Station opposes intrastate Internet gaming

David Strow

Friday, May 17, 2002 | 10:54 a.m.

Station Casinos Inc. has signed a deal that will put it in the Internet gambling business by year's end.

But the Las Vegas locals casino giant announced Thursday it is opposed to one kind of Internet gambling -- so-called "intrastate" Internet gambling, or online gaming that can be accessed from only within the state of Nevada.

"Would it make sense to put gaming in every home in the state through intrastate (interactive) gaming?" said Jack Godfrey, attorney for Station, at a meeting of the Nevada Gaming Commission.

During a discussion before the commission on Internet gaming, the possibility of intrastate online betting was frequently raised.

Internet casinos that accept bets from other states or other countries could present a tricky legal problem for Nevada, since it could potentially open Nevada-based operators to criminal charges in states that don't allow Internet gaming. It could also open the door for federal charges under the Wire Act -- a law the Justice Department has previously said bans Internet gambling in the United States.

Online betting contained within Nevada could avoid those problems, and give the state's operators a chance to become familiar with Internet gaming.

"The legal issues there are much easier to get our arms around," Dennis Neilander, chairman of the Nevada Gaming Control Board, said.

But Station officials expressed strong opposition to this concept. Their argument -- Nevada-only online casinos could "cannibalize" business from the state's existing casinos, costing jobs and gaming revenues. Godfrey also argued that such a move would go against the trend started several years ago, when state lawmakers passed a law that restricted the number of sites that could be used for the construction of local casinos.

Ironically, Station has been a big proponent of Internet gambling -- at least, that which draws customers from outside of Nevada. It signed a pact earlier this year to acquire a 50 percent ownership stake in an Internet casino being operated by Bahamas-based casino operator Sun International, which does not take bets from Americans.

"The original intent was to stay competitive with jurisdictions around the world," Station President Lorenzo Fertitta said. "So that (an international online casino) makes sense. What does not make sense is to allow intrastate gaming. The intent (of the Internet gaming bill) was to import business."

Neilander acknowledged the issue had to be examined before the state allowed intrastate gaming, but he said it had advantages.

"Any time new business is generated, that's good for the economy," Neilander said. "It could create different kinds of jobs that we don't currently have in Nevada."

Much of Thursday's hearing focused on the issues the commission has to consider before it can move forward with legalized Internet gambling. Similar hearings will continue on a regular basis at the commission's future meetings, commission Chairman Peter Bernhard said.

One issue is technological -- whether Internet casinos have the ability to determine where an online gambler is located, whether they can confirm his age and identity, and whether regulators have the ability to monitor Internet gambling while it's occurring.

"I don't know of any technology that binds all of these concepts together that is cost-effective," Control Board member Bobby Siller said. "Eventually we will be there. I just have not seen it today."

Richard Fitzpatrick, chief executive of the Las Vegas-based Interactive Gaming Institute, urged gaming regulators to consider field trials of potential technologies.

But Siller argued against such an approach.

"I would urge us not to consider a trial by error approach to new technologies," he said.

The other issue being considered by the commission is the legality of Internet gaming. In some states it would be considered a criminal act, and that could present problems for the commission, Neilander said.

Siller used an example -- suppose a district attorney in rural Tennessee, in an effort to win publicity for a re-election campaign, decided to launch a sting campaign by gambling undercover at Las Vegas-run Internet casinos, then charging them with a criminal act under Tennessee law?

"That would be very difficult for our operators to deal with," Siller said. "It's a worst-case scenario, but that's the kind of thing we have to think about."

And it was clear, after Thursday' hearing that thinking -- not action -- is on the commission's agenda for the foreseeable future.

"I didn't hear any answers," Bernhard said.