CasinoCityTimes.com

Gurus
News
Newsletter
Author Home Author Archives Author Books Send to a Friend Search Articles Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Recent Articles

Gaming Guru

 

Internet Gaming Issue in the National Spotlight

5 September 2001

Nevada recently passed an Internet gaming bill paving the way for Nevada gaming regulatory authorities to study the issue and to seek to develop a workable system of proper regulation. In reaction to this development, proponents of a ban on Internet gaming are seeking to have a bill introduced in Congress in the next few weeks seeking to ban the activity in all 50 states.

The Nevada bill, at this stage, provides that the Nevada Gaming Commission can promulgate regulations for Internet Gambling if certain critical conditions are met. These conditions including the following:

1. The state must be in compliance with all federal laws;

2. There must be an effective way to restrict access for those under the age of 21.

3. There must be an effective way to restrict access to only those residing in jurisdictions that permit Internet gambling; and

4. It must be determined that Internet gambling promotes the general welfare of the state.

The Nevada bill also establishes a licensing framework similar to the requirements already in place to acquire a casino operator's license. Only existing Nevada licenses will be eligible to become licensed Internet gambling operators. Other factors that the Nevada Gaming Commission is likely to focus on are some safeguards (such as a self-exclusion mechanism) to assure that problem gamblers are protected.)

The American Gaming Association, the national trade association of the gaming industry, estimates that there are currently over 1,800 Internet gambling sites worldwide generating between $3 billion and $4 billion annually. Surprisingly, the AGA has expressed a great deal of concern over the growth of this industry. In July, AGA President and CEO Frank J. Fahrenkopf, Jr. stated the following in testimony to the House Financial Services Committee.

". . . [O]ur major concern with Internet gambling as it exists today is that it allows offshore Web sites that accept bets and wagers to frustrate important state policies, including restrictions on the availability of gaming within each state. Similarly, unregulated Internet gambling that exists today allows an unlicensed, untaxed, unsupervised operator to engage in wagering that is otherwise subject to stringent federal and state regulatory controls. These controls are vital to preserving the honesty, integrity and fairness that those in the gaming industry today have worked so hard for so long to bring about."

Yet, prior attempts at a nationwide ban on Internet gambling have not succeeded largely because of the view that the issue should be left to the individual states and that it is difficult, if not, impossible to police. Additionally, there were many who thought that existing criminal penalties in the federal Wire Act were sufficient to prohibit the activity. The U.S. Department of Justice, for example, has taken the position that Internet gambling is prohibited. Earlier this year, however, a federal judge in Louisiana ruled that the ban on wagering in the federal Wire Act applies only to Internet sports betting, not Internet-based casino games. That decision is now on appeal to the Fifth Circuit Court of Appeals. These legal developments have lead some in the industry to rethink their complete opposition to all forms of Internet gaming.

U.S. Representative Bob Goodlatte, R-Va., will seek to make the decision moot, by getting his legislation passed to specifically make Internet gambling illegal in the United States. The specifics of this latest legislative proposal will not be known for a few weeks. The interesting aspect to watch will be the position that the AGA will take. The issue of Internet gambling is not an easy one because of the billions of dollars involved. The American population has accepted casino gaming as a legitimate industry because of the ability for states to license and regulate the businesses involved. The use of the Internet to bring casino gaming into the homes of all Americans is one that will not be wiped clear with the enactment of a federal law. International jurisdictions have advanced the issue of Internet gaming, but their ability to license the businesses involved is not a safeguard to American citizens. Therefore, it is important that our political leaders take a cautions approach in addressing the issue. Nevada law makers enacted a statute that authorizes the study of the issue. It is my belief that the U.S. Congress should take a similar approach and realize that the Internet is a unique entity that requires proper analysis before making any radical decisions.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com