CARSON CITY, Nev.-- Some Nevada lawmakers want the state to be the first to regulate the multibillion dollar, quasi-legal Internet poker industry.
But with some of the most powerful casinos lining up against the proposal, the bill could be headed the direction of other recent federal and state efforts -- a legislative grave.
The bill would ask state gambling regulators to create rules for Internet poker operators and companies that make related equipment. It would also specifically prevent the Nevada Gaming Commission from denying a license to popular existing poker sites -- like PokerStars and Full Tilt Poker -- just because they have been operating offshore in a legal gray area after a federal law effectively banned online gambling in 2006.
Alan Feldman, spokesman for MGM Resorts International, said the federal law needs to be fixed first. "I think everyone's objective should be to get the proper bill passed, and to do so federally," he said. "The business model ought to be following sound public policy, and (the Nevada bill) is actually a pretty good model of getting a business model way far ahead of anyone's policy." MGM Resorts, a publicly traded company that counts billionaire Kirk Kerkorian among its major investors, is Nevada's largest employer. But Feldman said the proposal introduced Thursday by Assemblyman William Horne is flawed. "Online poker has been growing like gangbusters," said Horne, D-Las Vegas. "It will provide a new source of revenue that we aren't able to enjoy right now."
The bill opens up the possibility of partnerships between established Nevada casinos and major offshore poker operators, said Jeff Ifrah, a Washington D.C.-based lawyer who represents a Canada-based trade association for online casinos. But casino companies that oppose it would rather have exclusive competition than give players what they want, he said. "If the state is serious about raising revenue for this endeavor, then it needs to be able to obtain the participation of the leading operators," said Ifrah, who represents the Interactive Gaming Council in litigation. The council counts PokerStars and Full Tilt Poker among its members. "Those leading operators happen to be offshore," he said.
MGM Resorts has made no deals, but has been approached by many Internet poker companies about establishing a partnership to combine their know-how with MGM Resorts' brands, Feldman said. The American Gaming Association, the casino industry's largest trade group, declined to comment on the bill. But the world's largest gambling company, Caesars Entertainment Corp., immediately criticized it even though it has been pushing to legalize online poker in the United States. "This is not a bill that we support," said Jan Jones, Caesars' senior vice president for communications and public relations. "Our focus is not intrastate, our focus is interstate. It's federal, it's putting together an American, an appropriate regulation and licensing regime and taking the jobs and revenues going to foreign companies and bringing it back to America."
Jones said the bill introduced Thursday isn't the right way to legalize online poker because it's state-only legislation. "That's been our position in every state, and it's our position in Nevada as well," she said. "Internet, by its nature, is an interstate activity, and the rules should be crafted appropriately." Efforts higher up have fallen flat. Nevada Sen. Harry Reid's bill to set federal regulations for online gambling died in December during the lame duck session of Congress. "It would have been great if it was done back in D.C.," Horne said. "That doesn't preclude Nevada from doing something." Nevada's rigorous system has long been the "gold standard" for gambling regulations, Horne said.
"The writing has been on the wall that if the federal government doesn't act to regulate Internet poker, then states will try to do so," said Reid spokesman Zac Petkanas. It's happening. New Jersey lawmakers passed a bill that would have made the state the first in the nation to legalize Internet gambling, but Gov. Chris Christie vetoed it last week. Other states are considering similar bills. The preamble to Nevada's proposal says legal internet poker could benefit Nevada's ailing economy, and notes that current technology could be used to limit the gambling sites to places where it is legal.
Feldman said the Nevada bill isn't tough enough. "In a lot of ways, (the bill) doesn't even meet our own state's regulatory standards," he said. By extending a hand to offshore poker companies, the state bill bypasses the idea of forcing operators to be have good track records with regulators, and to have operations at stake as they offer gambling on poker, Feldman said.
"The point is to put something at risk so that bad behavior carries a penalty with it," he said.
(Copyright 2011 by The Associated Press. All Rights Reserved.)