Attorneys: State taking right tack on Web poker

Attorneys from one of Nevada's largest law firms said Wednesday that the state is taking the correct approach by getting into the game early should the federal government legalize Internet poker.

Nevada gaming regulators will consider the first set of proposed online poker regulations during a public workshop later this month. The mission is to have a structure for regulating Internet poker in place by the end of January, ahead of any action by Congress that would legalize the activity.

Attorney Mark Clayton said the move could put Nevada at the forefront in becoming the jurisdiction that would license and regulate Internet poker for the rest of the country.

"The first state out to capture the market is going to have a tremendous advantage," said Clayton, one of several attorneys from Lionel Sawyer & Collins who took part in a two-hour seminar on Internet gaming at the University of Nevada, Las Vegas' Boyd School of Law.

Clayton said servers, software and computer equipment that are used by Internet gaming companies are neither small nor easily transportable; once they are in Nevada, they are here to stay. The state would also collect licensing fees from the Internet gaming companies that would set up headquarters in the state, and tax revenues from any wagering activities.

The lawyers, all members of the firm's gaming practice, said the proposed regulations include rules for the finding of suitability, technology approvals and accounting matters. The initial regulations don't allow for the granting of credit play or markers, as is done for high-end customers in Strip casinos.

Also, an Internet gaming company hoping to gain approval from the state would have to become affiliated with a licensed Nevada casino company to have access to U.S. players.

"The regulations dictate that there be a connection with a traditional bricks- and-mortar casino," said attorney Dan Reaser.

Added attorney Greg Gemignani, "It seems the regulators want to make sure Nevada casinos have some skin in the game."

In April, several Internet poker companies struck deals with Nevada casino operators. PokerStars entered an agreement with Wynn Resorts Ltd. while FullTilt Poker signed a deal a company run by Fertitta Gaming, which operates Station Casinos.

But after the operators of PokerStars, FullTilt and Absolute Poker were among the 11 individuals named in an federal indictment on April 15, charged with money laundering and bank fraud, the deals were canceled.

The attorneys said two companies, Caesars Entertainment Corp., which is affiliated with Gibraltar based Internet gambling provider 888 Gaming, and International Game Technology, which acquired a Swedish Internet gaming company in the spring, stand to benefit quickly if Internet poker is legalized. Both Internet companies run gambling websites that exclude wagers from Americans.

The attorneys said companies that accepted wagers from American gamblers after the approval of the Unlawful Internet Gambling Enforcement Act in 2006 could be prohibited from gaining access to the U.S. gamblers once Internet poker is approved federally.

Clayton said companies like PokerStars and FullTilt, which may not be licensable in Nevada, could sell their databases of U.S.-based players to other Internet poker companies.

"The database would have the most value because a company isn't starting from scratch," Clayton said.

He suspected that companies like Yahoo and Google might explore becoming Internet poker providers if the activity becomes legal because of the Internet companies' large customer databases.

Gemignani said there are two separate bills in Congress that address Internet gaming, one that is specific to Internet poker. However, he didn't think either bill would be passed during the current session.

However, the lawyers said congressional approval of Internet poker seemed "inevitable."

Nevada first approved the establishment of regulations governing Internet gaming in 2001. However, the U.S. Department of Justice suggested the Gaming Control Board stop drafting regulations.

The approval of Assembly Bill 258 in last spring's legislative session called for gaming regulators to establish Internet poker regulations.

Nevada Gaming Commission member Randolph Townsend said Wednesday that the state started researching the regulatory language two years ago. He said the regulations would be "a work in progress" and could be amended as situations change.

"This is absolutely crucial to our future," Townsend said.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
Follow @howardstutz on Twitter.