GamblingCompliance: Nevada’s Sandoval Lobbies Sessions Over Online Regulation

2ND MAY 2017 | WRITTEN BY: CHRIS SIEROTY

With a 2011 Department of Justice legal memo under review, Nevada Governor Brian Sandoval has assured U.S. Attorney General Jeff Sessions that online gaming is well regulated and that controls on underage gambling and geo-location are working effectively.

Sandoval spent several days last week in Washington, D.C. meeting with Sessions, U.S. Department of Energy Secretary Rick Perry and Environmental Protection Agency Administrator Scott Pruitt, while also having a working breakfast at the White House.

“We talked about internet gaming and I reminded [Sessions] that I’m a former chairman of the Nevada Gaming Commission and I have personally worked on and sponsored a bill that allowed for interstate poker,” Sandoval said.

The governor noted he has also negotiated an interstate compact with Delaware, a decision that has “worked extremely well.”

“I am not aware of any issues associated with underage gaming with regard to internet poker and [players having] access to those sites that don’t live within the borders of Nevada,” the two-term Republican governor said.

Sandoval also said he told Sessions that Nevada has been “better than anybody in the country, if not the world, when it comes to the regulation of gaming.”

The meeting between Sandoval and Sessions came amid rumors that the attorney general, a former U.S. Senator from Alabama, is mulling a move to overturn the 2011 U.S. Department of Justice legal opinion that allows states to regulate online casino, poker and lottery games.

At his Senate confirmation hearing in January, Sessions said he was not a fan of the memo finding that the 1961 Wire Act only applies to online sports betting.

Still, Anthony Cabot, a partner with law firm Lewis Roca Rothgerber Christie in Las Vegas, said several problems exist with the notion that Sessions can simply change the 2011 opinion.

Cabot noted that the Fifth Circuit U.S. Court of Appeals already decided in a 2002 case involving Mastercard that the Wire Act only applies to sports.

“Therefore, the branch of government that has primary responsibility for interpreting the law already has done so consistent with the 2011 opinion.”

In addition, the 2011 opinion, besides being correct, is extremely well researched and reasoned, according to Cabot.

“It will be difficult to even conceive of how this attorney general will justify a reversal on a purely analytical basis,” Cabot said.

Any move will draw criticism due to the interest of Sheldon Adelson, the influential Republican Party donor and chairman of Las Vegas Sands, in the topic of online gambling.

“No matter how hard online casinos try to cover it up, bad actors from all over the world continue to hack internet games,” John Ashbrook, a spokesman for the Coalition to Stop Internet Gambling.

“And we’re hopeful that the Department of Justice will reverse the Obama-era overreach that exposed Americans to a dangerous set of online predators.”

The Coalition to Stop Internet Gambling, a group supported by Las Vegas Sands, continues to lobby lawmakers to ban online gambling.

Jeff Ifrah, founder of Ifrah Law in Washington, D.C., said Sessions has always been a “keen advocate for state’s rights” as a U.S. senator and predicted “he will continue to be that advocate as our attorney general.”

“Were the DOJ memo to be rewritten to suggest the federal Wire Act can be used to prosecute non-sports betting related activity, such as poker and casino gaming, or even online lottery games, our federal courts will be called upon for their analysis of that question,” Ifrah said.

“Previously, two federal courts of appeal have reasoned that the language of the Wire Act is narrow and applies only to sports-betting related activity.”

Sandoval had already pushed back against a potential move to ban online gambling in his capacity as vice-chairman of the National Governors’ Association (NGA).

The NGA sent Sessions a letter last month requesting he leave decisions over online gambling policy to the states, not the federal government.

“As you review this issue, we encourage you to take note of the current regulatory mechanisms put in place by the states to ensure that consumers and children are protected, and that licensees comply with strict standards of conduct,” Sandoval and NGA chairman Governor Terry McAuliffe, a Democrat from Virginia, wrote.

The letter also warned Sessions that a federal “ban drives this activity offshore to unregulated markets.”

Since 2011, only Nevada, New Jersey and Delaware have legalized online poker and casino games, with a handful of state lotteries moving online as well.

But other states, including Pennsylvania, are considering legislation, while gaming experts also warn of wider fallout from any move to alter the scope of the Wire Act.

“Although the reversal of the DOJ’s 2011 memo might have minimal impact on interactive (internet) gaming in Nevada because of the current restriction to poker, it could certainly have an impact on the ability to conduct intrastate sports wagering, server-based gaming, account wagering, and other emerging wagering technologies in the state,” said Jennifer Roberts, associate director of the UNLV International Center for Gaming Regulation.

“Clearly, a reversal would have a much greater impact on the revived growth in New Jersey’s gaming market, as well as those states offering online lottery products,” Roberts said.

In the short term, David Schwartz, director for the Center for Gaming Research at UNLV, said any reversal would have a small negative effect.

“Poker is about 1 percent of the total gaming win, and online is a fraction of that,” Schwartz said.

“Long term, though, there could be negative consequences for Las Vegas-based companies, as this would inhibit efforts to roll out a wider menu of online offerings in Nevada, eliminate revenue sources from states where it is already legal, and complicate efforts to legalize it in new states,” Schwartz said.

Besides online gaming, Sandoval also used his visit to the nation’s capital to reiterate his “absolute opposition” to a proposed nuclear waste repository at Yucca Mountain and urged Perry to explore an alternative to deal with the “nation’s nuclear waste problem.”

Sandoval and the American Gaming Association (AGA) are opposed to the Energy Department operating a storage facility some 90 miles north of Las Vegas. The area is one of the nation’s top tourist destinations, drawing 43m tourists annually and generating $59bn in revenue, according to the Las Vegas Convention and Visitors Authority.

Sandoval told reporters on Friday that he made it extremely clear to Perry that “whether we’re friends or not, we’re not friends on this, that I would do everything in my power to oppose the project.”

Sandoval also warned Perry, a former Texas governor, that Nevada would use “every legal opportunity at our disposal to attack the assigning of the Yucca Mountain as a high level nuclear repository in our state.”

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