Regulator, industry group support state Internet bill

David Strow

Friday, March 9, 2001 | 11:43 a.m.

When Internet gambling first began appearing on the radar screen, the casino industry was one of its most adamant foes.

When Sen. Jon Kyl, R-Ariz., introduced a bill banning gambling over the Internet, gaming interests supported him, saying that the unregulated world of Internet gaming could create scandals that would hurt land-based casinos.

That attitude in changing, following state Assemblywoman Merle Berman's introduction of a bill that would give Nevada gaming regulators the ability to legalize and regulate on-line gaming. The Nevada Resort Association, the chairman of the Nevada Gaming Commission and casino giant MGM MIRAGE all say they will support Berman's bill.

"If it (Internet gambling) is clearly a legal act, I think it's appropriate that Nevada licensees engage in it," said NRA President Bill Bible. "Gambling is certainly one of the mainstays of our economy, and if licensees in other jurisdictions can do it, then it certainly makes sense that Nevada licensees should be involved in it."

"We think it makes sense," said Alan Feldman, spokesman for casino giant MGM MIRAGE, the largest operator of hotel-casinos on the Strip. "I do think this kind of approach from a legislator is a lot more sensible than what we're seeing out of Washington, (the attitude of) just stick your head in the sand and make all this go away."

Harrah's Entertainment Inc. also likes what it sees, though spokesman Gary Thompson said the company must study the bill before taking a formal stance.

"We think it's an interesting first step," Thompson said. "I would think it's also a tacit recognition that Internet gambling is something nobody can just wish away. It's out there, people are making money on it, consumers are unprotected. If it is indeed implemented ... it will provide protection to consumers and additional tax revenues to the state."

State representatives appear ready to approve the bill. Thirty-three of the 42 members of the assembly are co-sponsors of Berman's bill, and five of the state's 21 senators have also signed on.

A big reason support is building for the bill is because it doesn't force Nevada to immediately allow Internet gaming. Instead, the bill leaves the decision to open the Internet gaming market to the Nevada Gaming Commission.

For that reason, commission Chairman Brian Sandoval said it's a bill he supports.

"It gives the regulators the ability to determine whether we can regulate it properly," Sandoval said. "The discretion is left with the (state Gaming Control) Board and the commission, which is where it should be.

"I have always believed that (Internet gaming) is part of the evolution of gaming, as long as we can regulate it properly. I think Nevada should show some leadership in this area and move forward."

But before the commission will begin issuing licenses, Sandoval said technology must exist to make Internet gaming secure and reliable. One key issue has been how to block players from areas where gambling is illegal.

"To make that finding, there would have to be a demonstration showing that technology exists," Sandoval said. "The technical expertise in that regard lies with the board, which would make the recommendation to the commission."

And that's why the NRA will support the bill as well, Bible said.

"My assumption is that (Internet technology) won't be in the same form four or five years from today," Bible said. "The Nevada Legislature only meets biannually. (With this bill), you don't have to wait for a two-year window in order to act. Some other state could get the jump on Nevada by a couple of years, and Nevada wouldn't want that to happen."

In preparation for legalized Internet gaming, a number of gaming corporations, including MGM MIRAGE, Harrah's and Park Place Entertainment Corp. have established non-cash, for-fun casino games on their Internet sites.

The Department of Justice has argued that the Federal Wire Act, passed in 1961, makes Internet gaming illegal in the United States. That law bans the use of a "wire communication facility for the transmission in interstate or foreign commerce in the placing of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest."

"Clearly, that's an area that would have to be clarified" before Nevada companies could move forward with Internet gaming, Bible said.

But Anthony Cabot, Las Vegas gaming attorney and Internet gaming expert, believes the Wire Act only blocks sports betting over the Internet, not the operation of casino games.

"There are other federal laws that could apply to casinos, but each requires a predicate violation of state or local laws," Cabot said. "(Justice attorneys) have said 'sporting' is meant to (apply) to events, but not contests. That's ridiculous.

"They've never brought prosecution against anyone but sports bookies. It's fairly clear this doesn't apply to Internet non-sports gambling."

A federal law specifically banning Internet gambling could override Nevada law, but Cabot said it isn't clear if a new version of the Kyl Bill will be introduced.

"I think it probably will (be re-introduced)," Cabot said. "It depends on what it says."

The last time Kyl went forward with an anti-Internet gambling bill, the NRA supported it. Bible said that's not a certainty this time.

"We have not seen the latest version of the Kyl Bill, so I will withhold judgment," Bible said. "I suspect our position would change from supporting it to neutrality or opposition."