Nevada's Top Gaming Regulator: 'Internet Gaming Is Here and It's Here to Stay'

12 May 2000

MONTREAL - A thaw is developing in the icy response of Las Vegas interests to Internet gaming, judging by remarks from two speakers at a conference here.

About 500 people - operators and potential operators of online casinos, software vendors, payment processors, regulators, lawyers, marketing experts and assorted hangers-on -- are gathered for the Global Interactive Gaming Summit and Expo. Just the fact that Nevada's top gaming regulator, Brian Sandoval, agreed to speak to such a group is noteworthy in itself.

He was joined at a session Thursday by Anthony Cabot, a veteran gaming lawyer at the politically well-connected Las Vegas firm of Lionel Sawyer & Collins.

"We realize that Internet gaming is here and it's here to stay," Sandoval, the young chairman of the Nevada Gaming Commission, told the group. On the part of Nevada regulators, he said, "there's an atmosphere that we are listening and we are learning."

Last month, Sandoval, with help from Cabot, organized a day-long seminar for Las Vegas regulators to learn about the technical aspects of online gaming and to hear arguments from a proponent as well as an opponent.

Sandoval emphasized that Nevada law prohibits Internet gaming, and that companies with a Nevada gaming license must steer clear of any connection to it. But he also said the state legislature is "the appropriate forum" to discuss the issue.

Asked if he thought the legislature would revisit the subject, Sandoval said, "Because of the growth in Internet gaming, it's only a matter of time."

Cabot left no doubt that major U.S. casino interests, and therefore the politicians they support, will embrace online gaming.

"Internet gaming will be a big business in the U.S.," he said at the conference session. The only questions, he said, are which major casino brands jump in first, and when.

"The brands will get into the game," Cabot said. "I can tell you with no hesitation that Internet gambling is a major topic of every major casino company in Nevada, all of whom are trying to figure out what their Internet gambling strategy is going to be."

Cabot predicted that the Internet Gambling Prohibition Act, which is in the U.S. House of Representatives, will not pass this year. It's a companion bill to the one long championed by Arizona Republican Jon Kyl that sailed through the Senate in November.

Estimates vary, but experts say 50 to 90 percent of online gambling is done by Americans. Therefore, the Kyl bill is a major cloud hanging over the industry.

But Cabot said Native Americans, many of whom want to operate Internet gaming sites, have enough clout in the House to stop the bill this year.

He noted that Kyl's bill has already been watered down in order to gain support. Major exemptions are included that would permit Internet gambling on pari-mutuel horse races, on state lotteries and on fantasy sports games.

Eventually, the bill will become law, he said, but only with the ultimate exemption - casino gambling. He thinks the final version of Kyl will simply prohibit the use of the Internet for gambling that is not otherwise legal in the U.S.

Nevada casino interests "backed away" from Internet gambling in 1997, Cabot said, because of their fear of the then-impending National Gambling Impact Study Commission.

But the need for growth will lead the big gaming firms to the Internet, he said, and that will cause them to demand that Kyl also gives them an exemption.

"These public companies are going to continue to feel pressure from Wall Street to meet expectations for growth," Cabot said.

"Where are they going to find expansion? I think there's only two markets left in the world - Asia and the Internet."

Asia will see great growth in casino gaming, he said, but finding the right jurisdictions and the right conditions will be tricky. On the other hand, he said, the Internet is ripe.

"There are no strong brands yet," Cabot said. "There are no Amazons or eBays. The market is fragmented. A traditional casino brand can step up and grab significant market share with a very reasonable cost factor."

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Global Interactive Gaming Summit & Expo (GIGSE) 2000