Don't Bet the House: Online Gaming Ban Faces Uncertain Future
Politics has always been partly a game of chance. And when it comes to the politics of gambling policy, where the industry's high-rolling campaign donors are anteing up for a clash over online gaming, it's anybody's guess who the big winners will be.
The gaming industry has long had a big presence in Washington. As it has moved beyond a small, fixed cluster of highly profitable casinos in places like Las Vegas and Atlantic City, though, its united front has begun to splinter, along with its influence in D.C. Now, with a fight on over whether online gambling should be banned, the industry has divided into warring camps.
The gaming industry has long had a big presence in Washington. As it has moved beyond a small, fixed cluster of highly profitable casinos in places like Las Vegas and Atlantic City, though, its united front has begun to splinter, along with its influence in D.C. Now, with a fight on over whether online gambling should be banned, the industry has divided into warring camps.
But not everyone in Vegas (or Atlantic City) takes that view. Some major casino companies are betting they can extend their brand from the Strip to the Web and make money online. And it's not just a fight between casino magnates: Indian tribes, racetracks, online game makers, states that run lotteries and financial institutions all want a say in the matter.
Splitting the Strip
The driving force behind the effort to ban online gaming nationally is Sheldon Adelson, billionaire owner of the Venetian casino. Adelson and his wife, Miriam, spent at least $92 million in 2012 supporting his favorite conservative candidates by giving to outside spending groups -- including $15 million to a super PAC supporting former Republican House Speaker Newt Gingrich's bid for the White House and $30 million to the one backing GOP presidential nominee Mitt Romney. (That's why possible Republican 2016 presidential hopefuls were practically tripping over themselves to speak at his confab, dubbed "the Sheldon primary," earlier this year.)
At the time, Adelson's main interest appeared to be electing a GOP president who would be strongly pro-Israel, although he's said to be concerned as well about a federal investigation into whether anyone connected with his company, Las Vegas Sands, bribed foreign officals; Las Vegas Sands is the world's largest casino company, and its operations in Macau account for much of its revenue.
Now, though, Adelson has taken on what he says he views as a moral issue, telling Bloomberg News -- in one of many interviews he's done on the subject in recent weeks -- that Internet gambling is "a train wreck, it's a toxicity, it's a cancer waiting to happen."
At the end of March, Lindsey Graham (R-S.C.) in the Senate and Jason Chaffetz (R-Utah) in the House introduced the Restoration of America's Wire Act, which would mandate the reversal of a 2011 decision by the Department of Justice to allow online gambling except when it came to sports betting. Graham has picked up two co-sponsors, Sen. Mike Lee (R-Utah) and Sen. Dianne Feinstein (D-Calif.)
At the time, Adelson's main interest appeared to be electing a GOP president who would be strongly pro-Israel, although he's said to be concerned as well about a federal investigation into whether anyone connected with his company, Las Vegas Sands, bribed foreign officals; Las Vegas Sands is the world's largest casino company, and its operations in Macau account for much of its revenue.
Now, though, Adelson has taken on what he says he views as a moral issue, telling Bloomberg News -- in one of many interviews he's done on the subject in recent weeks -- that Internet gambling is "a train wreck, it's a toxicity, it's a cancer waiting to happen."
At the end of March, Lindsey Graham (R-S.C.) in the Senate and Jason Chaffetz (R-Utah) in the House introduced the Restoration of America's Wire Act, which would mandate the reversal of a 2011 decision by the Department of Justice to allow online gambling except when it came to sports betting. Graham has picked up two co-sponsors, Sen. Mike Lee (R-Utah) and Sen. Dianne Feinstein (D-Calif.)
Adelson strongly supports the bill. And as it happens, in the first half of the 2014 cycle alone, Graham received $10,400 from the Adelsons and $20,600 from employees of Las Vegas Sands. Adelson, in fact, threw a fundraiser for the South Carolina lawmaker in 2013 at the Venetian. None of the co-sponsors appear to have received any money from Adelson.
And Adelson picked up an industry ally earlier this year when Steve Wynn, the owner of Wynn Resorts, flipped to support a ban on online gaming.
Wynn's political contributions show that he, like Adelson, is a reliable Republican booster. According to an OpenSecrets Blog analysis, Wynn and his current wife, Andrea, have given more than $1.1 million overall since 1990, of which $949,000 has gone to Republican candidates, PACs or party committees.
So far in this cycle, the couple has written multiple five-figure checks to three big Republican national party committees. Otherwise, they've donated only to Nevada lawmakers -- Senate Majority Leader Harry Reid, a Democrat, and Republican Rep. Joe Heck. The Wynn Resorts corporate PAC has only given out $2,500 so far this cycle to House Speaker John Boehner (R-Ohio). In past cycles, the PAC has given exclusively to Republicans.
But Wynn's comments about Internet gaming seem focused on the fact that he sees little in it for him, rather than any principled desire to see online gambling banned. His company did report lobbying on online gaming in the first quarter of 2014, but it spent just $30,000.
Lining up on the other side of the issue -- and for the most part, the political aisle -- are the two names that control just about every other iconic casino on the Las Vegas strip.
MGM Resorts, which owns the MGM, the Bellagio, the Luxor, CityCenter and the Mirage, to name a few, has publicly backed an expansion of online gaming. MGM also a history of political donations on the other end of the political spectrum from Adelson and Wynn. The company's corporate PAC and employees have favored Democrats since 2010, but the company has also made donations to outside groups. In 2010, MGM gave $300,000 to Patriot Majority, a liberal super PAC closely affiliated with Harry Reid. In more recent cycles, Patriot Majority has changed its status and become a politically active "social welfare" nonprofit that does not disclose its donors, but rails against conservative megadonors and outside spending.
Joining MGM in backing legalized online gambling is Caesar's Entertainment, which owns not only Caesar's Palace, but Harrah's and numerous other casinos across the country. Caesar's corporate PAC also leans Democratic, though less so than MGM's.
Not only do both companies publicly oppose a federal ban on gambling, but both have casinos that have been licensed in New Jersey to run online gaming operations.
Adelson's Sands Corp., in contrast, has only one non-Vegas casino, in Pennsylvania. Still, that state is considering legalizing online gambling, meaning that Adelson could yet be poised to reap the rewards of the "toxicity," if he so chooses.
Adelson's Sands Corp., in contrast, has only one non-Vegas casino, in Pennsylvania. Still, that state is considering legalizing online gambling, meaning that Adelson could yet be poised to reap the rewards of the "toxicity," if he so chooses.
A representative for the Sands would only confirm the company's support for a ban on online gaming and declined to elaborate.
The Sands has beefed up its lobbying operation, however. In the first quarter of 2014, the company reported spending $170,000 on lobbying -- more than half of what the company spent in all of 2013. All four lobbying disclosures filed by firms representing the casino listed Internet gambling as an issue. The firms representing the Sands include powerhouse K Street names like Patton Boggs and Steptoe & Johnson. The Sands also added former senator-turned-lobbyist Blanche Lincoln, the Lincoln Policy Group, and her firm to its roster of lobbyists.
Each side has formed an alliance to get its message out. Those sharing Adelson's point of view put together the Coalition to Stop Online Gambling. In response, the casinos on the other side created the Coalition for Consumer and Online Protection, which told OpenSecrets Blog that federal ban on lobbying would interfere with what are properly state-level decisions.
Each side has formed an alliance to get its message out. Those sharing Adelson's point of view put together the Coalition to Stop Online Gambling. In response, the casinos on the other side created the Coalition for Consumer and Online Protection, which told OpenSecrets Blog that federal ban on lobbying would interfere with what are properly state-level decisions.
"With the proposed Adelson bill banning all Internet gaming, Congress would block important consumer protections, threaten state and individual rights and stifle innovation -- all in one legislative action," said that group's spokesperson Kristen Hawn.
Deal them in
Outside of the major casino interests, a diverse array of groups has tried to chime in on the subject: Indian tribes, gaming tech companies, banks, law enforcement and even Zynga, the company that makes Farmville and other games for Facebook.
One lobbyist representing several groups that oppose the ban said that many in the industry simply "want the issue to go away," maintaining that Adelson was solely responsible for the push. The rest of the industry, even those who might be disadvantaged by online gambling, is happy to have the issue decided at the state level, the lobbyist told OpenSecrets Blog.
Among Indian tribes, there's no broad consensus on the question, said Larry Rosenthal, a lobbyist with Ietan Consulting. Rosenthal represents the National Indian Gaming Association as well as 10 individual tribes -- including ones with major gaming operations like the Mashantucket Pequot Tribal Nation.
"Everyone is all over the map," Rosenthal told OpenSecrets Blog. "You have some tribes who want online gaming, and some who want to protect their bricks-and-mortar operations. There is no monolithic position."
"Some of the more rural tribes are worried -- they're not going to compete on the level of Las Vegas, so some folks would probably support Adelson," Rosenthal said. Still, he noted, some tribes feel they have the resources to compete and have been meeting with technology companies to try and set up online gaming operations.
Given the huge range of resources and pre-existing operations, the only consensus position on any action by federal government is that it must not step on existing tribal rights, Rosenthal said.
"Many tribes are saying that if something is going to happen, they want to be protected -- they want to make sure Indian Country is protected," he said. "If there is legislation it should respect tribal sovereignty."
States, too, are eyeing federal legislation warily -- though their lobbying records so far this year show little activity on this front. But the Democratic Governor's Association has issued a strong condemnation of Graham's legislation, citing two main concerns similar to those raised by tribal leaders: Decisions over regulating gambling traditionally have been ceded to the states, and a proposed ban on Internet gambling could hurt existing operations, in this case state lotteries; 10 states have online lotteries and more are considering it.
The concern about the impact on lotteries, though, cuts two ways. One of the few non-casino groups to sign on with Adelson is the National Association of Convenience Stores. The trade organization's first quarter 2014 lobbying reports show an interest in the issue, and the group's website points out how meaningful in-store (not online) lottery sales are to its members: In 95 percent of visits by lottery customers, they bought merchandise in addition to tickets, the group claims.
The concern about the impact on lotteries, though, cuts two ways. One of the few non-casino groups to sign on with Adelson is the National Association of Convenience Stores. The trade organization's first quarter 2014 lobbying reports show an interest in the issue, and the group's website points out how meaningful in-store (not online) lottery sales are to its members: In 95 percent of visits by lottery customers, they bought merchandise in addition to tickets, the group claims.
The Republican Governor's Association hasn't followed the DGA's lead with a similar declaration against the ban -- which has some observers wondering if the slew of sitting Republican governors with presidential aspirations, and so possibly a desire for Adelson's millions, might be a factor. At least four Republican governors who fall into that category -- South Carolina's Nikki Haley, Texas' Rick Perry, Louisiana's Bobby Jindal and Indiana's Mike Pence -- have all recently issued statements of support for restricting online gambling, which have been trumpeted by the coalition supporting the ban.
But even if some governors are calling for the ban, they're facing pressure from groups of their own public employees. For example, law enforcement, which is not generally known as a friend of gambling, has expressed some opposition to Graham's legislation. The National Fraternal Order of Police, one of the leading police unions which has spent $55,000 lobbying this year on a variety of issues including online gaming, released a statement of its own criticizing the proposed ban. The union's opposition was two-fold -- concern that without regulated online gaming, "black market" online gaming happens anyway, and, the loss of revenue for law enforcement agencies.
The legislation is pending in both the House and Senate Judiciary Committees. As the fight heats up, visit our new Issue Profile on Online Gaming.
Images: This Nov. 29, 2013 photo shows a losing game of Internet blackjack on a computer screen in Atlantic City NJ. (AP Photo/Wayne Parry)
http://www.opensecrets.org/news/2014/05/dont-bet-the-house-online-gaming-ban-faces-uncertain-future.html
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