A bill in Congress that would ban Internet gambling would inadvertently criminalize Nevada’s booming mobile sports wagering business, which has been credited with turning the Silver State’s sports books into a $3.9 billion-a-year industry.
The measure, backed by Las Vegas Sands Corp. Chairman Sheldon Adelson, is aimed at reversing changes made in 2011 to the 1961 Federal Wire Act.
If approved, the bill would end most forms of online betting, including interactive poker in Nevada.
Because the bill would stop transmission of gambling information through wire communications across state lines, mobile sports wagering in Nevada would also be halted, crippling sports book operations in the state.
“While we don’t think this is the intent of the bill, we are concerned it could be an unintended consequence,” said William Hill U.S. CEO Joe Asher. The company, which operates race and sports books for Nevada casinos, operates a healthy mobile wagering business.
The Restoration of America’s Wire Act bill, sponsored by Rep. Jason Chaffetz, R-Utah, had a hearing in March before the House Judiciary crime subcommittee. The next step is a Judiciary Committee session in which the bill will be opened for amendment and votes. A similar bill is expected to be introduced in the Senate by Sen. Lindsey Graham, R-S.C.
A spokesman for Las Vegas Sands declined comment on the bill and its potential impact on mobile sports wagering.
The unintended consequences of the bill was discovered by Las Vegas gaming attorney Greg Gemignani, of the Las Vegas office of the law firm Dickinson Wright. Gemignani, who specializes in Internet gambling law, researched the bill last year and found several issues “that could backfire on some of our operators in Nevada.”
Gemignani said wireless phone transmissions in Nevada — including those used for mobile sports wagering — often travel through routers in Arizona, California or Utah because of the network topology and function. Under the bill, transmitting gambling information across those state lines, even when the transmissions originate and end in Nevada, would be illegal.
In addition to banning mobile sports wagering, the bill would also make illegal off-site Internet servers using a virtual private network that many older casinos employ to operate their slot machines’ server-based gaming systems.
“By making licensed and regulated online gaming illegal, the bill is counterproductive,” Gemignani said.