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Nevada casinos frustrated by US online gambling prohibition
The ongoing saga of attempts to legalize/prohibit online gaming in the Washington is costing Nevada substantial sums, and some experts within the land-based casino industry are getting frustrated.
Gaming industry experts said the current legislative impasse could cost Nevada substantial gaming revenue, encourage money laundering and give a head start to non-US online gaming interests.
Land-based Nevada casino operators are missing out on their share of what is projected to be a $6 billion to $10 billion a year industry by 2006 due to the Bush administration’s decision that Internet gambling is against the law, and due to Congress’ failure to decide whether to legalize and regulate the business.
University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said the online gaming business can’t be stopped ‘without being Draconian,’ and he thinks the US government policies are keeping confining the development of the industry to offshore interests.
The US House of Representatives tried to prevent US residents from funding their online gambling through last year by passing legislation to prohibit the use of credit cards, checks and electronic fund transfers in such transactions.
Scott Duncan, spokesman for the House committee that passed the legislation, said he still hopes Congress will take action this year, but industry and Washington sources both say the Senate is ‘highly, highly unlikely’ to do anything about online gambling with an election looming this year.
However Tony Cabot, a partner in Las Vegas law firm Lionel, Sawyer & Collins, said the legislation tied up in Congress is merely an excuse for politicians for failing to regulate online gaming. He said it is also irrelevant – the majority of credit card companies and PayPal, an alternative online payment system, have already blocked payments to online gambling companies.
‘The situation is that prior enforcement action by private interests and the U.S. (Justice Department) have sifted all payment systems offshore so any legislation will legislate against something that’s not occurring,’ said Cabot, chairman of the gaming practice group at Lionel, Sawyer & Collins.
Cabot said Nevada could take back some of the money flowing from US punters to offshore sites if the industry were regulated.
‘It could also provide the government with a greater ability to prevent money laundering,’ he said.
Cabot said US regulators must understand that legislative efforts to regulate online gaming are proceeding, mostly in Europe.
‘Unfortunately for the U.S., the U.K. has the perception it’ll be the online gaming capital of the world and will establish a world-class regulatory regime around its activities,’ he said.
Thompson said it is likely Great Britain will win the battle to be the top global destination for online gaming because of its reputation for strict casino regulation.
Cabot said that will represent a serious missed opportunity for the United States in general and Nevada in particular.
However, Cabot said the US situation is more complex than in the UK.
‘There’s an unwillingness by many politicians to take a position that recognizes the practical and technological realities of online gaming because it’ll cost them votes from the religious right, which is against all forms of gaming,’ Cabot said.
Thompson also warned that care would be necessary in regulating and attracting online gaming here.
‘We don’t want it too much because it really lends itself to problem gambling because it eliminates the social context,’ he said. ‘But if it’s legalized and regulated, we could at least eliminate illegal operators (and protect children). Right now, that possibility doesn’t exist.’
