Legal brief: Anthony Cabot, Distinguished Fellow in Gaming Law at the William S. Boyd School of Law, University of Nevada, Las Vegas
The Bermuda Government was advised more than two years ago that the sale of American lottery tickets on the island appeared to breach “numerous” laws in the United States, including some designed to stop money-laundering, The Royal Gazette can reveal.
A legal opinion was sought by the Bermuda Casino Gaming Commission on the issue from a leading gaming lawyer in Las Vegas, who identified a series of potential violations of federal and state laws.
His evaluation, seen by The Royal Gazette, is understood to have been shared by the commission with at least two Cabinet ministers and members of the Betting Licensing Authority.
But nothing was done to stop the sale of Florida Lottery Powerball and Mega Millions tickets at Paradise Games on Court Street — a betting shop belonging to former Progressive Labour Party leader Marc Bean.
Mr Bean said last week that there was nothing illegal about selling foreign lottery tickets in Bermuda, which was why Paradise Games still offered the service and why other betting shops also sold lottery tickets from other countries, including Triple Crown Racing on Victoria Street.
Mr Bean said: “If the authorities — the law — tell us it is illegal, we will cease and desist. No one ever has. An opinion coming from someone in the States doesn’t apply to us.
“The proper opinion to seek is from the United Kingdom Gambling Authority. We come under UK law and we are ultimately answerable to the Privy Council.”
Mr Bean, who was Leader of the Opposition when the legal opinion was given, dismissed the idea that the One Bermuda Alliance government or the Bermuda Police Service opted to look the other way.
“That makes no sense,” he said. “How could I get a free pass? I was an aggressive Opposition leader. Why would anybody give me favours?”
Mr Bean and his wife, Simone Smith-Bean, a lawyer who co-owns Paradise Games, said they were completely unaware of the legal opinion obtained by the commission from Anthony Cabot, who was then a partner at Lewis Roca Rothgerber Christie law firm in Las Vegas. The gaming commission at the time had no involvement in regulating betting shops, although responsibility was later transferred to it.
David Burt, the Premier and Minister of Finance, told a press conference this month: “Betting shops are now under the purview of the casino gaming commission and they will regulate that area as necessary.”
Mr Cabot, now a Distinguished Fellow in Gaming Law at the University of Nevada’s school of law, told the commission in an eight-page memo in early 2016: “It appears that, by selling Florida Powerball tickets to Bermuda residents, Paradise Games is violating numerous Florida and federal laws.”
His opinion was that the ticket sales appeared to violate two provisions of Florida state law and seven provisions of federal gambling statutes, some designed to prevent money laundering.
There is no suggestion that Paradise Games or any other betting shop has been used for money-laundering purposes.
The commission is understood to have passed the contents of the legal opinion to Shawn Crockwell, who was the minister responsible for casino gaming, and to the Betting Licensing Authority, which decides on applications for bookmaker’s and pool betting agent licences.
Michael Dunkley, then the Premier, was advised by the commission in July 2016 that US lottery ticket sales potentially violated US federal laws designed to protect against acts that could facilitate money laundering.
The advice was shared with Mr Burt eight months later, while he was Opposition leader.
The licensing authority had already discussed the sale of lottery tickets at its January 21, 2016 meeting, resolving to “consider obtaining a legal opinion from the Attorney-General’s Chambers”.
Minutes of that meeting show that members raised concerns about “whether the sale of such lottery tickets in Bermuda was unlawful, primarily because it was unclear as to the process by which such lottery tickets were being sold, and as to whether the activity is permitted under the Betting Act 1975”.
Mr Bean said the licensing authority did ask questions about lottery ticket sales “for a brief second”, at a licence-renewal hearing in 2016, and determined that it was a legal activity.
He added: “Our policy is that we ask ourselves the questions. What’s the process to ensure that they can legally redeem their winnings? If we couldn’t answer that question, then we are at risk from a betting and bookmaking perspective. We could potentially be seen to be doing something untoward. We are not. We have our processes.”
In 2014, Paradise Games said in a statement it used FML Web Shop in South Miami to obtain the lottery tickets.
FML was terminated as a lottery retailer in February 2017 for “conduct prejudicial to public confidence”.
Mr Bean said tickets were now bought through one person using a variety of licensed Florida agents, after customers choose their numbers here.
“Historically, what we did was buy through our agent. They would purchase the tickets on our behalf from authorised agents.
“We have one person who actually does the buying for us. There is nothing illegal in doing that; nothing at all.
“Once the new legislation comes into effect and if the new regime indicates something is illegal, we will stop offering the service.”
He added: “If someone was to win one of those lotteries, the ticket gets redeemed in Florida. The agent in Florida gets a commission.
“I hope they do win one day. We have to fly them down there [to Miami] and they would have to go to the office that generated the ticket and exchange it for their receipt.
“Then we would fly them to Tallahassee, where they would redeem their winnings. We will pay for them, absolutely. That’s customer service.”
He said he welcomed tighter regulation of the betting industry, adding that improvements had been made in recent years by senior magistrate Juan Wolffe, the licensing authority chairman.
Mr Cabot gave an opinion only on Paradise Games.
Triple Crown Racing, which is owned by businessman Wendall Brown, is an authorised agent of the Caribbean Lottery and sells Caribbean Super Lotto tickets.
Mr Brown did not respond to e-mails seeking comment.
Mr Wolffe was unavailable for interview, as he was sitting in the Supreme Court, and questions sent to him to be forwarded to other authority members were not responded to by press time.
Economic development minister Jamahl Simmons, who is now responsible for betting shops, did not respond to questions, and nor did the casino gaming commission.
Mr Burt and Mr Dunkley did not respond to requests for comment.
A Bermuda Police Service investigation launched in 2014 into whether any local laws were breached at Paradise Games or other betting shops appears to have been dropped.
Acting police commissioner Mike Jackman said at the time that officers visited four betting shops in Hamilton to “check compliance with section 2 of the Lotteries Act 1944”.
Mr Jackman said: “Those findings have been communicated to the DPP and the Bermuda Police Service is taking legal advice on whether or not any offences have been disclosed at any of the businesses.”
A BPS spokesman said in January 2016: “The Bermuda Police Service at this juncture does not have any public comment on the aforementioned subject.
“We will in the future revisit our position in the event there is something we would like to communicate to the public via the media.”
No further comment was provided in response to a request last week for an update. The Department of Public Prosecutions did not respond to questions.
The Florida Lottery said it had never authorised the sale of tickets outside of the state.
“For their own protection, we recommend players purchase tickets through our more than 13,000 authorised retailers,” a spokesman said.
“The Florida Lottery strives to protect the integrity of our games so players and retailers alike can be confident in the games we provide to benefit Florida’s students and schools.”
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