There are three separate bills recommended for hearing in Nevada legislature, that have relevance to the future of internet gambling, a.k.a “interactive gaming” within the state.

One bill, highlighted in the press recently, was AB268 <full text>. This bill was proposed by Assembly Majority Whip – William Horne, and makes changes to the established Nevada Revised Statues for “interactive gaming” (NRS 463). AB268 was read for the first time in the Assembly Judiciary yesterday, and has now been recommended to Senate Judiciary Committee, but has not yet been scheduled for hearing. This bill is distinctive in that it is for ‘poker only’. It also provides definition for the interstate gambling networks with other jurisdictions outside of Nevada to interface with the intrastate model, taxing 4% of wagers made externally. It states that NGC cannot deny operators solely because they operated interstate/foreign internet gambling commerce with entities unlicensed in the United States. AB268 defines what base regulation the Nevada Gaming Commission must use, and sets the deadline of December 31, 2011 for the establishment of such regulation.

In addition to AB268 internet poker bill, there are two other bills that are in Nevada State Legislature. SB103 and SB218 will be heard this morning (3/11/2011) in the Nevada Senate Judiciary committee at 8:00 AM PST. These bills are both related to “interactive gaming” (see agenda), and attempt to add to and amend NRS 463. Live feed for the NV Senate Judiciary committee hearing for SB103/SB218 on 3/11/2011 in Carson City will be available here at 8AM PST-> View (low speed) || View (high speed).

The second bill, SB103 <full text>, lists amendments/additions to NRS 463.750 for the Nevada Gaming Commission to establish licensing requirements and fees for each “interactive gaming service providers” to act on behalf of a gaming establishment. It does not specify that NGC cannot discriminate against operators that have previously operated internet gambling sites without U.S. licensing, nor does it discuss opening up Nevada’s intranet gambling to other jurisdictions outside of the state.

The third bill, SB218 <full text>, authorizes the Nevada Gaming Control Board to setup and regulation of “hosting centers” as well as the authorization of “service providers” as amendments to NRS 463.750, with the assistance and advisement of the Nevada Gaming Commission. It introduces the terms “hosting centers” (to be defined by NGCB) and “service providers” as new definitions to the NRS. There is discussion of the current technology allowing for “cashless wagering systems for race book/sports book” not on premises of casinos, and states that the NCGB and NGC should be responsive to new technology in the amendment to NRS 463.750. This bill seems to provide a framework and a basis for AB268, and SB103.

These three bills are particularly significant because in January Caesars signed a Statement of Understanding with the Alderney Gambling Control Board Commission on the Channel Islands (article courtesy of Pokerati.com, Stu Hoegner, twitter: @GamingCounsel). In addition, the Nevada Gaming Control Board made a preliminary decision this week to find the relationship between Caesars Interactive (CIE) and online gaming provider, 888 Holding, to be "suitable" under Nevada’s Foreign Gaming Act. The Nevada Gaming Commission must still give their final approval on March 24th. These events, coupled with three separate bills associated with internet gambling shows the momentum that Nevada is experiencing in this sector, just after of NJ Governor Chris Christie vetoing their intrastate gambling bill, and while as efforts in Iowa, Florida, California, and the District of Columbia to regulate online gambling are being made.

Nevada Bill Analysis: AB268, SB103, SB218

Details/links and analysis for the three bills including some background, recent developments, definitions, as well as key similarities and differences between AB268 and SB103 are included here.

Background

The Nevada legislation previously passed internet gambling bill in November 2001 called AB466 (see full bill text). This provides core concepts and definitions which exist in NRS 463 including the definition of “interactive gaming “. This bill provided, but regulations were not formed, and in 2002 the Justice Department warned Nevada that they considered all such “interactive gaming” to be illegal.

Currently the term “interactive gaming” is defined in the Nevada Revised Statues or NRS, as the follows in the NRS Chapter 463 which generally provides for the “Licensing and Control of Gaming”. This gives the core definition of what constitutes gambling off premises of a “licensed gaming establishment” through the usage of technology, which has obvious correlation to using a computer or mobile device to gamble via the internet.

Existing NRS Definition “Interactive Gaming”

From Nevada Revised Statues NRS 463.016425 “Interactive Gaming” definition ->

1. “Interactive gaming” means the conduct of gambling games through the use of communications technology that allows a person, utilizing money, checks, electronic checks, electronic transfers of money, credit cards, debit cards or any other instrumentality, to transmit to a computer information to assist in the placing of a bet or wager and corresponding information related to the display of the game, game outcomes or other similar information. The term does not include the operation of a race book or sports pool that uses communications technology approved by the Board pursuant to regulations adopted by the Commission to accept wagers originating within this state for races, or sporting events or other events.

2. As used in this section, “communications technology” means any method used and the components employed by an establishment to facilitate the transmission of information, including, without limitation, transmission and reception by systems based on wire, cable, radio, microwave, light, optics or computer data networks, including, without limitation, the Internet and intranets.

Recent Developments

In January 2011 Caesars signed a Statement of Understanding with the Alderney Gambling Control Board Commission on the Channel Islands. The AGCC is a jurisdiction that licenses online gambling whose most notable licensee is Full Tilt Poker.

On March 9, 2011, the Nevada Gaming Control Board made a preliminary decision this week to find the relationship between Caesars Interactive (CIE) and online gaming provider, 888 Holding, to be "suitable" under Nevada’s Foreign Gaming Act. This is a significant development for intrastate gambling, but does not give 888/Dragonfish permission to operate directly within Nevada, nor does it speak to the legality of any entity operating an online site within Nevada.

In order for this finding to be complete, the Nevada Gaming Commission must still give their final approval on March 24th.

Proposed NRS Definition: Common to SB103/AB258 “Interactive Gaming Service Provider”

This term is common in both bills SB103 and AB258.

“Interactive gaming service provider” means a person who acts on behalf of an establishment licensed to operate interactivegaming and:

Manages, administers or controls wagers that are initiated, received or made on an interactive gaming system; Manages, administers or controls the games with which wagers that are initiated, received or made on an interactive gaming system are associated; Maintains or operates the software or hardware of an interactive gaming system; Provides the trademarks, trade names, service marks or similar intellectual property under which an establishment Licensed to operate interactive gaming identifies its interactive gaming system to patrons; Provides information regarding persons to an establishment licensed to operate interactive gaming via a database or customer list; or Provides products, services, information or assets to an establishment licensed to operate interactive gaming, and receives therefor a percentage of gaming revenue from the establishment’s interactive gaming system.

Bill Summary: Enacts provisions governing the licensing and operation of Internet poker. (BDR 41-657)

BDR 41-657 Introduced: on Dec 10, 2010

AB258 Introduced: March 10, 2011

Presented by: Assembly Majority Whip William Horne

Fiscal effect on State: YES

Status: Hearing has been requested but not scheduled in Senate Judiciary

Legislative Counsel’s Digest: Existing law authorizes certain gaming establishments to obtain a license to operate interactive gaming. (NRS 463.750) This bill requires the Nevada Gaming Commission to establish by regulation certain provisions authorizing the licensing and operation of Internet poker under certain circumstances.

AB268: Internet Gambling Key Highlights

AB268 is a bill that sets up the concept of “interactive gaming service provider” as a new definition to Chapter 463 of the NRS as defined in the Proposed NRS Section. This bill is specific to internet poker. It defines new terms such as “interactive gaming system” and “internet poker”.

One unique part about this bill is that it provides definition for the interstate gambling networks with other entities outside of Nevada “intrastate model”. If an outside jurisdiction to Nevada wants to conduct interstate gambling with Nevada they need to pay Nevada a 4% tax on Internet poker wages conducted across state lines. In fact it explicitly states that the NCG may license of “interactive gaming service provider” to and entity or their affiliate which has already been licensed to operate Internet poker for a period of more than 2 years accepted by a “recognized regulatory body of another jurisdiction.”

AB268 adds a number of baseline provisions for how NCG should set up their regulations which cover the basic areas such as protecting minors, anti-cheating standards, and accounting and internal controls, as well as establishes a deadline for NGC to implement them at as 12/31/2011.

AB268 states that NGC cannot deny operator solely because before this bill they operated or was associated with interstate/foreign internet gambling commerce with entities unlicensed in the United States prior to AB268 being passed while licensed by another jurisdiction abroad.

Bill Summary: Authorizes a licensed interactive gaming service provider to perform certain actions on behalf of an establishment licensed to operate interactive gaming. (BDR 41-828)

BDR 41-828 Introduced: on Dec 15, 2010

SB103 Introduced: Prefiled Jan 27, 2011 (Prefiled

Bill Status List)

Fiscal effect on State: NO

Status: Initial hearing scheduled in Senate Judiciary Mar. 11, 2011 – 8:00 AM PST – Agenda

Legislative Counsel’s Digest:Existing law authorizes certain gaming establishments to obtain a license to operate interactive gaming and additionally authorizes the licensing of manufacturers of interactive gaming systems and manufacturers of equipment associated with interactive gaming. (NRS 463.750, 463.765)

This bill:

(1) authorizes an interactive gaming service provider to perform certain actions on behalf of an establishment licensed to operate interactive gaming.

(2) requires that a person must obtain a license as an interactive gaming service provider before performing such actions.

This bill also requires the Nevada Gaming Commission to establish by regulation certain provisions concerning:

(1) the licensing requirements

(2) certain fees that an interactive gaming service provider may be required to pay.

SB103 is a bill that sets up the concept of “interactive gaming service provider” as a new definition to Chapter 463 of the NRS as defined in the Proposed NRS Section. It shares this definition with AB268. This bill is not specific to internet poker. It lists amendments/additions to NRS 463.750 for the Nevada Gaming Commission to establish licensing requirements and fees for “interactive gaming service provider” who must have a license to act on behalf of an establishment.

Bill Summary: Revises provisions governing the regulation of gaming. (BDR 41-991)

BDR 41-911 Introduced: on Dec 15, 2010

SB218 Introduced: March 3, 2011

Fiscal effect on State: YES

Status: Initial hearing scheduled in Senate Judiciary Mar. 11, 2011 – 8:00 AM PST – Agenda

Legislative Counsel’s Digest (partial: of relevance to internet gaming):

Under existing law, the Nevada Gaming Commission and the State Gaming Control Board are required to administer state gaming licenses and manufacturers’, sellers’ and distributers’ licenses, and to perform various acts relating to the regulation and control of gaming. (NRS 463.140)

Section 2 of this bill authorizes the Commission to provide by regulation for the operation and registration of hosting centers, which will serve as centers for the operation of certain gaming systems.

Section 3 of this bill authorizes the Commission to provide by regulation for the licensing of service providers, who will assist licensed gaming establishments in providing services to the public with regard to the conduct and exposure of certain games.

SB218: Internet Gambling Key Highlights

SB218 is a bill that authorizes the Nevada Gaming Control Board to setup and regulation of “hosting centers” as well as the authorization of “service providers” as amendments to NRS 463.750 , with the assistance and advisement of the Nevada Gaming Commission. It introduces the terms “hosting centers” (to be defined by NGCB) and “service providers” as new definitions to the NRS. There is discussion of the current technology allowing for “cashless wagering systems for race book/sports book” not on premises of casinos, and states that the NCGB and NGC should be responsive to tech in the amendment to NRS 463.750 .

SB103 and AB268: Items in Common

Definition of “interactive gaming service provider” “Interactive gaming service provider” must have a license to act on behalf of an establishment, which is granted by the NGC.

SB103 and AB268: Key Differences

AB268 is “poker only”; SB103 is not specific of internet poker AB268 provides definition for the interstate gambling networks with other entities outside of Nevada “interstate model” with 4% tax for interstate outside jurisdictions; SB103 does not. AB268 states that NGC cannot deny operator solely because before this bill they operated or was associated with interstate/foreign internet gambling commerce with entities unlicensed in the United States prior to AB268 being passed while licensed by another jurisdiction abroad. SB103 has no such restriction. AB268 is much more specific in defining what base regulation the NGC must use, as well as a deadline for NCG establishing the regulation as December 31, 2011.

Thanks to Chris Krafcik (twitter: @CKrafcik) and Susan Rhodes (twitter: @sdrhodes) for assistance in research and analysis.