A prominent gaming attorney said he doesn’t expect an online poker bill to be passed anytime soon, even though the demand is present, states are clamoring for tax revenue and sufficient technological safeguards would be in place to prevent underage players from gambling.
I. Nelson Rose, a distinguished senior professor at the Whittier Law School in Costa Mesa, Calif., said he’s pessimistic about the passage of legislation because federal lawmakers this session have demonstrated they can’t come to an agreement on any significant legislation.
Rose was a speaker Thursday at a two-day conference on online gaming law at Aria. Many of Southern Nevada’s leading gaming attorneys are attending the conference, which features scholars, regulators and legal experts on topics ranging from the prospects of passage of online gaming legislation to the obstacles European online gaming companies will have partnering in ventures in the United States if and when Internet gambling is approved.
Rose said there are many potential pathways for the legalization of online gaming, and he listed six states that have the lead in exploiting online poker once approved.
In addition to Nevada, which is expected to approve online gaming regulations and standards next month, Rose named New Jersey, Iowa, California, Florida and Massachusetts as having the inside track. New Jersey and Iowa already have regulatory regimes in place, and the other three states have large populations or strong gaming cultures.
Other states that could exploit online poker, if approved, include Washington, Oregon, Arizona, Nebraska, Oklahoma, Louisiana, Mississippi, Indiana, Michigan, Ohio, New York, Pennsylvania and Connecticut. Most of those states have either strong tribal gaming centers or active commercial gaming.
Rose said most commercial gaming companies in the United States would prefer federal legislation for online poker for a consistent policy across state lines. Several states, including Nevada, are developing their own online regulatory rules to avoid being behind other states.
Rose said Nevada could be at a disadvantage because of its small population base, if the federal government enables states to establish their own rules for their own residents.
But most states are counting on there eventually being interstate poker play.
Legal experts are strategizing how they could best exploit Internet gambling through existing regulations for interstate horse-racing wagering. Others are exploring the wording of rules that enable multiple states to conduct multimillion-dollar lotteries.
In a session on opportunities for European operators to enter the U.S. market, panelists agreed that they expect foreign companies to be surprised with the level of scrutiny they’ll receive from U.S. gaming regulators.
Frank Schreck of Brownstein Hyatt Farber Schreck in Las Vegas, one of the city’s pre-eminent gaming lawyers, said he first began paying close attention to Internet gambling when some of his clients sought his advice on partnering with foreign operators in online gaming ventures.
He eventually advised his clients not to partner with foreign companies because he felt U.S. law and Justice Department actions made it clear that there would be no tolerance for enabling U.S. players to wager online with companies based overseas.
“I was one of the happiest guys on the face of the Earth when the indictments (against three online poker companies in April) came down, not because I wanted to see them in trouble, but because of the advice I gave,” Schreck said.
Federal prosecutors in New York indicted executives of PokerStars, Full Tilt Poker and Absolute Poker executives in April. The action cast a pall on the movement to get online poker legalized.
Wynn Resorts quickly dropped a joint venture it had with PokerStars.com, which at the time was an agreement to lobby federal lawmakers to pass an online poker bill but had the potential to grow to conduct other business.
The Nevada Legislature has directed gaming regulators to develop online poker regulations and standards by January, and the Control Board and the Nevada Gaming Commission are on track to accomplish that.
Katie Lever, general counsel and executive vice president of Las Vegas-based Shuffle Master, said while her company supports Internet gambling initiatives, it has been confronted with a new problem — its trademarked software is being used illegally by other companies. She said nine of the top 11 online games use material her company has patented.
Shuffle Master has been one of the most aggressive companies for protecting its land-based games and devices.
Panelists also agreed that the European companies may have a harder time than they think with background checks and probity reviews.
They believe some regulators will take a closer look at and possibly disqualify companies that continued to take wagers after the Unlawful Internet Gambling Enforcement Act was signed into law. But companies that partner with established licensed U.S. companies can be “cleansed” if they have a good track record and work with a company that has a good regulatory record in the United States.