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Nevada takes the lead in interactive gaming

22 February 2013

By Sean Whaley

CARSON CITY, Nevada -- Nevada became the first state in the nation Thursday to authorize interactive gaming when Gov. Brian Sandoval signed Assembly Bill 114 into law in a ceremony in the Old Assembly Chambers in the Capitol.

His signature capped a flurry of activity on the measure, starting with a joint committee hearing and later unanimous votes in the Assembly and Senate on the same day.

It was one of the speediest actions on a bill seen in the Legislature in recent memory other than at the end-of-session when there is a rush on bills to meet the adjournment deadline.

The law, which takes effect with Sandoval's signature, gives Nevada a jump on New Jersey in the rush to compete in the online poker business.

"This is an extraordinarily important bill to our economy," Sandoval said just before signing the bill.

The location for the signing, which was attended by numerous lawmakers, was not an accident. It is the same room where casino gambling was legalized by the Legislature more than 80 years ago.

Assembly Majority Leader William Horne, D-Las Vegas, who sponsored the bill, took a poke at the Garden State in his brief remarks at the ceremony.

"As to our competitor New Jersey, they should be accustomed to following Nevada," he said.

GOVERNOR SEEKS 'NEW FRONTIER'

Sandoval earlier had testified in person in support of the bill at the joint hearing of the Assembly and Senate Judiciary committees.

He had asked the Legislature in his State of the State address to pass an online gaming bill within 30 days. Lawmakers got the job done in 18 days.

Sandoval called online gaming the "new frontier" for the industry.

"This legislation today finally opens the door to allow Nevada licensees or those who would get licensed in this area, to engage in online gaming," he said. "It's important because there are other states that are looking at this as well, specifically New Jersey.

"We're not trying to be first for the sake of being first but we are prepared to move forward," Sandoval said.

Online gaming won't start up immediately, however. The Nevada Gaming Commission will have to adopt regulations implementing some aspects of the interactive gaming law.

Nevada allows interactive gaming within the state based on 2011 legislation, said A.G. Burnett, chairman of the Nevada State Gaming Commission. The new legislation removes regulatory barriers impeding interstate online gaming, he said.

The bill is viewed as critical to Nevada's economy because it will enable existing licensed gaming companies to take the lead in making online poker available around the country, potentially giving them a competitive advantage over operators in other states.

Horne said in testimony at the joint committee hearing that online gaming will generate new jobs, $3 million in tax revenue and create an economic output between $10 million and $15 million.

BILL, SANDOVAL PRAISED

Horne praised the cooperation with Sandoval on the issue and said he hoped it was a sign of further cooperation on other critical issues facing Nevada.

In remarks in the Assembly before the vote, Horne said the bill will allow Nevada to continue to be the leader in gaming around the country and world.

"Not only are we showing our Nevadans that we can work well together, but we'll be showing the nation and the world that Nevada is serious about its gaming and gaming regulation," he said.

Assemblyman Jim Wheeler, R-Gardnerville, a member of the Judiciary Committee, urged his colleagues to support the bill.

"Since the inception of legalized gaming, Nevada has always led the way in sensible yet strict regulation," he said. "As new technology has entered the gaming arena, Nevada has continued to lead the way. We now have the opportunity to once again show the world that this bipartisan bill will ensure that the great state of Nevada is the true gold standard in gaming."

Senators from both parties were equally supportive in their comments before the vote. The bill was supported by the Nevada Resort Association.

Pete Ernaut, president of government affairs for R&R Partners and representing the gaming association, said the new law gives Nevada casinos and others who want to get licensed here and engage in interactive gaming a chance to compete in the new economic opportunity.

It requires a higher level of scrutiny for those who may have operated illegal online gaming operations in violation of federal law before they could become licensed in Nevada.

Those who operated online gaming with U.S. patrons would not be able to get a Nevada license for five years, with some possible exceptions.

Ernaut said that without such scrutiny, those operators would have an advantage because they have amassed player data while other gaming operations were following the rules. That head start might be a fatal advantage over Nevada licensees, he said.

The bill allows Nevada licensees to enter compacts with other states that have a player base.

"And that's really the issue for us," Ernaut said. "It's imperative for the success of this that we compact with other states because we don't have a universe of players. So for us, what we get to offer to a state like California or Texas, is that we have the most mature regulatory infrastructure. We have the most mature financial, auditing and collection capabilities, much greater than some of those states, and they have the players."

THORNY ISSUE RESOLVED

The bill as originally introduced by Horne created a conflict with Sandoval over the level of fees to be charged for those seeking an online gaming license.

Sandoval wanted a $500,000 initial license fee while Horne proposed a $1 million fee.

In an agreement reached before the hearing, the fee was set at $500,000, although the Nevada Gaming Commission will be able to increase or decrease the fees under some circumstances.

The agreement also saidthat the application fees could never rise above $1 million or fall below $150,000.

The renewal fee is set at $250,000 instead of the $500,000 proposed by Horne. Horne said that because Congress has failed to act on the issue, Nevada has to take action.

"Passing this bill incentivizes online gaming companies to be headquartered in our state," he said.

In his testimony, Sandoval said the bill offers Nevada gaming companies the opportunity to reach thousands, if not millions, of new customers. He also said it will drive more visitors to Nevada.

"The potential is extraordinary," Sandoval said. "It is vital that we move quickly."


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Sean Whaley
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