Economist: State can gain millions with Internet poker
An economist says ailing Nevada stands to gain millions in tax revenue if it regulates and develops the multibillion-dollar online poker industry, but detractors – including some of the most powerful Las Vegas casinos – called the bill on the table premature and said it could chew away at brick-and-mortar businesses.
The economic analysis came Thursday as a legislative panel heard Assembly Bill 258, which would call on the Nevada Gaming Commission to create rules for Internet poker operators and manufacturers of related equipment. After U.S. Sen. Harry Reid’s attempt to set federal regulations on the quasi-legal Internet gambling industry fell flat late last year, several states are pushing their own bills.
It’s stoking the fires of competition in a state considered the nation’s leader when it comes to gambling regulation.
“Make no mistake – this is about Nevada jobs, Nevada revenue and Nevada pride,” said
former state Assembly Speaker Richard Perkins, who is lobbying for PokerStars. “Other states are going to leapfrog us.”
The bill would prohibit the commission from denying a license to existing poker sites such as PokerStars just because they have been operating offshore and offering online gambling to Americans in a legal gray area after a federal law effectively banned online gambling in 2006.
Economist Jeremy Aguero estimated the state could collect between $2 million and $3.4 million in taxes annually if online poker is legalized in Nevada, and up to $65 million if it captured a quarter of the international market.
The economic possibilities go beyond tax revenue, Aguero said. If the state sets up a structure requiring licensed online poker operators to be headquartered in Nevada, an estimated 1,200 direct jobs and $77 million in direct wages could result.
In another scenario, Nevada could require all online poker operators to make a minimum capital investment in Nevada, Aguero said. That projection shows 3,400 direct new jobs, $200 million in direct wages and about $1.3 billion in total economic activity.
“This may be the single largest step you can take to get Nevada back on track,” Perkins said.
But opponents including the Nevada Resort Association said the bill on the table – which would legalize Internet gambling within the state – would set up an industry that would eat away business from brick-and-mortar casinos until other states or the federal government legalize the practice and grow the U.S. market.
“We want this industry to flourish. We want partnerships,” said Pete Ernaut, lobbyist for the resort association. “We’re just asking you to do it in the right order.”
Ernaut also questioned the legality of setting state regulations in light of the federal law, but bill supporters pushed aside the objections.
“What does the law really say? It’s really a murky and gray area,” said Scott Scherer, a lawyer for PokerStars.
A lawyer with the Poker Players Alliance, which announced its support of the bill Thursday, said the Department of Justice has issued a press release condemning Internet poker, but is ambiguous in the law and would likely not prosecute Nevada for developing the gambling rules.
Gaming Control Board Chairman Mark Lipparelli acknowledged the board already has the authority to create the kind of regulations outlined in AB258. But the process is lengthy and involved, and the board has not taken on the task of its own volition.
The Nevada Gaming Commission on Thursday marked a milestone in approving a business relationship between Caesars Entertainment Corp. and 888 Holdings PLC, a London company that runs online gambling sites in the United Kingdom. It’s the first relationship Nevada regulators have approved between a casino company and an Internet gambling operator.
The bill’s sponsor, William Horne, D-Las Vegas, said the bill would give the board specific direction to start the process – and the sooner, he said, the better.
“I believe the issue with the opposition is one of competition,” Horne said. “Nevadans that are out of work and would enjoy these employment opportunities can’t wait 18 months.”