Nevada bets on legalized Internet gambling
LAS VEGAS (AP) -- Flush with a new state law that permits Internet casinos, Nevada lawmakers hope the Silver State is the first to rake in winnings from modem-equipped gamblers in faraway lands.
For now, online gambling is discouraged in the United States by a law that forbids wagering over telephone lines. But Nevada lawmakers believe online betting will be legalized if federal restrictions are changed by pending court challenges, including one underway in Louisiana.
Proponents also hope that new strides in computer security technology -- including software that lets only eligible gamblers place bets -- will persuade Congress not to ban the practice.
"In no shape or form are we seeking to defy the federal government," state Gaming Commission Chairman Brian Sandoval said. "We want to make sure we are proceeding in a lawful way."
At the moment, online gambling is not specifically banned by U.S. law. Congressional efforts to prohibit the practice have failed.
But the U.S. Justice Department considers online wagering a violation of the Interstate Wire Act, a 1961 law banning gambling by telephone. Federal law enforcers used the law in a successful prosecution last year.
That hasn't stopped Patti Danielewicz of Thorp, Wis., from betting online. The 47-year-old has been gambling regularly at as many as 20 offshore Internet casinos over the past 18 months.
"I was afraid at first," Danielewicz said. "But now I'm not worried. I've come across very few sites that say that if you have a U.S. address you can't gamble."
Danielewicz, who works for the pro-gaming Web site gambling.com, said she surfs around for the best offers and never bets more than $20 of her own money at a time.
While prosecutors have thus far ignored individual gamblers who make online bets, they have scared off entrepreneurs from opening gambling Web sites on U.S. soil.
In what many consider a test case, San Francisco entrepreneur Jay Cohen was sentenced last August to nearly two years in prison for operating a sports-betting business over the Internet.
Nevada's new law requires the state's two gambling regulators to let licensed hotel-casino resorts accept wagers over the Internet, as long as the cyber-casinos comply with applicable U.S. laws. Federal authorities have yet to respond to Nevada's gaming plans, saying they need more information.
In New Jersey, where a similar bid to legalize cyber-betting failed, state prosecutors sued three offshore companies that run online casinos, claiming the companies violate state laws by taking bets.
The state filed the lawsuit last month, saying the companies advertised in New Jersey, in part by placing billboards along the Atlantic City Expressway, which leads to the state's casinos.
In a class-action lawsuit in New Orleans, Visa and MasterCard were accused under racketeering law of aiding violations of the Wire Act by allowing credit cards to be used to accept bets at Internet casinos.
U.S. District Judge Stanwood R. Duval Jr. dismissed the claims in March, saying pending legislation on Internet gambling "reinforces the court's determination that Internet gambling on a game of chance is not prohibited conduct" under the Wire Act.
Las Vegas gaming attorney Tony Cabot expects the decision will be appealed. But if it holds, he said, "the precedent is we can take bets from any place in the world."
Nevada regulators hope to prevent other lawsuits against local casinos that troll the Internet. Regulators are reviewing new identification and security technology -- including global positioning systems and fingerprint and retina scanning -- to keep out would-be players younger than 21 or who live in jurisdictions that prohibit gambling.
So far, said Dennis Neilander, Nevada's Gaming Control Board chairman, "the technology isn't there."
In Congress, legislators are moving to stop the practice.
Sen. Jon Kyl, R-Ariz., plans to reintroduce federal legislation to ban Internet gambling after his effort failed last year. Rep. Bob Goodlatte, R-Va., also expects to introduce a similar bill.
But if preventative technology develops enough to head off lawmakers' attempts to ban the practice, the big winners could be Nevada's casino operators.
Marc Falcone, Internet gaming analyst for investment bank Bear Stearns, believes solutions to the legal and technological issues could be available in two years or less.
Experts estimate that worldwide revenues from Internet gambling -- largely conducted by companies with headquarters and Web sites based in the Caribbean and other locales -- reached $1.5 billion last year.
At least three Las Vegas gaming companies -- Park Place Entertainment, MGM Mirage and Harrah's Entertainment -- have invested in technology firms developing secure Internet games. The three companies already operate Internet sites offering non-cash casino games and prizes, such as rooms and meals.
Internet gambling will supplement, rather than take away from, traditional casinos, Falcone believes.
But the industry remains split.
Some, like MGM Mirage Chairman Terry Lanni and Sheldon Adelson, the owner of the Las Vegas Strip's Venetian megaresort, consider Internet gaming a growth opportunity. Others, like Tom Gallagher of Park Place and Phil Satre of Harrah's, urge caution.
Industry officials say it's difficult to know whether gamblers would substitute virtual games for trips to Las Vegas or Atlantic City, with their lure of coin-hemorrhaging slot machines, free cocktails and campy stage shows.
Danielewicz, who has paid twice-annual visits to Las Vegas for 13 years, believes there's no contest.
"Internet gambling can't replace Las Vegas because there's nothing like it," she said. "The lights, the people, the ambiance -- the whole Vegas thing can never be replaced by a computer screen."
------
On the Net:
Nevada gaming regulators: http://gaming.state.nv.us
Nevada Legislature: http://www.leg.state.nv.us
End advance for Monday, July 23