Nevada smart to bet on internet gambling

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On Feb. 21, Gov. Brian Sandoval and the Nevada Legislature signed a bill legalizing online gambling in the state of Nevada. This bill, which authorizes Nevada to enter into gaming compacts with other states that also allow internet gambling, will do much more for the state’s economy than many people realize. By potentially netting the state millions of dollars from online poker through casino licensing fees, taxes and tourism from players who wish to participate in physical tournaments, the Nevada Legislature has made a bold and wise decision to re-introduce online gambling at the interstate level.

But first, a history. Fans of online gambling were blindsided in 2006 when the Unlawful Internet Gaming Enforcement Act was slipped into national law in the metaphorical dead of night. It was tacked on to the SAFE Port Act, a bill designed to regulate port security in an effort to contribute to counterterrorism in the post-9/11 climate. Title VII of the act, however, departs completely from this mission. It rules that, in this new period of technological advancement, “new mechanisms for enforcing gambling laws on the internet are necessary,” and it quickly made illegal interstate betting on “games subject to chance” such as poker and fantasy sports. The UIGEA went into law in 2010, much to the outrage of gambling enthusiasts and online poker careerists everywhere.

The Department of Justice has received great criticism for its role in passing the UIGEA. From the way it was slipped in as an aside to a larger unrelated bill to its inability to target the real issues related to online gambling—such as psychological and physical issues related to addiction—the act has done far more damage to the economy than it has helped. Primarily, the act has prevented economic growth in a potentially lucrative field of interactive interstate gambling, and states with legalized gambling in casinos have not been the only ones affected.

The most immediate effect of the act’s passing was the withdrawal of millions of dollars from national and international e-commerce. American players and online gambling hosts (such as Full Tilt and PokerStars) were no longer able to legally operate in the U.S., and many transferred their business overseas. Online poker provides exorbitant revenue to places that have legalized it. Some estimates—such as an article published in Forbes in 2010 just before the full effect of the act was realized—say that the global revenue of poker reached somewhere around $30 billion annually. Not only is the U.S. no longer getting a share of the rake, Nevada, especially Las Vegas, is bearing the brunt of the act’s opportunity costs.

Since the passing of the UIGEA, fewer Americans have found success at the World Series of Poker, and international online poker players have been featured much more prominently as winners of various events in recent years. The amount of money that the World Series of Poker—held at the Rio casino in Las Vegas—brings to the state is in the multimillions, but even so, the UIGEA has prevented many poker hopefuls from honing their skills, which in turn deters thousands upon thousands of players from visiting Nevada during the summer when the poker tournaments take place. The lost tourism revenue alone is enough to reconsider the UIGEA’s continued national implementation.

While Gov. Sandoval’s signature on online gambling legalization in Nevada—and its unanimous support in the legislature—are a good first step to increasing revenue and broadening individual freedoms, the bill doesn’t reach far enough. The current standard of only being able to make compacts with states that have also approved online gambling needs to stretch to international limits. By doing so, both Nevada and the global gambling community will benefit.