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Nevada online poker bill not dead

19 April 2011

By Steve Sebelius

CARSON CITY, Nevada -- In any other state, Assembly Bill 258 -- which would legalize Internet poker in Nevada -- would be dead and buried.

That's what happens when the company pushing a piece of legislation gets indicted for money laundering, bank fraud and illegal gambling, after having treated the chief sponsor of the legislation to a trip to London and spread around nearly $300,000 in campaign contributions that are not only the possible fruits of a criminal enterprise, but may also be illegal donations from foreign nationals.

But this is Nevada, so not only is the bill alive, it's probably headed for the governor's desk. Why? Despite the bill's ignoble provenance, it may ultimately benefit the members of the Nevada Resort Association, which is pushing for its passage.

Last year, the Isle of Man-based company PokerStars hired a number of high-profile Nevadans -- including former Assembly Speaker Richard Perkins -- to push for a law to legalize online poker. The ex-speaker accompanied Assemblymen William Horne (chairman of the Judiciary Committee) and Kelvin Atkinson (chairman of the Commerce Committee) to London in December to see PokersStars in action.

Meanwhile, the company was spreading political donations on the Legislature like thick, chunky peanut butter on a sandwich.

Horne introduced AB258 in almost the exact form PokerStars desired -- it would have allowed companies able to obtain a gaming license to start up Internet poker games immediately in the state and anywhere the practice is legal. (Federal authorities maintain all Internet gambling is illegal.)

The Nevada Resort Association opposed the initial bill, until it was changed with a key amendment: No poker until "a federal law providing for the licensure of Internet poker is signed into law or the United States Department of Justice advises the (Gaming Control) Board or (Gaming) Commission that it is permissible to license Internet poker operations."

On Friday, a March indictment was unsealed in New York City, charging PokerStars (along with Absolute Poker and Full Tilt Poker, together the biggest names in the business) with bank fraud and money laundering as well as illegal gambling. The companies allegedly disguised payments to get around U.S. laws prohibiting banks or credit card companies from paying online gambling debts.

Suddenly, the world changed: Las Vegas companies such as Wynn Resorts and Fertitta Interactive dropped budding partnerships with poker companies. Lawmakers (including Gov. Brian Sandoval) began shedding their PokerStars contributions. Perkins -- who denied, based on a PokerStars lawyer's information, that the company faced any pending legal trouble -- acknowledged he was backing off lobbying for the bill. "At this point, it becomes more of a resort association issue," he said.

And an issue it is: Billy Vassiliadis, lobbyist for the NRA, said the policy should stand apart from the controversy over the PokerStars indictment. If the bill should pass, and if the federal government acts, Nevada has the regulatory structure in place to license companies untainted by scandal and take advantage of the worldwide market in online poker play. (Horne, by the way, says the same thing.)

"If these companies (under indictment) had never existed, it would still be good policy for the state of Nevada," Vassiliadis says, although he admits passing the bill will be harder now. "It hasn't made it easy. It was easier Thursday."

But is it even possible to separate the policy from its promoters at this point? And is potential gain for casinos really enough reason to ignore the way AB258 was born?

In any other state, the bill would have perished under the weight of controversy. But this is Nevada, soon to be U.S. headquarters of online poker.

"The Arizona Charlie's brand has been around since the late 1980's and these assets are well entrenched, competing at the low to mid-end of the Las Vegas locals market."

Cannery Casino Resorts. Owned by Millennium Gaming, Oaktree Capital, and Crown Limited. In Las Vegas, the company operates the Cannery Casinos in North Las Vegas and on the Boulder Strip and Rampart Casino in Summerlin.

"The original Cannery has fairly minimal competition, as it serves residents near Nellis Air Force Base. Eastside Cannery is a comfortable and well themed locals facility, primarily catering to retirees."

Silverton. Privately owned by real estate developer Ed Roski Jr.

"Silverton, in our view, primarily competes with the M Resort and South Point Casino for locals patrons."

Palms. Owned by George Maloof, but reports have surfaced that two private equity firms are attempting to purchase a controlling stake in the resort's debt.

"The Palms has long been popular with celebrities given its nightclub and restaurant elements. With that said, over the years we have heard that the property struggled to find an identity as it faced strong competition from Strip and locals casinos while it sought various target audiences."

South Point. Privately owned by Michael Gaughan.

"South Point is located just minutes away from the Strip. The property has the largest base of hotel rooms (2,163 rooms) in the Las Vegas locals market and given its scale, also targets tourists."

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