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Kevin Smith

Nevada Meeting Yields only Molasses

21 May 2002

The prospect of regulated interactive gaming continues to creep up in Nevada, but not all industry insiders are sure the concepts could work.

At its monthly meeting last week, the Nevada Gaming Commission discussed the possibility of introducing intrastate online gaming throughout the Silver State. Such a system would allow Nevada-licensed operators to offer online gaming, but only to residents of Nevada. All gaming systems and hubs would have to be located in the state as well.

"There are as many questions as there are answers."

-Dennis Neilander
Nevada Gaming Control Board

The recent push for such a system comes as the state struggles with whether an open system that would allow residents to gamble online would be in violation of federal law.

Nevada Gaming Commission Chairman Peter Bernhard feels the direction of interactive gaming in his state in the coming years will rely heavily on what the federal government says.

"We have to look at policy issues, decide if having people playing from their homes is what we want," he told the Associated Press.

Officials with the Nevada attorney general's office are in communication with the U.S. Depart of Justice in an effort to determine whether Nevada can move forward without violating federal laws, but no conclusion has been reached.

If approved, an intrastate Web betting policy could apply to remote wagering from hotel rooms.

Ironically, Station Casinos Inc., which has developed a system that could be adapted for intrastate use, has come out against this approach.

Jack Godfrey, an attorney for Station, told the commission during last week's meeting that an intrastate system wouldn't make sense for the land-based industry. By limiting an interactive system to just Nevada residents, he said, the state would risk a serious dip in its brick-and-mortar operations.

The possibility of intrastate online betting was frequently raised at the meeting during a discussion before the commission on Internet gaming.

Allowing Internet casinos to accept bets from other states or other countries could potentially open Nevada-based operators to criminal charges in states that don't allow Internet gaming. It could also open the door for federal charges under the Wire Act--a law the Justice Department said bans Internet gambling in the United States.

Advocates of intrastate gambling argue that their approach could prevent these problems and give the state's operators a chance to become familiar with Internet gaming.

"Technology is changing, and I think it will eventually get there.''

- Peter Bernhard
Nevada Gaming Commission

"The legal issues there are much easier to get our arms around," Dennis Neilander, chairman of the Nevada Gaming Control Board, said.

But Station officials feel that Nevada-only online casinos could cannibalize business from the state's existing casinos, costing jobs and gaming revenues.

Whatever route regulators decide to take won't be decided for sometime though, according to Neilander. He said an intrastate approach would have to be examined more closely before it would get the green light.

"Any time new business is generated, that's good for the economy," Neilander said. "It could create different kinds of jobs that we don't currently have in Nevada."

Much of Thursday's hearing focused on the issues the commission has to consider before it can move forward with legalized Internet gambling. Bernhard said similar hearings are to be expected on a regular basis at the commission's future meetings.

Among the issues the commission must look at is ensuring that technology exists to determine where an online gambler is located, his age and whether the activity can be monitored while it is happening.

"I don't know of any technology that binds all of these concepts together that is cost-effective," Control Board member Bobby Siller said. "Eventually we will be there. I just have not seen it today."

Not only does the commission have to determine if the technology exists, but how to make that judgment call. Some who spoke before the commission felt it was best to field-test any new technology, while others felt a trial-by-error approach was the wrong way to go.

About the only thing that was agreed to at the meeting was that the issue needs to be studied much more by regulators and operators.

"There are as many questions as there are answers,'' Neilander said.

Bernhard echoed those sentiments.

"I didn't hear any answers," he said.

But he did offer a slightly optimistic outlook on what could be accomplished in Nevada and other jurisdictions.

"Technology is changing, and I think it will eventually get there," he said.

Nevada Meeting Yields only Molasses is republished from
Kevin Smith
Kevin Smith