LV council still exploring online gaming venture

Diana Sahagun

Thursday, Jan. 3, 2002 | 8:57 a.m.

Most Las Vegas City Council members think Internet gaming could provide local taxpayers someday with a property tax refund from the city of Las Vegas.

New books would be given to needy students and teachers would earn a raise from the city, a result of money gained from selling the city's trademark name to an Internet casino.

The possibility of reviving the Las Vegas Valley's struggling economy led City Council members Wednesday to direct city staff members to continue exploring the idea of selling the city's name and seal to an Internet casino in return for a share of the profits.

Tony Cabot, an Internet gambling expert and local attorney, said the industry is growing too fast to be ignored.

"Online gaming has a significant future," Cabot said. "It's already a major industry. The question becomes, 'Is it practical from a distribution and cost perspective?' "

The council raised those questions Wednesday, but received few answers on whether the city could be at risk if it allows its name and seal to be used. Armed with little precedent, a majority of the council agreed to continue exploring the idea, but only if the city's integrity could be preserved.

City Manager Virginia Valentine and the city attorney's office will soon begin meeting with state officials, including the governor and representatives from the Gaming Control Board and Nevada Gaming Commission.

So far, three companies have expressed interest in using the city's name and seal, Valentine said.

Wednesday's discussion was similar to one in 2000, when Vegasone.com proposed using the city's brand name and sharing in the profits. As they did last year, Mayor Oscar Goodman and Councilmen Larry Brown and Michael Mack expressed enthusiasm, citing the shrinking city budget.

Cabot said estimates show online gaming was a $2.4 billion industry last year; it is expected to grow to $10 billion venture over the next five years.

According to current law, U.S. residents can't legally make a bet with the stroke of a key.

The U.S. Department of Justice has ruled that Internet gaming is illegal in the United States under the federal Wire Act, though this position is being challenged in a federal appeals court.

But the legality question caused Councilwoman Lynette Boggs McDonald to repeat her concerns, first expressed last year.

"Why would we ask city staff to pursue an illegal activity?" she said. "This is paramount to giving the Good Housekeeping stamp of approval, which is a false sense of security."

The 2001 Nevada Legislature passed a bill paving the way for online casinos if they become legal by giving the Gaming Control Board and the Nevada Gaming Commission the ability to establish regulations for Internet gaming.

Cabot said Internet casinos already use a combination of software and procedures to keep minors and U.S. citizens from gambling on the site. Typically users have to register with a non-U.S. address, which must match credit card information.

New software has the capability of identifying the Internet service provider being used, which is compared to a database that identifies all U.S. providers. If the provider is in the United States, the user is not allowed into the site, Cabot said.

"The gaming industry as a whole needs to pay attention to this area, because it's a significant growth area," he said.