Alcohol and Gaming Commission of Ontario ("AGCO") released a statement clarifying the nature of its new standards of gaming registration based upon the "Risk-Based Registration" concept

This month the Alcohol and Gaming Commission of Ontario ("AGCO") released a statement clarifying the nature of its new standards of gaming registration based upon the "Risk-Based Registration" concept. While these standards have been in force since September 11, 2011, the AGCO has notably reaffirmed its commitment to them by issuing a helpful restatement of these principles in June 2012, as many new companies are considering roles in the Ontario gaming industry as land-based casino operators and online gaming operators.

Risk-Based Registration is designed to refocus the regulator's decision-making process to ensure that its resources are allocated in a manner that targets applicants who represent a higher level of risk to the integrity of gaming and the public interest generally. The AGCO states that this approach "reflects a general evolution in best practice thinking about effective regulation and supports a broader transition underway in the gaming sector toward a less prescriptive and more standards-based regulatory approach."

New applicants for registration as casino operators or gaming suppliers in Ontario can expect to be subjected to an in-depth due diligence investigation. Where an applicant is familiar to Ontario regulators, either because they are renewing registrations or are applying for a registration in a new category after many years of being registered in Ontario in a different gaming capacity, they will likely undergo a more streamlined review.

All applications for registration will be evaluated according to a comprehensive set of risk criteria to determine whether additional disclosure and/or investigation is required. Those applicants identified as "lower risk" may be approved for registration without the need for additional information or personal interviews by AGCO investigators. As noted, a longstanding record of compliance with the law is a factor that will be considered in determining whether an applicant will be deemed "lower risk."

This initial risk assessment involves the review of an applicant's completed application materials as well as information obtained based on a standard background check. This information is evaluated based on five criteria; in relation to businesses applying for registration as suppliers or operators, the five criteria are:

• Honesty and integrity
• Financial responsibility
• Compliance with the law
• Registration type
• Financial gain from registration

It remains to be seen whether the AGCO will be willing to deem a company to be a "lower risk" and therefore eligible for a streamlined registration process where it is new to Ontario, but has a long-established reputation for honesty, integrity, compliance and financial responsibility in a number of other "first tier" gaming jurisdictions, in particular those jurisdictions whose gaming regulators have entered into reciprocal information-sharing agreements with the AGCO.

A further refinement to the Ontario gaming regulatory regime has just come into force on June 1, 2012. Effective on that date, amendments to the Gaming Control Act, 1992 grant authority to the Registrar of the AGCO to establish standards and requirements related to gaming products and the operation of gaming sites (e.g. casinos, bingo halls, etc.). These standards and requirements will apply not only to registered gaming suppliers and casino operators, but also to the Ontario Lottery and Gaming Corporation (the government-owned corporation that conducts and manages all non-charitable gaming in Ontario) ("OLG"). The need to comply with these standards and requirements is tempered by an allowance for flexibility in how such compliance is achieved.

As with Risk-Based Registration, these standards and requirements will allow for increased efficiencies and reduced administrative burdens for gaming operators and suppliers who have a strong record of compliance.

Further, it will make public for the first time the expectations of the regulator in many of these areas. In Ontario, the standards set by the government in this area were for the most part enforced by contractual arrangements between the OLG and the suppliers or operators, rather than by explicit legislative or administrative provisions. As of June 1, 2012, the Registrar may establish standards and requirements related to:

1. prohibiting or restricting certain persons from entering gaming sites or playing lottery schemes (i.e. responsible gaming exclusion measures;)
2. the prevention of unlawful activities;
3. the integrity of a lottery scheme;
4. surveillance, security and access related to gaming sites or lottery schemes;
5. internal controls;
6. the protection of assets, including money and money equivalents;
7. the protection of players and responsible gambling; and
8. the keeping of records, including financial records.

Like Risk-Based Registration, this is a standards-based approach to gaming regulation that it is hoped will provide suppliers and operators with greater flexibility to continue to meet their regulatory objectives while thereby allowing the AGCO to more effectively target its resources to the areas of risk that are of most concern.

http://www.mondaq.com/unitedstates/x/183808/Gaming/AGCO+Reaffirms+Its+Commitment+To+RiskBased+Registration+And+Introduces+Its+New+Standards+And+Requirements+System