Approval of online gaming collaboration might make history

By Richard N. Velotta

Monday, March 21, 2011 | 3 a.m.

Is history about to be made on Internet gambling in Nevada?

This month’s state Gaming Control Board meeting had that feel when a seemingly mundane request on the suitability of a relationship between Caesars Entertainment and a foreign company turned out to be a baby step toward the implementation of legal online gambling.

After nearly two hours of discussion, the Control Board unanimously recommended approval of Caesars’ relationship with Cassava Enterprises (Gibraltar) Ltd. and Fordart Ltd., subsidiaries of Israel-based Internet gaming giant 888 Holdings LLC. 888 Holdings offers online casino games, poker, bingo, sports wagering and social gaming applications in the United Kingdom, France and Italy.

Caesars and 888 aren’t saying exactly what they plan to do, but the tone of the questions and responses with regulators indicates Caesars is getting ready to take poker to the masses online. That’s no surprise. Caesars has been pressing for the legalization of online poker for some time and owns arguably the most recognized poker brand, the World Series of Poker.

Regulators have long thought that any online gaming legislation would address poker, which generally pits players against each other instead of against a casino. Although online gambling is a reality around the world, most think the United States isn’t ready for anything other than poker right now.

Meanwhile, a day after the Control Board meeting, Assemblyman William Horne, a Las Vegas Democrat, unveiled legislation enabling the state to regulate Internet poker. Horne’s bill said “allowing licensed Internet poker sites to locate in and operate from … Nevada will benefit the economy of this state and assist in protecting consumers from criminal and corruptive influences that may be present in unlicensed and unregulated Internet poker sites.”

The next step in the historic walk occurs March 24 when the Nevada Gaming Commission takes up the Control Board’s recommendation. Don’t expect much drama on that decision. Although the commission is meticulous in its analysis of the Control Board’s actions, there don’t appear to be any roadblocks to approval.

Three commissioners attended the Control Board meeting to get a grasp of the discussion they might not get from a transcript.

If Caesars is allowed to collaborate with 888, it would be only the second time a Nevada-licensed company has been allowed to have that type of relationship under the state’s foreign gaming statutes.

At the Control Board hearing, Mitch Garber, CEO of Caesars Interactive Entertainment, told regulators the company would use its World Series of Poker and Caesars brands in overseas markets through its relationship with 888. He added that Caesars chose to partner with the company because it has online gaming hardware and software and that his company wouldn’t be writing programs.

After the vote, Garber said he thought it was an important step toward the legalization of Internet gambling in the United States.

“It was a historic moment,” Garber said. “It confirms that Internet gaming is a reality. It should allow us to look more and more at a federally regulated environment in the United States.”

That comment could be more telling about Caesars’ game plan — and why Horne’s bill may not stand a chance in the Legislature.

Caesars and its top rival, MGM Resorts International, have panned Horne’s proposal because they think Internet gambling should be regulated on the federal level and not by states.

Horne’s bill references Internet gambling across state lines and enables the Gaming Commission to establish regulations that enable it to enter agreements with other states and take a cut of revenue from play originating outside the state.

The legislation says the commission “may issue a license as an operator of Internet poker to a person or an affiliate of a person who has been licensed to operate Internet poker by a recognized regulatory body of another jurisdiction with licensing requirements that are similar to the licensing requirements of this state …”

In addition, the commission “is authorized to enter into compacts with other jurisdictions where interactive gaming is not prohibited, setting forth the manner in which … Nevada and such other jurisdictions will regulate and share tax revenues from interactive gaming operations between jurisdictions and enforce criminal laws related to cheating, tax evasion or unlicensed interactive gaming …”

But representatives of Caesars and MGM Resorts are convinced that state oversight is no substitute for uniform federal regulation.

“This is not a bill that we support,” said Jan Jones, Caesars’ senior vice president of communications and public relations, after Horne’s bill became public. “Our focus is not intrastate, our focus is interstate. It’s federal, it’s putting together an American, an appropriate regulation and licensing regime and taking the jobs and revenues going to foreign companies and bringing it back to America.”

Her counterpart at MGM Resorts, Alan Feldman, told AP, “I think everyone’s objective should be to get the proper bill passed, and to do so federally. The business model ought to be following sound public policy, and (the Nevada bill) is actually a pretty good model of getting a business model way far ahead of anyone’s policy.”

One concern about different states having different Internet gambling legislation is that states have had different standards in how they deal with casino companies.

New Jersey was close to being the first state to legalize Internet poker, but Gov. Chris Christie vetoed legislation this month, citing legal concerns. New Jersey state Sen. Raymond Lesniak, author of that bill, promised to retool it.

The Poker Player Alliance, an organization that is working to get some form of Internet poker legislation enacted, has acknowledged the same concerns Caesars and MGM Resorts has had with state-by-state regulation.

Former New York Sen. Alphonse D’Amato, chairman of the Poker Players Alliance, called the Christie veto “a wake-up call” to federal lawmakers to enact online poker legislation.

Many gaming insiders think efforts in New Jersey, Nevada and other states to approve online poker will pressure federal lawmakers to reconsider the matter sooner rather than later. Sen. Harry Reid attempted to gather support for a poker bill in December, but it died in the lame-duck session.

Supporters of online poker are hoping the surge in interest at the state level will create momentum for federal legislation.

The favorable finding of the suitability of Caesars to collaborate with an established foreign online gaming company is a small part of that surge that could eventually lead to the legalization of Internet poker.

From that perspective, the Nevada Gaming Commission meeting could be historic.

Visitor statistics

Las Vegas’ strong January convention calendar resulted in a healthy boost in visitor volume for the month, the Las Vegas Convention and Visitors Authority reported.

With 140,000 people showing up for the Consumer Electronics Show compared with 126,000 in 2010 and three shows in February 2010 starting in January this year, the 50,000 World Market Center show, the 50,000 World of Concrete and the 18,000 Surfaces show, visitor counts attributable to convention attendance were stellar.

There were 615,854 people in town for conventions, a 36.9 percent increase over the total in January 2010, despite a dip the number of shows for the month.

The positive bump for convention attendance led to an 8.6 percent increase in visitor volume to 3.1 million for the month.

Nearly every category showed improvement in January compared with last year.

The number of passengers arriving and departing from McCarran International Airport was up 5 percent to 3.2 million people.

The average daily room rate broke the $100 barrier for the first time since October, hitting $107.22, a 7.5 percent increase over January 2010. Before that, it hadn’t been more than $100 since January 2009.

All four occupancy rate categories were up. Hotel occupancy was up 7 points to 81.8 percent, motel occupancy climbed 15.5 points to 53.7 percent, weekend occupancy was up 4.6 points to 86.1 percent and midweek occupancy soared 11 points to 75.6 percent. The overall average was up 7.9 points to 79 percent.

But there were a few declines in numbers, confirmation that tourism isn’t completely back.

The average daily auto traffic on major Southern Nevada highways dipped 0.4 percent to 73,764 vehicles a day. Gaming revenue was off with Strip revenue down 2.5 percent to $482.7 million, resulting in overall Clark County revenue down 0.4 percent to $761.4 million.

The state Gaming Control Board said gross gaming revenue was off as a result of lower volume and win in baccarat, the volatile game of choice for high rollers.