Attorneys

Michelle Cohen Member

/ P (202) 524-4144

LinkedIn connect on LinkedIn / Twitter @MichelleWCohen

  • Michelle Cohen: Internet Privacy Lawyer on Internet Marketing

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  • Attorney Michelle Cohen: Increased Federal Enforcement of Mobile Commerce in 2013

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  • What to do if you think your company has had a data breach

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Michelle’s unfailing dedication to her clients is evidenced by the fact that her first client, whom she worked with as a first-year associate over 20 years ago, remains an active client. She establishes strong and lasting relationships by committing herself to client service. Michelle understands her clients’ business goals, guides them in their use of new technologies, and communicates with them as their business activities unfold.

Michelle’s practice is focused on helping her clients establish powerful and lasting relationships with their customers and prospects. Whether engaging audiences through sweepstakes/contests, social networks, telemarketing, text, or email marketing, Michelle ensures that her clients’ communications comply with current marketing and privacy laws and regulations. For clients who have embraced the popularity of online promotions and gamification, Michelle keeps programs running smoothly by providing guidance on the necessary rules, thresholds and disclosures in the midst of a constantly changing legal landscape. As clients rely more on social media to publicize promotions, Michelle provides up-to-the minute legal counsel related to the rules on Twitter, Facebook and other social sites.

As Ifrah Law increasingly leads the way in iGaming, Michelle advises daily fantasy sports and e-Sports companies on privacy matters, including drafting online terms and conditions, and preparing legal opinions and analysis to support iGaming companies’ launching of their services, including working with payment processors.

When clients find themselves involved in an enforcement matter with the Federal Trade Commission, Federal Communications Commission or state agencies, Michelle’s deep knowledge in these areas and her strong footing in the privacy community help her to resolve issues in the most expedient manner possible. Michelle has extensive experience defending individual and class actions in the consumer protection context, including dozens of Telephone Consumer Protection Act cases. She obtained a rare rescission of an FCC citation in a TCPA enforcement matter.

Michelle also advises clients as to what policies and procedures can be put in place to show a company’s good faith efforts, should the government come knocking. When companies are involved in potential data or security breaches, Michelle knows which questions to ask to ensure they have a sound legal strategy. She works with the company step-by-step to resolve the situation from both the government’s, and her clients’ as well as their customers’ points of view.

Previously, Michelle was a partner at Thompson Hine where she was a member of their telecommunications, corporate transactions & securities and emerging technologies groups. She began her legal career in the litigation department at Paul Hastings, where she spent seven years honing her litigation skills, prior to moving into their corporate practice. Her litigation experience gives her a solid foundation for helping clients avoid litigation as well as in advising them when they are faced with litigation. This litigation experience, coupled with her regulatory and corporate experience, allow Michelle to offer her clients a full complement of services.

Awards + Recognition

  • National Law Journal, 2016 Top Rated Litigator
  • Certified Information Privacy Professional (CIPP) certification, International Association of Privacy Professionals
  • ALM 2013 Washington DC's Women Leaders in the Law
  • ALM 2012 Top Rated Lawyer - Technology Law
  • Martindale-Hubbell AV Preeminent Peer Review Rating
  • Editorial Board Member, E-finance & Payments Law & Policy
  • Editorial Board Member, E-Commerce Law & Policy

Professional + Community

  • Board Member, Sewall-Belmont House & Museum
  • Women in Cable and Telecommunications Past Board Member Washington, D.C. - Baltimore Chapter
  • Federal Communications Bar Association
  • District of Columbia Bar
  • New York State Bar Association
  • Women's Bar Association of DC
  • Volunteer, Special Olympics
  • Brandeis University Alumni Admissions Council
  • Pro Bono Volunteer through the District of Columbia Bar
  • Former Board member for the Law Firms Division of the United Way, National Capitol Area
Michelle Cohen, Speaker, "The FCC’s New Broadband Consumer Privacy NPRM: What It Means For Your Client Program," American Bar AssociationMay 2, 2016
Michelle Cohen, Speaker, "The Telephone Consumer Protection Act: Avoiding Multi-Million Dollar Litigation," Clear Law InstituteApril 27, 2016
"Scoring Cash With Angry Birds?," iGaming Business North AmericaApril/May 2016
Michelle Cohen, Speaker, "The Golan v. Veritas Entertainment, LLC Ruling: Ensuring Your Firm’s Telemarketing Strategies Compliant," The Knowledge GroupMarch 31, 2016
Michelle Cohen, Speaker, "Update on State and Federal Legislative and Regulatory Developments in Cybersecurity and Breach Law," Annual Conference on Data Breaches and Cybersecurity, Law Seminars International, Seattle, WAJanuary 11, 2016
Michelle Cohen, Speaker, "Skill-Based Games: What Is the Best Model?" National Council of Legislators from Gaming States, 2016 Winter Conference, Orlando, FLJanuary 9, 2016
Michelle Cohen, Presenter, "TCPA: The New Guidance and What It Means," IAPP: Practical Privacy Series 2015, Washington D.C.November 17, 2015
"Is The Emergence of a U.S. ‘Right To Be Forgotten’ Likely?," E-Commerce Law & PolicySeptember 2015
Michelle Cohen, Presenter, "Technology and IP Forum: Back to School Marketing Primer – Marketing Through Technology, What is Allowed and What Isn’t?," Association of Corporate Counsel, National Capital RegionSeptember 30, 2015
Speaker, Michelle Cohen, "Committee on Casinos: Update on Internet Sweepstakes Café Enforcement Issues," National Council of Legislators from Gaming States, 2015 Summer Conference, Atlantic City, NJJune 12, 2015
"Progress Slow For Commercial Use of Drones In The US," E-Commerce Law and PolicyApril 2015
Michelle Cohen, Speaker, "Lotteries and Social Media" National Council of Legislators from Gaming States, 2015 Winter Conference, Las Vegas, NVJanuary 2015
"FTC Staff Recommendations for Mobile Financial Services," E-Finance & Payments Law & PolicyOctober 2014
"The FTC Releases Staff Report on Mobile Shopping Apps," E-Commerce Law & PolicySeptember 2014
"What’s Legal in Text Marketing!," Hybrid Telephony Summit 2014, Chicago, ILSeptember 22, 2014
"Managing Litigation in the Small Law Department Environment," WMACCA Small Law Department Initiative, McLean, VASeptember 11, 2014
"U.S. Banking Regulators to Review Laws," E-Finance & Payments Law & PolicyJune 2014
"The Wild World of Witnesses: When Good Witnesses Go Bad," WMACCA Litigation Forum, McLean, VAJune 26, 2014
"Zealous Counsel or Unethical Social Media Maven – How Far Can a Lawyer Go?," WMACCA E-Newsletter May 9, 2014
"Net Neutrality – Verizon v. Federal Communications Commission," E-Commerce Law ReportsFebruary 18, 2014
"Oral Arguments Heard in the FCC’s ‘Open Internet’ Dispute," E-Commerce Law ReportsDecember 2013
"Data Security: FTC v. Wyndham Corporation," E-Commerce Law ReportsOctober 3, 2013
Michelle Cohen, Speaker, "Don’t Litigate, Mediate: Here’s How," WMACCA Litigation Forum, McLean, VASeptember 11, 2013
"Smart House, Smart Car, Smartphones. The FTC Examines the ‘Internet of Things," E-Commerce Law ReportsJune 2013
"FTC issues privacy focused mobile payments report," E-Finance & Payments Law & PolicyMarch 2013
"FATCA: the end of hiding US accounts in foreign banks?," E-Finance & Payments Law & PolicyMarch 2013
Michelle Cohen, Speaker, "Trash Talk? Viral Leaks? What to do When Employees and the Public Take to the Internet Town Square," WMACCA Technology and IP Forum, McLean, VAFebruary 19, 2013
"Editor’s Insight – Mobile Marketing and Privacy," E-Commerce Law & Policy February 7, 2013
"The FTC reports to the US Congress on Dodd-Frank," E-Finance & Payments Law & PolicyJanuary 2013
"Visa/MasterCard Antitrust Litigation," E-Commerce Law ReportsSeptember 2012
Michelle Cohen, Presenter, "The Consumer Financial Protection Bureau: The Financial Industry’s New Watchdog," LeadsCon East Conference Presentation, New York City, New YorkJuly 2012
"Best Offense Is a Good Defense," Inside Supply ManagementMarch 2012

Winning Big with a Celebrity Sweepstakes Endorsement

After developing a solid online promotions program over several years with Michelle Cohen advising on sweepstakes and contests, Michelle’s long-standing client, a digital wellness company, decided to energize its online efforts with a celebrity endorsement sweepstakes. The celebrity, a known health advocate and popular entertainer, partnered with our client to give away VIP ticket packages to his sold out shows in multiple cities.

Michelle crafted sweepstakes rules and reviewed promotional materials, including social media campaigns. The celebrity also used social media to organize in-person athletic meet-ups around the country, as part of his current touring schedule. This coast-to-coast campaign included sweepstakes at the on-site events. Michelle worked with our client on several aspects of its campaign, including social media messaging, drafting winner’s eligibility affidavits and ensuring compliance with state and federal sweepstakes laws, as well as social networks’ policies and requirements.

The result? Michelle’s client continues to develop exciting and clever online promotions that will engage their audience, while complying with applicable laws and regulations and maintaining positive relationships with key social networks.

 

Successfully Negotiating the Sale of Assets During a Government Investigation

When a company that is under investigation for money laundering decides to sell its assets, what was once a straightforward sales process becomes a complex negotiation. That is what happened with our client, a provider of diagnostic testing equipment.

Ifrah Law and Michelle Cohen represented the company in its sale of radiology and cardiology diagnostic services equipment, which involved numerous challenges. Understandably, the buyer was concerned about the ongoing criminal investigation, and Michelle worked closely with them to address their concerns about representations and warranties and possible post-sale seizure from the government. Additionally, since there were bank liens on some of the assets, Michelle worked with the bank’s outside counsel to arrange a prompt payoff, obtain a satisfactory pay-off letter and secure a release of the liens in order to close the deal. Michelle also worked with the buyer to create a creditor payment plan that would payoff unsecured creditors and obtain releases from them in order to address the buyer’s concerns about unsecured creditors seeking relief from the buyer. Finally, she created an employee fund (funded by the buyer) to pay for uncompensated leave time.

These complicated issues were resolved in less than two weeks, as a result of Michelle’s skilled negotiations with all parties. The buyer was represented by Delaware’s largest law firm.

 

Successful Resolution of a TCPA Class Action

Michelle Cohen’s client, a publicly-traded enhanced messaging provider, was involved in a large-scale class action alleging violations of the TCPA’s unsolicited facsimile advertising rules. In addition to having provided the client with TCPA advice for over 15 years, Michelle represented them in enforcement matters before the FCC, including obtaining the rescission of an FCC citation, a highly unusual ruling from the FCC, finding that the client had a valid defense to the citation.

This TCPA case involved the alleged sending of 125,000 unsolicited faxes. The class was suing for triple damages of $1500 per violation – up to $180 million. Michelle and her team handled discovery, including depositions and motions. When the other parties decided to enter mediation, Michelle represented her client through the mediation, to the settlement agreement and ultimate dismissal of the case. Given the damages at stake, this case was successfully resolved for Michelle’s client, whose settlement contribution fell below the limits of their insurance policy.

 

Ensuring TCPA Compliance for a Global Provider of Customer Management Services

On behalf of our client, a leading provider of customer management services with call centers around the world, Ifrah Law led a full-scale review of its customer communications to ensure that they comply with federal and state requirements, including those of the TCPA and the FTC’s Telemarketing Sales Rule (TSR). We addressed the many different types of calls that the company undertakes on behalf of its varied customer base – service calls, appointments, live sales calling and pre-recorded calls – to ensure that its call centers are using consistent protocols and controls in the United States, and that these protocols are in compliance with the TCPA and TSR. Our client trusted Ifrah Law with this extensive project due to our long history with managing TCPA matters – we have been involved with the TCPA since its inception in 1991 – and due to our prior work for the client, including successfully representing the client in two FCC inquiries.

We worked with the company’s Director of Privacy to develop a thorough understanding of the types of calls that the company makes for its customers, and the contractual protections that are in place and which could be revised to protect the company further. A critical aspect of this project was to educate leaders within the company that there are different TCPA requirements based on the type of call: technology used, person being called, whether the call is pre-recorded or live; mobile or business. We also wrote the call center guidelines and controls to ensure that all employees – from those being trained to the marketing team – had the same information regarding how to handle different types of customer call projects.

This large-scale process took a year to complete. Once the documentation was finalized, our client was ready to begin a company-wide training program on the guidelines, well in advance of TCPA rule changes.

 

New Jersey Issues Bulletin Clarifying Licensure Standards for Internet Gaming

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Today, the New Jersey DGE issued a “Director’s Advisory Bulletin” clarifying how it would apply its suitability rules to gaming license applicants who conduct internet gaming in other jurisdictions.  If you offer a game that is illegal in any jurisdiction, the DGE will consider you unsuitable and bar you from the New Jersey market.  The new Bulletin clarified what New Jersey considers illegal:  If you operate in a “grey market” jurisdiction where internet gaming laws are ambiguous – or no affirmative enforcement actions have been taken – you’re probably good to go where NJ licensure is concerned.  But if you operate in a jurisdiction where the relevant authorities have taken affirmative action to prevent internet gaming activity, it will be considered a “black market” and you may be ineligible for a New Jersey license.  Make sure you know what a black market is and stay out!

As a prerequisite to any gaming license determination, the DGE must determine whether an applicant is “suitable” for licensure under the New Jersey Casino Control Act.  Internet gaming companies operating illegally in other jurisdictions will be unable to establish the “good character, honesty, and integrity required for a New Jersey gaming license.  Operating a legal internet gaming business in another jurisdiction presumably poses no obstacle to suitability.  Today’s Bulletin was a result of the DGE’s struggle with how to determine “suitability” when internet gaming companies operate in jurisdictions – as is often the case – where the legality of online gaming is “unclear or inconsistent.”  The DGE deemed such jurisdictions “grey markets.”  Recognizing that it was in no position to opine on the laws of these grey market jurisdictions, the DGE opted not to adopt a standard that would have imposed its own views on the laws or actions (or inaction) of other sovereign jurisdictions.  For practical purposes, this means that New Jersey has adopted a suitability standard of “if it’s not prohibited there, you are permitted here.”

Instead, the DGE will deem an applicant unsuitable based on its operations in other jurisdictions only if the applicant has conducted gaming operations in a “black market” jurisdiction: one in which the online gaming is clearly illegal or where the jurisdiction has “taken affirmative, concrete action to enforce” its anti-gaming law.  The DGE listed civil and criminal complaints and the issuance of formal cease and desist letters as examples of such affirmative actions.  Where a jurisdiction has refrained from taking any affirmative steps to prevent an internet gaming market to develop, the DGE will consider that jurisdiction to be a “grey market.”

The Bulletin does, however, leave substantial ambiguity concerning the hot area of daily fantasy sports (“DFS”).  Some states, like Alabama and New York, have issued cease and desist letters or taken other actions to prevent the operation of DFS sites in their states.  New Jersey’s Bulletin clarifies that those states should now be considered “black markets” and operation of DFS in those states could cause an applicant to be found unsuitable by the DGE.  The attorney generals of several other states have issued opinions declaring that DFS constitutes illegal gambling.  But unlike Alabama and New York, many of those jurisdictions have taken no affirmative action to enforce any law against DFS operators.  It remains unclear how the DGE will address those jurisdictions.  It could, however, consider the operation of a DFS business in those states as a prohibited “black market” activity.

For internet gaming companies, many of which operate both internationally and in multiple U.S. states, the DGE’s newly announced standard provides welcome clarity to companies looking to do business in the Garden State.  Companies currently operating in New Jersey, or hoping to do so in the future, should work with their counsel to ensure that they are not operating in any “black market” jurisdiction.

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Wells Fargo Learns That Recording Calls In California Can Be Costly

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In the past few years, many organizations such as Capital One, Bass Pro Outdoor, and the Cosmopolitan Hotel have faced class actions alleging violations of California’s call recording law.  This week, California’s Attorney General demonstrated that her office, working with state prosecutors, will also vigorously enforce the law under the state’s criminal statutes.  Attorney General Harris announced an $8.5 million dollar settlement with Wells Fargo Bank, N.A. over the alleged failure to provide call recording announcements to California consumers.

The complaint alleged violations of Sections 632 and 632.7 of California’s Penal Code, including the purported failure of Wells Fargo’s employees to “timely and adequately disclose the recording of communications with members of the public.”  These laws form part of California’s Invasion of Privacy Act. Section 632 makes it illegal to eavesdrop (monitor) or record a “confidential communication” without the consent of all parties. The statute defines a “confidential communication” as including “any communication carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto.“ The law specifically excludes communications in circumstances “in which the parties to the communication may reasonably expect that the communication may be overheard or recorded. “ Section 632.7 bars the recording of cell phone conversations, without the consent of all parties.

Wells Fargo Bank settled the case, agreeing in a stipulated judgment to the $8.5 million settlement and certain compliance requirements.  Specifically, Wells Fargo must make a “clear, conspicuous, and accurate disclosure” to any consumer in California of the fact that Wells Fargo is recording the call.  The settlement requires that this disclosure occur “immediately at the beginning” of the call, but allows Wells Fargo to precede the disclosure with an introductory greeting identifying the customer service representative and the entity on whose behalf the call is made (presumably, a Wells Fargo-affiliated entity). Wells Fargo also committed to a compliance program for one year and periodic internal testing of its employees’ and agents’ compliance with the call disclosure requirement.  The bank agreed to appoint an officer or supervisor with specific oversight responsibility for compliance with the settlement obligations.  Within a year following the stipulated judgment, Wells Fargo must provide the Attorney General with a report summarizing the testing.

Interestingly, the Attorney General previously pursued a similar action against home improvement platform Houzz Inc. for allegedly failing to notify all parties of its recording of incoming and outgoing telephone calls.  In that case, Houzz agreed to appoint a Chief Privacy Officer to oversee Houzz’s compliance, a first for a California Department of Justice settlement.

As we have advised before, all organizations recording calls – whether inbound or outbound – should immediately disclose to called parties that the call is being recorded.  The disclosure should occur at the outset of the call.  One type of introduction could be, “This is Michelle, calling on behalf of XYZ Company. This call is being recorded and/or monitored.”  Some companies may wish to announce the option of a non-recorded line, available via a key press. It is also important to time the recording to begin after the announcement, to avoid potential liability based on even a few seconds of a recorded call before an announcement is given.

A few important reminders are worth repeating:

  • The announcement requirement applies to inbound and outbound calls, including requested return calls.
  • Recording announcements apply to all types of calls – not just sales calls.
  • Maintain proof of the announcement.
  • Implement a short, written call recording policy.
  • Train customer service representatives to understand the call recording policies.
  • Periodically “test” call recording procedures.
  • Promptly investigate any call recording complaints and take appropriate corrective action.
  • Have customer service representatives sign an acknowledgment that they understand they are being monitored and/or recorded.

The recording of customer service and other calls is an important component to prevent fraud, fulfill legal requirements and augment customer service, among other reasons. Companies can implement call recording effectively, but must comply with announcement requirements and should take proactive measures, such as training and testing, to protect against civil and criminal liability and to safeguard consumer goodwill.

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New York DFS: Sites Agree To Armistice, Not A Settlement

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The New York Attorney General, FanDuel, and Draft Kings announced yesterday that a settlement had been reached in the litigation over the future of daily fantasy sports (“DFS”) in New York.  Effective immediately, FanDuel and DraftKings will discontinue operations in New York and pay out existing balances to New Yorkers.  This sounds like a major victory for the AG, and a surprising capitulation by the DFS sites after an appellate court allowed them to keep operating in New York while the court cases were in progress. But a closer study of the DraftKings and FanDuel agreements plainly shows that this is far from a definitive settlement.

The agreement would be better described as an armistice. No claims will be dismissed and no resolution has been agreed upon.  Everyone has agreed to postpone action on the pending appeals until at least this summer, when the filings will be due for the Appellate Division’s September session, and suspend all litigation in the trial court until the appeals are resolved.

The DFS sites, in other words, have agreed to suspend operations in New York, and now appear to be turning their attention to the New York State legislature as the agreements revolve entirely on whether there is a change in state law expressly legalizing DFS before June 30, 2016.  If so, all parties agree not to proceed further and neither DFS site would incur any penalties or pay restitution on the majority of the AG’s claims.  This would be a big win for DFS in New York—not only would it be able to operate legally in the state, but DraftKings and FanDuel would be off the hook for any claims about its previously questionable status.

But there’s plenty in this agreement that is unfavorable to the sites.  First, the matter of false advertising—central to the AG’s prosecution—is almost entirely unaffected, although it bears little relevance to the permissibility of DFS in general. More interestingly, if the legislature does not expressly legalize DFS, the sites have agreed not to appeal a loss to the New York Court of Appeals, the state’s highest court.  This is a curious concession that leaves the sites vulnerable to an adverse decision from an intermediate appellate court in Manhattan.  For its part, the AG has made no such concessions. If the Appellate Division rules in the sites’ favor, it would send the case back to the trial court for further proceedings without committing either the AG or the sites to any specific course of action.

Because nothing has changed about the DFS litigation itself, there is good reason to wonder why this “settlement” happened at all.  The best-case scenario for the DFS sites would be that the AG, faced with conflicting signals from state courts and New Yorkers alike, has agreed to collaborate on finding a legislative solution that would allow DFS to exist in New York subject to state approval and a method of oversight that allays some of his concerns.  A less encouraging possibility is that DraftKings and FanDuel are losing the stomach for a protracted fight in their biggest market and that, if it is not possible to restore DFS to New York quickly, the sites have decided it would be more prudent to cut their losses and focus on other markets.

In the meantime, New Yorkers likely will be without DFS through this summer.  If they don’t want it to stay that way indefinitely, they should do as we will and turn their attention to the New York State legislature—where S 6793 in the State Senate is the most promising bill—and where we can expect to see a strong push to finalize a legislative solution before the end of June. So serious a deadline has potent ramifications on the future of DFS in New York and perhaps the nation.  As such, we hope it will encourage action even from those who have viewed DFS as a low-priority issue until now.

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Guitar Hero for Cash! New Jersey Issues Temporary Regulations for Skill-Based Gaming

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Just last month at the National Council of Legislators from Gaming States (“NCLGS”) winter meeting in Orlando, I discussed the strong interest in skill-based games by casino owners, regulators, legislators, and the public. In an effort to appeal to millennials, fill empty slot seats, and expand the demographic at Atlantic City casinos, New Jersey’s Division of Gaming Enforcement (“DGE”) just announced new temporary regulations for “skill-based gaming.”  Although the DGE already has authority to permit skill-based games – and last year allowed a $10,000 free throw basketball tournament at the Borgata – the agency issued these regulations to provide additional guidance to industry.  DGE hopes to encourage companies with skill-based games to bring their products to Atlantic City before other jurisdictions. The regulations can be found here.

Key Consumer Protection Disclosures

The temporary regulations define “skill based gaming” as “any Division approved casino game where game outcome is dependent in whole or in part upon the player’s physical dexterity and/or mental ability.” This definition is broad enough to cover a wide variety of skill-based games – from basketball and golf to “Trivia Crack” and various brain teasers. The DGE mandates certain consumer protections, including that skill-based games clearly display:

  • Rules of play
  • Amount required to wager on the game
  • Amount to be paid on winning wagers
  • Any rake or fee charged to play the game
  • Total amount wagered by the player
  • Statement that the outcome of the game is affected by player skill (applies to skill and “hybrid” games), and
  • Other information sufficient for the player to reasonably understand the game

In addition, “unless otherwise disclosed to the player,” once a player begins a skill-based game, the gaming device cannot be altered during play based on a player’s skill.

Special Advantages/Identifiers Allowed with Conditions

DGE’s regulations allow player-purchased enhancements, randomly awarded enhancements, or other advantages, provided all players are advised of these features. The DGE put certain protections in place for these features.  Specifically, players must be advised both, that the feature is available, and of the benefit it offers. A skill-based game offering these advantages is required to explain how to obtain the feature and to provide players “with sufficient information to make an informed decision, prior to game play, as to whether or not to compete against a patron” who has this advantage.

Skill-based games may use an “identifier” (such as the skill of the player) to determine which games are available to a player.  The regulations also allow players to compete against a computerized or skilled house-sponsored opponent, provided the game discloses when the opponent is participating and allows a player to opt-in or opt-out of a computerized or house-sponsored opponent.  To establish fairness, the computerized or house-sponsored opponent must be prevented from having access to information that is otherwise unavailable to a player (for instance, knowledge of upcoming events).

Peer-to-Peer Skill Gaming

All peer-to-peer skill-based games are to be monitored for collusion and money laundering activity using an automated feature (following the internal controls of the casino licensee).

Payout

The temporary regulations require that slot machines with a skill-based component have a payout of at least 83 percent for each wager available for play on the device. However, games, which rely “entirely” on skill or do not use a random number generator (“RNG”) are not required to achieve a minimum hold percentage.

Approvals

Skill-based games will continue to require DGE approval.  A special “New Jersey First” process allows companies that bring their skill-based products to New Jersey before or simultaneously with submission to any other jurisdiction or testing lab, a 14-day approval process from testing to placement on the casino floor.

The temporary regulations mirror Nevada regulations on skill-based gaming adopted in September 2015. Therefore, any skill games approved in New Jersey would be permissible in Las Vegas and vice versa.

Massachusetts, Pennsylvania Close Behind/Trends

Other states are exploring permitting skill-based games at casinos. Just last week, Massachusetts issued draft regulations  – comments are due by March 7. Pennsylvania is also reviewing allowing skill games at casinos.

Empty chairs at traditional slots mean zero revenues. Casinos are, understandably, looking to attract new patrons and recognize that millennials are used to interactive gaming experiences, having grown up with Xboxes, Wii games, and popular online games such as Candy Crush.  Caesars Entertainment’s CEO recently reportedly advised slot makers to speed the development of new products, such as skill-based gaming machines. We expect to see the roll-out of a variety of skill-based games and other contests, including many that may appeal to millennial and Generation “X” and “Y” nostalgia, such as Guitar Hero, Pac Man, and other popular arcade games.

Regulators and casino operators will likely continue to develop rules and procedures during the approval processes and following reviews on the initial roll-out.  We see several issues that will need to be addressed depending on the type of game. For instance, when playing head to head, what happens if there is an unanticipated stop of play due to a player issue, a tech issue or some other act?  Who ultimately decides the winner in the event of a dispute/tie?  Can professionals (for instance e-Sport-sponsored players) play skill-based video games?  What about college athletes playing “their” sport in a skill-based athletic game? How will wagers work? Who will host the games? Will there be exclusivity?

The key to answering many of the operational questions will be for the manufacturers and casino operators to develop clear “rules of the game” that address the varied situations – similar to current rules for skills contests run online or in brick and mortar locations.  Detailed rules and disclosures can help the games run smoothly and prevent later disputes and litigation.

We applaud New Jersey’s DGE for encouraging innovation through these new regulations and the New Jersey First program. The DGE recognizes the need for games that appeal to expanded demographics.  The DGE’s speedy implementation of skill-based gaming regulations, as well as  its outreach and willingness to engage with industry demonstrate the agency’s commitment to economic growth while ensuring consumer protections are in place.

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ESPN’s ‘Outside the Lines’ Interviews Jeff Ifrah On The Future of Sports Betting in The U.S.

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*Image from CalvinAyre.com

Ifrah Law founding partner, Jeff Ifrah, weighed in on the battle over bets in a recent newscast for ESPN’s “Outside the Lines.” During the program, Jeff observed that major league sports are getting accustomed to the idea of legalized sports betting: “They are willing to recognize regulation; they’re willing to recognize the legality and it seems to indicate that they are willing to ignore the whole integrity of the game issue.”

The ESPN program, and its related piece, “Betting on the Come,” provided analysis of the sports leagues’ projected take on U.S.-based sports betting, quoting Jeff along with other industry experts such as Commissioner Silver and Nevada state Sen. Mark Lipparelli (the former leader of the Nevada Gaming Control Board).

A few of the recurring themes voiced by Jeff and others included (1) the significant amount of revenue the sports industry is losing out on to illegal and offshore sports betting operations, (2) the growing and inevitable desire of sports fans to be able to place wagers, and (3) the recognition that the technology and data analysis that goes hand-in-hand with modern wagering can actually promote game integrity.

Going Where The Money Is

Jeff noted in the interview that sports betting is “a critical part” of major league sports’ future revenue: “They can’t ignore that.” The program identified estimates that sports betting is a $400 billion a year industry in the U.S. alone, and that illegal sports betting out measures legal betting by some forty fold. With such staggering numbers, it should be no wonder that much of the sports industry would want to partner with the sports betting industry and tap into this revenue stream.

Listening To The Fanbase

Regardless of Commissioner Goodell’s opposition, fans are trending towards wagers. They increasingly see wagering as an integral part of sports entertainment. The uptick in sports fans’ interests, coupled with technology’s ability to provide an outlet, makes for an opportunity the sports industry shouldn’t want to deny. Jeff noted: “You’ve got a potential captive fan base that’s watching games on their phones. And how are they watching those games? Some of those games are being live streamed through the betting apps that they follow because they want to wager while they are watching the game.” More generally, the ESPN program pointed out that sports betting and gambling have become widely accepted. Especially since the growth of fantasy sports, it’s very common for fans to bet on games. This reality is hard for the major leagues to ignore.

Issue Spotting On The Field

“The integrity of the game issue” as an argument against sports betting seems to be dying, according to Jeff and others. One of the overarching reasons major league sports have historically fought against legalized sports betting is the concern that betting will corrupt the game and encourage cheating and game-fixing. But coordination with sports betting can actually help to ferret out such problems. Silver has stated that his league’s relationships with gambling companies [who can provide real time data analysis] help the NBA look for signs of “irregularities, just like the New York Stock Exchange can monitor insider trading.” If betters have to register in a regulated space, and their bets can be seen in real time, it will be easier to flag—in real time—problems like match-fixing.

Holding Their Hand Close? Hedging?

The inevitability of sports wagering and the staggering revenues it yields are especially compelling reasons for rational sports industry stakeholders to support the legalization of betting in the U.S. There are signs that this is the future major league sports are vying for, whether or not stakeholders will fully admit it. As the ESPN program pointed out, the leagues are investing in companies with strong ties to sports betting. For instance, the NFL has partnered with (and become a stakeholder in) Sportradar US, an American subsidiary of Switzerland-based Sportradar AG, which provides sports data to bookmakers in Europe and Asia. The NBA recently invested in FanDuel, which later acquired numberFire, a daily fantasy and sports betting analysis provider. And MLB recently partnered with Sport Integrity Monitor, whose parent company sets odds for foreign bookmakers.

Jeff noted these investments show that sports leagues are no longer truly adverse to wagering: “If you take an equity interest in a company that’s running lines on the games that your teams are playing, then you must have gotten over that issue.”

Regardless of what’s going on in the background, in the foreground these days are conflicting messages, such as major league’s opposition to legalized sports betting in New Jersey (a lawsuit is currently pending in federal court). Perhaps the leagues are trying to hold their hand close, as state attorneys general across the country are looking into the legality of daily fantasy sports. Perhaps the leagues are merely hedging their bets by their investments. In the end, if it’s a numbers game, we suggest you put your money on Silver.

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