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Another Deadline Today for Nevada Net Gaming Bill

21 May 2001

The effort by Nevada legislators to have the state legalize and regulate Internet gambling faces another deadline today. The Judiciary Committee of the state Senate has scheduled a "work session" on AB 578, the bill – already passed by the state Assembly – that would authorize Nevada regulators to license Internet casinos.

The committee must vote today to send the bill to the floor of the Senate, or it dies. Because Nevada's legislature meets only every other year, that would mean no action on this topic until 2003.

If AB 578 is sent to the Senate floor, the Senate would have until its adjournment on June 4 to pass the bill. If Gov. Kenny Guinn then signs it, Nevada would become the first state in the U.S. to legalize Internet gambling.

A staff member of the Judiciary Committee told RGT Online that she expects AB 578 to pass the Senate, although she cautioned that "everyone is leery of change in any matter."

She said the bill "has become a real Christmas tree bill," meaning that all kinds of amendments have been proposed. That slows down the committee's approval process.

The bill began life as a housekeeping measure for the state's gaming regulators, who want to clean up some loose ends in the gaming laws. In the Assembly, the bill was amended to incorporate much of the language of AB 296, the legislation to authorize interactive gambling that had been introduced by Merle Berman, a Republican from Las Vegas.

The Senate Judiciary Committee held a hearing on AB 578 Tuesday, during which amendments were introduced. Some of these --- such as one involving casino organizing campaigns by labor unions and another involving landlords who charge higher rents to tenants that have slot machines – have nothing to do with interactive gambling.

Others, sponsored by the Nevada Resort Association and the Nevada Gaming Control Board, do address interactive gambling. The committee has to deal with all the amendments today, and then vote on the bill.

At Tuesday's hearing, Anthony Cabot – a gaming lawyer at Lionel, Sawyer & Collins, Nevada's most powerful law firm -- testified in favor of the bill. He said it's not a question of whether Nevada regulates or prohibits Internet gambling, because the activity will continue regardless.

"We can regulate it or we allow it to remain unregulated," Cabot said. ". . . Clearly we can adequately regulate Internet gambling and provide some of the governmental benefits that are important to regulated gaming. That is that the games are honest, and we can assure that people get paid if they win."

Asked by a Senator how Nevada regulators could enforce rules internationally, Cabot said simply, "We can't. Unregulated Internet gaming will continue to exist. What we can do is we can put a place on the Internet where gamblers can go where it's safe to gamble, where they know that games are fair and honest and they'll get paid if they win and there's a level of credibility. But to try to say that we can somehow prohibit a casino operating out of Costa Rica or some other country, it's not feasible."

Several Senators expressed concerns about the legality of Internet gambling. Asked if it would be legal in any other state in the U.S., Harvey Whittemore, a prominent lobbyist and also a partner of Lionel, Sawyer & Collins, answered, "No."

Mark James, a Las Vegas Republican and chairman of the Senate Judiciary Committee, asked how the state could be sure that an online bet is legal in the jurisdiction where it's made, which is one of the stipulations in AB 578.

"Where is the bet made if it's made at a computer in some other part of the world on a site operated by one of our Internet gaming-licensed establishments?" James asked.

"I believe that legally that matter is not clear," Dennis Nielander, chairman of the Nevada Control Board, told James. "My opinion is that when you have a wager it is governed by contract law. The offer is made through the terminal from the site where the server is. I believe the wager is placed in the jurisdiction where it's accepted. That's the offer and acceptance.

"I base that on just contract law theory. But this area is a new frontier and is one where we're not going to have a lot of case law and there's not going to be any statutory provisions to rely on. So there are a lot of legal questions that are going to be outstanding."

Later in the hearing, Nielander said, "Mr. Cabot, he believes the law is crystal clear in this area. I believe it's a legal quagmire."

Senator Dina Titus, a Democrat from Las Vegas, expressed concern that approving Internet gambling could lead to further conflicts between Nevada and the U.S. government.

Brian Sandoval, chairman of the Nevada Gaming Commission, said he didn't think AB 578 would defy the federal government. But he predicted that U.S. Senator Jon Kyl's bill to specifically prohibit Internet gambling would be re-introduced. It "would make this moot if it passes," Sandoval said.

James told Nielander and Sandoval that if the legislature passes AB 578, "We're delegating you a tremendous responsibility, more than we normally do. . . . You have to proceed with the utmost of caution."

Later, James told the regulators: "If we pass this, it's a big job for you."

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