In Nevada, online gambling poised to go interstate

Online gambling is poised to go interstate, thanks to a fast-tracked bill in Nevada that Gov. Brian Sandoval (R) signed in to law on Thursday. Not only does the bill legalize some forms of online gaming within the state, it also allows Nevada to negotiate online gambling agreements with other states. 

The bill was signed in to law in the same room where, 80 years ago, Nevada legalized gambling at good old fashioned brick and mortar casinos. Now, the state hopes to get an early advantage within the online frontier. 

“Online gaming is a multibillion dollar industry. We've been missing out for years on that revenue and we hope to start benefitting from it,” said the bill’s sponsor, Nevada state Assemblyman William Horne (D) in an interview with television station KTVN in Reno.

Lawmakers hope online gambling license fees, which will cost $500,000 a pop, will bring new revenue to the state. Prof. Richard McGowan, a gambling industry expert at Boston College, says Nevada is betting that online gaming will not cannibalize the state's real world casinos, but instead help the industry recruit new gamblers. 

“I guess their rationale is that people will like to learn to gamble online, but will want to come to the real thing in Nevada,” he says. 

A federal bill to legalize online gaming across the country failed in congress last year, so for the time being states are tackling the issue piece meal. Besides Nevada, Delaware is the only other state that's legalized online gaming. New Jersey is expected to take action soon. 

As a checkerboard of states emerges, there will be new challenges for online gaming companies required to keep track of who is logging on where, and that could be a lucrative opportunity for geo-tech companies.

“None of these operators want to find out that there’s somebody playing from Idaho, but makes it look they’re in Nevada,” says online gaming consultant Sue Schneider.

Also keeping a close eye on the trend toward legalization are social gaming companies like Zynga, that already have Facebook games where you can use real money to buy credits on virtual slot machines, but -- at least, currently -- can't cash out. As online gambling becomes legal in more parts of the U.S., those companies could start allowing users to bet real money. 

“The way is already paved, and this is going to complete the journey and make it possible to directly gambling online,” says Natasha Dow Schull, a professor at MIT.  Schull worries Facebook could become a potent “gambling gateway,” for its more than 100 million users in the U.S.   

She warns that if you think Facebook is addictive now, think of what it could be like if you could gamble there with real money. 

About the author

Krissy Clark is the senior reporter for Marketplace’s Wealth & Poverty Desk.

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