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Lipparelli Talks Legalized Web Gambling in US, Sheldon Adelson and Colbert Probe

Written by:
Jenny Woo
Published on:
Nov/10/2013
Lipparelli Talks Legalized Web Gambling in US, Sheldon Adelson and Colbert Probe

Former chairman of the Nevada State Gaming Control Board (GCB) Mark Lipparelli sat down with our own Jenny Woo for a Gambling911.com world exclusive to discuss, among other things, what he sees as the future for legalized online gambling in the US.  Hint:  These won’t be anything happening at the federal level.  “The opportunity to act has passed,” Lipparelli tells G911.

Lipparelli also offers his take on casino billionaire Sheldon Adelson’s opposition to real money Web gambling in the United States (taking the politically correct approach, we might add) and discusses the October 2012 indictment of Cantor Gaming Sportsbook Vice President of Risk Mike Colbert, charged with enterprise corruption and illegal gambling, more specifically, what effects these charges may have had on the GCB's reputation as the "gold standard" of legalized brick and mortar gambling in the United States.   The Colbert probe occurred on Lipparelli’s watch.

Court documents claim Colbert searched out bets that would cancel out large wagers while  allowing runners from an alleged illegal gambling operation out of Queens, N.Y.—known as the “Jersey Boys”—to place these bets.  Nevada law does not permit the use of runners.

There is speculation running amuck that other executives at Cantor Gaming are under intensive scrutiny by federal law enforcement officials.  Whether more charges will be filed remains to be seen.

Jenny Woo:  You and others had worked so hard to build Nevada into the premier gold standard for reputable gaming establishments during your tenure.  I want to ask you your reaction to what occurred with Mike Colbert late last year.  So that our readers know, Colbert was a prominent figure in the Vegas sports book scene as a Director with Cantor Gaming.  He was arrested and charged in October 2012 with enterprise corruption, promoting gaming in the first degree and money laundering in the second degree and has since plead guilty to one charge of conspiracy.   Do you believe the situation with Colbert could taint Vegas' stellar reputation should more improprieties be uncovered?

Mark Lipparelli: Quite the contrary. This was a joint investigation of our agency and law enforcement in New York.  I think this case actually supports the notion that while we led the way to legalize interactive gaming and other technologies like mobile sports wagering, we also were steadfast in our enforcement efforts.  Otherwise, I would not comment on this as it is an ongoing matter.

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And then there is Adelson, one of the GOP’s biggest donors and a man who, of late, has become a thorn in the side for many casino executives pushing to get their brands online.  Adelson has referred to Internet gambling as “toxic” and a “cancer” on society.

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Mark Lipparelli: I can’t speak directly to Mr. Adelson’s comment, but let me provide you with an alternative viewpoint:

For years, illegal online gambling sites have operated in a perfect ecosystem: no regulation, no taxes and little risk of prosecution. The effect has been that operators grew rich, communities were deprived of badly needed tax dollars and gamblers have been likely been cheated regularly.

The federal government’s efforts to shut down the industry were justified and beneficial to US citizens as it allowed licensed operators within the US to regroup and prepare for its eventual rebirth.  However, if we fail to act and provide an alternative, US citizens will simply make their way back to illegal off-shore operators who are more than willing to take the action.  Many have already done so. This is an exciting time because the legal industry has stepped up.  Let’s hope policy makers recognize that dedication and investment risk by legitimate businesses.

There is a considerable public debate to be had at the state level, but we have to recognize that the public is consuming illegal online gaming.  Technology has advanced to a stage where we can move ahead with confidence.  And, as states go live, the tools for regulators will get deeper and more effective.

Jenny Woo:  In 2012, you opted not to serve another term with the Nevada State Gaming Control Board. What have you been doing since your resignation and how has the transition been going into your new role as advisor with CAMS?    

Mark Lipparelli: The transition has been going well. I’ve been presented a number of consulting opportunities and I have selected a small number that present interesting challenges. In addition, I have dedicated a portion of my time toward developing new technologies for the gaming industry.  (to learn more about CAMS go here)

Jenny Woo:  As advisor, what will you be bringing to the table of this already reputable company?

Mark Lipparelli: My experience in managing technology based products over sixteen years as well as a more than passing knowledge of regulatory requirements should be helpful.  Online gaming is just getting started in the US and CAMS is looking to me for guidance on how to they can support a reasonable framework for regulation.  There will be certainly differences from brick and mortar gaming applications but the integrity focus is at least as important.

Jenny Woo:  How did this new venture start for you? How has the relationship been thus far?

Mark Lipparelli: I had a positive dialogue with CAMS while serving as Chairman.  They were sensitive to being a supporter of reasonable regulations from the start.  I completed my cooling off period recently and looking forward to re-engaging.  As an industry, we all should be working toward a common goal – licensed and regulated internet gambling within the United States.

Jenny Woo:  How has the state-by-state roll out for online gambling been working thus far in your opinion? What obstacles do you see getting in the way where other states are concerned?

Mark Lipparelli: It’s too early to judge or analyze the state-by-state roll out. New Jersey will be a big step forward. The state is densely populated (unlike Nevada) and concentrated among a number of states on the east coast.  CAMS’ technology will play a big role in ensuring that only New Jersey residents play on legal New Jersey sites.

As for obstacles involving other states, I have changed my views interstate agreements. My strong guidance now to the policymakers that have reached out to me in Nevada and elsewhere is to keep it simple. Far-reaching compacts will present big challenges and likely not work.  Further, ambitious rigid technology guidelines will weigh down an operation that can otherwise effectively deal with regulatory requirements. There is no reason to re-invent the wheel in this case.

Jenny Woo:  What are some other states you believe would likely pass their own legislation in 2014?

Mark Lipparelli: State legislatures are very hard to predict but I do think there is a high likelihood that the next legislative cycle will result in several new bills leading to new online gaming expansion - at least 3 or 4 states.  For those with a negative outlook, I point to the fact that few would have predicted casino gaming in states like Pennsylvania, Maryland, and Massachusetts yet here we are.  Illegal operators are thriving in the current system and that is not acceptable.

Jenny Woo:  Do you foresee online gaming on a federal level?

Mark Lipparelli: No, I believe the opportunity to act has passed.  There is a lot of blame to go around but the damage is done. The states are now engaged and gaining cohesion at the federal level will be harder now that three states are live or going live.  Washington DC is as dysfunctional as it has ever been and I doubt it will change any time soon.  The forthcoming election cycle does not help as few are going to put gaming expansion as a priority for the legislative agendas.

That said, there may be some continued interest in adding some substance and clarity to the Wire Act of 1961.  Also difficult, but possible.

Jenny Woo:  Explain how any multi-state compacts would work.  Would other states need to pass their own legislation or is it a situation where you see a state like Nevada signing something with another state's Governor to allow its citizens to wager online without any set measures?  Perhaps we have a situation like with Utah where legislators would instead pass "opt-out" laws whereby citizens would be implicitly prohibited from betting online?

Mark Lipparelli: Many states will need to make statutory changes or reform language that makes online gaming possible. A few others have to deal with outdated gambling bans. Looking to Nevada and New Jersey could help streamline the process and keep heavy regulatory costs in check.

New Jersey will be launching real money online gambling in the state for residents and visitors by month’s end (November 2013)

- Jenny Woo, Gambling911.com Senior International Correspondent

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