Major has set high standards for his team. To maintain propriety, AGCO staff is prohibited from playing games they regulate, including raffles, bingo, slot machines, lotteries or table games in casinos.
Each AGCO department conducts specific job functions similar to other gaming regulators. For example, the Licensing and Registration Branch performs a critical function in processing applications for registration.
The Electronic Gaming branch tests and approves electronic gaming equipment and management systems. It conducts random and scheduled onsite inspections of approved electronic gaming machines, and verifies slot machines and associated software for paid jackpots higher than $30,000.
The AGCO Gaming Lab accepts domestic and foreign submissions of new slot machine platforms, plus any subsequent hardware or software modifications. Multiple levels of security facilitate the approval process. However, it remains labour intensive and “hands-on”. Complete testing for a new slot machine prototype takes three to six months, while testing a new game program averages 30 days.
Lab engineers, mathematicians and technologists ensure machine accuracy, safety, accountability and security. They also train and support Electronic Gaming Enforcement Officers.
The Investigation function of the AGCO is performed by the Investigations and Enforcement Branch, headed by a Chief Superintendent of the Ontario Provincial Police (OPP). The Branch comprises civilian investigators and inspectors, as well as police officers, who perform regulatory duties on behalf of the Registrar. Some Branch members also have forensic accounting skills to assist in the more complex background investigations of some gaming companies.
All Ontario casinos have a 24/7 OPP presence. Major says, “The OPP manages the enforcement of the liquor and gaming industries on behalf of the Registrar, but as police officers, they may also deal with criminal matters.”
Investigations and Enforcement also conducts applicant background checks and investigations. The complexity of an investigation is based on the type of registration.
“The Statutory test requires that applicants demonstrate they will conduct themselves with honesty, integrity and financial responsibility. We conduct a due diligence investigation to determine if an applicant meets these standards, based on past conduct. For example, someone with a criminal history could bring into question their future actions, including the ability to act in accordance with law. We expect applicants to come clean about their history or any potential problems when they apply. If they don’t, and issues are uncovered in the investigation, the applicant won’t meet the basic test of honesty,” says Major.
Major estimates the AGCO rejects less than one percent of suppliers and one to three percent of individual applicants. They may also issue a registration with conditions where circumstances warrant.
However, financial examinations may prove more complicated. As companies expand internationally, the AGCO must reach beyond the traditional background details. The Investigations and Enforcement staff works closely with other law enforcement agencies, including the FBI and Interpol.
Major states, “We are shifting internal skill sets, often using both forensic and traditional financial accountants. The gaming industry is second to none in regulation.”
A registration is a prime asset to any company or individual. The ACGO demands compliance, and enforcement is taken seriously. Infractions are handled on a case-by-case basis.
When a serious problem arises, the accused violator receives a Notice of Proposed Order (NOPO) to suspend or revoke a registration. The order will outline the reasons for the proposed action, allowing 15 days to respond and request a hearing.
Major says, “In most cases, casino operators terminate the employment of an individual who is subject to a Proposed Order. Therefore, few cases ever get to a hearing. In the most serious cases where there is evidence that the law has been and will continue to be violated, an immediate suspension of a registration is issued. Public interest trumps the individual’s.”
Effective January 2009, the AGCO introduced monetary penalties. Major describes the range of sanctions available to deal with violations, depending on their seriousness. At one end of the spectrum, warnings can be issued. An Order of Monetary Penalty (OMP) can be assessed. The third disciplinary action is a suspension, and for the most serious cases, the registration is permanently revoked.
“The OMP was intended to lie between a warning and a suspension, with the goal of bringing the registrant into compliance. Proactive casino operators self-report any violations and take corrective action, resulting in few hearings. The highest monetary penalty to date has been $25,000,” states Major.
However, some registrants do request a hearing within 15 days of receiving an OMP, and come before an independent three-person tribunal. Major, as Registrar, is represented before the tribunal of the ACGO by legal counsel. Usually a lawyer speaks for the registrant, but it is not required.
In the interim, the individual may continue to work. Major says that the hearings are held within a few months to prevent long business disruptions.
Changes to the casino gaming marketplace as well current budget constraints have motivated the AGCO to use more advanced technology and streamline regulatory methods. Major says, “Philosophically, we want to maintain, if not improve, our standards, but rethink our approach to casino gaming regulation. The public expects integrity in our games and the people who operate them. However, we must also modernize our regulatory framework, policies and processes. We have initiated a thorough review of how we regulate the business, and have initiated internal changes such as our four-year upgrade to our information technology (IT) to support these changes.”
To update the traditional “prescriptive” approach, the AGCO, OLG and the operators of the four resort casinos have met to discuss how these changes should take place. They are working on a “risk-based approach” to regulation, which is not a new concept in other parts of the world, but is less known in North America. This proposed approach attempts to balance the high standards required of regulation with the business needs of optimum operational flexibility.
“We are challenging old assumptions by understanding and assessing all of the risks, and then considering who can best handle them and how they should be mitigated,” Major says.
Major acknowledges both the sophistication of this regulatory model and its pressure on operators. However, he envisions a positive alliance, saying, “Everyone understands their role and respects each other’s mandate. This plan is intended to be collaborative, not confrontational. We may not agree on everything, but there are many areas that we can agree on without diminishing our regulatory standards, so why not make it easier?”
This new approach will take years to implement, but all parties involved have high hopes for its success. However, Major pledges continued adherence to high regulatory standards in all present and future decisions.
By Sharon Harris, writer (email@example.com)