At the October 19, 2017, meeting of the Mississippi Gaming Commission, the Commission approved for publication, for receipt of public comment, a proposal to amend the Commission’s regulations on institutional investors.
Institutional investors under the Mississippi gaming regulations and those of other jurisdictions are certain defined banks, insurance companies, registered investment companies, registered investment advisors, collective trust funds, employee benefit plans and trust funds subject to ERISA, state or federal government pension plans and the like.
Under those regulations, institutional investors are typically permitted to acquire equity interests in public (and sometimes private) gaming companies without having to undergo a full finding of suitability investigation. The rationale for this special treatment is to permit gaming companies to have access to the capital markets. Additionally, due to the limited list of qualifying institutional investors, gaming regulators are comfortable that the institutional investors are sufficiently otherwise regulated by banking or insurance commissioners or the Securities and Exchange Commission, among others.
Currently, the Mississippi institutional investor regulation permits investments by such companies not to exceed fifteen percent (15%) of the voting securities of a Mississippi gaming licensee or its holding company. Nevada and New Jersey gaming regulators have adopted a twenty-five percent (25%) standard for institutional investor ownership in gaming companies. Moreover, the Indiana Gaming Commission has granted to institutional investors limited waivers under its gaming regulations to acquire up to twenty-five percent (25%) of the voting securities of a gaming company.
That other major gaming jurisdictions have seen fit to establish institutional investor ownership maximums at twenty five percent (25%) demonstrates the reasonableness of the Mississippi Gaming Commission’s consideration of this amendment to its regulations and commitment to encouraging continued capital market investment in the Mississippi gaming industry. Such a change also brings Mississippi in line with other major gaming jurisdictions and provides greater flexibility to gaming companies doing business in all these states; otherwise, institutional investors in a gaming company operating in Nevada, New Jersey, Indiana, and Mississippi are practically limited to a maximum of fifteen percent (15%) ownership in the licensee due to the Mississippi limitation being the lowest among the four states.
If the proposed amendment is approved at an upcoming Commission meeting, the proposed amendment could become effective prior to the end of 2017.