While many of the traditional heavyweights in the gaming industry have been positioning themselves nicely in preparation of the legalization of Internet gambling in Nevada, the state's Attorney General has voiced opposition to such a plan.
That opposition has come down in the form of a legal opinion in which the Attorney General's office feels the free-play sites that such heavy hitters as Harrah's and MGM operate, could be in violation of state law.
But, one leading attorney for the gaming industry feels the opinion may not have as many teeth to it may first appear.
The opinion was the result of a meeting with MGM officials who were seeking some legal clarification from the Nevada Gaming Commission regarding the company's websites.
The sites will soon feature play-for-free casino games developed by WagerWorks, a subsidiary of Silicon Gaming. The sites cannot legally get users to pay up front to play the games, so they entice users with reward points and other incentives. Some even enter users in drawings for prizes; the longer a player plays, or the more he wins, the more chances he gets in the drawing.
It is this aspect of the sites that has drawn the ire from the Attorney General's office. The opinion letter, written by Senior Deputy Attorney General Jeff Rodefer, says that casinos can't offer free gambling on the Internet if the outcome of the game results in a player getting prizes, even if no money was bet up front.
The opinion has four sections. The issue of awarding play credits, casino points, tickets and instant incentives are all touched on in the opinion.
Gaming attorney Tony Cabot says the heart of the nine-page opinion is in one sentence: "As long as tickets are always paid out," the opinion reads, "then the related electronic or computer equipment may be administratively approved pursuant to the conditions that the Board Chairman deems appropriate or necessary."
"They basically are saying that players can't lose any more credits than they start with, but can win them, and if you want to use it for promotional reasons, it needs to get approval," says Cabot.
Rodefer did point out that the opinion is not a law.
"This is an opinion between the Attorney General's office and the Gaming Control Board," he said. "There are no laws that cover this so the Attorney General has to look at what laws do exist and determine what course of action needs to be taken."
The opinion makes it clear that no money has to actually be bet in order for a wager to occur. It says that if a reward of any kind is given to a player as a direct result of a game, then a wager has been made, even if no money was placed beforehand.
The opinion does allow for operators to continue their free-play sections, just under some ratification.
According to the Attorney General operators are in the clear if they reward players for visiting the site and exploring what it has to offer. But the opinion makes it very clear that any type of a point or reward system must be predicated on the user visiting the site and not winning games.
The opinion also says that if nonnegotiable or non-redeemable "play credits" are given for free, they do represent value. If those free credits are increased as a player wins a virtual game, then a wager has been made.
Conversely, if the same type of system is set up, but instead gives players redeemable tickets or chances for a sweepstakes or drawing, the Attorney General advises, then there is no violation of law--even if the points are related to a marketing or promotional campaign.
"The (Gaming) Commission does not currently license the Internet gaming activity that is directly connected to the proposed promotion," the opinion states. "Until such time as the commission licenses the Internet games, any drawing, sweepstakes or related prize distribution associated therewith is impermissible as a matter of law."
Cabot feels the Attorney General's opinion is the result of a growing market.
"There are a number of sites offering promotional gambling," he said. "One of them (MGM) wanted to know what all they could do, and the Attorney General said, 'OK, here you go.'"
Cabot did predict that it would take two to three weeks before the gaming industry is able to determine what to make of the opinion.
"It will be a few weeks before the industry can digest it," he said. "But, I think a lot of questions will be raised from this."
Click here to view the opinion letter.