Nevada aims to be first in Web gaming

Erin Neff

Friday, March 30, 2001 | 11:30 a.m.

CARSON CITY -- Nevada has the ability to be the first state to enter the multi-billion dollar Internet gaming market, witnesses testified this morning.

Assemblywoman Merle Berman, R-Las Vegas, has sponsored Assembly Bill 296 to allow state regulators to approve interactive gambling for resort hotel-casinos with unrestricted gaming licenses.

"It is unthinkable to me that the Legislature would not allow the Nevada Gaming Commission and Gaming Control Board to be the first," Berman said.

Buoyed by support from Nevada's gaming industry, regulators and Wall Street, Berman told the Assembly Judiciary Committee this morning that her bill simply enables regulators to approve Internet casinos.

Berman chose the term "interactive" gaming to include the Internet and any other technology that follows.

Tony Cabot, an Internet gambling expert and attorney with Lionel, Sawyer & Collins, said Nevada can legally allow casino operators to set up servers in this state and take bets from people in jurisdictions where gaming is legal.

"With us moving forward with this first, do you think we might be sending the wrong message when we want Congress to stay out of our other gaming activities?" asked Assembly Majority Leader Barbara Buckley, D-Las Vegas.

Cabot argued that Congress cannot restrict Nevada casino operators from launching Internet casinos. Operators within Nevada could lawfully tax the operators for any bet taken, he added.

"If Nevada approves Internet gaming, Nevada could take bets from anywhere," Cabot said.

Nevada casino operators with Internet casinos could not accept bets from people living in states or countries where gaming is illegal, he added.

The bill allows regulators to approve Internet casinos if:

--All applicable laws are met.

--The system is secure and reliable.

-- There is a reasonable assurance that the players are lawful, and the casino is licensed.

Some concerns have been raised that smaller casino operators would be prohibited from launching Internet casinos.

By using the definition resort hotel, the bill limits interactive gaming to such facilities in Clark and Washoe counties.

"Because of the extent of their investment, resort hotels have the most at risk if anything goes wrong with interactive gaming," Berman said.

Marc Falcone, associate director of Bear Stearns & Co. in New York, said the resort hotels have the biggest brand in the industry, and thus could draw the biggest customer base.

Falcone said Internet gaming would allow casino companies to cross-market their product and introduce new visitors to Nevada.

He also warned the committee that native American tribes in California could beat Nevada to the Internet and increase the threats to Nevada's gaming industry.

"Other states and jurisdictions are going to actively move forward and try to regulate this industry ahead of Nevada," Falcone said.

New Jersey lawmaker, Anthony Impreveduto, has introduced legislation in that state to allow New Jersey casinos to operate Internet gaming sites. That legislation has not yet been heard in committee.

Berman said if Nevada casinos are approved for Internet gaming, they would bring in an additional $56 million in taxable revenue during 2001-02. That amount would rise to $111 million in 2002-03.

Assemblyman John Carpenter, R-Elko, expressed concern about the inability of smaller casinos in his county to launch interactive gaming.

Harvey Whittemore, a lobbyist for the Nevada Resort Association, said he would be willing to discuss a possible amendment to include other casinos.

"You're going to take care of cowboy country, right?" Carpenter asked.

Since any legislation must pass the house in which it originated by April 16, Judiciary Chairman Bernie Anderson warned that negotiations would have to occur quickly.

Samuel McMullen, a lobbyist for the Association of Gaming Equipment Managers, expressed concern about the bill's requirement that resort hotels alone could embark on Internet gaming. He agreed to negotiate with the NRA about what that definition entails.

Before this morning's hearing, Berman said she was confident her bill had support in the Senate, but was not certain what would happen to it in the Assembly.

Anderson expressed an interest in moving forward on the bill as a "cautious first step."

Buckley told McMullen she was not pleased that he raised such concerns just two days before the hearing since Berman has been working on the legislation for more than a year.

Dan Wade, vice chairman of the board of directors of MGM-MIRAGE, told the committee his company has been working on Internet gaming for more than a year.

"This is not something that we've whimmed up," Wade said.

Anderson ordered all proposed amendments to the bill be returned to the committee by Thursday. The committee, which is seen as the last hurdle for the bill, is expected to vote April 10.