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Nevada, seeking a big jackpot, legalizes online poker

February 22, 2013|By Michael Muskal

Already home to a major gaming industry, Nevada is preparing to take its expertise online after officials rapidly approved a law to become the first state in the nation to authorize what could become one of the most lucrative gambling markets still to be tapped.

At the bill signing held in the same Capitol room where lawmakers legalized gambling some 80 years ago, Nevada Gov. Brian Sandoval formally put his signature to the law Thursday. By quickly moving the bill through the Legislature, Nevada gets ahead of rival New Jersey in the race to win the first slot in the online poker business, where billions of dollars are being wagered domestically and tens of billions of dollars are bet from around the world.

“This is an historic day for the great state of Nevada,” said Sandoval, a former state gaming chairman, during the ceremony in Carson City. “Today I signed into law the framework that will usher in the next frontier of gaming in Nevada. This bill is critical to our state’s economy, and ensures that we will continue to be the gold standard for gaming regulation.”

While the law goes into effect immediately, it will probably be months before the first online bet is played in Nevada and even longer before the games are allowed to lure players from outside the state. Numerous obstacles remain to be worked out, according to state officials.

But the law eliminates some key barriers that had prevented Nevada from moving toward online gambling, A.G. Burnett, chairman of the state Gaming Control Board explained in a telephone interview with the Los Angeles Times on Friday. The changes are designed to accommodate the shift in federal policies, which had held that all forms of Internet gambling were illegal.

Congress has yet to act on Internet gambling, but at the end of 2011, the federal Department of Justice announced that it was revising its opinion of the Wire Act of 1961, which the department had argued banned all forms of Internet gambling. In its announcement, Justice said it considered that the Wire Act ban was limited to sports betting, thus making online poker potentially legal -- as far as the federal government was concerned.

The new law is designed to allow Nevada to take advantage of the changes by creating a licensing and regulation system for online poker games, Burnett said. Nevada has been working to allow such gambling within the state -- hoping to draw tourists -- and is likely to have its system up and running within months, he said. The new online requirements mirror those already in place for gaming in the flesh.

Intrastate online poker will probably draw about $2 million to $3 million a year to Nevada, Burnett said. But the state is small and the number of new tourists will probably also be small, he said.

The real jackpot is negotiating with other states to form a compact that allows the expansion of Internet gaming to customers from those states.

In effect, Nevada would supply the licensing and regulation that could make online poker accessible everywhere the Internet is in the United States -- a potential market of $4 billion to $10 billion a year. Globally that market could reach $30 billion a year, Burnett estimated.

“We feel pretty certain that an agreement with another state would be legal because it is some form of compact,” Burnett said. “We are being cautious and researching so that we do things appropriately. We are not going too fast and don’t want to offend the federal government in any way. But we need to allow our licensees to compete.”

Already in the regulatory pipeline are nine casinos that would offer the poker websites as well as manufacturers, software designers and other professionals needed to prepare the sites, Burnett said.

“Right now,” Burnett said, “I think we’re in the right time and the right place.”

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