Tuesday May 15, 2012 : SECURITY AND UNDERAGE GAMBLING THE MAIN CONCERNS AS LAS VEGAS COMMITTEE MEETS (Update)
 
Experts brief Gaming Policy Advisory Committee
 
Nevada’s Gaming Policy Advisory Committee, revitalised earlier this year by Governor Brian Sandoval as online poker legalization moves progressed  met for the second time Monday to listen to security experts on ways to keep the underaged and cheaters away from internet gaming sites, reports CBS.
 
Gaming Commission chairman Peter Berhard heads the 11-man committee, which advises the governor and is tasked with studying the challenges and potential pitfalls of internet poker in the gambling state. The committee will conclude in the late summer with recommendations to the 2013 legislature.
 
The Nevada legislature has passed an online legalization law, subject to federal legalization, and state bodies are already well advanced in preparing appropriate and wide-ranging regulations and associated structures.
 
CBS reports that the committee hearing lasted for around 2 hours and was briefed on technologies to verify identities, ages, and locations of online players.
 
The identity of the player device may also be important, Jim Ryan, CEO of Bwin Party Digital Entertainment told the committee, pointing out that a single device might be used to conduct fraudulent transactions using the identities of multiple people.
 
Ryan described the efficacy of Bwin.Party's systems, boasting that these delivered a 99.8 percent confidence level despite the system handling over a million players a month. An average of only 10 underaged players managed to get through the screening mechanisms, but were only able to gamble briefly before being picked up by ancillary systems, he claimed.
 
The Bwin.Party system not only had the ability to bar underaged players and identify the player's location, but can also identify excluded players, potential problem gamblers, individuals who have self-excluded themselves, potential money launderers and frauds and players engaged in collusion, he said.
 
Ryan said the system compares information presented by players on registration with other databases and uses sophisticated technology to assess IP addresses and locations, and deploys bots which track playing patterns and alert security on suspicious activity.
 
Despite the United States being the biggest online poker market in the world there are no federal regulations in place to protect the players.
 
Ryan entertained committee members with a practical test he had carried out from a Las Vegas hotel; he had deposited $100 into an online gambling account, using a Spanish registered cellphone and a credit card issued by a Gibraltar bank.
 
This would have raised several red flags in his own organisation, yet it went through undetected, illustrating a lack of appropriate security measures at the company in question.
 
Commenting on the test, chairman Peter Bernhard 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,” he said. “As soon as we set up procedures, there will be individuals working to find ways around them.”
 
Nevada Gaming Control Board chairman Mark Liparelli assured the committee that the regulators would demand the highest levels of security before issuing licenses.
 
Applicants for licenses use different brands and systems for underage and fraud protection, making it difficult for the Nevada Gaming Commission to draft specific requirements, but companies seeking a licence 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, he said.
 
However, he warned that Nevada’s gaming leadership could be jeopardised in the absence of federal law to create a legal online gaming framework.   Liparelli said he foresees a multi-state “race to the bottom,” in which other jurisdictions rush to reap the economic benefits of online gaming without sufficient fraud controls.
 
With each state calling its own shots, he said, Nevada could find itself at a competitive disadvantage if interested businesses moved to other states where regulations may not be as strict.
 
Lipparelli estimated that the first two applicants to appear before an online licensing regulatory panel would be interviewed in June and July, although he could not say which applicants these would be.
 
Security expert James Elste of INOV8V CyberCQRT said his company hopes 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.
 
Anna Thornley, a senior research specialist with the Nevada Gaming Control Board, briefed the committee on moves in other states toward legalization, saying that Delaware, Rhode Island and West Virginia were studying options to develop interstate poker play, but were not expected to offer play until the second quarter of 2013 at the earliest…assuming online gambling is approved by the federal government.
 
Committee member Jim Murren, who is also CEO of the MGM Resorts International group, drew attention to Thornley's report, commenting that it may be necessary to review Nevada's high fees – $500 000 for a two year licence, and $250 000 a year to retain it.
 
He suggested that a five year term may be a better option and one more attractive to operators, who could look to other states to locate due to more operator-friendly licensing fees.