warehouse facilities, business facilities, and registration with other regulatory agencies.²⁵

Some non-gaming suppliers may request a waiver from the licensing requirements. Those suppliers must complete a Non-Gaming Supplier Waiver Application.²⁶

Duration

Non-Gaming Supplier Permits are valid for five years.²⁷

Fees

Non-gaming suppliers must pay a $250 licensing fee at the time the application is submitted and, once issued, annually based on the date of issuance.²⁸

Application

Entities applying for a Non-Gaming Supplier Permit must complete a Level II Business Application.²⁹

Information requested in the application includes:

1. Gaming licenses or licensing applications in other states;
2. Criminal charges in any jurisdiction;
3. Civil lawsuits in which the applicant was a defendant in the past five years;
4. Subpoenas for testimony in any jurisdiction;
5. Any work as a lobbyist in Louisiana;
6. Regulatory actions in any jurisdiction;
7. Identity of operator with whom the applicant will conduct business;
8. Location of warehouses and storage facilities;
9. Number and identification of commercial delivery vehicles;
10. Financial history, including interest holders and bankruptcy proceedings;
11. Location of records and books; and
12. Statements of assets and liabilities.³⁰

Also required of each applicant are several attached documents. These documents include the following:

1. Certified copies of charters and other corporate governance documents;
2. Proof of Registration with the Louisiana Secretary of State if domiciled outside the state;
3. Signature Authorization Cards for each operating account of the applicant;
4. The most recent annual report sent to shareholders and to all states;
5. If applicable, the most recent 10-K, 10-Q, and 8-K filings;
6. Organizational chart noting control over the applicant;
7. Organizational chart noting directors, officers, managers, partners, and other key personnel;
8. State, federal, and local tax returns for the past year;
9. IRS 1099 receipts for the past year;
10. Photographs of the exterior of the business, warehouse, and storage facilities; and
11. Affidavit of Full Disclosure.³¹

Key and Non-Key Gaming Employee Permit Requirements

Any person who has control over any ownership, income, profits, or economic interest in a Level II Business applicant must file a Personal History and Financial Disclosure Form.³² Note that there is a separate, abbreviated form for individuals associated with a Non-Gaming Supplier Permit applicant.

Duration

Employee permits are valid for a term of one year.³³

Fees

The application fee for a Key Gaming Employee Permit is $500. The renewal fee for a Key Gaming Employee Permit is $200.³⁴

The application fee for a Non-Key Gaming Employee Permit is $200. The renewal fee for a Non-Key Gaming Employee is $200.

Application for Individuals Associated with Manufacturers and Gaming Suppliers

These individuals must complete a Gaming Personal History and Financial Disclosure Application. Information necessary to complete the application includes the following:

1. Personal identification information;
2. Residence information for the past 10 years;
3. Family and marriage information;
4. Identification of parents and spouse's parents;
5. Identification of children, stepchildren, and adopted children;
6. Education;
7. Military service;
8. Past criminal, investigatory, and civil filings information;
9. Gaming and other professional licensing in all jurisdictions;
10. Employment history;
11. Political contributions;
12. Business associations and ownership for the past 10 years; and
13. Financial history for the past 10 years.³⁵

In addition to this information, the applicant will be required to submit the following documents:

1. Photograph;
2. Two fingerprint cards;
3. Statement of annual income;
4. Net worth statement;
5. Birth certificate;
6. If applicable, Form DD214 or its equivalent;
7. Affidavit of Disclosure; and
8. Disclosure of Tax Information.³⁶

Application for Individuals Associated with Non-Gaming Suppliers

These individuals must complete a Non-Gaming Personal History and Financial Disclosure Application. Information necessary to complete the application includes the following:

1. Personal identification information;
2. Residence information for the past 10 years;
3. Family and marriage information;
4. Identification of parents and spouse's parents;
5. Identification of children, stepchildren, and adopted children;
6. Education;
7. Military service;
8. Past criminal, investigatory, and civil filings information; and
9. Gaming and other professional licensing in all jurisdictions.³⁷

In addition to this information, the applicant will be required to submit the following documents:

1. Photograph;
2. Two fingerprint cards;
3. Birth certificate;
4. If applicable, DD214 or its equivalent;
5. Affidavit of Disclosure; and
6. Disclosure of Tax Information.³⁸

Supplier Licensing Process

The licensing process in Louisiana is run primarily though the Louisiana Department of Public Safety and Corrections, a division of the State Police. Potential applicants must first complete the appropriate application forms discussed above and submit the completed documents to the Gaming Enforcement-Licensing Section of the State Police. Officials will then review the applications and conduct required background checks. Applicants may be required to meet personally with licensing officials for interviews regarding the applicant's suitability. The applicant will be notified in writing of any final action taken on an application.

Renewal

When applying for the renewal of any permit, the renewal application must be received by the
Board at least 60 days prior to the expiration date of the permit.³⁹ If the permit is received after this date, then the person or entity will be charged $25 or 25 percent of the amount due, whichever is greater, as a late fee.⁴⁰ If a key or non-key employee of a licensed company fails to renew his or her occupational license, then that employee must be terminated or suspended until the Board notifies the licensed business that the employee's license has been renewed.⁴¹

Distributors of video draw poker devices must submit renewal applications at least 30 days prior to the expiration of the license. If the licensee submits a renewal application within 30 days of expiration, the renewal application will still be processed, but the licensee will be assessed a $500 penalty fee.⁴²

Renewal applications will include disclosures regarding all civil suits, current list of stockholders, all administrative actions, tax returns, and charitable/political contributions made since the issuance of the previous license.⁴³

Withdrawal of Application

At any time during the application process, an applicant may make a written request to the Board for withdrawing an application.⁴⁴

Disclosure and Reporting Requirements

Before Licensure

Any person who intentionally makes a material false statement in any application will be criminally liable for the false statement and subject to imprisonment for no more than 10 years, a fine of up to $10,000, or both.⁴⁵

If the Board requests additional information of an applicant, then the applicant must provide the information within 10 days of the request.⁴⁶

After Licensure

It is important to note that Louisiana, as most other states, views suitability for licensure as an ongoing process. Therefore, any material change occurring that would affect a permit holder's suitability must be reported to the Board within 10 days of the event.⁴⁷ This includes any public SEC filings or material changes in the permit holder's organizational structure.

Gaming suppliers must provide the Board with a list of any and all gaming equipment for sale or lease in connection with gaming conducted within the state. Suppliers must keep books and records for sales of gaming equipment separate from other records retained by the supplier. All gaming equipment and supplies sold to operators must have the name of the supplier affixed to the equipment or device.⁴⁸

Each quarter, gaming suppliers must submit a quarterly return with the Board listing all sales and leases of gaming equipment during the period.⁴⁹

Annually, gaming suppliers must submit to the Board an inventory of all gaming equipment and devices.⁵⁰

Any change of 5 percent or more in the ownership of a private permit holder must be approved by the Board prior to the transfer of ownership.⁵¹ All approvals of a transfer of interest will be made in writing by the Board.⁵²

If there is a violation of the license requirements during the licensure period, then the licensee must pay a fine in accordance with a fee schedule issued by the Board.⁵³

Reapplying for Denied License

Applicants who have been denied a license may reapply after a period of five years from the date of denial unless the Board issued the denial without prejudice.⁵⁴

If a licensee continues to sell equipment after its permit expires, then the licensee may be subject to imprisonment for up to six months and up to a $500 fine.⁵⁵

Political Contributions

All licensed suppliers are prohibited from providing any political contributions to candidates running for office within the state. This includes not only license and permit holders, but also officers, directors, and 10 percent shareholders of licensees. Additionally this law does not restrict casino gaming licensees from contributing to US Congress, Presidential, or support committee campaigns.⁵⁶

Gaming Technology Standards

Louisiana law requires that all electronic gaming machines (slot machines, video poker, etc.) be connected to a central computer system accessible to the State Police and Board.⁵⁷ The system is maintained in order to provide state law enforcement and the Board a mechanism to ensure the security and integrity of the devices. In order to support this system, Louisiana imposes an annual fee on each electronic gaming device and the licensee is responsible for ensuring that the device has the capabilities to operate properly within the system.⁵⁸

In addition, electronic gaming machines and progressive gaming machines must be maintained according to Louisiana Administrative Rules. Payouts for such machines must be between 80 and 99.9 percent and the device must meet several technical considerations regarding its hardware and software.⁵⁹ In order to verify compliance with the gaming laws and Administrative Rules, gaming machines may be requested for inspection by the Board. These machines will be used for evaluation purposes and a report will be issued by the Board regarding the evaluation results.
⁶⁰

All devices must be registered with the Board and contain specific markings (e.g., serial number plates or engravings) before sale. If a device has not yet been registered, then a $100 registration fee per device will be charged by the Board.⁶¹

Gaming tokens, dice, and associated token equipment must meet specific manufacturing requirements (e.g., size, color, identification) set forth by the Board in its Administrative Rules.⁶²

Exemptions

The Board may waive the Non-Gaming Supplier Permit requirements for an individual or entity or a field of commerce if either of the following conditions are met:

1. The individual or entity is currently and sufficiently regulated by another public agency or will supply goods or services in an inconsequential amount to a licensed operator; or
2. That permitting is not advisable or necessary in order to protect the public interest or to accomplish the provisions of the Act or Rules.⁶³

Any non-gaming supplier, other than those licensed as wholesalers of alcoholic beverages, may request a waiver from filing for a Non-Gaming Supplier Permit. (Note that wholesalers of alcoholic beverages licensed by the state, federal, and local governments are exempt from the Non-Gaming Supplier Permit requirements.⁶⁴) The Board may grant a waiver request upon showing of good cause.⁶⁵

In addition, the Rules put forth exemptions from the Non-Gaming Supplier Permit requirements that include nonprofit charitable organizations, publicly traded corporations regulated by the SEC, state or federally regulated banks, professional service providers, media publishers, and employee benefit plans.⁶⁶

Certain interest holders in permit holders or their property are presumed suitable for permit purposes. These individuals or companies include insurance companies, investment companies registered under the Investment Company Act of 1940, investment advisors registered under SEC rules, investment trusts regulated by the SEC, dealers registered with the SEC, certain institutional investors and banks, and certain business development companies.⁶⁷

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¹La. Rev. Stat. § 27:29.1.
²La. Admin. Code tit. 47, pt. 7, § 2501.
³La. Admin. Code tit. 47, pt. 7, § 2331.
⁴'Level II Business Application,' p. 3.
⁵La. Rev. Stat. § 27:29.1(D).
⁶La. Rev. Stat. § 27:29.1(E).
⁷Available online at http://www.lsp.org/gamingforms.nsf/fdcf9e5f850b2bc78625731b006934c6/2f9b61e1351d5e2d862573590058ea13/$FILE/Level_II_Business_Application_DPSSP0073_Rev02-06.
⁸'Level II Business Application.'
⁹'Level II Business Application.'
¹⁰La. Rev. Stat. § 27:3(10).
¹¹La. Rev. Stat. § 27:29.2(A).
¹²La. Admin. Code tit. 47, pt. 7, § 2501.
¹³La. Admin. Code tit. 47, pt. 7, § 2331.
¹⁴'Level II Business Application,' p. 3.
¹⁵La. Rev. Stat. § 27:29.2(E).
¹⁶La. Rev. Stat. § 27:311(A) (2).
¹⁷Available online at http://www.lsp.org/gamingforms.nsf/fdcf9e5f850b2bc78625731b006934c6/2f9b61e1351d5e2d862573590058ea13/$FILE/Level_II_Business_Application_DPSSP0073_Rev02-06.pdf.
¹⁸'Level II Business Application.'
¹⁹'Level II Business Application.'
²⁰La. Rev. Stat. § 27:29.3(A) (2).
²¹La. Rev. Stat. § 27:29.3(A) (1).
²²La. Admin. Code tit. 47, pt. 7, § 2501.
²³a. Rev. Stat. § 27:81(A).
²⁴La. Admin. Code tit. 47, pt. 9, § 2107.
²⁵La. Admin. Code tit. 47, pt. 7, § 2331.
²⁶Available online at http://www.lsp.org/gamingforms.nsf/fdcf9e5f850b2bc78625731b006934c6/013f8f81fc1cac758625738b006b37eb?OpenDocument.
²⁷'Level II Business Application,' p. 3.
²⁸La. Rev. Stat. § 27:29.3(F).
²⁹Available online at http://www.lsp.org/gamingforms.nsf/fdcf9e5f850b2bc78625731b006934c6/2f9b61e1351d5e2d862573590058ea13/$FILE/Level_II_Business_Application_DPSSP0073_Rev02-06.pdf.
³⁰'Level II Business Application.'
³¹'Level II Business Application.'
³²'Level II Business Application,' p. 5.
³³La. Admin. Code tit. 47, pt. 9, § 2155(b).
³⁴La. Rev. Stat. § 27.29.4(F).
³⁵'Gaming Personal History and Financial Record.'
³⁶'Gaming Personal History and Financial Record.'
³⁷'Non-Gaming Personal History and Financial Record.'
³⁸'Non-Gaming Personal History and Financial Record.'
³⁹La. Rev. Stat. § 27:29.5(B).
⁴⁰La. Rev. Stat. § 27:29.5(C).
⁴¹La. Rev. Stat. § 27:29.5(D).
⁴²La. Rev. Stat. § 27:311(L).
⁴³La. Admin. Code tit. 47, pt. 7, § 2141.
⁴⁴La. Admin. Code tit. 47, pt. 7, § 2155.
⁴⁵La Rev. Stat. § 27:30.
⁴⁶La. Admin. Code tit. 47, pt. 9, § 2127(d).
⁴⁷La. Admin. Code tit. 47, pt. 9, § 2151. For a detailed list of items and conduct that must be reported and may be subject to discipline, see La. Admin. Code tit. 47, pt. 11, § 2417.
⁴⁸La. Rev. Stat. § 27:29.2(D).
⁴⁹La. Rev. Stat. § 27:29.2(D).
⁵⁰La. Rev. Stat. § 27:29.2(D).
⁵¹La. Admin. Code tit. 47, pt. 7, § 2501(c).
⁵²Id. at § 2511.
⁵³See La. Admin Code tit. 47, pt. 7, § 2325.
⁵⁴La. Admin. Code tit. 47, pt. 7, § 2157.
⁵⁵La. Rev. Stat. § 27:30.2.
⁵⁶See Title 18 of the Louisiana Code.
⁵⁷La. Rev. Stat. § 27:30.6(A) (2).
⁵⁸La. Rev. Stat. § 27:30.6(I), (K).
⁵⁹See La. Admin. Code tit. 47, pt. 9, § 4201 et seq.; see also Id. at § 4329 et seq.
⁶⁰La. Admin. Code tit. 47, pt. 9, § 4207-4209.
⁶¹La. Admin. Code tit. 47, pt. 9, § 4212.
⁶²See La. Admin. Code tit. 47, pt. 7, § 4301 et seq.; see also La. Admin. Code tit. 47, pt. 9, § 4301 et seq.
⁶³La. Rev. Stat. § 27:29.3(B) (1).
⁶⁴La. Rev. Stat. § 27:29.3(E).
⁶⁵La. Rev. Stat. § 27:29.3(B) (2).
⁶⁶La. Admin. Code tit. 47, pt. 9, § 2166(a) (2).
⁶⁷La. Admin. Code tit. 47, pt. 9, § 2145(b).