Bill would OK Internet gambling across state lines

Feb 4, 2013 9:53 AM

The nation’s gambling capital is taking steps to make sure it is not dealt out of the lucrative online poker market as more states enter the bourgeoning industry.

Soon after the Nevada Legislature begins its four-month session on Monday, lawmakers are expected to begin debating a bill that would let companies offering online poker in Nevada accept wagers from players in other states.

Such betting is essentially banned in most of the nation, but several states, including California and New Jersey, are weighing bills that would legalize some types of online gambling. The Nevada proposal, known as Assembly Bill 5, is intended to position Nevada-based companies to expand their customer base as other states ease restrictions. It’s one of a handful of gambling bills lawmakers will be asked to consider but it’s by far the most important.

Republican Gov. Brian Sandoval requested the change in his State of the State address in January and the Nevada Gaming Control Board drafted the legislation, which officials see as a potential moneymaker. Nevada currently permits online poker but no other type of internet gambling, so the agreements would apply only to poker.

“I think this is something that could help our state. Otherwise I don’t think you’d see this kind of interest in it,” Gaming Control Board Chairman A.G. Burnett said. “This is something that would go out and allow our operators to be as competitive as they can be.”

The proposal builds on state regulations from 2011 that established a framework for Nevada companies to offer online poker.

The bill would allow Sandoval to reach agreement with other governors to share virtual customers. Subsequent legislation may one day allow the state to join the international global gambling community.

“I would say the ability of the governor to enter into that kind of agreement, whether it is international or domestic, is extremely important,” Burnett said.

About 85 countries have legalized online gambling, and online players are believed to wager as much as $35 billion worldwide each year, according to estimates by American Gaming Association lobbyist Frank Fahrenkopf Jr.

The bill comes on the heels of a failure to pass federal online gambling regulations in Congress.

Sen. Harry Reid, D-Nev., and Sen. Jon Kyl, R-Ariz., made a push for sweeping legislation as the congressional session drew to a close in December, but ultimately ran out of time to unite the many factions with a stake in the issue.

Reid, the Senate majority leader, has said he will renew his efforts this year. But statehouses and entrepreneurs already are moving ahead on their own, creating a state-by-state patchwork that industry leaders had sought to avoid.

Nevada’s existing online gambling regulations stipulate that companies will not be allowed to accept wagers across state lines until Congress or the U.S. Department of Justice takes regulatory action. Assembly Bill 5 would get rid of that requirement. Burnett said he did not anticipate any conflict with federal law.

Many states began looking into online poker after the U.S Department of Justice issued a letter in 2011 stating that the federal Wire Act of 1961, often used to crack down on internet gambling, only applies to sports betting.

Sandoval asked the Legislature to take quick action on the bill, saying Nevada must continue to be a leader in the gambling industry.

“No opportunity is as rich with promise as our primary industry, gaming,” he said.

Gambling has long been an important revenue generator for the state, which does not impose a state income tax. State regulators have granted online gambling licenses to at least 17 casino and technology companies, and more are seeking licenses.

These companies may “play in the sandbox” of Nevada’s 2.8 million residents and Las Vegas’ 39 million annual visitors for a time, but, the industry will eventually need to expand to continue to interest investors and players, said Dave Schwartz, director of the UNLV Center for Gaming Research.

Among the industry players eagerly watching Assembly Bill 5 is Tom Breitling, chairman of Ultimate Gaming, who plans to launch a real-money poker site that will accept wagers from laptops and smartphones within the state’s borders this year.

“This is peer-to-peer game, so you want your customers when they go online to actually be able to get a game of poker going” he said.

“It becomes much more exciting if the player pool is 100,000, not 10,000, and if you can actually go online and win $1 million, not $10,000.”

Lawmakers will consider several other bills introduced this session on behalf of the Gaming Control Board:

-Assembly Bill 7 would expand the Gaming Policy Committee to 11 members by adding a representative from academia. The bill would also allow the governor, who chairs the policy committee, to establish a subcommittee on education. The new subcommittee would consist of no more than five members, and would evaluate all gambling-related educational institutions, among other duties.

-Assembly Bill 10 would update state law on counterfeit chips and tools used to cheat. Among other technical revisions, the bill specifies that it is crime to possess counterfeit gambling chips and to manufacture tools intended, but not actually used, for cheating.

-Senate Bill 10 would allow the Gaming Control Board to charge casinos and other gambling companies for the costs of investigating overpayments. Currently, companies can ask for refunds of state taxes and fees they have overpaid. This bill would allow the state to bill companies for the costs of evaluating refund requests.

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