CITY COUNCIL HEARS 'NET GAMBLING PLAN

By KEVIN FERGUSON
lasvegas.com GAMING WIRE

Monday, October 30, 2000
   
   LAS VEGAS - A proposed Internet gambling site with ties to the city 
of the Las Vegas could have a three-month trial period.
   Mayor Oscar Goodman proposed the test run during a Monday City 
Council meeting to consider whether such a site should operate with 
the city's official name and seal.
   Las Vegas lawyer James Jimmerson, who represents a group of 
longtime casino executives pushing the plan, said he was unsure 
whether his clients would approve a trial period.
   "My suspicion is that they would support it," Jimmerson said 
following the afternoon meeting, "but I don't want to overstep my 
bounds."
   City officials are considering the proposal by vegasone.com to lend 
Las Vegas' official seal to the site, as part of a money-making 
effort to raise millions of dollars for city programs.
    Las Vegas casino industry lawyer Tony Cabot, who represents 
developers of the proposed site, said the Web address could 
conservatively generate $360 million a year, with $90 million going 
to the city of Las Vegas.
   Last spring, the City Council approved a $321 million budget for 
the current fiscal year.
    According to the terms of their proposed licensing agreement with 
the city, the group of Las Vegas-based executives would use the city 
of Las Vegas name and official seal on their vegasone.com Web site in 
exchange for 5 percent of the site's gross revenues and 25 percent of 
its profits.
    Company executives believe the seal would give their site a 
competitive edge with skeptical online gamblers who are wary of many 
of the estimated 1,000 Internet betting sites.
    City Councilman Larry Brown questioned Monday if the city should 
join with a private company in a business venture.
    "Where do we draw the line between partnering with a company and 
overseeing it? What is our role as a government agency?" Brown 
wondered aloud. "I'm interested in moving forward with this, but we 
need to move forward incrementally. I'd like to see more public 
dialogue of what we are contemplating."
   The company's board of directors includes Jimmerson; former Caesars 
Palace boss Dan Reichartz; ex-MGM Grand boss Larry Woolf; former 
Nevada Gaming Control Board Chairman Phil Hannifin; International 
Game Technology founder Si Redd; and USA Capital's Tom Hantges. 
Hannifin is vegasone.com's chairman, and Redd is the vice chairman.
     Jimmerson said USA Capital's Hantges has committed $20 million 
toward the venture.
    Citing figures from the Wall Street Investment banking firm of 
Bear, Stearns & Co., Cabot predicted that Internet gambling will 
generate $6.3 billion in yearly revenues by 2003.
    "If 50 percent of those bets are being made by the U.S., and we 
garner just 10 percent, that's $360 million," Cabot said.
   Jimmerson said he will tell the council Wednesday whether his 
client's will agree to the proposed trial period although board 
member Woolf said Monday evening it was too early to say if he'd 
support such a move.
    "We would be willing to look at the issue very closely, but I 
can't give an answer since I wasn't at the (City Council) meeting and 
am not aware of the context in which it was given," Woolf said.
    Jimmerson said he doesn't see any reason why his fellow board 
members would not accept a practice run.
   "They may ask for a longer trial period, like a year," he said, 
"but I'm sure they are willing to work with the city."
   The City Council would have to vote to determine whether the city's 
seal could be placed on the site.
    Ten people testified at Monday's public hearing, with several 
wondering whether the city would be held liable if minors and others 
accessing the site from within U.S. borders were caught gambling.
    Lawyers at the U.S. Justice Department believe federal law 
prohibits Internet gambling within U.S. borders, and legislation 
supported by Sen. Richard Bryan, D-Nev, is working its way through 
the House and Senate to clearly ban Internet gambling within the 
United States.
   Jimmerson said numerous fire walls or security checks would be 
taken to prevent illegal betting and a city-appointed board could 
define acceptable advertising for the site.
   He noted that vegasone.com would be licensed and regulated in 
Australia to avoid Nevada's prohibition against Internet gambling. 
Its Web server would be based overseas, possibly in Australia or 
Europe.
    Council members as well as some residents raised concerns of an 
online gambling site with the Las Vegas' seal possibly harming the 
city's reputation if the site conducted itself in an unethical 
manner, such as accepting X-rated advertisements.
    "I think anything of this magnitude should go to the vote of the 
people," resident Richard Bratton said. "This is very very 
risky."
 

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

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