INTERNET GAMBLING VENTURE FACES CHALLENGES

Thursday, November 02, 2000

By KEVIN FERGUSON
lasvegas.com/GAMING WIRE

   LAS VEGAS - It has been done before, but with innocuous souvenir 
items and minimal success.
   This time the idea of licensing the city of Las Vegas seal to a private
business has created a new set of issues.
   Many question if it's ethical to lend the city's seal to a Web-based casino, vegasone.com, a business that legally cannot cater to U.S.-based gamblers.
    "I think it's a contradiction to have an online gambling site with 
a Las Vegas city seal when Internet gaming is illegal in Nevada," 
said Brian Sandoval, chairman of the Nevada Gaming Commission.
     Nevada gaming regulators would have no jurisdiction over 
vegasone.com, because operators of the site intend for it to be based 
in Australia.
    Yet, some continue to doubt that Web-based casinos can effectively 
bar minors or U.S.-based gamblers, often citing a past sting 
operation by Nevada regulators on one of its licensees, sports book 
operator American Wagering.
    "I don't feel the technology could be put in place to keep out 
people who live in jurisdictions where its illegal, based on the 
Australian case that allowed someone to place a bet going through a 
Canadian business," Councilwoman Lynette Boggs McDonald said at a 
recent council meeting.
    In a July 1999 case, a Nevada Gaming Control Board in Las Vegas 
opened an Internet account using a Canadian Internet service 
provider, and opened a wagering account under a fictitious name with 
Megasports Australia.
    As a result, American Wagering, the owners of Australian e-betting 
site, were ordered by the Nevada Gaming Control Board to divest 
itself of the Australian Internet business.
    Sebastian Sinclair, an Internet gaming analyst of New York-based 
Christiansen Capital Advisors, said there is "no magic bullet" to 
block U.S.-based gamblers  from accessing a site, but there are safer 
solutions than what was being used by American Wagering.
     "The best security options are the ones that are being used for 
fraud protection," Sinclair said.
    James Jimmerson, a lawyer and board member of vegasone.com, said 
the site would have a "military strength" firewall to keep out 
hackers, comparing it to just below financial institution security.
     The company's board is loaded with former Nevada casino chiefs, 
such as Dan Reichartz, formerly of Caesars Palace, and Larry Woolf, 
of MGM Mirage forerunner MGM Grand Inc.
    Vegasone.com's initiative lost steam this week when Mayor Oscar 
Goodman and Councilman Michael Mack said potential conflicts of 
interest have forced them to withdraw from the debate, vegasone.com 
executives still hope to win over a shaky council on Nov. 15.
    If the majority of the five remaining council members rule in 
favor of vegasone.com, this won't be the first time the city has 
licensed its seal to a private business.
   Four years ago, city officials licensed it to Global Licensing 
Ltd., which allowed the company to set up contracts with souvenir 
retailers seeking the city seal.
    But the deal wasn't the jackpot the city had hoped, minting about 
$20,000 in four years of selling items like T-shirts, hats and other 
touristy souvenirs.
   "It didn't happen on the grand scale that we had hoped," said Bob 
Hasegawa,  manager of business operations.
    Under the contract, the retailers agreed to pay a 7 percent 
royalty fee on all items that advertised the seal. The city received 
60 percent of the royalty fee. The contract expired last February.
    City Attorney Brad Jerbic said the deal was granted the go ahead 
after the City Council discussed it at a public meeting.
He noted that is the role of the City Council.
    "The seal is owned by the city of Las Vegas, and the City Council 
is charged with making decisions with city affairs and city marks, 
including the city seal," Jerbic said.
    What's unique in the vegasone.com debate, the company is seeking 
an exclusive licensing agreement without going through a competitive 
bid process. Some council members doubt the fairness of such a deal.
    "I question the role of government," Councilman Larry Brown said. 
"We are being asked to partner with a company that will compete with 
other companies in the industry."

-- 
Dave Berns
Editor/Writer
lasvegas.com Gaming Wire
Direct: 702-380-4543
Fax: 702-383-4676

Website: http://www.lasvegas.com/gamingwire/
Email: gamingwire@lasvegas.com
Phone: (702) 383-0478
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