Internet gambling is the next step

Anthony Cabot

Friday, Nov. 5, 2010 | 3 a.m.

In 1997, the Nevada Legislature took a visionary step in enacting legislation that would permit casinos to engage in Internet gambling where legal. At the time, Internet gambling was a truly nascent industry with potential but no record of performance.

Other places thought that they could control Internet gaming to protect their state gaming franchise or monopolies. Several states took steps to prohibit Internet gaming over which they had no real jurisdiction.

Criminalizing the conduct of gambling once had practical implication where the person operating the illegal gambling was the neighborhood bookie or a craps table at an underground casino. It made no sense, however, where the operator was located in a different country under the regulation and protection of a sovereign government.

States, however, were not alone. Several countries attempted in vain to stop Internet sites from offering their services to their citizenry. But, they soon learned what the Nevada Legislature knew in 1997. So, several major countries including France and Italy decided that the best course was to legalize, regulate and tax Internet gambling. Others are following suit.

For a variety of reasons, Nevada never followed through on licensing Internet gaming operators even for intrastate gaming opportunities. Its first mover advantage never materialized. The Internet gaming world never moved its facilities to Nevada, like the massive co-location facilities that exist just outside Montreal, they did not open the extensive technical and security facilities that employ skilled technological personnel such as those on the Isle of Mann or the customer service centers that are common throughout the world.

Many thought that the Nevada gaming industry was doing just fine without Internet gambling. Times and attitudes have changed. Some casino companies that were the most vocal opponents of Internet gambling are now the most vocal supporters. An activity that was once deemed as not subject to regulation has been successfully tamed by others of less capacity such as the island nation of Malta.

Second chances are rare in life. As the federal government debates legal Internet gambling, Nevada can, once again, espouse the industry and the opportunity to regulate Internet gaming. We should be encouraging Internet companies to make Nevada their domestic home for research, development, operations and customer service. We need the diversity.

Without debate, brick-and-mortar casinos are not recession-proof. Moreover, we should be encouraging our regulators to gain the expertise to regulate the technology involved in Internet gambling. We can leverage our 60 years of gaming regulatory experience to bring additional government jobs and substantial tax and regulatory fees to our state coffers. Our casinos may even find that they can successfully extend their world-renowned brands, and the slot manufacturers can offer their established games to an new market of customers.

Those who oppose Internet gambling miss the point. We made the policy decision in 1931 that gambling was an acceptable vocation. If we fail to embrace the new technologies that deliver the gaming experience based on customer preferences we may become the vinyl record counterpart to iTunes. Although we could stop Internet gambling by filtering all the content that passes over it, we would need to suspend at least the First Amendment. Short of that, Internet gaming is here to stay without us.

Lewis and Roca is participating in the new iGaming Congress during the gaming industry convention and trade show G2E at the Las Vegas Convention Center. The iGaming Congress Nov. 15-16 will be a networking and educational event designed to provide brick-and-mortar gaming enterprises with information about the global iGaming industry and its potential in North America. G2E 2010 runs Nov. 15-18.

anthony cabot is a partner in the Las Vegas office of the law firm Lewis and Roca