Memo to members of the Nevada Gaming Commission: Do yourselves and all Nevadans a favor by prohibiting state gambling licensees from any involvement with Indian and/or Internet gaming. These disreputable and unsuitable forms of gambling are, in the words of your own regulations (5.010), "Inimical to the . . . general welfare of the people of the State of Nevada" because they "reflect or tend to reflect discredit upon the State of Nevada . . ." Is that clear enough for you?
In the 1960s, when I worked for the State Gaming Control Board, our licensees were forbidden from having gambling interests outside Nevada. I thought that was a good rule then and I still think it's a good rule, except that in this era of corporate licensing it's mostly unenforceable. But Indian and Internet gaming should be out of bounds for Nevada casino operators because they don't meet the minimum standards we require of our licensees, and built-in problems associated with unregulated gambling could taint our state's strictly controlled and fully taxed casino industry.
Let's look at the $7 billion Indian gambling business first. In the old days, Nevada rejects went into illegal gambling in other states or to the Caribbean, where they could operate free of government controls and taxation. These days, they're hired to run Indian casinos, where they play by their own rules.
Passage of California's Proposition 1A early this month means that Indian casinos in our neighboring state will soon be operating more than 100,000 slot machines in direct competition with Nevada casinos. Tribal casinos strategically placed at Auburn on Interstate 80 and Shingle Springs on Highway 50 will drain business away from the Reno and Lake Tahoe casinos, respectively. Gaming industry analysts estimate that 1A could cost northern Nevada as much as 20 percent of its annual gross gaming revenues.
Although some Nevada gaming licensees, including Station Casinos of Las Vegas, are already involved in Indian casino operations, I think they should be required to choose between Nevada and the Indians. Tribal casinos are allegedly "regulated" by the National Indian Gaming Commission, a dependency of the inept U.S. Bureau of Indian Affairs, and the tribes themselves. In other words, there isn't any real regulation as we know it in Nevada because there aren't any licensing or enforcement standards.
Just the other day, at a California Indian Gaming Summit at Palm Springs, state and tribal officials vowed to create an effective gaming control system from scratch. "I am convinced that there is no better regulatory system than that which is being built in California," said Harlan Goodson, director of the California Division of Gambling Control. Oh sure, and if you believe that I'll sell you some beautiful waterfront property in Washoe Valley. The reality of Indian casinos is on display in Wisconsin, where the Menominee tribe is fronting for dubious non-Indian gaming operators. Wisconsin authorities allege that the Menominees are acting as a "front" for Nii Jii Entertainment Corp. of Chicago, whose largest stockholder is former Illinois congressman Morgan Murphy Jr.
According to a Washington Post investigative report, one of Murphy's former associates, John Serpico, was ousted as vice president of the Laborers International Union during a 1995 federal crackdown on crime syndicate influence in labor unions. Serpico later testified before the President's Commission on Organized Crime about his close relationship with the late Chicago Mob boss Joseph Ferriola. Last August, Serpico was indicted by a federal grand jury in Chicago on charges of money laundering, racketeering and fraud. Those kinds of people are attracted to Indian gaming because they know they can't get a license in Nevada.
The Associated Press reported earlier this month that the State Gaming Control Board is looking into Nevada licensees who are "dabbling in Internet ventures that have come under increasing (federal) scrutiny. . . . The big concern is that federal action against some offshore betting operators could . . . tarnish this state's regulatory apparatus." Exactly right since anyone with a computer can operate an Internet gaming website completely out of reach of U.S. regulators. Most such sites are based in the Caribbean, where law enforcement is weak, if it exists at all. And who guarantees that you'll be paid if you win an Internet bet? No one, that's who.
"It's (Internet gaming) such uncharted waters right now," said Gaming Control Board Chairman Steve DuCharme in an AP interview. "Legitimate gamblers have their own reputations to protect, as well as the integrity of the state." Among Nevada licensees currently under investigation is American Wagering Inc. of Las Vegas, which faces a GCB complaint to the parent Gaming Commission for its involvement in an online betting scheme in Australia. Earlier, Reno-based International Game Technology (IGT) pulled out of another Australian online venture after the GCB initiated an investigation.
As they say Down Under, Good on 'em! IGT made the right decision, choosing to play by Nevada's established rules instead of taking a gamble on the Internet, where the number of online casinos has mushroomed from 15 in 1996 to more than 700 today. They are expected to generate $1.5 billion in untaxed revenue this year and $3 billion by 2002.
Clearly, the lax or non-existent rules of Indian and Internet gaming are incompatible with the tough standards Nevada licensees are required to meet, and that's why our gaming control authorities should prohibit their licensees from participating in all forms of unlicensed, untaxed and unregulated gambling. And the sooner the better.
Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, resides in Carson City.
