Online bets on threshold

June 12, 2001 11:17 AM
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Gambling first became legal in Nevada in 1931. Now, 70 years later, the state is poised to maintain its status as the gaming leader through this century. To do that, though, state politicians, hotel executives and others in the gaming industry had to make sure a bill to eventually legalize Internet wagering in Nevada passed.

They accomplished this at the cost of cutting out the smaller casinos, since they set the cost of two-year licensing fees at $500,000. It was typical Nevada style politics. The big corporations write the bill, deciding how much the fee is going to be so they can exempt the small guy. At least, unlike the federal government, Nevada understands where the future is headed.

"It’s good for the hotels; they’re finally realizing how powerful the Internet is," said Vic Salerno, president of American Wagering Inc., and head man of the Leroy’s sports book chain. "If they go about it right, they’ll be very successful. Even if they can’t do it in the United States, if they can go out of the country where it is legal, it would be a great help to their international markets."

This isn’t something that is going to happen overnight. Nevada has the most sophisticated and stringent gaming regulation controls in the country, if not the world. The Gaming Commission will proceed cautiously knowing they could be serving as a potential model for online gambling regulations in other states. Salerno and others guess the time frame for Nevada casinos to start taking bets over the Internet range from 18 months to two years. The key is if the federal government will back off and permit Internet gambling, including sports wagering. So far Washington has refused citing the ancient 1961 Federal Wire Act, which forbids U.S. citizens from accepting wagers over a phone line.

Barry Lieberman, vice-president and general counsel for Coast Resorts, was asked if he thought the climate in Washington would change in the near future.

"No," Lieberman said. "They’re still prosecuting the offshore (books). You have someone who’s president now who controls the justice department, and who was adamantly opposed to gambling in Texas. And you have an attorney general who is adamantly opposed to gambling. So, at least for the next four years, I don’t see anything good coming out of this administration in terms of expanding gambling."

Some Nevada officials are more optimistic. In the last Congress legislation, Nevada backed Sen. Jon Kyl, R-Ariz., and his bill to outlaw American citizens from betting on the Internet. Now Nevada has reversed itself. Kyl’s bill passed the Senate, but fell short in the House. Since Nevada has changed course, Kyl believes the window of opportunity for his bill to pass may have closed. Nevada’s lobby is that powerful.

People are betting on the Internet to the tune of about $4 billion annually, according to a Wall Street Journal story that ran last month. Much of this is from sports bets being funneled to Internet books in the Caribbean, Europe, Australia, South America and just about every place that isn’t governed by the U.S.

Canbet, an Internet book located in Canberra, Australia, handles $300 million annually in sports wagers and has a customer base of 30,000, according to their executive director, Michael Tomeny. This makes Canbet one of the 10 largest interactive sports books in the world.

"If you had the Bellagio poker room on the Internet, and the overhead to run an Internet card room is very, very low, it would be better for everybody," Tomeny said. "You’d attract a huge audience from around the world. You’d rather play in a regulated environment. That’s why Canbet is experiencing the growth it is because it’s regulated by Australia. Your money is safe. It’s a proper public company. We have a proper regulatory environment that looks at everything we do. Everybody thinks of that in terms of Nevada. It’s well regulated. Your money is safe. If you have a complaint you see someone and you get your money back."

If Nevada were allowed to take sports wagers over the Internet it would destroy many of the offshore books that primarily deal in American sports. While some of these offshore books offer bigger limits and exotic wagers not found in Nevada sports books, they would have a hard time competing against hotels with built-in name recognition and credibility such as MGM, Mirage, Caesars Palace, Hilton, Stardust and Harrah’s.

"If they did it right, there would be no Antigua, there would be no Caribbean," Tomeny said.

The key, of course, is for the American government to get into the 21st century and legalize Internet gaming in states that approve it.

"If they (the federal government) embraces it, and say two years from now they made it legal," Tomeny said, "then I’d be back home in my weekly poker game at The Mirage. Vegas would dominate American sports betting. If you’re an American, you’re going to bet with them."