Nevada committee meets Wednesday; online poker affiliates will need licenses


nevada-online-poker-affiliate-licensesOn Wednesday, the Nevada Gaming Policy Committee (GPC) will hold its fourth meeting since Gov. Brian Sandoval reconstituted the long-dormant body to assist the state’s bid to become the country’s one-stop shop for online poker regulation. Among the items up for discussion this week are “maintaining Nevada’s role as the intellectual, technological and operational capital of the world-wide gaming industry.” While Nevada’s politicians, regulators and casino execs have made no secret of their preference for a federal online poker plan, they are also considering “modifications to statutory barriers affecting online gaming regulation, including alternatives to federal approvals.”

Mark Lipparelli, chairman of the Nevada Gaming Control Board (GCB), is scheduled to speak at the GPC hearing. Lipparelli recently spoke at length with Inside Poker Business regarding Nevada’s online poker plans. Lipparelli hopes Senate Majority Leader Harry Reid (D-NV) can find enough Republican support in Washington for his online poker bill in the post-November election lame duck session of Congress, but Lipparelli recognizes that scenario is far from certain. “There are two trains steaming down the track. One is federal and no one can predict whether that might happen or not. The other train is individual states proceeding with online activities in the various markets – that could be casinos, racetracks, Native American operations, lotteries. I think the further the states proceed, the more difficult a federal framework will become. As more states come online, that will create a complication for regulators. It’s not an ideal outcome, but, as it stands, it’s one likely to occur.”

Given that likelihood, Lipparelli suggested Nevada could provide sufficient liquidity to support an online poker market within its own borders, but admitted “it won’t be ideal. It’s likely we’d pursue additional strategies to open up liquidities for other markets.” Lipparelli believes “each state is going to come at it from its own strengths and possibilities … A state like California doesn’t have as much regulatory legacy but they have an enviable population base which they can leverage and they have some pretty creative companies too.”

Last month, the GCB released a draft of Instructions to Applicants for Licensure as a Service Provider that included in its definition of an ‘interactive service provider’ any company that “provides information regarding persons to an establishment licensed to operate interactive gaming via a database or customer list*” (with the asterisk indicating “Marketing Affiliate”); or “provides products, services, information or assets to an establishment licensed to operate interactive gaming and receives therefore a percentage of gaming revenue from the establishment’s interactive gaming system.” It’s not clear from the draft guidelines whether an affiliate operating on a cost-per-acquisition model would also require a license. Regardless, the licensing of affiliates would represent a global first for the online gaming industry.

Under Nevada’s guidelines, marketing affiliates would require Class 3 licenses, which would mean filling out personal histories and financial questionnaires, as well as detailing one’s business agreements with online poker providers and, yes, the fingerprinting demanded of those seeking to actually deal the online poker cards and process the payments. Applicants will also have to ante up $3k for the privilege of being poked and prodded by regulators. Suffice it to say, if Nevada becomes the watchdogs of a federally regulated system, a lot of mom-and-pop affiliates may have difficulty making the grade and/or making money.