Cellular Phone Prohibition Rings Hollow

Originally appeared in Casino Lawyer on 09/01/08

For more than a decade Nevada Gaming Regulation 22.135 prohibited the use of communication devices in Nevada race and sports books. Patrons were not allowed to place or receive calls on their cellular phones, nor could they transmit information via other such technological means while located within the books.

The rationale for the enactment of Regulation 22.135 was to prevent legal books from being used to facilitate illegal bookmaking. With the introduction of cellular technology, there was a fear that spotters could enter the books, review the lines and communicate this information to illegal bookies across the country. Likewise, there was trepidation that illegal bookies could transmit instructions back to their spotters to place “layoff” wagers. However, on Aug. 21, 2008, the Nevada Gaming Commission repealed Regulation 22.135, while reserving the right to review the decision after one year. There were four reasons for this repeal: technology, administrative burden, prohibition or inhibition, and substantial remaining protections.

As technology has progressed, the number of illegal bookies trying to layoff, or balance, bets by phoning wagers into Nevada’s legal books has decreased significantly. With the advent of real-time lines offered over the Internet, there is no longer any need for illegal bookies to have spotters enter the books to obtain the odds. Today, anyone in the United States can sit in his or her bedroom or living room and access a plethora of information available at a track or book.

Similarly, illegal bookies now can easily layoff large bets through the numerous online sports books located offshore. This methodology allows for easily perusing the lines for the best odds, laying the wager through an ordinary personal computer with an Internet connection, virtual anonymity, frustrating law enforcement by using international commerce, and a complete lack of regulatory oversight.

Consequently, the attraction that Nevada books once posed is no longer present.

Administrative Burden

In addition to the proliferation of the Internet, cellular phone technology has advanced well beyond those capabilities that were in effect when the ban was implemented. As a result, the ability of books to enforce the prohibition has become increasingly difficult, if not impossible. For example, the widespread availability of wireless earpieces that allow the user to receive calls without having to place a cellular phone to his or her ear has made recognizing the use of cellular communications particularly difficult. Race and sports book employees do not know if an individual is talking on the phone or merely thinking out loud. Moreover, cellular technology is now available in a broad range of other devices, from personal computers to PDAs. For example, patrons are allowed to use personal computers in the book. However, the book has no reasonable means of determining whether the computer has Internet access through a wireless connection. PDAs also are not prohibited in the books, but book employees, again, have no way of determining whether a PDA has a wireless Internet connection. Essentially, the advancement of wireless technology has provided for the undetectable use of communications devices in the books. Therefore, from a book’s perspective, the prohibition of communication devices diverted employees’ attention from their other duties—they were too busy policing the book in an effort to ensure that people are not using cellular phones. In today’s society this is an almost impossible task anyway, due to the advancement of wireless devices. Even assuming employees were able to detect such usage, employees then had to leave their station, interrupt that patron, explain why they were inconveniencing that patron, and make sure the patron did, in fact, turn off the communications device.

Prohibition or Inhibition

In light of the ubiquity of the cellular phone, patrons were often told to end conversations with a family member or friend—conversations that were completely unrelated to any gaming activity. Indeed, many patrons did not understand why they were being told to end the call. The unjust nature of this prohibition did not go unheard, however, as evidenced by Nevada Gaming Commission Chairman Pete Bernhard’s statement on the record that there is a lot of “purely innocent use of cell phones in casinos.” Not only did the cellular phone prohibition hinder patrons, but it also conflicted with the evolution of mobile gaming into race and sports books. Two great advantages of mobile gaming are to allow patrons in race and sports books to use mobile devices to access other gaming opportunities and to allow persons in other areas of the casino to place race and sports book wagers. If a person in the keno lounge, for example, has complete sports information and can place a bet from the keno lounge, banning the use of cellular devices only in the book area no longer has value. Likewise, if the patrons in the race and sports book can use mobile gaming devices, then the burden of distinguishing a mobile gaming device from a cellular communications device would be substantial. The relaxation of the prohibition on cellular phones in race and sports books might stimulate further development of mobile gaming technology.

Substantial Remaining Protections

While the repeal of Nevada Gaming Regulation 22.135 eases some of the burdens on race and sports books, this is not to discount the policy in Nevada that race and sports books may not be used to aid illegal books. As noted by Gaming Control Board Member Randall E. Sayre at the Gaming Control Board hearing, “We are not relaxing our standards.” When the Nevada Gaming Commission adopted Regulation 22, the ability of illegal bookies to access online line information and to place wagers at offshore books was not available. As such, Nevada implemented extraordinary provisions to prevent layoff wagers from illegal bookies. Even with this repeal, substantial protections continue to exist in Nevada to protect against layoff wagers. In fact, Nevada Gaming Regulation 22 provides extensive protections against the use of a licensed Nevada sports book as a vehicle to place wagers in violation of federal law. When Regulation 22 was adopted, the ability of illegal bookies to access online line information and to place wagers at offshore books was not available. Legal books were thus targeted to facilitate illegal bookmaking activities. Accordingly, Nevada implemented extraordinary provisions to protect the integrity of the books and prevent layoff wagers from illegal bookies. These steps included:

• a prohibition against messenger betting;

• registration of sports book employees;

• information gathering and recordkeeping of wagers in excess of $10,000;

• aggregation of multiple transactions to prevent circumvention of the book wager reports;

• a prohibition against structuring;

• stationing a Gaming Control Board agent at a licensed sports book; and

• a prohibition against the use of communications devices in

the race and sports book.

Thus, even with the relaxation of the prohibition on  communications devices, numerous protection mechanisms remain in place. Accordingly, this repeal should not be seen as a relaxation of compliance requirements. As Sayre noted in the Aug. 22, 2008, Industry Letter: “[T]he Gaming Control Board will continue to be aggressive in its observations within the books and will conduct both overt and covert observations to ensure that licensees and patrons are complying with federal statutes pertaining to the transmittal of wagering information, state statutes regarding messenger bettors, and gaming regulations concerning such areas as book wagering reports, messenger bettors, the structuring of wagers, wagering communications, suspicious wagers, and house rules, among others.” Nevada Gaming Regulation 22.135 no longer has any particular practical merit; its implementation is difficult and burdensome on the books and the regulation conflicts with the regulations permitting mobile gaming. Moreover, numerous other regulations and measures remain in place to ensure that layoff wagering does not occur. Nevada gaming authorities remain committed to maintaining strict compliance with all relevant statutes and regulations pertaining to race and sports wagering. Cellular phone use in the sports books will be closely monitored, and if any illegal activity is reported within this one-year “probationary period,” gaming authorities will be quick to re-enact this prohibition. As such, race and sports books must recognize and appreciate their regulatory responsibilities to ensure that the repeal of Nevada Gaming Regulation 22.135 is permanent and not jeopardized by inattention. For the time being, however, sports books across Nevada will have a new look to them, free of the signage prohibiting cellular phone use.`

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Karl F. Rutledge
Karl F. Rutledge
Partner, Chair - Commercial Gaming Group

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