SOURCE: Las Vegas Sun

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The federal government's crackdown on Internet betting and the passage of last year's Unlawful Internet Gambling Enforcement Act in Congress have driven the online gambling industry further underground.

Some of the largest and most trusted gambling Web sites no longer do business in the United States, leaving the business to privately held offshore operators willing to operate just out of reach of the Justice Department.

U.S. banks and credit card companies also steer clear of Internet gambling transactions, forcing gamblers to set up accounts with offshore banks and credit cards.

The ban that passed Congress last fall further criminalized Internet gambling on a federal level but specifically allows states to pursue their own regulations. It also says bets are legal as long as they begin and end in a jurisdiction where Internet gambling is allowed.

That definition is important because it means the gambling data that travel through the Internet can leave the state, go to computer servers and routers elsewhere and return without violating the law in terms of interstate transactions. "That's an important point because it reduces some uncertainties that may have existed in the past," Las Vegas gaming attorney Tony Cabot said.

Cabot, who has consulted for Internet operators, said the UNLV study may show there are enough gambling dollars going to offshore sites to warrant efforts by the state to tap that revenue.

Besides, he said, state regulation is appropriate. "It's historically been the policy of the state of Nevada to regulate gaming so that we can protect patrons and make sure they get paid when they win," he said.

Some experts say in-state online gambling could eventually spread nationwide much as statewide lotteries proliferated in the 1990s, bypassing federal rules. And some states' systems could link up with others', as with multistate lotteries.

"It's more a matter of when, not if," Las Vegas-based gaming consultant Phil Flaherty said.

If that happens, Nevada - in spite of its free-market opportunities for gambling - may not be the first state to pursue online gambling.

Nevada's population is relatively small compared with other states', such as California's, that would stand to gain more from the gaming and tax revenue generated by residents online.

Internet gambling won't come without some controversy - even in Nevada.

Previous discussions didn't focus on online gambling by locals, which raises the prospect of compulsive gambling as well as convenience gambling.

Neilander said Internet gambling won't be an easy decision for Nevada because it "seems contrary" to the aim of several laws passed in recent years to restrict convenience gambling, including a prohibition on locations for suburban casinos in Las Vegas and a requirement that casinos be built with attached hotels, he said.

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