05/25/2006 11:00PM

Internet remains untapped gold mine

Email

Nevada gaming companies are enjoying unprecedented growth and prosperity - an enviable position for any business. Records keep falling for number of visitors and revenue for both local and tourist destinations in the state. These conditions are fueling mega-mergers and multibillion-dollar expansions in Las Vegas. And, these gaming giants continue to look for further investments throughout the world.

There is no doubt that the proliferation of gaming elsewhere - from Indian casinos to riverboats to Gulf Coast gaming - has led to growth in the Las Vegas market. Ever since the Atlantic City revelation - that casinos across the country serve as feeders rather than competition - Nevada gaming companies have realized that the more gaming the better for them.

But there is one market that Nevada gaming companies have not been able to capitalize on:

Internet gaming. As American-based companies, Nevada's biggest brick-and-mortar proprietors are prohibited from taking bets over the Internet. They have managed to take their product into the neighborhood, but not the living room.

Those Internet gaming companies operating at the present time - which conservatively number in the thousands - do so beyond the purview of U.S. laws in foreign countries that enjoy income from those enterprises. Meanwhile, while Americans contribute a good chunk of the estimated $12 billion bet annually over the Internet, the government does not benefit by a penny from that action.

With Internet gaming projections doubling in the next few years, a House of Representatives committee approved a bill on Thursday that would prohibit most forms of Internet gaming. The bill - which provides exemptions for horse racing - would outlaw electronic funds transfers from banks and credit cards to Internet gaming companies.

On the surface this may be viewed as beneficial to American gaming companies, but it still keeps them out of the lucrative Internet gaming market. Thus, the political climate was right to make a preemptive play. On Wednesday, three Nevada members of the House introduced their own bill. The Nevada version would create a federal study commission on Internet gambling. This maneuver was a result of a shift in position by the American Gaming Association, which is the casino industry's lobbying organization. The proposed nine-member Gambling Study Commission would be given 1 1/2 years to explore the legal and economic impact of Internet gaming in America and possible regulatory recommendations, with an eye on possibly allowing U.S. gaming companies entry into the Internet gaming business. Also to be addressed are a mechanism for taxation, prevention of underage betting, and money laundering concerns.

Ralph Siraco is turf editor for the Las Vegas Sun and host of the Race Day Las Vegas radio show.