While the U.S. Attorney’s Office, U.S. Immigration and Customs Enforcement, and the Internal Revenue Service are running around seizing online gambling domain names, freezing player funds, and otherwise doing whatever they can to stop Americans from playing internet poker at home, the state of Nevada is looking to do the opposite. On Tuesday, Nevada’s Senate Judiciary Committee passed Assembly Bill 258, which allows the Nevada Gaming Commission to establish regulatory framework for online poker and grant licenses to casinos who wish to offer the service.
This revised version of AB 258 does not actually lay out all of the rules and regulations for online poker; it simply gives the green light to the Nevada Gaming Commission (known as the Commission) to establish the regulations and issue licenses if one of two things happen: 1) a federal law is passed legalizing internet poker, or 2) the U.S. Department of Justice (DoJ) tells the Commission or the State Gaming Control Board, in writing, that “interactive gaming” is allowed under federal law. If the latter happens, any games allowed would likely be of the “intrastate” variety, meaning only Nevada residents would be allowed to patronize the online poker sites who receive Nevada licenses. The Unlawful Internet Gambling Enforcement Act of 2006 does provide for intrastate online poker, but that is up to each state’s government to sort out on its own.
In the previous version of the bill, dated March 10, 2011, a basic regulatory framework was drawn up. Regulations were required to include things such as safeguards to prevent underage and problem gambling, accounting and internal control standards, security standards, and general internet poker technical standards. All of that has been stripped from the second reprint and has essentially been replaced with one sentence: “To provide for licensed and regulated interactive gaming and to prepare for possible federal legislation, the State of Nevada must develop the necessary structure for licensure, regulation and enforcement.”
As Assemblyman William Horne put it at the committee hearing, “We have to have all our ducks in a row and be ready to go the next day.” Horne is the bill’s sponsor.
One other significant amendment that was accepted was proposed by Peter Ernaut of the Nevada Resort Association prevents double taxation of gambling revenue. At the end of the passage which states that gross revenue is subject to fees (read: taxes), the following has been tacked on: “unless federal law otherwise provides for a similar fee or tax.”
The bill does outline the requirements businesses must meet to receive a license to offer online poker, for all intents and purposes restricting licensees to established casinos, large ones in particular. One clause does leave the door open for other possible licensees, though, as it reads, “The Commission may issue a license to operate interactive gaming to an applicant that meets any qualifications established by federal law regulating the licensure of interactive gaming.”
Thus, it appears that Nevada may grant licenses to offshore online poker companies if future federal legislation dictates that such companies are eligible to offer online poker to U.S. residents.
Anyone operating an interactive gaming business without the proper license will face between one and ten years in prison and/or a fine of up to $50,000.
With this bill Nevada is clearly positioning itself to be the epicenter of online poker in the United States as soon as it gets the green light from the federal government. As Horne said, “The race is on who will do it first.”
The full Senate will vote on the bill later this week, after which it will return to the Assembly for approval of any additional amendments. Nevada Governor Brian Sandoval has already extended his support of the legislation as long as the U.S. DoJ or Congress give online poker the go-ahead.
