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November 21, 2014

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Online gambling is illegal, but betting sites’ logos often in Nevada casinos

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Sam Morris

Many poker players such as Mike Beasley, shown at a July 7 World Series of Poker event, sport logos of Internet gaming sites.

.Net versus .com

Gambling companies’ free-play tutorial websites ending in “.net” have historically gotten a pass with regulators. But now regulators see little difference between .com and .net sites.

Casino partnerships

Local casino companies have even entered into sponsorship deals with online gambling sites. But because of the U.S. government’s position that online gambling is illegal, the Nevada Gaming Control Board is taking a close look at the deals.
Click to enlarge photo

Mike "The Mouth" Matusow, wearing a Full Tilt Poker.net logo, celebrates a winning hand July 5 at the World Series of Poker.

World Series of Poker Main Event Day 1

Poker players are shown during the first day of the 41st annual World Series of Poker no-limit Texas Hold 'em main event Monday, July 5, 2010. The tournament started with 7,319 players and is down 27. Launch slideshow »

Black-market online gambling companies have a considerable presence on the stage that is Las Vegas.

Those who watched the start of the World Series of Poker main event at the Rio this month were just as likely to see logos for online gambling companies as they were to see the tournament’s ubiquitous poker chip icon.

Internet casinos pay tournament winners, celebrity players and other high-profile gamblers to wear their logos, and wannabes wind up wearing a lot of the same logos.

Despite the federal government’s long-standing position that online gambling is illegal, such brand advertising has moved into the mainstream, with logos appearing on the shorts of mixed martial arts fighters, the green felt of gaming tables and advertising banners adorning Las Vegas casinos.

Lately, some area casinos have entered into sponsorship deals with online gambling sites and the celebrity poker players hired to promote them.

Now, the Nevada Gaming Control Board is taking a closer look at many of those arrangements.

One primary target of the Control Board’s recent attention is the Venetian, which hosted a traveling poker tournament in February sponsored by PokerStars.net.

Years ago, gambling companies created separate, free-play tutorial websites ending in “.net” — thinking they would be protected from federal government prosecution. American broadcasters and Nevada gaming regulators have historically accepted this form of advertising because these Web portals don’t offer real-money gambling. And yet, while ads for these .net Internet poker sites continue to be broadcast on American TV, the Control Board, upon further investigation of such sites, has more recently concluded that there’s little difference between .com and .net sites because they are owned by some of the same corporate entities and individuals.

Control Board member Randall Sayre takes a dim view of .net sites.

“We are concerned that Nevada licensees are associating with companies that are ... purposefully violating the law,” by continuing to accept wagers from Americans even as they advertise .net sites in this country, Sayre says.

Whether a casino company is violating state law by affiliating with a .net site would depend on how the relationship is structured, he adds.

Sayre clarified the Control Board’s position on Internet gambling relationships in May when he responded to a query from a casino company (which the board will not name) and distributed his written response to the Nevada casino industry.

The Venetian then dissolved its sponsorship arrangement with PokerStars and its North American Poker Tour.

“We don’t have any current relationships with any of the online companies. Obviously, we’re going to follow” the Control Board’s lead, Venetian spokesman Ron Reese says.

Sayre won’t comment on the Venetian deal or discuss any other specific casinos and their advertising or marketing arrangements, though he said some casinos are in the process of dismantling or changing contract terms.

His letter urges the industry to be cautious. The Justice Department “has shown no indication of relaxing its position and interpretation that Internet gambling in any form is illegal in the United States,” the letter notes.

The ubiquity of online gambling brands in Las Vegas remains a murky subject, in part because of the Control Board’s unwillingness to comment on specific casinos or deals that cross the line in favor of pursuing private discussions with casino companies. The May letter notes that the board is “assessing these relationships on a case-by-case basis ...”

The federal government has taken the lead on Internet gambling by charging online gambling operators with money laundering and mail fraud, among other infractions. Internet gambling is, after all, an interstate, even global, enterprise. Nevada regulators, lacking the resources, jurisdiction or will to prosecute offshore gambling companies — have taken a backseat role. Still, the Control Board has a requirement to ensure that Nevada casinos aren’t doing business with illegal entities, Sayre says.

Nevada’s two largest casino companies, Harrah’s Entertainment and MGM Resorts International, have been careful in recent years not to enter into direct deals with Internet gambling companies that accept bets from Americans, even as they urge lawmakers to legalize Internet gambling so they can capitalize on demand and diversify their bricks-and-mortar casino empires.

Since December, Harrah’s has launched three British gambling websites that claim to block bets from American citizens.

Some MGM Resorts casinos have hosted the World Poker Tour, a traveling tournament sponsored by PartyPoker.com. PartyPoker was the largest poker gambling site in the country until 2006, when the company got out of the U.S. market in deference to the Unlawful Internet Gambling Enforcement Act, which further criminalized online gambling by making it illegal for banks to process online gambling transactions.

After the bill passed Congress, some sites left the U.S. market, fearing prosecution by federal regulators. Some sites, including PokerStars.com and Full Tilt Poker.com — whose .net logos adorn the clothing of many World Series of Poker players — continue to allow action from Americans, however. Those sites are “purposefully putting that product in the United States in disregard of Department of Justice interpretations of federal law and also Nevada law,” Sayre says.

With a few exceptions, such as horse racing and sports betting for Nevada residents who set up accounts in person and use registered software, Internet gambling is illegal in Nevada, which states that the federal government must explicitly OK online gambling before the state can allow it.

Harrah’s and its World Series of Poker tournament have been “overly cautious” in avoiding deals with Internet gambling companies doing business in the United States, tournament spokesman Seth Palansky says. Since at least 2006, the tournament has prevented such companies from putting up banners, setting up booths to entertain players or selling merchandise at the Rio. However, the tournament allows hospitality suites to be branded by the names of poker pros affiliated with gambling sites, and vehicles advertising the websites sit parked outside the Rio.

One of the tournament’s sponsors is, in fact, an online gambling site called Everest Poker. That’s allowed because it is a European site that says it prevents U.S. play.

Cynics might say that bricks-and-mortar casinos are finding ways to get around the rules because online gambling companies drive revenue to casinos.

Palansky counters that “there’s no way a giant corporation ... would want to risk a successful land-based operation for what amounts to a small financial gain.” In Harrah’s case, the World Series of Poker continues to break records for attendance and prize money — but it generates a tiny fraction of Harrah’s overall revenue, he adds.

While the Control Board is examining deals involving celebrity poker players who market poker rooms or other venues for Nevada casinos, the casino companies involved say they have deals with the players themselves rather than the Internet gambling sites the players promote on the side.

These include MGM Resorts’ Aria, which has a deal with poker pro Phil Ivey to brand the property’s poker room, and Cantor Gaming, which uses poker legend Doyle Brunson to market the company’s mobile gambling device for use at the M Resort.

Ivey is among a team of celebrity players who promote Full Tilt Poker.com while Brunson represents the gambling site doylesroom.com.

Sayre said regulators are most concerned with a direct exchange of money between Internet gambling companies and Nevada casinos that are using those companies to promote gambling activities.

“Are you merely making a provision for a guest or are you engaged in a commercial joint venture where there’s oversight responsibility or a sharing of revenue? This became an activity that migrated further than logos on baseball caps, felts on the table or monikers on a shirt.”

Mindful of such concerns, some casinos are finding creative ways of working with Internet gambling brands.

The PokerStars.net logo, for example, is adorning table felts and banner ads at the Palms, where PokerStars officials and customers — players who won entry to the World Series of Poker by playing satellite tournaments on the website — are staying during the tournament.

Palms spokesman Larry Fink said the property doesn’t have a sponsorship or other official marketing deal with PokerStars, and that the arrangement is similar to free advertising given to many other groups who have stayed at the resort in the past.

The Palms has notified the Control Board of the arrangement, which is more than a year old, Fink says.

The Control Board’s concern about business deals doesn’t extend to what players wear during tournaments and other poker games, however. That strays into the First Amendment rights of those players, Sayre says.

Las Vegas casino attorney and Internet gambling expert Tony Cabot says the board is right about that. It can’t dictate what casino customers can or can’t wear, he says.

People paid to wear logos or who choose to wear them are “simply patrons of the casino who are buying into the tournament” and aren’t subject to laws governing how casinos can operate, Cabot says.

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