Nevada Ready for Online Gambling

Nevada Ready for Online Gambling

August 23, 2009.

The respected Las Vegas Review-Journal provided encouraging weekend reading in an article by Howard Stutz which examined how prepared the gambling state of Nevada might be should Barney Frank's attempt to legalise online gambling in the United States prove successful.

Stutz observes that Nevada could benefit financially from such a move, becoming the premier American jurisdiction for hosting Internet casinos.

Interviewed by Stutz, gaming regulators said the online businesses would have to pay upfront fees, and online casinos would be taxed at the same rate as Strip casinos, currently 6.75 percent on gaming revenues.

However, the pressure of other work could slow the progress of Frank's bill through Congress. "(Debate on the bill) probably won't happen this year," former Senator Richard Bryan, an attorney with Lionel Sawyer & Collins, who spent 12 years representing Nevada in the U.S. Senate as a Democrat, told the LVRJ.

"My sense, however, is that there is a gathering, gradual momentum where, eventually, Internet gaming will occur and be regulated.

"I'm just not sure if it has reached critical mass yet."

Bryan and fellow attorney Greg Gemignani revealed that their law firm has been approached by potential clients who want to set up Internet gambling businesses in Nevada should the activity be legalised.

Stutz points out that Nevada lawmakers enacted a licensing process for Internet gaming back in 2001 (see previous report) but that the state's effort went dormant a year later when there wasn't any action on the federal level.

"If Internet gaming is legalized under the current bill in Congress, Nevada could be chosen by the Department of Treasury to determine whether an applicant is suitable for federal gaming licensing," Stutz claims in his article.

It's a sensible premise, given that the state has been licensing gambling operations since 1931, investigating and licensing gaming companies and regulating the land industry longer than any other jurisdiction.

"The suitability requirements under the current bill look like a subset of what Nevada already requires," Gemignani said. "Given Nevada's current laws permitting interactive gaming licensing, Nevada is well-placed to be at the forefront of regulating online gaming and providing assistance to the federal government in determining the suitability of applicants."

Gaming Control Board Chairman Dennis Neilander told the LVRJ that the state's current regulatory structure could be enhanced with regulations covering online gambling. Under the state's 2001 law, the Nevada Gaming Commission could set policy that mirrors federal regulations.

Nevada online casinos would have to use technology that offers reasonable assurance that wagers would not be accepted from states where Internet gambling is prohibited and that minors could not access the sites.

"We have the enabling legislation in place that would allow us to go forward with the concepts that I've heard are being discussed," Neilander said. "The federal government would set a baseline standard of minimum requirements. It would be up to individual states to opt in."

Under the state's law, Nevada could earn upfront fees, which could be larger than normal licensing fees.

"We would contemplate going forward with a gaming tax that would be the same as a bricks-and-mortar casino," Neilander said.

Congressman Frank's House Resolution 2267, the Internet Gambling, Regulation, Consumer Protection and Enforcement Act provides safeguards against compulsive and underage gambling, money laundering, fraud and identity theft.

Quoting the American Gaming Association, the LVRJ says that an estimated $5.9 billion was wagered b Americans on gambling Web sites outside the United States last year. "Those same sites took in another $21 billion from gamblers worldwide," the publication notes.

"I haven't taken the industry's temperature in terms of Internet gaming, but, because of the potential revenues involved, I do believe there is some momentum moving in favor of the activity," former Senator Bryan said.

Fellow attorney Gemignani opined that gaming companies licensed in Nevada that are interested in jumping into the Online Casino business would have an advantage over outside companies seeking to break into the market.

"There are a substantial number of Nevada licensees with experience in the technologies, systems and management of systems that can be used for online gaming," Gemignani said.

Stutz goes on to comment that support by the land industry for legalised online gambling is split, with the AGA consequently taking a neutral stance on the issue.

MGM Mirage spokesman Alan Feldman told Stutz that the company's position on Internet gaming has not changed.

"We have always felt it should be legalized, regulated and taxed," Feldman said. "There is no need to create a whole new infrastructure with government oversight because it already exists in the States."

Stutz records that Harrah's Entertainment is the most vocal proponent of legalisation in the USA, reporting that earlier this year, the company hired a former Online Gambling executive to expand its World Series of Poker brand internationally and online through Harrah's Interactive Entertainment.

The article also points out that slot machine giant International Game Technology owns two subsidiaries based in Europe that provide content to Online Casino.

Bryan said Washington, D.C., moves at a "glacial pace." However, he said there may be an underlying effort to pass Frank's bill because states could realise much-needed tax revenues from Internet gaming.

"I believe there is probably more support for it today than there was a decade ago," Bryan said.

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