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Reduced standards for online gaming nearly a sure bet

The state Gaming Policy Committee could easily adopt the Boy Scouts’ motto: "Be Prepared."

For that’s its goal if and when online gaming becomes legal in the United States.

The need for regulatory preparedness was demonstrated at the committee’s Monday meeting in Las Vegas when a speaker described how easily he was able to deposit $100 to gamble online. Access a site from a Las Vegas hotel, then use a credit card from Gibraltar and a cellphone based in Spain.

Someone at the other end should have realized this was an illegal effort by Jim Ryan, co-CEO of bwin.party digital entertainment, who was testing if safeguards would screen him out. Nope. The online company just took the money, despite the red flags.

Ryan’s company is a major online gaming company operating in Europe and eager to expand to the United States. He reviewed the checks and balances used to protect the integrity of online betting.

He explained that his firm knows how to block players who say they want themselves excluded . It can prevent money laundering, and when it comes to cheating or collusion, bwin.party has records of every single hand ever played.

While screening minors is a priority for Nevada regulators – Gov. Brian Sandoval and Nevada Gaming Commissioner Pete Bernhard both have teenage sons they don’t want playing online poker – minors are a small percentage of prospective players, Ryan said. Out of 1 million players a month, his company identified 10 underage players trying to sign in over a year’s time.

The same day Ryan made his presentation , a Reuters news story was published that said he has questionable associations. It also made Gaming Control Board Chairman Mark Lipparelli sound like Nevada is willing to reduce regulatory standards in order to welcome the lucrative online gambling business.

Ryan wasn’t asked about the Reuters story, even though his company has a contractual relationship with MGM Resorts International and Boyd Gaming, which are both represented on the committee. (Jim Murren of MGM Resorts disclosed the relationship; Boyd’s Keith Smith didn’t make the meeting.)

According to Reuters, "In 2009, an earlier incarnation of the company paid $105 million while admitting to U.S. prosecutors it had run an illegal gambling operation and engaged in bank and wire fraud. Among its principal backers was a California-born woman who made a fortune in phone sex and Web pornography businesses that, like the pioneering online gambling company that became bwin.party, faced multiple allegations of wrongdoing."

And, the Reuters story said, Caesars Entertainment Corp. "is prepping for online poker by tying up with an Israeli company that in 2007 acknowledged settlement talks with the U.S. Justice Department over alleged breaches of anti-gambling law."

For Nevadans, the eyebrow-lifting quote in the story was taken from a hearing last year where Caesars Entertainment’s contract with that company, Dragonfish, a subsidiary of 888 Holdings, was found suitable and wouldn’t discredit Nevada.

"I don’t think as we look at companies that we can have perfection as the standard, because I think that would be a disservice to the state in attracting business here," Lipparelli said at that hearing.

Lipparelli told me Tuesday that he wasn’t suggesting standards for licensing would be lowered for online gaming.

Bwin.party has applied for a gaming license in Nevada and will be questioned about issues raised by Reuters as part of the licensing process, he said.

Realistically, most major online companies have had run-ins with law enforcement.

Unless the federal government regulates online gaming, Lipparelli believes a handful of states will go with the simplest regulation possible to benefit from online gaming .

The states, including Nevada, want to be prepared all right – prepared to rake in that online money.

Jane Ann Morrison’s column appears Monday, Thursday and Saturday. Email her at Jane@reviewjournal.com or call 702-383-0275. She also blogs at lvrj.com/blogs/morrison.

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