Manne wrote:
Allowing wealthy gamblers to play on casino credit is a common business practice among some of Nevada’s Strip casinos. For some high rollers, signing a marker — or casino I.O.U. — is much easier than carrying around enormous sums of cash.
According to an article by Dr. David Schwartz, Director of the Center for Gaming Research at the University of Nevada Las Vegas, it was once estimated that as much as 15 percent of all money wagered in Nevada is on credit. This means, millions in gaming revenue are generated from the practice.
With Nevada now on the verge of entering into the online gaming arena, regulators have been in charge of deciding whether or not extending credit should be permissible in cyberspace.
For now, the answer is no.
Nevada online poker regulations currently forbid the extension of credit to players, but that could change as the industry takes shape, according to Gaming Control Board member A.G. Burnett.
While some of last year’s online poker scandals were continuing to play out in the fall, Silver State gaming regulators were in the midst of hashing out rules for a new era of online gaming. However, it was conservatism on the issues, not the past failures of offshore online poker sites, which helped Burnett.
“My own individual take would be that I don’t think [the rule] directly stems from any past problems regarding credit,” Burnett said. “We were taking a conservative approach on the issue, and assuming we start going forward with intrastate and someday maybe interstate, I think we always reserve the right to amend the regulations. So, if we were to find some comfort in allowing credit to be issued and there was an interest in doing that, we would obviously be amenable to allowing it. In my own opinion, I didn’t have any case in mind when we put that in.”
Schwartz told Card Player that being cautious was the right play. “You want to let [the industry] evolve,” he said. “There’s already a lot of moving parts here, so eliminating the extra level of doing credit is probably a good thing for the start-up.” Earlier this month, news broke of poker players owing about $18 million to Full Tilt Poker. The debt, which includes as much as $4 million for a single person, could stifle a French firm’s efforts to acquire the company and cash out some players.
Burnett said that the crafting of Nevada’s language to ban the loaning of money to customers (as well as that for all Internet gaming regulations) involved Control Board staff working with those in the casino industry.
“They investigate [the stakeholders in the gaming industry] to a certain extent — look at how they work and how they operate. Then our staff goes back and drafts the regulations independently, before sending them to us for our review. After that we have workshops to flush out the issues. Then the [Gaming] Commission has the final say.”
The Commission — Nevada gaming’s top regulatory body — approved the core framework in December, but since new business concerns may emerge, the fine-tuning isn’t over yet. However, for Burnett, a lawyer, he wants to make sure allowing Internet poker markers is sound from a legal standpoint. “There are so many legal implications in doing that, especially from an online perspective, and the law just isn’t clear.”
Schwartz said he doesn’t see such I.O.U.‘s falling into any gray legal area. "I think if they develop their credit procedures, it won’t be too much different than doing it in person. Casinos already make millions of dollars in credit decisions every year, so they obviously have systems to do this — and they do it pretty well."
According to a Nevada Gaming Abstract, casinos lost about $133 million in “bad debt” — or from markers that haven’t yet been repaid — in fiscal year 2011.
Burnett added that, if the practice was ever allowed, player deposits would be segregated from funds used to extend credit.
The online gaming rules state that player funds must be on hand at all times. Other stipulations say that funds in the form of cash must be backed by a federally-insured financial institution and daily accounting must occur.
Schwartz called the reserve requirements “very strict.”
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2012/01/28
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