Local concerns raised in Internet debate

By Liz Benston (contact)

Friday, Sept. 27, 2002 | 10:59 a.m.

The prospect of allowing Internet gambling by Nevada residents may conflict with state actions to slow the spread of convenience gambling in neighborhoods, a top state casino regulator said Thursday.

"(M)aking it more convenient (might) fly in the face of legislation over the past decade," state Gaming Control Board Chairman Dennis Neilander said at a public hearing Thursday in Las Vegas.

The meeting was the first of several regulators have scheduled over the next couple of months to explore whether to develop regulations that permit "intrastate" gambling.

It was the first meeting since regulators received a letter from the U.S. Department of Justice stating that Internet gambling over state lines -- encompassing Las Vegas-style casino games as well as sports wagers -- is illegal under federal law.

Internet gambling proponents were hoping for a more liberal interpretation of the Wire Act, a federal law that specifically prohibits sports wagers over interstate telephone lines.

Limiting online bets to state residents, in theory, wouldn't violate federal law, according to legal experts. Still, some have questioned whether offering Internet gambling within the state will simply cannibalize existing casinos without boosting gambling tax revenues.

That and the issue of "convenience" gambling in places like neighborhood stores were policy concerns that weren't explored when the Legislature in 2001 authorized regulators to develop rules authorizing Internet gambling, Neilander told members of the Nevada Gaming Commission Thursday.

The legislation was aimed at broadening Nevada's tax base by allowing Nevada gambling license holders the opportunity to develop Internet casinos aimed at customers worldwide, he said.

Few members of the public showed up to the commission meeting Thursday to discuss Internet gambling.

Richard Fitzpatrick, president of the lobbying and consulting group Interactive Gaming Institute of Nevada, told commissioners not to interpret that as a lack of interest in the topic.

Over the next couple of months, the Institute expects to present specific examples of systems that can allow customers to legally gamble within Nevada. Casinos are waiting to see what works, Fitzpatrick said.

"People are taking their time to develop systems that really work," he said.

Companies have already created systems that can pinpoint customers' identities and locations, allowing online casinos to place bets for adult customers in places where it is legal, Fitzpatrick said after the the commission meeting Thursday. Systems for "intrastate" gambling in Nevada would be simpler in that they would be an extension of what some casinos are already using, he said.

Some foreign jurisdictions allow customers to gamble at interactive kiosks that accept cards that can confirm player identities, he said. Also, Nevada casinos already allow players to watch keno games from their hotel rooms. But they don't yet have the capability to allow gamblers to place wagers using their television sets, he added.

A Las Vegas attorney in attendance said he sought more guidance about the prospects for online gambling within Nevada.

The Department of Justice letter is "not much to go on" absent some more definitive legislative action or court decisions on the issue, attorney Jeffrey Silver told commissioners.

Silver also questioned another aspect of the DOJ letter stating that the "promotion" of interstate Internet gambling activities is illegal under federal law.

"Does placing bets on your Internet site ... constitute promotion?" he said.

Loosely interpreted, a company might be liable for posting a link to a Web casino from its Internet site, he said after the meeting. Or a casino with a legal Internet gambling site offshore could be found liable for putting an ad on its domestic site, he added.

Silver said he is representing a company interested in Internet gambling within Nevada.