NEVADA REGULATORS COMMISSION ONLINE GAMBLING STUDY

30 November 2007

Another step in the state online gambling legalisation process?


In what several observers are seeing as another step forward on the road to the eventual US legalisation of online gambling, the Nevada Gaming Control Board will soon release a study into the pastime that it commissioned through the University of Las Vegas earlier this year.

According to reports in the Las Vegas Sun, the objective of the study is to quantify how many Nevadans gamble online, and measure gamblers' attitudes toward legalising Internet gambling. Regulators say that the survey is intended to inform lawmakers about the pros and cons of regulating a business that the U.S. Department of Justice has declared to be mostly illegal.

"This will be valuable information for policymakers," said board chairman Dennis Neilander.

Historically, the Nevada legislature has taken a liberal attitude toward strictly controlled online gambling, and in 2003 approved state legislation that allows regulators to study whether Internet gambling could be regulated. The Gaming Control Board has since learned of developing technology to pinpoint the location and identity of gamblers using satellite signals, conduct online background checks and maintain account information.

But regulators, wary of the federal government's position, haven't pursued the approval of online gambling in Nevada.

Las Vegas gaming attorney Tony Cabot, who has consulted for Internet operators, said the UNLV study may show there are enough gambling dollars going to offshore sites to warrant efforts by the state to tap that revenue. Besides, he said, state regulation is appropriate. "It's historically been the policy of the state of Nevada to regulate gaming so that we can protect patrons and make sure they get paid when they win," he said.

The Department of Justice, most recently at the Conyers hearings in Washington two weeks back claims that almost all forms of Internet gambling are illegal.

An act passed last year, the Unlawful Internet Gambling Enforcement Act, bars financial institutions from handling Internet gambling transactions, with exceptions for lotteries, fantasy sports and horse racing.

While Nevada regulators have the authority to adopt rules governing in-state online gambling, they aren't entirely comfortable taking that step just yet and want the Legislature to revisit the issue before moving forward, reports the Las Vegas Sun.

The Justice Department maintains that all forms of Internet gambling are illegal based on a decades-old law known as the Wire Act. The Justice Department sent the Gaming Control Board an opinion letter clarifying that position in 2002. The online casino industry has argued that the law, designed to combat mob bookmaking operations in the 1960s, prohibits only online sports betting.

Online gambling firms and technology companies that make gambling software are apparently pressing the Nevada legislators to reconsider the state's position, bearing in mind the right of individual American states to pursue online gambling at state level, where bets are legal as long as they begin and end in a [state] jurisdiction where Internet gambling is permitted.

That definition is important because it means the gambling data that travel through the Internet can leave the state, go to computer servers and routers elsewhere and return without violating the law in terms of interstate transactions. "That's an important point because it reduces some uncertainties that may have existed in the past," Las Vegas gaming attorney Tony Cabot said.

Some experts say in-state online gambling could eventually spread nationwide much as statewide lotteries proliferated in the 1990s, bypassing federal rules. And some states' systems could link up with others', as with multistate lotteries.

"It's more a matter of when, not if," Las Vegas-based gaming consultant Phil Flaherty said.

Gaming Board chairman Neilander said Internet gambling won't be an easy decision for Nevada because it "seems contrary" to the aim of several laws passed in recent years to restrict convenience gambling, including a prohibition on locations for suburban casinos in Las Vegas and a requirement that casinos be built with attached hotels, he said.

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