The American business magnate Sheldon Adelson has been waging a war against online gambling for almost the past year, and it’s beginning to take its toll on the fledgling industry. Most observers had a skeptical view of Adelson’s position, pointing out that his long record of earning profits from physical casinos took away from his supposed moral high ground.
They said Adelson was cynical in his efforts to curb online gambling, and they didn’t take his campaign seriously since he’d already failed to get Mitt Romney elected as president in 2012, despite throwing millions of dollars into the campaign. Adelson’s war on Internet gambling, however, has turned out quite differently, and he’s been making progress on all fronts, including Delaware, Nevada and New Jersey, where online gambling has recently been legalized.
Now it’s been a little over nine months, and the same observers are starting to admit that Adelson’s promises were substantial after all. The newly legal online gambling grounds of Nevada, Delaware and New Jersey have seen profits fall far short of expectations, prompting other states to reconsider the legalization of online gambling. The online gambling experiment in the United States was supposed to encourage other states to take up the cause by generating huge state tax revenues of the kind generated by Mega-Millions state lotteries. Instead, states that were once considering making Internet gambling legal are now pausing to reconsider their options. Supporters of legal online gambling have pointed out that, although Adelson has apparently slowed the progress of online gambling, he’s far from influencing legislation banning the practice at the federal level. For these supporters, however, the best hope is that individual states will promote online casinos and collect taxes from the revenue.
Opponents of online gambling went on the offensive when Adelson secured support from the American Gaming Association. With this powerful lobbying group now opposed to federally regulated online gambling, Adelson’s dream of nationwide laws banning Internet casinos is one step closer to fruition. The interesting part of this story is that the AGA supported online gambling when the first states adopted the new laws legalizing it. This position caused a rift in the committee that represents the group’s senior members. The AGA is made up of large, powerful Las Vagas casinos such as the Sands, MGM Resorts and Caesars Entertainment, and the rift divided the AGA such that Adelson’s Sands casino opposed MGM Resorts and Caesars Entertainment, weakening the group’s lobbying power. This fragmentation played into Adelson’s plan by hampering the AGA’s efforts to support online gambling at the state level, which Adelson opposed.
Before the disagreement within the AGA and its subsequent resolution, Adelson and the anti-online-gambling lobbyists were opposed by a coalition of pro-online-gambling activists represented by high-profile Las Vegas figures and politicians. Casino owners such as Steve Wynn and politicians such as Richard Gephardt staunchly opposed Adelson following his declaration in late 2013 that he would actively seek to outlaw Internet gambling. However, Adelson racked up another success when Steve Wynn changed his mind and joined the anti-online-gambling lobbyists, unifying the ranks of the AGA. As an explanation, Wynn said that online gambling didn’t seem like a good business model for him after all. With two of the richest Las Vegas casino owners opposed to online gambling, Internet casino opponents suddenly had as much money to throw against the cause as the once-powerful advocates had to support it.
Adelson’s next front in the war on Internet gambling will be California, where the law is seen as a state’s rights issue, rather than a federal issue, as Adelson portrays it. Adelson has the support of several prominent Republican governors, such as Nikki Haley and Rick Perry, who have seized the opportunity to oppose online gambling on moral grounds. Even without this uncharacteristic opposition to state’s rights from Republicans, online gambling has just not lived up to its expectations. In New Jersey, online gambling fell far short of its monthly goals, and Chris Christie’s claim that New Jersey would get $180 million in tax revenue in 2014 is unlikely to come true. Instead, it looks like New Jersey will only get about $12 million, according to Bloomberg News. As of now, there are only theories as to why online gambling hasn’t taken off as expected. Charles Coppolani, a French official in charge of online gambling, declared the fad to be over, when asked about declining online poker revenues.
With these unfavorable headwinds, California looks less and less likely to legalize online gambling, especially with the powerful Native American casino owners standing in the way. Native American tribes in California are divided on the issue, however, and this disagreement has contributed to the stalling of legislation in the country’s most important online gambling market.