BUSINESS PRESS
Nevada gamblers will be able to place bets on Palm Pilot-like devices supplied by casinos so long as the wagering is confined to casino floors, according to a measure passed by state legislators late last month.
Casino floors, like this one at the Tuscany Suites & Casino, may change if handheld wireless gaming devices are introduced.
Assembly Bill 471 was drafted by the New York-based investment firm of Cantor Fitzgerald, with input from Nevada casino industry regulators.
It would permit "mobile gaming" in casinos with more than 100 slot machines, pending development of state regulations that would implement the law.
No software or hardware for the slot-style games has been submitted for testing by the Nevada Gaming Control Board, said Keith Copher, the control board's enforcement chief. Deployment of the betting devices is probably eight months or a year away, he noted.
Cantor Fitzgerald has been the principal force behind the bill, its lobbying effort spearheaded by local gaming lawyer Bob Faiss of Lionel Sawyer & Collins.
Former control board member Scott Scherer also lobbied on behalf of the measure. He was retained by Baton Rouge-based Diamond I, which previously did business as the wireless-Internet provider AirRover WiFi Corp. The new company is focusing on the marketing of gaming software.
Diamond's flagship product is WiFi Casino GS, software that would link wagering with personal electronics, a form of gambling currently available in the United Kingdom.
The leading trader of government bonds, Cantor Fitzgerald may be best known for the tragedy it suffered in the terrorist attacks of September 11, 2001. Two-thirds of the company's New York workforce -- 658 employees in all -- were killed in The World Trade Center, the greatest death toll suffered by any company that day. Cantor dedicated 25 percent of its profits to the victims' families.
The firm offers electronic-trading software through its eSpeed affiliate. On June 1, eSpeed signed a deal to provide trading solutions for Nextel's BlackBerry products.
"Think about the swimming pool at a casino resort," Cantor Managing Director Joe Asher wrote in an email to the Business Press. "They spend a tremendous amount of money building swimming pools, but while people are there, they aren't gambling. (Now) customers will be able to play while they sit by the pool and in other areas."
MGM Mirage Senior Vice President Alan Feldman says he's uncertain whether his company's customers will show much interest in mobile betting.
"Our customers know how to find the casino," Feldman says. "We need to undertake a more thorough analysis of whether this is relevant for our guests."
Cantor has been pursuing gaming opportunities overseas and expects to open an online casino in Alderney, in the English Channel.
It has obtained sole rights to the software of Australia-based Gaming & Entertainment Group, a developer of Internet casino sites. In exchange for the right to take majority control of Gaming & Entertainment, Cantor has raised $1.25 million in financing, with an option for another $6.8 million.
"Considered to be in unsound financial condition," Gaming & Entertainment is carrying an accumulated deficit of $7.13 million and continues to post six-figure quarterly losses -- although revenue is climbing and costs declining, according to recent filings with the Securities and Exchange Commission. GMEI's future hinges largely on the licensing and deployment of its technology in new markets.
Diamond, which posted slightly over $8,000 in revenues last year, says it is in "negotiations with a nationally known Las Vegas casino," although it declines to name names.
Company President David Loflin says he has been in Las Vegas as recently as the last week of May, "visiting with opportunities."
Diamond has yet to apply for a Nevada gaming license, says Scherer, the former control board member who left the regulatory body in January.
While there is no state law that would have forbade Scherer from lobbying for Diamond's interests, an informal agreement among former Control Board members dictates that they avoid lobbying on a gaming company's behalf for six months from the time they leave the control board, unless that company lacks a state gaming license or is not applying for one.
Meantime, Loflin says he'd logged a "significant number of calls" already about his hand-held gambling software, an indication of interest that "increased tenfold" after Nevada legislators voted for mobile wagering.
That could be good news for a company that only had $20,305 in working capital on hand as of May 24, according to a recent SEC filing.
Noting that Diamond was "actively seeking capital for use in our business," the company's 10QSB filing adds that it "can make no assurance that we will obtain enough to continue our business operations."
Consultants and company executives have been paid predominantly in stock. If certain benchmarks are not met, rights to the company's gaming software revert to the original owners.
"We point out the absolute worst-case scenario," says Loflin of Diamond's filings. The company, he says, has cash available "on a draw basis. There is no chance that we'll lose the technology at this point ... we have verbal communication that would allow us to fund up the company with significantly more than $2 million."
Loflin expects the recent passage of the Assembly Bill in the Nevada Legislature to spur interest in mobile gambling in other jurisdictions.
The bill rolled through the Nevada Assembly and Senate virtually without opposition, prompting Bill Thompson, a UNLV professor of public administration, to wonder what monied interests were at work behind the scenes.
"It's strange," Thompson says. "It suggests that things are not in the open."
Although slot machine giant International Game Technology has its own lobbyist in Carson City, a company executive said IGT had no stake in the legislation. "It wasn't submitted on our behalf," said IGT Vice President of Marketing Ed Rogich.
MGM Mirage's Feldman also characterizes his company's position as one of neutrality on the legislation. Station Casinos took a similar stance.
"We sort of walked into this" when MGM Mirage inherited Mandalay Resort Group's membership in the Nevada Resort Association, which backed AB 471. "We didn't get too terribly excited about it," Feldman says of the mobile-betting issue.
"Nobody even bothered to come talk to me about it," says State Sen. Maggie Carlton, D-Las Vegas, who cast the lone vote against the bill.
"Sixty-two people liked it. I was the one who didn't," Carlton says. "Having a gaming device in front of you all the time just turns me off," she adds.
As for limiting use of the devices to public areas, the Control Board's Copher says: "I don't know that a determination has been made" on how access will be constrained.
Diamond's Loflin says his company has a patent pending on biometric software that would require authentication of each bet or would generate random authentication requests.
But Carlton's concerns haven't yet been resolved.
"What's to say they won't be handed to kids or taken up to somebody's room?" she asks.
