Casino Bigwigs to Battle Billionaire GOP Donor Adelson in War on Internet Gambling

Casino operators gathered in DC on Tuesday evening to develop a strategy against GOP billionaire donor and Chairman of the Las Vegas Sands, Sheldon Adelson.

In recent days, Adelson has threatened to lobby against the multi-billion dollar industry in an effort to prevent legalization within the US.  Nevada and Delaware have both started offering real money Web gambling while New Jersey is set to do so by the Thanksgiving holiday weekend.

Geoff Freeman, president and CEO of the American Gaming Association (AGA), said his trade group hosted lottery representatives, game manufacturers and casino operators in a meeting that he described as unprecedented, according to TheHill.com's Kevin Bogardus.
“When you have a situation like this, it can galvanize and unite parts of a community towards a common cause,” Freeman said. “It was very productive and probably the first time that has ever happened.” 

Draft legislation to ban online gambling, presumably pushed along by Adelson, has already begun to circulate among lobbyists in Washington, theHill.com reported.

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We Saw This Fight Coming

Adelson has made it no secret he hates the idea of Web gambling becoming legalized in the United States.

Over the summer, the casino magnate, wrote a handful of opinion pieces expressing his stance on the activity.  He has referred to Internet gambling as "toxic", a "cancer to society" and a "plague".  His vitriol only got worse.

“I have 2 teenage boys. They get addicted to everything that is on the TV. When they talk about Gary Loveman only wants Poker. Gary Loverman and MGM have their own challenges. I do not have Challenges… We made billions of dollars last year. It is not a money issue with me. I think it is a train wreck. It’s really toxicity. It is a cancer waiting to happen.”

“That skill base is, in my opinion, just a bunch of baloney. To get a card is not skill base. I know people say it is skill based, but it’s just so they can categorize it in a certain segment.

“I do not want my children to have the opportunity to become addicted to gaming. And poker, in my opinion, would become one of the most addictive games. People do not get addicted to necessarily playing blackjack. They get addicted for the game. It is one of the many compulsive behaviors and somebody is addicted to gaming, they are addicted to some other compulsive behaviors. Can you tell me one good reason why internet gaming should be allowed.”

When asked how taxation from the Internet sector could not benefit the US, Adelson equated Web gambling to cocaine and prostitution.

“You could also make that argument for legalizing heroin and cocaine and prostitution. You can create a lot of sin tax for the government to make money,” Adelson argued.

Adelson’s Sway Among Republicans
It is certainly not lost among many Republicans that Adelson was considered among the GOP’s biggest donors during the 2012 US Presidential campaign.  He contributed $25 million to candidate Newt Gingrich’s efforts prior to the former House Speaker dropping out of the race, and a total of $125 million to other Republicans.  That, by the way, is a mere drop in the bucket for one of America’s 10 richest men.

Adelson’s reasons for doing so, according to MSNBC commentator Rachel Maddow, may not have been entirely kosher.  

Dueling probes of Adelson’s company, Las Vegas Sands, were underway at the U.S. Department of Justice and the Securities and Exchange Commission during the time in which the billionaire's family members donated monies to Gingrich following accusations that Las Vegas Sands bribed a foreign official in Macau.

As Maddow put it, Adelson isn’t just any political donor, he’s “the single largest American political donor of all time” — and virtually all of his money has gone to Republicans.  Certainly there were hints that Adelson’s friends in the Republican Party could effectively “make this all go away” if they were in full power a la the Presidency. 

From The Rachel Maddow Show Blog :

Discussion about Adelson's motivation for backing the Republican Party usually rotates around two things: his support for Israel's government and his opposition to labor unions. But a new investigation finds that there may be a third motivation: saving himself from a Department of Justice investigation.

PBS Frontline and ProPublica have found that Nevada and federal investigators are looking into Adelson's extensive casino business in Macau. Included among the investigation are possible violations of the Foreign Corrupt Practices Act, which Adelson may have run afoul of by directing legal fees payments to a Macau legislator. 

"[Adelson] is the guy at the heart of this mess in Macau, and the federal investigation into it," mused  MSNBC host Rachel Maddow. "If you were that guy...how much would it be worth it to you to get a brand new Justice Department installed in Washington?" 

The Las Vegas Sands Corp. would later concede it likely broke the law, issuing the following statement last March.

In its annual regulatory report published by the commission, the Sands reported that its audit committee and independent accountants had determined that “there were likely violations of the books and records and internal controls provisions” of the Foreign Corrupt Practices Act.

The disclosure comes amid an investigation by the Securities and Exchange Commission as well as the Department of Justice and the Federal Bureau of Investigation into the company’s business activities in China.

Ultimately, the Las Vegas Sands Corp was ordered to pay $70 million to businessman Richard Suen in a jury verdict arrived at this past summer.

Suen claimed he was owed up to $328 million for helping the Las Vegas-based company secure the lucrative gambling license in Macau, the world's largest casino gaming destination.

Washington Meeting of the ‘Sane’ Minds:

The AGA says online gambling should be brought under federal regulations and argues that banning it would only empower the black market.

“Prohibition of an everyday product has not and will not work,” Freeman said. “The only thing a Wire Act fix does is cement the power of offshore operators.” 

Adelson’s company, Las Vegas Sands Corp., has an executive on the AGA’s board of directors. Freeman said there has been no discussion of the company leaving the trade group despite its opposition to Internet gambling. 

“We are not the first trade association to have board members who have divergent viewpoints,” Freeman said. 

David Satz, senior vice president of government affairs for Caesars Entertainment, gave a PowerPoint presentation to the officials that said, “Internet gambling is here to stay,” according to slides obtained by The Hill. 

Satz noted that people in all 50 states could gamble online, despite the fact that it’s still largely prohibited.

“Prohibition has proven it does not work. We’ve supported a federal solution due to the interstate nature of Internet activity and to more effectively deal with the black market,” Satz told The Hill. 

While bills are currently being drafted to legalize Web gambling at the federal level, former chairman of the Nevada State Gaming Control Board (GCB) Mark Lipparelli recently told Gambling911.com's own Jenny Woo, that train has left the station a long time ago.

“The opportunity to act has passed,” he said.

New Jersey will launch real money online gambling for those physically located within the state's borders late next week following an initial testing period.  Nevada and Delaware already offer some forms of Internet gambling.  Other cash-strapped states are looking to jump on the bandwagon.  [monitor the latest news regarding New Jersey's efforts to offer legalized online gambling here]

“For years, illegal online gambling sites have operated in a perfect ecosystem: no regulation, no taxes and little risk of prosecution,” Lipparelli told Gambling911.com when asked about Adelson’s adversarial position.  “The effect has been that operators grew rich, communities were deprived of badly needed tax dollars and gamblers have been likely been cheated regularly.

“The federal government’s efforts to shut down the industry were justified and beneficial to US citizens as it allowed licensed operators within the US to regroup and prepare for its eventual rebirth.  However, if we fail to act and provide an alternative, US citizens will simply make their way back to illegal off-shore operators who are more than willing to take the action.  Many have already done so. This is an exciting time because the legal industry has stepped up.  Let’s hope policy makers recognize that dedication and investment risk by legitimate businesses.

“There is a considerable public debate to be had at the state level, but we have to recognize that the public is consuming illegal online gaming.  Technology has advanced to a stage where we can move ahead with confidence.  And, as states go live, the tools for regulators will get deeper and more effective.”

- Alejandro Botticelli, Gambling911.com