Tuesday, July 25, 2006

Nevada gaming regulators need to get tough, in a hurry. The state's Gaming
Control Board takes great pride in being strict enforcers of the rules that
govern Nevada gambling. And they are - for the most part. But the meteoric
growth of the poker business has blinded the gaming industry's cops, and
they seem unable to deal with the new realities that have accompanied the
rise of Internet poker. Playing poker online for money is illegal in Nevada,
according to state law, and the federal government says it is illegal
everywhere in the United States, a stance the online poker business hopes
the courts will overturn. Nevada gaming regulators originally took a tough
stand against Internet poker. They forced prospective gaming license
applicants to sell their ownership stakes in online casinos. They prohibited
poker tournaments in state casinos from licensing online poker rooms to
conduct official satellite tournaments that send winners to play in Nevada
events. They did so because almost every top Web poker room accepts bets
from the United States, including Nevada. Regulators considered the poker
Web sites to be lawbreakers. That was when the online poker business was
still relatively small. But after Tennessee accountant Chris Moneymaker
parlayed his $40 PokerStars satellite victory into a (non-officially
sanctioned) entry into the 2003 World Series of Poker championship event at
Binion's Horseshoe and took down the top prize of $2.5 million, the online
business exploded. Online poker sites ran countless commercials on the
dozens of hours of televised poker shows available each week.

The revenue stream fueled more poker TV shows. With Moneymaker's win and the
TV exposure, Web poker boomed, as did revenue in Las Vegas poker rooms and
the tournaments they held.

The World Series of Poker championship event drew 839 entries in 2003, a
number that jumped to 2,576 in 2004, 5,519 last year and is expected to
reach 8,000 or more this year.

Those skyrocketing numbers have been driven by online sites.

One week ago PokerStars held a single online satellite tournament that will
send an incredible 234 players into this year's WSOP $10,000-entry
championship event. Dozens of other sites will send thousands more entrants.

What I find astonishing is that the Gaming Control Board allows the
properties hosting major poker events to ally themselves so closely with
poker Web sites that invite players to break the law.

At the WSOP, now under way at the Rio, Harrah's sold official hospitality
rooms just steps away from the poker competition to several online poker
rooms: Doyle's Room, Bodog and Ultimatebet. Other sites rent luxurious
suites at the host hotel, the Rio.

. . .

From the felt tops of the WSOP poker tables, which feature a PartyPoker
logo, to World Series media director Nolan Dalla, also a top spokesman for
PokerStars, the incestuous relationship between legal Nevada casino poker
and illegal online poker has never been clearer.

Harrah's can get away with the close partnerships because the online
operators use their Web sites' "dot net" suffix, meaning that they call
themselves by the names of their "educational" sister sites that offer free
play instead of poker for money.

Ultimatebet.com, where you can bet, with a wink becomes Ultimatebet.net,
where you can't. So Harrah's isn't technically partnering with illegal
operators, and regulators aren't technically allowing a rule-breaking
partnership.

Control Board Chairman Dennis Neilander says the distinction between the
dot-coms and the dot-nets matters and that regulators don't see a problem
with the dot-net marketing at the WSOP.

He's wrong. The dot-net distinction shouldn't make a difference. Nevada
casino operators shouldn't be partnering with illegal online casino
operators - or their shadow sites.

It's time for Nevada regulators to say enough is enough and prove they still
have the backbone to stand up to the big money of online casinos.