Inside Asian Gaming

March 2008 | INSIDE ASIAN GAMING Feature A nexasperatedBillyCarter,theyounger brother of US President Jimmy Carter, once told an interviewer:“Sometimes, even lawyers need lawyers.” MGM Mirage would probably agree. The Las Vegas-based casino operator at one time considered running in-flight casinos, but reportedly dropped the idea on the advice of its lawyers. Right approach Now, Sheldon Adelson—the billionaire chairman of Las Vegas Sands Corp and a self- confessed private collector of aircraft—has decided his lawyers know something those of his rivals do not. He believes the plan will work after all—if executed cannily enough. Mr Adelson wants to launch VIP charter flights between Hong Kong and Las Vegas featuring on-board baccarat tables. The Las Vegas Sun newspaper says LVS recently acquired and is refitting two second-hand Lockheed Martin L-1011 Tristar wide body aircraft to accommodate about 200 customers. Captive audience Chinese gamblers regularly fly to Las Vegas in any case. Why not entertain them on the 17-hour journey and avoid having to share the revenue with the taxman in Macau and Nevada? That seems to be the thinking. What everyone wants to know now is will it be legal? There’s an assumption that if something’s fun, innovative, cheeky, and, perhaps more importantly, tax avoiding, someone somewhere will want to ban it. When Michael O’Leary, the charismatic and provocative chief executive of Irish budget carrier Ryanair, announced in November 2005 that his company planned to allow passengers to gamble in-flight by 2007, people watched with interest. Mr O’Leary even suggested that an on- board casino could support a new business model capable of doing away with airfares completely. Take-off aborted Well, 2007 came and went without any news of progress on Mr O’Leary’s announcement. The most Ryanair seems to have managed so far is a tie up with UK online bingo operator jackpotjoy.com, making its gaming products available via the Ryanair website. In the late 1990s, Swissair introduced on-board video gambling, followed by Lauda Air. Singapore Airlines also tried it twice, and terrestrial operator Harrah’s entered into a joint venture with Sky Games. Canadian company DTI Software provides in-flight gaming to 81 airlines, including In- Flight Hold’em Poker , but so far strictly on a play-for-fun basis. In May 2007, the firm did, however, announce a tie up with London- listed online casino company 888.com to develop an in-flight online gambling platform offering casino games. Rising trend MrAdelsonmaythenbepushingagainst a door that’s already slightly ajar. There do seem to be several major challenges though. One is that as with cyberspace and online gaming, few countries have clear guidelines on what should happen up in the sky. International air travel is in any case covered by a patchwork quilt of conventions, protocols and agreements that not all countries have ratified and that can potentially be interpreted in many different ways by many different jurisdictions. Unless someone sticks his neck out and tests the boundaries of governments’ tolerance, then gaming operators may continue to fly blind. “We have looked at this on behalf of a number of clients,” says Hilary Stewart- Jones, a partner specialising in gaming law for legal firm Berwin Leighton Paisner LLP in London. “The difficulty is the consistency of international law. It depends where the aircraft is registered. What the conventions have decided is that you carry the law of where your aircraft is registered, and that stays with you until you land.” Aproblem is that not all countries have signed up to the relevant conventions. Picture unclear Stephen Ketteley, a colleague of Ms Stewart-Jones, explains that some countries even consider they have jurisdiction over an aircraft while it is in their airspace. Jamie Nettleton, a partner at the Sydney office of commercial law firm Addisons, agrees “There are at least three possible jurisdictions,”he says. “The point of departure, the point of arrival, and any other jurisdictions you’re flying over. For example, a flight from Macau to Europe using Russian air space has to get overflying consent from the Russian authorities.” This is the position taken by the Tokyo Convention 1963, defining states’ rights and obligations regarding in-flight criminal acts. Article 16 states:“Offences committed on aircraft registered in a Contracting State shall be treated, for the purpose of extradition, as if they had been committed not only in the place in which they have occurred but also in the territory of the State of registration of the aircraft.” “Whether or not the Russians in that case can actually regulate anything that occurs in connection with the aircraft is pretty questionable,” says Mr Nettleton. “But both the point of departure and the point of arrival can have a say regarding activities taking place on the flight,” he adds. Junket partners An interesting question regarding Hong Kong law is whether LVS plans to use its existing Macau junket partner Dore Holdings as an agent for its proposed in- flight gaming, or whether it will seek to deal directly with Chinese high rollers. If it’s the former, then Dore—which is listed on the Hong Kong stock exchange—may need approval from Hong Kong’s Securities and Futures Commission. If it’s the latter, it could cause friction between Dore and LVS if Dore feels its close relationship with Chinese VIPs is being undermined. The Hong Kong government’s position on Mr Adelson’s proposed in-flight casino isn’t yet clear. Although Hong Kong tightly controls the availability of gambling on its territory and online, there is a precedent for allowing casino charters to operate from the city, in the form of gambling cruise ships that are legally required to sail out into the