Column: Nevada must confront Indian, Internet gaming

A few months ago I urged the Nevada Gaming Commission and State Gaming Control Board (my alma mater) to prohibit Nevada gaming licensees from having any involvement with mostly unregulated Indian and/or Internet gambling. After reading the Indian gambling series in the Reno Gazette-Journal last week, I feel more strongly than ever that the Nevada Legislature should address this issue head-on next month.

I based my earlier column on Gaming Commission Regulation No. 5.010, which prohibits Nevada licensees from participating in unsuitable forms of gambling that are "inimical to the ... general welfare of the people of the State of Nevada" or because they "reflect or tend to reflect discredit" upon our state. Both Indian and Internet gambling meet those negative criteria because they fall far short of the minimum background and financial standards that we require of our licensees.

So why do our gambling control agencies and the State Legislature continue to tolerate such involvement by some Nevada gaming licensees? Could their hear-no-evil, see-no-evil attitude have anything to do with campaign contributions? Now that the major casinos have defeated (correctly, in my opinion) Sen. Joe Neal's punitive gambling tax petition, perhaps they can turn their attention to the image of their besieged industry.

If I were the PR adviser to one of the major casinos, however, I'd urge management to do two things: (1) offer up a one-quarter to one-half percent increase in the gross gaming tax for public education and other urgent needs in our state and (2) sever any ties with Indian and/or Internet gambling.

When I worked for the Gaming Control Board in the 1960s, I learned that legal gambling must be accompanied by strict state control and enforcement to ensure clean games and to keep the Mob away from the action. That's why Gov. Grant Sawyer's gaming control agencies closed several casinos - including the Silver Slipper on the Las Vegas Strip - for cheating and revoked Frank Sinatra's gambling license for hosting Chicago godfather Sam Giancana at his North Lake Tahoe hotel-casino. In our drive to clean-up the gambling business, we insisted that everyone play by the same tough rules.

And that's what state authorities should do now, breaking the troubling ties between Nevada gaming licensees and new, highly questionable forms of gambling. Frankly, I put Indian and Internet gambling in the same category as illegal gambling. No one knows who the real owners and operators are (some are Nevada rejects), no one knows where the money comes from or where it goes, and enforcement is inadequate, or altogether lacking.

The weak Federal Indian Gaming Commission, a division of the discredited Bureau of Indian Affairs, which can't keep track of Indian trust funds or its own budget, has fewer than 50 enforcement agents to police a $7 billion industry scattered throughout the country. And because most on-line gambling websites are based outside the U.S. - many of them in Australia or the Caribbean - they avoid any kind of control or supervision. What's more, Internet gamers pay no taxes to anyone while Indian casinos don't pay their fair share of state and local taxes because they're operated by "sovereign nations."

A number of miniscule California Indian tribes are planning massive operations to compete directly with Nevada casinos. For example, a sign at the Barona Casino east of San Diego asks, "Why Go to Las Vegas?" The Barona features 1,600 slot machines (comparable to the Reno Hilton) and is in the midst of a $225 million expansion project. Closer to home, small tribes are developing large casinos near Auburn on Interstate 80 and Shingle Springs on U.S. 50 east of Sacramento. Minnesota-based developers of the $125 million Shingle Springs casino plan to put in 2,000 slots in an effort to siphon-off Lake Tahoe customers. The Auburn casino, to be operated by Station Casinos Inc., of Las Vegas, could gross $150 million per year. By comparison, Reno's Eldorado Hotel-Casino grossed $113 million last year.

Fortunately for us, some local residents in Auburn and Shingle Springs are fighting the tribal casinos, arguing that they are too close to schools and residential areas, and would be a drain on public services and local budgets. It's interesting to note that in New Mexico, where Indian casinos were supposed to pay for much-needed social services, eight gaming tribes are asking state taxpayers to finance nearly $6 million worth of such services.

But it isn't so much the Indian casinos that I object to, it's the unfair competition where one side isn't subject to state regulation and doesn't pay state taxes - nice work if you can get it. Meanwhile, more than 700 online gaming ventures are expected to gross $3 billion per year by 2002 without being answerable to anyone, neither customers nor governments.

I hope Congress will pass a bill sponsored by Sen. John Kyl, R-Ariz., that would outlaw online gambling in the U.S. Simultaneously, the Nevada Legislature should defeat a bill sponsored by Assemblywoman Merle Berman, R-Las Vegas, that would legalize gambling websites based in Nevada.

As I wrote in an earlier column, "Clearly, the lax or non-existent rules of Indian and Internet gaming are incompatible with the tough standards Nevada licensees are required to meet." That's why the 2001 State Legislature should act quickly to force our licensees (like Station Casinos) to choose between Nevada and these unsuitable and unsavory forms of gambling. Although casino owners are focused on profits, legislators are supposed to protect the interests of the voters who elect them. So our elected representatives should do the right thing when they meet in Carson City in February.

Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, resides in Carson City.