Nevada OKs Web Gambling Sites

Giving the green light for Nevada residents to bet on football games and horse races using the Internet, the Nevada Gaming Board has set the stage for the first online betting sites to operate legally in the United States.

Under the terms of the approved proposal, San Diego, California-based Virtgame.com will supply the technology to power betting Web sites operated by Coast Resorts, the owner of four Nevada casinos.

Although residents of other U.S. states will not be able to place bets at Coast Resorts’ Web sites, Virtgame.com operates a look-alike site called Primelinesport.com where people from outside Nevada can place dummy bets.

Border Control

The gambing sites are relying on Virtgame.com’s eBorder control technology to ensure that only Nevada residents living within Nevada can place bets on the sites. Betting on sporting events is legal in Nevada, but illegal in other U.S. states.

The proprietary system uses both a telephone caller origination identifier system and Virtgame’s Active User Verification System (AUVS). AUVS is a plug-in that uses a dial-up connection to restrict access to Nevada residents. The system also relies on biometric software to make sure that the connection is not forwarded from other locations.

In addition to tapping into the online gaming market, Virtgames.com has also developed the online lottery software currently being used by Argentine State Lotteries. According to some reports, lottery officials in the states of Ohio, New York and Illinois, as well as the capital city of Washington, D.C., have considered launching online lotteries. State lotteries in the U.S. rake in $41 billion (US$) a year.

High Stakes

Online gambling is extremely popular in the United States. A recent report from the online gambling industry estimates that one million Americans gamble online at least once a day, and that 4.5 million have gambled online at least once.

The Internet hosts over 700 online gaming sites, generating $1.1 billion in 1999, according to a recent survey by gambling industry consulting firm the River City Group. By 2002, online gambling revenue is expected to reach $3 billion.

Internet Gambling Laws, Old and New

Although the Nevada sites will mark a first in the U.S., off-shore Internet companies have been accepting U.S. bets illegally for sometime.

In August, a federal court in New York sentenced an Internet bookie named Jay Cohen to 21 months in prison for illegally accepting bets from Americans over the Internet under existing laws regarding gambling via interstate wire transmissions. Cohen, the co-owner of Antigua-based World Sports, was also fined $5,000.

Federal legislators have not yet enacted laws specifically aimed at Internet gambling. However, in July, a bill that would have banned online betting was stalled in the U.S. House of Representatives after it fell 25 votes short of the two-thirds majority needed for approval under the special floor rules under which it was considered.

The proposed law would have made it a federal crime — punishable by up to four years in prison and fines of $20,000 or more — to operate a Web site that accepts wagers from Americans.

At the time, the Clinton administration said that because of loopholes that would allow betting on dog and horse racing, the bill would have had the effect of “opening the floodgates” for illegal gambling.