THE ROYAL GAZETTE investigates how a potential multimillion-dollar deal for a cashless gaming system could prove “problematic” for the Bermuda Government

Gaming regulators fear that a multimillion-dollar casinos deal involving the Government is still on the table, despite concerns that it could damage the island’s financial reputation.

Local company MM&I Holdings stands to potentially net tens of millions of dollars a year if it is given the contract to provide a cashless gaming network management system for any casinos that open on the island.

But the Bermuda Casino Gaming Commission has warned that individuals associated with the company’s partner firm, Florida-based Banyan Gaming, have previously surrendered their gaming licences in two major gambling jurisdictions in the United States and this could be “problematic” in relation to them being licensed in the Bermuda market.

In addition, after checking references provided by the two companies, the commission questioned why those referees seemed “unwilling to endorse” them.

Disclosures made under the Public Access to Information Act reveal that Deborah Blakeney, the commission’s lawyer, raised the issues in an e-mail to MM&I earlier this year.

She wrote: “It is the commission’s goal to ensure that the highest standards of suitability will be employed in allowing operators to enter the Bermuda integrated resort market. To do anything less not only jeopardises the ability of the industry to secure a correspondent banking relationship, but can also damage the reputational brand of the island.”

MM&I is owned by Bermudians John Tartaglia and Michael Moniz.

As of July 2016, MM&I was represented by Mark Pettingill’s law firm and the company reached its agreement with the Government when Mr Pettingill and his business partner, the late Shawn Crockwell, were in Cabinet.

Mr Crockwell, in a Cabinet memorandum seen by The Royal Gazette, told his colleagues it was “imperative” to proceed with the agreement with MM&I since “no other local entity” could provide the same networking system.

The agreement itself, obtained through public access to information, was non-binding, conditional upon the legalisation of casino-style gaming and was signed by Mr Crockwell as tourism minister and witnessed by Mr Pettingill, then the Attorney-General, on December 3, 2013, a year before casino gaming was given the green light by Parliament.

It proposed a ten-year contract for MM&I, with the option to renew for another ten years, giving the company 40 per cent of Bermuda’s gross gaming revenue from electronic gaming devices — slot machines and electronic table games — and an 8 per cent transaction fee on the purchase of chips for use at dealer-operated tables. With Bermuda’s annual revenue from casinos projected to be between $84 million and $146 million, according a 2010 government-commissioned report, and electronic gaming probably accounting for about three quarters of that, the rewards for MM&I and Banyan were likely to be substantial.

At about the time the agreement was signed, at the request of Mr Crockwell, MM&I gave a $30,000 donation towards a marketing campaign aimed at persuading Bermudians to vote in favour of casino gaming in a planned referendum on the issue.

The One Bermuda Alliance government decided to break its promise to hold that referendum just ten days after the MM&I agreement was signed. Mr Crockwell later tabled the Casino Gaming Act, which passed in Parliament in December 2014, paving the way for a casino industry in Bermuda.

Mr Crockwell said the introduction of casinos would significantly enhance Bermuda’s tourism product and the referendum was ditched “for the better good”.

Although MM&I’s agreement with the OBA government was terminated by Michael Fahy, who replaced Mr Crockwell as tourism minister after the latter quit Cabinet, gaming commission executives are querying whether it is still under consideration by the new Progressive Labour Party administration.

The PLP, when in Opposition, invited two representatives of Banyan to sit as panellists at a forum it held on “safe and responsible” gambling on May 3 this year.

At that meeting at Elbow Beach Bermuda Resort & Spa, Banyan president Jason Seelig outlined the benefits of a cashless gaming system and suggested that it be mandated by law. He was backed by Australian attorney Tibor Vertes, another panellist and client of Mr Crockwell and Mr Pettingill’s law firm.

Just the day before, according to the records disclosed under Pati, the gaming commission’s lawyer had written to MM&I with questions about a firm that Mr Seelig previously ran with his father, Mac Seelig, and its “history of regulatory difficulties in markets” in which it was licensed.

That history was a concern, according to the commission’s lawyer, Deborah Blakeney, because any sound anti-money laundering regime requires thorough background checks on operators, and banks could be deterred from dealing with the proceeds of the island’s casinos.

Ms Blakeney wrote on May 2: “I raise these two issues because in the commission’s dealing with the correspondent banks for the island, and in dealing with the mandates of the Financial Action Task Force, a keystone condition concerns the suitability of the operator and all associates thereof.

“The fact that it appears that this operator is considered unsuitable for licensing in at least two major US jurisdictions appears problematic. If I am missing something here, I would appreciate your guidance.”

Public records show that the predecessor company, AC Coin & Slot, voluntarily surrendered its licence in New Jersey after the company was wound down in July 2013. In doing so, it became ineligible to apply again for a licence for five years.

In the same month in Pennsylvania, AC Coin & Slot withdrew “with prejudice” its application for a licence. Such withdrawals can result in a five-year period of ineligibility to apply for a licence, in certain circumstances.

Ms Blakeney referred to a list of references provided to the Government by MM&I and Banyan. “You are obviously not aware that my executive director, Richard Schuetz, knows many of these individuals and he was able to make inquiries,” she wrote.

“The written and verbal responses from these individuals was generally less than glowing and the commission is puzzled as to why such individuals would be included as references for your company.”

Ms Blakeney added: “We would ... appreciate your explanations as to why your listed references seem unwilling to endorse you.”

Commission executive director Mr Schuetz reiterated the commission’s concerns in an e-mail to Ms Blakeney on August 2, pointing out that MM&I had not responded to her questions.

He said since her letter was sent, Banyan had removed the names of Jason Seelig and Mac Seelig from its website.

“This may all result from the fact that Jason and Mac are no longer associated with Banyan,” he wrote. “That would be a most interesting coincidence.”

Mr Schuetz also considered the possibility that Banyan was distancing itself from those two individuals in order to pursue a licence in Bermuda without any legacy licensing issues or to position itself to argue that past concerns were no longer relevant.

“This is particularly disconcerting if their plan of entry is by way of legislative mandate,” wrote Mr Schuetz. “I believe that certain people on this island believe that legislative mandate is worth $40 million per year for ten years.

“If, in fact, Mac and Jason are no longer listed on the Banyan website to create the impression that our past licensing concerns are no longer relevant, then I believe it is safe to conclude that the legislative mandate option is still being considered...”

Mr Schuetz, who resigned from the commission on the day of the General Election and is serving out his notice period, has been criticised by Mr Crockwell and Mr Pettingill, as well as by Mr Vertes and social development and sports minister Zane DeSilva, a friend and sometime legal client of Mr Pettingill.

Mr Vertes is being sued by Mr Schuetz for defamation.

The Royal Gazette asked new tourism minister Jamahl Simmons if he was aware of the December 3, 2013 agreement with MM&I and whether the Government was still in talks with MM&I/Banyan or any other company about a casino gaming system for Bermuda. Mr Simmons replied: “As the ministry responsible for gaming, the main priority is ensuring that our gaming regulations are in place to assist with passing the current global review process, protecting our reputation as a jurisdiction and ensuring a clean gaming industry that benefits Bermudians first. Matters related to gaming systems should be addressed by the gaming commission.”

There was no response by press time to a request for the minister to clarify what he meant by the “current global review process”.

Digital Gaming Corporation USA acquired Jason Seelig’s 50 per cent share in Banyan in July. Jason Seelig now lists himself on LinkedIn as an executive vice-president at DGC.

Mac Seelig’s profile on LinkedIn refers to him as a senior business analyst at Banyan.

Keith Furlong, from DGC, told this newspaper: “Banyan Gaming LLC was established in January 2015 with Jason Seelig as a 50 per cent owner of the entity.

“On or around July 2017, Seelig’s interest in Banyan Gaming was acquired by Digital Gaming Corporation USA. Seelig is no longer a shareholder of Banyan Gaming or Digital Gaming Corporation USA. The company does not wish to comment further.”

Company filings in Florida from August show that Mr Furlong replaced Mr Seelig as Banyan’s manager.

Mr Pettingill, the lone respondent to The Royal Gazette’s request for comment yesterday, has promised to speak today after consulting his clients.

• To view documents obtained in response to a Pati request to the Bermuda Casino Gaming Commission, click on the PDF links under “Related Media”

• On occasion The Royal Gazette may decide to not allow comments on what we consider to be a controversial or contentious story. As we are legally liable for any libellous or defamatory comments made on our website, this move is for our protection as well as that of our readers.