Update: Las Vegas Committee Hears Concerns about Security and Underage Gambling

Gaming Policy Advisory Committee learns about expert opinion

May 14 saw Nevada$s Gaming Policy Advisory Committee, revitalised earlier this year by Governor Brian Sandoval as online poker legalisation moves progressed, reconvene to hear the opinions of security experts regarding ways to maintain the underaged and fraudsters away from internet gaming sites.

The 11-man committee headed by Gaming Commission chairman Peter Berhard is in charge of studying the challenges and potential drawbacks of internet poker in Nevada; in addition, it will present its recommendations in late summer to the 2013 legislature.

Online legalization law passed by the gambling state$s legislature is subject to federal legalization, but state bodies are already well advanced in preparing appropriate regulations and associated structures. At the committee hearing, which took around 2 hours, there was also talk about technologies to verify identities, ages, and locations of online players.

According to Jim Ryan, CEO of Bwin Party Digital Entertainment, who spoke before the committee, the identity of the player device may also be important, as a single device might be used to conduct counterfeit transactions using the identities of multiple people. He also gave as an example the efficacy of Bwin.Party’s systems, which handle over a million players a month and see an average of only 10 underaged players manage to get through the screening mechanisms and gamble only for a short period of time before they were picked up by ancillary systems.

He added that the system is also able to identify the player’s location, excluded players, potential problem gamblers, individuals who have self-excluded themselves, potential money launderers and frauds and players engaged in collusion by comparing the info obtained from players on registration with other databases and by using sophisticated technology to assess IP addresses and locations, and deploying bots which track playing patterns and alert security on suspicious activity.

Ryan made a very picturesque example of the lack of player protection in the US, by carrying out a practical test from a Las Vegas hotel $ndash; depositing $100 into an online gambling account, using a Spanish registered cellphone and a credit card issued by a Gibraltar bank $ndash; an action which would have raised several red flags in his own organisation, but went through undetected at the company in question.

The test raised concerns in chairman Peter Bernhard, who said it was unsettling to hear how easily Ryan had been able to deposit funds online. “This shows why we need to stay in front of this. As soon as we set up procedures, there will be individuals working to find ways around them,” he added.

Another expert in the field, Nevada Gaming Control Board chairman Mark Liparelli told the committee the regulators will make sure the highest levels of security are in place before issuing licenses.

However, he added that it is challenging for the Nevada Gaming Commission to draft specific requirements, as license applicants often use different brands and systems for underage and fraud protection. Still, all applicants will have to prove that the systems in place efficiently detect and stop underaged play or fraudulent activity, and can pinpoint a player’s location within the state.

Lipparelli also cautioned that Nevada$s gaming leadership could be jeopardised in the absence of federal law to create a legal online gaming framework, adding that he predicts there$ll be a multi-state “race to the bottom,” in which other jurisdictions rush to reap the economic benefits of online gaming without sufficient fraud controls. This could see Nevada at a competitive disadvantage, with each state deciding for itself, as interested businesses could move to other states where regulations may not be as strict.

Another testimony heard before the committee was that of a security expert James Elste of INOV8V CyberCQRT who expressed his company$s hope to “improve security aspects in Nevada gambling by using National Institute of Standards and Technology grant funds to develop a “gold standard” comprehensive system capable of protecting players’ online financial transactions and also detecting and halting attempts by the underaged or fraudulent to access online gambling.”

Also, according to Anna Thornley, a senior research specialist with the Nevada Gaming Control Board, there are many moves toward legalization in other states, with Delaware, Rhode Island and West Virginia studying options to develop interstate poker play, conditional on the federal government approval of the pastime.

There has also been talk about Nevada$s high fees, which according to committee member Jim Murren, who is also CEO of the MGM Resorts International group, may require review. They currently amount to $500 000 for a two year licence, and $250 000 a year to retain it. What he proposed is a five year term as a better and more attractive option to operators, who could otherwise opt for other states due to more operator-friendly licensing fees.
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