The American Gambling Association officially withdrew its support for online gambling today. In a statement to justify its change of position, the AGA cited a split among the major land-based casino operators on the issue.
The rift among industry leaders makes online gambling "an issue that the association cannot lead on", according to Geoff Freeman, the CEO of the American Gaming Association. In ceding his association's position as a leading industry advocate on the issue, Geoff Freeman added, "One of the things I've learned in the industry is we are extraordinarily competent at shooting one another. The snipers in this industry are of the highest quality, and if you let that be the focus, we'll kill each other."
MGM and Caesars Support iGaming
The split Mr. Freeman refers to is between the top land-based gaming companies in the United States. On one side, MGM Resorts and Caesars Entertainment have been supportive of online gambling. Not only did the two gaming giants support politicians who advocated licensed online gambling in New Jersey, but the companies launched online casinos and card rooms which were licensed through their Atlantic City properties. These websites bring in several hundred thousand dollars a month, and hold out hope of increasing revenues in the months and years to come.
Opposition by Sheldon Adelson
On the other side of the debate, the Las Vegas Sands Corp. has been the leading anti-online gambling voice in the country. Sheldon Adelson, CEO of the Las Vegas Sands Corp. and the 8th richest person on the planet, has vowed to spend whatever money is necessary to see online gambling defeated in the United States. Adelson formed a 50-state political action group to fight online gambling initiatives wherever they might start in the USA. He also supports the Restoration of the Wire Act legislation currently making its way through the halls of the U.S. Congress. When Lindsey Graham and Jason Chaffetz introduced the bill a couple of months ago, pundits assumed the congressmen were backed by Adelson's money.
Meanwhile, Steve Wynn of Wynn Resorts International, the fourth major US operator, has been non-commital on the issue of online gambling. In 2012 and 2013, Wynn sounded like he was ready to give his support for iGaming. Around the turn of 2014, Wynn withdrew that lukewarm support, saying he was not sure whether the money involved was worth the trouble. Still, Steve Wynn is not actively working against the online gambling industry.
Growing Influence of Las Vegas Sands
With that in mind, the AGA decision is seen by many industry insiders as a sign of the growing influence of Sheldon Adelson. Since online gambling became a realistic option in late 2012, the American Gambling Association had given steadfast support for iGaming initiatives. Adelson was seen as an outlier in the debate, and he was much ridiculed for suggesting moral qualms about the dangers of problem gambling after collecting billions of dollars from losing gamblers over the decades.
The biggest percentage of the Las Vegas Sands' revenues come from China and Singapore these days, so it is Sheldon Adelson sees the potential revenues from online gambling as penny player business, in much the same way Steve Wynn does. Land based gaming firms in Las Vegas traditionally have been hostile to online gambling, assuming it would cannibalize their revenues. Debates still occur on whether that is the case, with New Jersey online operators stating 85% of their online business involves new customers who do not gamble in land-based casinos.
Billions of Dollars in Lost Revenue
Online gambling is illegal in 47 U.S. states, with Nevada, New Jersey, and Delaware as the only states with licensed online gaming operations. These states allow intrastate gaming, so no one outside those three states can open accounts. Geolocation technology assures no one outside those three states have the ability to play.
Meanwhile, online gambling draws in over $35.5 billion a year. Most of that money is taken from the European market, which is home to most of the biggest companies and the largest concentration of players. Internet gambling proponents in the United States argue iGaming could bring in bigger revenues in the USA than in Europe, based on pre-UIGEA numbers which were dominated by the US market.
Under those assumptions, at least 10 U.S. states are considering the legalization of online gambling. California, Oregon, Louisiana, Illinois, Massachusetts, New York, and Pennsylvania have bills being considered at the moment. Politicians in those states see the opportunity to draw in additional tax revenues without direct taxation of residents, much like the state lottery does. Nevada and Delaware signed an interstate poker compact earlier this year, allowing the states to share player lists. If a significant number of states legalized online poker and signed onto the compact, a large network of players might begin to draw in big revenues for the states involved.
