LV just a bit player in Internet gaming industry

Tuesday, June 29, 1999 | 11:10 a.m.

VANCOUVER, British Columbia -- Las Vegas is still the center of the gaming industry universe. But in cyberspace, it's just one more bit player.

All that could change one day, some of the gaming experts attending last week's inaugural Global Interactive Gaming Summit and Expo agreed.

It all depends on what happens in the halls of Congress and the boardrooms of the city's major casino companies in the next few years.

Of the 350 people registered at the three-day event last week, only about a dozen were from the world's gaming capital.

Most of those in attendance were computer whizzes. Some were those who designed computerized casino games attempting to duplicate the look and feel of being at a place like Caesars Palace. Others specialized in the ability to link the owner of a personal computer to whatever fantasy world he or she chooses to visit, including a virtual casino.

A recurring theme of the conference was that there were precious few people who knew both the computer end of online gaming and the casino side. Several panelists noted that there aren't very many regulators -- or lawmakers -- who understand both ends of the industry. That's why the young and growing interactive gaming industry is having such a hard time persuading legislators to regulate them instead of prohibiting them.

There's more evidence that the industry is dominated by up-and-comers who know computer games, but not casino gaming. Some software designers are trying to figure out ways to turn familiar computer games, like Doom, into something that can be wagered on.

Maybe they're on to something. A number of panelists told tales of how Asians and Australians will bet on almost anything. One Australian speaker said he was only half joking when he said two Australians sitting in a bar would happily wager on which fly on the wall would climb to the ceiling first to determine who would pick up the tab.

Young designers also reason that today's teenagers will be tomorrow's gamblers. Why not offer them a game they're really familiar with to bet on?

But don't expect the Nevada Gaming Control Board to run out and certify Doom for bettors, even though a version of another popular game, Monopoly, is one of the hottest slot machines in Las Vegas casinos.

Online gaming companies are going to great lengths to establish themselves. They pay millions of dollars in start-up costs and will bear the expense of negotiating with foreign countries to become licensed.

How far will they go to establish credibility? Companies that wind up going to Australia have agreed to pay a 50 percent tax rate on gaming win for the privilege of doing business.

The industry has demonstrated it is willing to pay for some form of regulation. But instead, legislators are responding with a proposal to ban the business in the United States. Sen. Jon Kyl's Internet Gambling Prohibition Act awaits a Senate vote. Some industry leaders believe the Kyl bill is on a fast track toward passage. Others are skeptical whether a House version will emerge. Last year, the measure died in the House.

If the Kyl bill dies, current laws prohibiting interstate wagers and state laws barring Internet gambling would take precedence.

Because of those two alternatives, most Nevada casino companies aren't motivated to sink money into Internet gambling, which most analysts consider to be a niche market and not a competitor to the casino industry.

That leaves the door open to the up-and-comers to try to build an online brand name that will be as acceptable to Internet gaming as amazon.com is to book-selling.

David Herschman, president and chief executive officer of Virtual Vegas Inc., operator of an online casino website, believes the strong online casino companies will be able to hold their own -- and even beat -- Las Vegas casino companies that try to expand to the Internet.

But many of the software developers showing their wares at the gaming summit trade show admitted they would be just as happy getting bought out by a Caesars Palace or a Mirage as they would setting up their own virtual casinos.

So will the Las Vegas big boys ultimately jump into online gaming? Tony Fontaine, vice president of applied technologies for Bally Gaming, contends the big boys already have arrived.

Bally Gaming and International Game Technology already are collaborating with companies on Internet gaming projects. American Wagering, owner of Leroy's Horse and Sports Place in Las Vegas, operates a gambling site from Australia called MegaSports and Station Casinos Inc. recently announced an online deal with youbet.com.

Some of the big companies have just-for-fun casino sites to help future visitors learn how to play casino games. Those are perfectly legal and even the Kyl bill would allow them to operate.

But most companies aren't diving into the online world because they fear losing their land-based licenses. The risk of losing the license is greater than any up side online gaming would offer. But the companies that are jumping in now feel their partnerships will keep them from jeopardizing their own licenses.

The prize is a global audience of Internet web surfers growing faster than the number of U.S. users. And, if somehow the online advocates and lobbyists persuade U.S. legislators to regulate instead of prohibit online gaming some day, the local companies will be in a prime position to dominate the industry.

That's why corporate board rooms will continue to monitor what happens in the legislative circles on Internet gambling.

And, it's why Las Vegas isn't the center of Internet gambling -- yet.