Casinos to keep stance on Internet gambling

David Strow

Wednesday, Dec. 20, 2000 | 11:26 a.m.

The casino industry will again insist on exemptions to protect itself before supporting any future federal legislation banning Internet gambling, the head of the American Gaming Association said.

The AGA threw its support behind the Internet Gambling Prohibition Act in the last session of Congress after winning several key concessions from the bill's supporters. That bill died with the end of the 106th Congress -- and, without knowing what new legislation would allow, AGA Chief Executive Frank Fahrenkopf said the AGA cannot yet take a position supporting a new federal attempt to ban online casinos.

"In order to protect our industry, we had to do some bargaining to make sure we weren't left out," Fahrenkopf said. "I can't tell you if we'll be for or against it without looking at the exact language, seeing the exemptions impacting our industry, seeing if there will be regulatory and law enforcement provisions. We're starting fresh."

The bill, first introduced by Sen. Jon Kyl, R-Ariz., found strong support from Nevada officials, including all of Nevada's congressional delegation and the state gaming control board.

In its final form, the bill contained a smorgasbord of exemptions, added in an effort to build support in Congress. Exemptions for a ban on Internet gaming were provided for lotteries, horse and dog racing, jai alai and certain forms of Indian gaming. The load of exemptions led many to believe the bill would actually extend the reach of Internet gaming in the United States, rather than controlling it.

"We're not going to support something that's going to put our members in a poor competitive position," said Wayne Mehl, Washington lobbyist for the Nevada Resort Association. "There was a wide-open loophole for Indian gaming, as well as other types of gaming. If we're not going to ban it for everybody, we're not going to be a part of it."

Among the concessions made for casinos, three stood out. One would allow gaming companies to continue operating interstate computer systems used for transmitting wagering information; without such an exemption, a system like International Game Technology's "Megabucks" could have been wiped out by the Kyl bill, since parts of the network do cross state borders.

Second was a provision that allowed casinos to continue advertising on the Internet.

A third exemption permitted casino sports books to continue laying off certain high-risk bets in betting pools operated by remote racetracks, even if the track was in another state.

Though the casino industry's position on a new bill might change, Fahrenkopf said the AGA's overall position has not.

"To have any form of gaming with legitimacy, there must be rigorous regulatory and law enforcement oversight," Fahrenkopf said. "Any form of gambling without that, the AGA would oppose."

Fahrenkopf believes that oversight can only come at the state level. A bill has been introduced that would establish regulated Internet gaming in New Jersey, while in Nevada, Assemblywoman Merle Berman, R-Las Vegas, is considering introducing a similar bill in the Nevada Legislature in 2001. Passage of a bill in either state is expected to take several years, however.

Despite the historic support of an Internet gaming ban from many Nevada officials, there is support for such a move in some corners of the gaming industry -- provided Internet gaming operates under the same regulations as land-based casinos.

"We believe that Internet gambling is clearly an established business already," said Alan Feldman, spokesman for MGM MIRAGE. "The only question that remains for government is whether or not there's an appropriate means of meeting the regulatory criteria of a given state, and if so, whether that state wants to legalize (Internet gaming). We believe they should."

MGM MIRAGE has positioned itself to move quickly if Internet gaming becomes legal. The company, in a joint venture with Silicon Gaming Inc., is working on a site that will allow users to play casino games on the Internet.

Players won't be allowed to play for money or prizes, but if Internet gaming does become legal, the site could be converted to a true Internet casino.

But a number of technical challenges remain. One is preventing underage gamblers from accessing Internet casinos; another is making sure Internet casino operators can accurately track the location of players, so local bans against gambling aren't violated.

"We're working (through the joint venture) to develop the type of regulatory standards that would put us in compliance with Nevada or New Jersey law," Feldman said. "I can't tell you we're there today, but once we are, and once we can meet standards, we should be allowed to operate, we should be taxed, and we should be regulated."

Harrah's Entertainment Inc. is working on a similar "for-fun" Internet gaming site, though it takes a more cautious stance in its view on Internet gaming.

"Our position is neutral on this issue," said Harrah's spokesman Gary Thompson. "If the time comes when Internet gambling is a legal and accepted way to do business, we want to be a participant. But we'll do nothing to jeopardize our licenses in any of our jurisdictions.

"There's a lot of technical problems that would have to be resolved before we as a company would feel comfortable endorsing Internet gaming. Having said that, technology certainly advances very quickly."

Feldman said many members of Congress are starting to realize this -- and, as a result, he believes the next federal Internet gambling bill won't focus on prohibition. Instead, he said, there's support from both Republican and Democratic members of Congress for establishing minimum standards for online casino operators.

"A whole lot of congressmen ... have come to the understanding that the progress of technology is at such a rapid pace that these sort of all-out prohibitions may not be realistic," Feldman said. "The government role is better served when it sets forward minimum standards. If you can't meet those standards, you can't be doing this activity.

"I believe, when Mr. Kyl introduced this bill, everyone's understanding of technology as a tool to protect consumers was different than it is today. If he takes a new look, he may come to a different conclusion."