U.S. online gambling proponents are cautiously hopeful that a longstanding legal logjam is beginning to break up, allowing the legitimacy the Internet casino industry craves to flow and make it a major player in the business-to-consumer market.
Last week, the Nevada legislature approved a landmark bill that would allow Nevada residents to gamble on the Internet. However, Nevada casinos or other organizations wishing to offer online wagering would be subject to a rigorous set of approvals by the Nevada Gaming Commission.
"It changed the whole dynamic of the industry," said Paul Lavers, CEO of Covers.com, a company that sells sports statistics to online gambling sites. "Its like coming out of the closet."
Nevada Gov. Kenny Guinn has not indicated whether he will sign the bill into law, but a growing array of brick-and-mortar casinos, including Harrahs Entertainment and MGM Entertainment, are quietly pushing for the regulatory latitude to take bets in cyberspace.
The issue is market share. An estimated 1,400 to 1,800 gambling parlors reside on the Net, all operated overseas or in the Caribbean by small shops because of concerns over the 1961 Wire Act, a federal law that outlaws the transmission of some types of bets over state lines in the U.S.
The industry is booming. According to River City Group, online casinos brought in $2.2 billion in 2000, and will likely attract $3.1 billion this year. Half of that money comes from U.S. bettors, and a growing number of American land-based casinos want their share.
Until recently, U.S. casinos maintained a staunchly protectionist stance against online competitors. The American Gaming Association has been a key supporter of federal legislation to outlaw cybergambling. But such legislation has thus far failed to pass Congress, and now the AGA appears to be having a change of heart.
"Its no secret that some members are aggressively pro-Internet," said AGA President Frank Fahrenkopf, who confirmed that if Nevada successfully establishes strong regulatory oversight of Net gambling, his organization would support it.
But the path to Internet gambling across the U.S. is far from clear. If the Nevada bill becomes law, the Nevada Gaming Commission has the daunting task of affirming that technology and systems are available to ensure that such games would be fair, hackproof, available only to state residents and closed to minors.
Nevada is currently the only state close to allowing its citizens to legally place bets in cyberspace. Each state must come to its own conclusion, and legal experts are unsure how state laws will be affected by the Wire Act.