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May 25, 2015

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Horne crosses Sandoval, seeks to double online gaming license fee to $1 million

Assemblyman William Horne

Assemblyman William Horne

Brian Sandoval

Brian Sandoval

Last week, Majority Leader William Horne, D-Las Vegas, announced he would shepherd an online gaming bill — a top priority for Republican Gov. Brian Sandoval — quickly through the Legislature.

But the measure Horne introduced today would double the online gaming license fee—a move opposed by the governor and that would virtually kill the legislation.

“That’s why I said I would not sign on to it,” an agitated Senate Minority Leader Michael Roberson, R-Henderson, said. “That needs to be fixed and he (Horne) knows it.”

The bill Horne introduced on the Assembly floor today would allow Nevada to move forward with online gaming licenses and interstate compacts, so that Nevada gaming operators would have access to a larger customer base.

The bill also would prohibit companies that illegally operated online gambling establishments in the United States prior to 2006 from obtaining a Nevada license for 10 years.

Each of those provisions is backed by the industry and had been expected to sail relatively smoothly through the Legislature in the first 30 days—a goal Sandoval set in his State of the State speech.

But Horne also wants to charge operators $1 million for an online gaming license—double the current fee of $500,000. Because it's a fee increase, Horne would need to garner a two-thirds majority vote to pass the legislation-- an impossible feat without Republican support.

“We don’t want some average American Joe Six-Pack with a server in his garage starting an online gaming operation,” Horne said of the $1 million price tag for a license. “We want to have serious entrepreneurs entering this arena.”

Horne also said that other states are considering even higher fees. California and Illinois are considering license fees of up to $5 million.

“We would still be competitive,” Horne said. “We are constantly espousing ourselves to the world as the gold standard in gaming. But I also believe we are selling ourselves cheap. We have this Lexus product and we’re putting this Saturn price tag on it."

Critics of Horne’s approach, however, point out that under Nevada law only hotel resorts with unrestricted gaming licenses are eligible for an online gaming license, which would already prevent Joe Six-Pack from operating an online casino from his garage.

And so far, online gaming companies with approval from the Nevada Gaming Control Board have not gone live with operations-- in part-- because the market is too uncertain, one industry source said.

“And now he wants to double the fee?” the source said.

Gaming companies testified before the Gaming Policy Committee that lawmakers should consider lowering the fee.

Horne acknowledged that his proposal to up the fee isn’t popular. But he’s still confident the bill will pass in the next three weeks.

“The policy is still sound,” Horne said. “The governor has some concerns about that and we are working on it.”

Last week, Horne, seeking to take ownership of the online gaming issue, met with Sandoval about sponsoring his own bill despite the fact the Gaming Control Board already had one in the process.

Sandoval agreed and put out a press release praising Horne for helping him speed it through the Legislature. But sources say Horne wasn’t immediately upfront with the governor about the fee increase.

Sandoval’s spokesman Mac Bybee says the governor will oppose the fee hike.

“Gov. Sandoval does not support the increased fee and will work to resolve this issue before the legislation is passed into law,” Bybee said.

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