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States, Feds Warm To Online Gambling

Feb 28, 2013
Originally published on February 28, 2013 12:04 pm

Transcript

RENEE MONTAGNE, HOST:

New Jersey is hoping to hit the jackpot. Governor Chris Christie just signed a new law allowing online gambling. You have to be in the state to gamble there online, though it does save a drive to Atlantic City. And New Jersey's new law follows a similar move in Nevada last week.

To find out more, we called David Schwartz. He's director of the Center for Gaming Research at the University of Nevada, Las Vegas.

Good morning.

DAVID SCHWARTZ: Hi.

MONTAGNE: Hi. How big of a deal is this?

SCHWARTZ: Online gaming in the United States is going to be a big deal. It's not going to change the game right away. Companies have to get regulatory approval, so it'll take a little bit of time. And initially it might not be a huge chunk. In the U.K., they've had legal online gaming since about 2005 and it's about 12 percent of their total market.

So if that followed through to the U.S., it would be about a $12 billion a year business after it has a couple of years to mature. But there's a lot of roadblocks that have to be overcome before that.

MONTAGNE: What about other states, states that have very restricted industries - don't have a lot of casinos? Would they be willing to have in-state online gambling, you know, without the brick-and-mortar parts of it?

SCHWARTZ: Yeah, the interesting thing about online gaming is there's a lot of ways you can do it. You can follow the Nevada-New Jersey model, which is basically the state license and regulates private companies to offer it. Or you can let the lotteries offer it. Or if you're in a state that has a lot of tribal casinos, you could let Indian tribes regulate and offer it.

The fact that Nevada and New Jersey were the first to do this tells me that probably you will have it to be dominated by commercial casino companies.

MONTAGNE: So is there anything particularly tricky about putting gaming online?

SCHWARTZ: Online gaming is a pretty complicated thing because you have to not only verify the identity of the people gambling - so you know that they're not under 21 and they're legally allowed to gamble - but you also have to have a lot of security against fraud - both from the players and potentially from people trying to crack the system and defraud the people running the casinos. So it is not easy to devise these systems.

This is one of the reasons why Nevada operators have been trying to get regulatory approval for their systems for about a year now. And it's not easy. They go through extensive testing because, especially in the first wave of sites coming online, the states would rather have a system that works perfectly and has no scandals than rush somebody through and find out that there's a backdoor and players can get cheated or the operator to get cheated. So they really want to make sure they get this right.

MONTAGNE: Whatever happened to the federal government's crackdown on online gambling?

SCHWARTZ: Well, that crackdown is still here and this is really a long-standing U.S. government policy. You know, going back to the Clinton administration when they were prosecuting people for violating the Wire Act, to the Bush and Obama administrations when they were going after people for violating money-laundering and racketeering laws, you know, really they've been cracking down on this. They would continue to crack down on sites that were not licensed in U.S. states that were offering gambling - so that wouldn't go away.

It's really just giving the players a legal option, saying if you want to bet, here are places you can do it legally and you have the regulatory protections of the various states.

MONTAGNE: Thank you very much for joining us.

SCHWARTZ: Thank you.

MONTAGNE: David Schwartz is the director of the Center for Gaming Research at the University of Nevada, Las Vegas. Transcript provided by NPR, Copyright NPR.