For the first time, an open dialogue between the U.S. Department of Justice and the Nevada gaming regulators on the future of Internet gambling in the Silver State is underway.
Lawyers with the Justice Department's Intergovernmental Affairs office received an overview of federal laws in the United States and how they relate to a recently passed Nevada statute that sets up a framework for regulated online gambling. The Gaming Division of the Nevada Attorney General's office prepared the overview.
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"We are just looking for some guidance and clarification."
- Jeffrey R. Rodefer
Assistant Chief Deputy Attorney General, Nevada
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The Nevada legislation came with restrictions. Online casinos could be set up only after the Commission guaranteed that minors and residents in states where Internet gambling is illegal are blocked from accessing the sites and that the activity was deemed legal on a federal level.
Hoping to kick-start a much-needed exchange of ideas between the federal government and Nevada gaming regulators, the Nevada attorney general's office published its overview and sent a copy of it to the Department of Justice. The mailing also included a cover letter asking the department to look over the document and provide some direction for state regulation.
Jeffrey R. Rodefer, an assistant chief deputy attorney general in the attorney general's gaming office, compiled an informative overview.
Rodefer said the impetus for the review was not to make a decision one way or the other on policy. It was more, he said, to get the ball rolling from each side.
"Neither the Nevada Gaming Commission or the Nevada Gaming Control Board is for or against Internet gaming," he said. "They just asked us to look into it on a federal level and there are too many variables for us to be able to say it is or isn't legal."
Much of the problem, according to Rodefer, goes back to the Clinton Administration. He said the White House said Internet gambling was prohibited under federal law, but that it was using a very narrow construction of the Federal Wire Act from 1961.
In theory, it was an acceptable way to deal with the issue until the federal courts started ruling that the Federal Wire Act shouldn't be looked at so narrowly when ruling on cases involving Internet gaming.
Another option for the industry remains a possibility. Much like Congress did with land-based gaming, it could leave the issue of Internet gaming up to the states, but make the activity illegal at the federal level. The bottom line for Nevada, though, is it can't move forward in any direction until it gets some sort of an answer from Washington. Barring a passage of legislate that either regulates and makes legal online gaming, or one that bans it, Nevada regulators are in a waiting pattern.
"We are just looking for some guidance and clarification," Rodefer said. "You can look at all the laws and probably make a case that it is OK to do, but there are a lot of good prosecutors out there that could also prove it is an illegal activity that is in violation of the Wire Act."
Rodefer isn't as pessimistic about the outcome for Internet gambling as the media is making it seem.
The Las Vegas Review Journal reported Friday that gaming regulators had stalled in writing standards and codes for Internet gaming. Rodefer pointed out, however, that everyone involved in the process knew only small progress could be made until the state got a definitive answer from the federal government.
"This has stimulated dialogue between the state of Nevada and the Department of Justice," said Rodefer. He said in response to the mailed article and cover letter, attorneys from
The Intergovernmental Affairs Office (IAO) notified him a week after receiving the overview that it would study the matter and get back to the attorney general's office shortly.
"We aren't expecting anything right away," Rodefer said, "but just the fact that they are looking into it is a step in the right direction."
An official with the IAO said on Friday that the process was ongoing and there was no real time table for when it would come to a conclusion. The representative couldn't comment on what the initial process has resolved.
Having study the issue for over three months, Rodefer said that trying to make sense of how Internet gaming should be approached federally won't be an easy task. He said that after looking at various
levels of previous legislation and court rulings, even he is unsure of what should be deemed right and wrong.
"I really don't know where it will go," he said. "It is the million-dollar question right now."
For the online gaming industry, the answer to that question could lead to even billions of dollars.
Click here to view the Rodefer paper.