Internet gambling lurks as wild card in high-stakes struggle over slots

Gary Thompson

Sunday, Feb. 28, 1999 | 9:42 a.m.

One potential defensive strategy International Game Technology of Reno might employ to replace revenues lost from a ban on revenue-participation slot machines ought to scare the stuffing out of its opponents' shirts.

It's called Internet gambling.

Casino operators hate the threat posed by the Internet because it allows people to gamble without having to step inside those billion-dollar resorts sprouting up in Las Vegas and elsewhere.

Thus far casinos have successfully convinced federal legislators that Internet gambling is a bad thing.

But sooner or later government officials here may get tired of watching a a growing tide of dollars flow untaxed into the bank accounts of offshore Internet gaming companies.

That could result in pressure to legalize and regulate Internet gaming in the United States, encouraging publicly held entities with gaming experience to become big Internet gaming providers.

A company such as IGT would have no need to build billion-dollar resorts. It could wire up a website to its library containing tens of thousands of games and let the play begin.

No casino company with four or five properties in Nevada could build a jackpot big enough to compete with one generated by millions of players from all over the globe.

Just last month, IGT announced that it had acquired a stake in Access Systems Pty. Ltd., a Sydney, Australia, Internet company.

The deal calls for IGT to market an Access Internet gambling system worldwide. The system would allow customers in jurisdictions that allow Internet gambling to play IGT games from their personal computers.

Customers of the Access-IGT venture include the Australian lottery.

Two other Las Vegas companies -- American Wagering Inc. and Alliance Gaming's Bally Gaming division -- have also announced Internet gambling deals with Australian companies. Even casino giants Harrah's and Park Place have subsidiaries or investments in Australia looking at getting into Internet gaming.

Technological advances and the growth of the Internet make similar deals seem inevitable.

"Given the extraordinary changes in the slot industry and the evolution of computers generally, I'd be very surprised if we had a slot market 10 years from now even remotely like what we have today," William Eadington of UNR's Institute for the Study of Gambling says. "If you look at communications generally, all these technological developments have significant implications.

"In the meantime, I fall back on fundamentals. Casinos may find some short-term benefits in legislation to ban such revenue-participation games. But in the long term, it would be folly because it works against the incentives and dynamics that have driven Nevada's growth."