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May 25 — The Nevada Legislature is about to place a big pile of chips on the table by approving legislation that would allow casinos to conduct online gambling once state regulators were convinced they could effectively monitor it. But while the bill would make Nevada the first state to authorize Internet wagering, a number of hurdles remain before the first virtual dice can be tossed.
THE BILL has been approved by the state Assembly and appears assured of passage in the Senate by Monday. Republican Gov. Kenny Guinn has not publicly taken a position on the legislation, but gambling industry insiders have expressed confidence that he will sign it.
The legislation, introduced by Assemblywoman Merle Berman, R-Las Vegas, instructs state gaming regulators to determine whether they can ensure that Internet gambling games are fair, that operators can prevent minors from playing and that the games are conducted only where lawful. If the regulators reply in the affirmative, Nevada’s licensed gambling operators — or at least the bigger ones — will be able to begin offering online betting.
Asked how long it might take the state Gaming Commission and the state Gaming Control Board to determine whether those criteria could be met, Commission Chairman Brian Sandoval replied: “That’s the $64,000 question. Not to be flip, but it will take as long as it takes.”
THE FIRST STEP
The first step in the process would be to go to the Justice Department and see whether conducting Internet gambling would violate federal law, Sandoval said. That question is open to legal interpretation, but the Justice Department has prosecuted operators who have tried to conduct online gambling from the United States, as well as about 20 Americans involved in offshore operations
But Nevada regulators would have on their side a recent U.S. District Court ruling that concluded that the Wire Communications Act, a 1960s law that bans the use of telephones to accept wagers on sporting events, doesn’t apply to casino-style games played on the Internet.
If that hurdle is met, the regulators would turn to looking at a host of possible solutions aimed at preventing minors and residents of jurisdictions where online gambling is illegal from being able to play.
Anthony Cabot, a Las Vegas lawyer and author of “The Internet Gambling Report,” said technical means exist to accomplish both goals, although the cost could be prohibitive.
“I think they’re solvable, but the question becomes: Is the solution economically justifiable?” he said. Among the systems that could be used would be “biometrics” systems that would use unique physical characteristics like fingerprint to prevent minors from gambling, or global-positioning system software that would pinpoint the location of a computer before allowing a gambling session to begin.
TOUGH CHALLENGES
Even representatives of the online gambling industry say the challenge presented by those issues would be formidable.
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“There are some systems that address those issues, but they are cumbersome … and there’s nothing out there that is 100 percent proven and accepted at this point,” said Sue Schneider, chairwoman of the Interactive Gaming Council, a trade group. “I wish I could come up with it, because I think I’d be a rich person.”
The other criterion — ensuring that the games were fair and honest — would be the easiest to cross off the list, most experts say, because the state could require that the gambling software log every transaction and enable real-time auditing.
While he can see the long road ahead, Sandoval, the gaming commission chairman, said he was looking forward to the task.
“I think it’s an incredible challenge, but one that as a regulator I am looking forward to,” he said. “I feel Nevada should be the one to take a hard look at it and determine whether it can be regulated properly.”
Few believe that, even if everything goes smoothly, Nevada casinos will be taking bets online in less than a year. And others say 18 months to two years would still be pushing the envelope given the comprehensive testing of software that would be necessary to meet the state regulators’ standards, which are probably the most stringent in the world.
But if the big names of real world gambling were given the go-ahead, they would quickly become the 800-pound gorillas of the online landscape as well, many observers believe.
BIG PLAYERS WILL CHANGE LANDSCAPE
“Once you get the MGMs, the Harrah’s, the Trumps going online, you’re going to find that they’re attracting most of the players,” said Frank Catania, a former New Jersey gambling regulator who is now a consultant to the gambling industry. “It’s been proven that trust and comfort [on the Internet] really isn’t that high unless you’re shopping at a Macy’s or a Nordstrom’s, and the same thing will apply in gaming.”
Whether or not Nevada eventually conducts Internet gambling, approval of the legislation itself would represent a sharp shift in approach toward online betting, which in recent years has been vilified as “the crack cocaine of gambling” by opponents like Sen. Jon Kyl, R-Ariz., who failed in successive attempts to get a federal ban through Congress.
But with offshore gambling sites operating outside the reach of U.S. authorities and with state lotteries, horse racing interests and some casino operators working against a total ban, momentum appears to be shifting toward an “opt-in, opt-out” system under which the federal government would work to help states that don’t want gambling keep it from electronically crossing their borders.
Rep. Robert Goodlatte, R-Va., who has taken the baton from Kyl on the issue, said Friday that he intended to introduce legislation shortly that would concentrate on cutting off the use of financial instruments, such as credit cards and money orders, by Web sites offering gambling in violation of U.S. laws.
“If a company is engaged in legal gambling, fine,” he said. “... But it’s going to be misery for these illegal, unregulated, untaxed offshore gambling sites.”
THE BILL has been approved by the state Assembly and appears assured of passage in the Senate by Monday. Republican Gov. Kenny Guinn has not publicly taken a position on the legislation, but gambling industry insiders have expressed confidence that he will sign it.
The legislation, introduced by Assemblywoman Merle Berman, R-Las Vegas, instructs state gaming regulators to determine whether they can ensure that Internet gambling games are fair, that operators can prevent minors from playing and that the games are conducted only where lawful. If the regulators reply in the affirmative, Nevada’s licensed gambling operators — or at least the bigger ones — will be able to begin offering online betting.
Asked how long it might take the state Gaming Commission and the state Gaming Control Board to determine whether those criteria could be met, Commission Chairman Brian Sandoval replied: “That’s the $64,000 question. Not to be flip, but it will take as long as it takes.”
THE FIRST STEP
The first step in the process would be to go to the Justice Department and see whether conducting Internet gambling would violate federal law, Sandoval said. That question is open to legal interpretation, but the Justice Department has prosecuted operators who have tried to conduct online gambling from the United States, as well as about 20 Americans involved in offshore operations
But Nevada regulators would have on their side a recent U.S. District Court ruling that concluded that the Wire Communications Act, a 1960s law that bans the use of telephones to accept wagers on sporting events, doesn’t apply to casino-style games played on the Internet.
If that hurdle is met, the regulators would turn to looking at a host of possible solutions aimed at preventing minors and residents of jurisdictions where online gambling is illegal from being able to play.
Anthony Cabot, a Las Vegas lawyer and author of “The Internet Gambling Report,” said technical means exist to accomplish both goals, although the cost could be prohibitive.
“I think they’re solvable, but the question becomes: Is the solution economically justifiable?” he said. Among the systems that could be used would be “biometrics” systems that would use unique physical characteristics like fingerprint to prevent minors from gambling, or global-positioning system software that would pinpoint the location of a computer before allowing a gambling session to begin.
TOUGH CHALLENGES
Even representatives of the online gambling industry say the challenge presented by those issues would be formidable.
Advertisement
“There are some systems that address those issues, but they are cumbersome … and there’s nothing out there that is 100 percent proven and accepted at this point,” said Sue Schneider, chairwoman of the Interactive Gaming Council, a trade group. “I wish I could come up with it, because I think I’d be a rich person.”
The other criterion — ensuring that the games were fair and honest — would be the easiest to cross off the list, most experts say, because the state could require that the gambling software log every transaction and enable real-time auditing.
While he can see the long road ahead, Sandoval, the gaming commission chairman, said he was looking forward to the task.
“I think it’s an incredible challenge, but one that as a regulator I am looking forward to,” he said. “I feel Nevada should be the one to take a hard look at it and determine whether it can be regulated properly.”
Few believe that, even if everything goes smoothly, Nevada casinos will be taking bets online in less than a year. And others say 18 months to two years would still be pushing the envelope given the comprehensive testing of software that would be necessary to meet the state regulators’ standards, which are probably the most stringent in the world.
But if the big names of real world gambling were given the go-ahead, they would quickly become the 800-pound gorillas of the online landscape as well, many observers believe.
BIG PLAYERS WILL CHANGE LANDSCAPE
“Once you get the MGMs, the Harrah’s, the Trumps going online, you’re going to find that they’re attracting most of the players,” said Frank Catania, a former New Jersey gambling regulator who is now a consultant to the gambling industry. “It’s been proven that trust and comfort [on the Internet] really isn’t that high unless you’re shopping at a Macy’s or a Nordstrom’s, and the same thing will apply in gaming.”
Whether or not Nevada eventually conducts Internet gambling, approval of the legislation itself would represent a sharp shift in approach toward online betting, which in recent years has been vilified as “the crack cocaine of gambling” by opponents like Sen. Jon Kyl, R-Ariz., who failed in successive attempts to get a federal ban through Congress.
But with offshore gambling sites operating outside the reach of U.S. authorities and with state lotteries, horse racing interests and some casino operators working against a total ban, momentum appears to be shifting toward an “opt-in, opt-out” system under which the federal government would work to help states that don’t want gambling keep it from electronically crossing their borders.
Rep. Robert Goodlatte, R-Va., who has taken the baton from Kyl on the issue, said Friday that he intended to introduce legislation shortly that would concentrate on cutting off the use of financial instruments, such as credit cards and money orders, by Web sites offering gambling in violation of U.S. laws.
“If a company is engaged in legal gambling, fine,” he said. “... But it’s going to be misery for these illegal, unregulated, untaxed offshore gambling sites.”
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