Tuesday, July 20, 2010

Online Gambling is Illegal, But Betting Sites’ Logos Often in Nevada Casinos

July 13, 2010: summarized from Las Vegas Sun -- Black-market online gambling companies have a considerable presence on the stage that is Las Vegas.

Those who watched the start of the World Series of Poker main event at the Rio this month were just as likely to see logos for online gambling companies as they were to see the tournament’s ubiquitous poker chip icon.

Internet casinos pay tournament winners, celebrity players and other high-profile gamblers to wear their logos, and wannabes wind up wearing a lot of the same logos.

Despite the federal government’s long-standing position that online gambling is illegal, such brand advertising has moved into the mainstream, with logos appearing on the shorts of mixed martial arts fighters, the green felt of gaming tables and advertising banners adorning Las Vegas casinos.

Lately, some area casinos have entered into sponsorship deals with online gambling sites and the celebrity poker players hired to promote them.

Now, the Nevada Gaming Control Board is taking a closer look at many of those arrangements.

One primary target of the Control Board’s recent attention is the Venetian, which hosted a traveling poker tournament in February sponsored by PokerStars.net.

Years ago, gambling companies created separate, free-play tutorial websites ending in “.net” — thinking they would be protected from federal government prosecution. American broadcasters and Nevada gaming regulators have historically accepted this form of advertising because these Web portals don’t offer real-money gambling. And yet, while ads for these .net Internet poker sites continue to be broadcast on American TV, the Control Board, upon further investigation of such sites, has more recently concluded that there’s little difference between .com and .net sites because they are owned by some of the same corporate entities and individuals.

Control Board member Randall Sayre takes a dim view of .net sites.

“We are concerned that Nevada licensees are associating with companies that are ... purposefully violating the law,” by continuing to accept wagers from Americans even as they advertise .net sites in this country, Sayre says.

Whether a casino company is violating state law by affiliating with a .net site would depend on how the relationship is structured, he adds.

Sayre clarified the Control Board’s position on Internet gambling relationships in May when he responded to a query from a casino company (which the board will not name) and distributed his written response to the Nevada casino industry.

The Venetian then dissolved its sponsorship arrangement with PokerStars and its North American Poker Tour.

“We don’t have any current relationships with any of the online companies. Obviously, we’re going to follow” the Control Board’s lead, Venetian spokesman Ron Reese says.

Sayre won’t comment on the Venetian deal or discuss any other specific casinos and their advertising or marketing arrangements, though he said some casinos are in the process of dismantling or changing contract terms.

His letter urges the industry to be cautious. The Justice Department “has shown no indication of relaxing its position and interpretation that Internet gambling in any form is illegal in the United States,” the letter notes.

The ubiquity of online gambling brands in Las Vegas remains a murky subject, in part because of the Control Board’s unwillingness to comment on specific casinos or deals that cross the line in favor of pursuing private discussions with casino companies. The May letter notes that the board is “assessing these relationships on a case-by-case basis ...”

The federal government has taken the lead on Internet gambling by charging online gambling operators with money laundering and mail fraud, among other infractions. Internet gambling is, after all, an interstate, even global, enterprise. Nevada regulators, lacking the resources, jurisdiction or will to prosecute offshore gambling companies — have taken a backseat role. Still, the Control Board has a requirement to ensure that Nevada casinos aren’t doing business with illegal entities, Sayre says.

Nevada’s two largest casino companies, Harrah’s Entertainment and MGM Resorts International, have been careful in recent years not to enter into direct deals with Internet gambling companies that accept bets from Americans, even as they urge lawmakers to legalize Internet gambling so they can capitalize on demand and diversify their bricks-and-mortar casino empires.

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