Internet gambling faces hurdles

Kevin Ferguson

Monday, May 21, 2001 | 11:04 a.m.

Even if the Legislature enacts laws this session allowing online or Internet gambling in Nevada, that will only be one step on a long road to regulating Internet casinos, Nevada's top gaming regulator said.

Nevada Gaming Commission Chairman Brian Sandoval, whose commission the Legislature would rely upon to regulate Nevada's electronic gambling industry under Assembly Bill 578, said the regulators still question if today's technology could block minors or compulsive gamblers from accessing gambling sites.

And those, among other concerns, would have to be overcome before the first legal bets are accepted by a cyber-casino licensed by the state, he said.

Sandoval said Mark James, the Senate Judiciary Committee chairman, fired off a warning to him in a conversation last week about the importance of maintaining the integrity of Nevada's gaming industry.

"He told me this would be an unprecedented delegation of authority from the legislature to the gaming regulators. And we are taking a leap of faith, and we don't want to get burned," Sandoval said.

Telling this story to a group of gaming executives at a Friday convention in Las Vegas, Sandoval added: "So how's that for some pressure?"

The Senate Judiciary Committee is scheduled to vote on AB578 as early as today. If it passes, the bill would have to be approved by the full Senate before being sent to Gov. Kenny Guinn for final approval.

Sandoval said he expects the bill to pass, which would pave the way for the state's biggest casinos to launch electronic casinos.

Sandoval said state regulators, if the bill passes, will schedule meetings with lawyers for the U.S. Justice Department to ensure any regulatory structure that Nevada establishes does not conflict with federal laws, specifically the Federal Wire Act.

The 1961 Wire Act made it illegal for sports wagers to be placed or accepted across state lines using any form of "wire communications." That law was drafted with the intention of making it a federal crime for the mob, or others, from using phones to take sports bets.

Tony Cabot, an Internet gambling lawyer for the Las Vegas firm Lionel Sawyer & Collins, said its clear that the wire act applies to sports betting websites, but he doesn't believe the law was written broadly enough to cover Internet casinos.

Sandoval said regulators will also be seeking assurances that technology could be in place to keep activities of compulsive gamblers under control. But he noted that could be difficult.

"If we impose (time) limits on players, how do we prevent them from jumping to another site when they reach their limit?" Sandoval questioned. "For example, if you reach your limit at the Aladdin's site, how can we prevent you from jumping to an MGM MIRAGE site."

Tony Fontaine, a vice president in charge of technology issues for Station Casinos Inc., noted Nevada's e-gaming industry would have to "take baby steps," in adopting regulation.

"It's too complex to jump right into Internet gambling," Fontaine said.

He said regulators need to monitor play-for-fun casino sites first, to learn how 'random-number-generators' operate. For example, regulators need to determine if technology is sophisticated enough for virtual poker or blackjack cards to be dealt in a way to give the players a fair chance of winning.

Fontaine said he envisions a four-pronged approach toward regulating the industry. The first and easiest system to regulate would be one that only permits gamblers from within state borders to participate and would be only accessible on a computer by downloading software.

In other words, the casino games initially would not be available on a public network, like the Internet.

The next step would be to open the network to one or a few other states, followed by a multi-national system.

"The most difficult system to regulate would be the wide-open Internet, because there are too many countries and various stages of technology to tell who you are and where you are (playing from)," Fontaine said.

Sandoval said if AB578 passes, regulators plan to form subcommittees made up of members of the commission and the Gaming Control Board to address the various issues on regulating Internet gambling.

Those issues, he said, would be tackled in a number of workshops and public hearings.