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Sheldon Adelson Says He Is 'Willing To Spend Whatever It Takes' To Stop Online Gambling

This article is more than 10 years old.

Sheldon Adelson, the nation’s 11th richest person and chief executive of casino company Las Vegas Sands , says he is determined to stop online gambling in America and he will go to great lengths to battle the corporate interests pushing for it.  “I am willing to spend whatever it takes,” Adelson said in his first interview since The Washington Post revealed that he had hired an army of lawyers and lobbyists to try to convince Congress to ban online gambling. “My moral standard compels me to speak out on this issue because I am the largest company by far in the industry and I am willing to speak out. I don’t see any compelling reason for the government to allow people to gamble on the Internet and nobody has ever explained except for the two companies whose special interest is going to be served if there is gaming on the Internet, Caesars and MGM.”

Adelson’s effort to launch an advocacy group, the Coalition To Stop Internet Gambling, has shocked a casino industry that has been gearing up for a big push into online gambling in states like New Jersey, Delaware and Nevada—and maybe beyond. One of the nation’s top political donors, Adelson first openly declared his opposition to online gambling in a June article he wrote for Forbes, in which he claimed online gambling would cause people to lose their homes. He spent enormous amounts of money on the 2012 presidential election and is now preparing to use his financial firepower to push a legislative agenda connected to his business like never before. While Adelson is closely identified with Republican Party politics, his campaign against online gambling is a bipartisan effort, headed by former Republican governor George Pataki, together with Democrats Blanche Lincoln, the former Arkansas senator, and Wellington Webb, the former mayor of Denver. “I won’t go into the business because it’s a moral issue for me,” says Adelson about online gambling. “If a stockholder said to me ‘your morality can’t count when it comes to making money for shareholders,’ I see it from a business view point as very harmful to all the companies that go into it.”

The way Adelson sees it, Internet gambling will hurt young and economically vulnerable Americans, including those who will view it as a potential way to get out from under a mountain of student debt. He claims that there is no efficient technological way to stop minors or those suffering from alcohol or other substance abuse problems from gambling online, but that land-based casinos can prevent issues like money-laundering and stop people who should not be gambling from engaging in it. Adelson says online gambling advocates are “hypocrites” because they claim that a tightly regulated online gambling industry can prevent people who should not be gambling from betting money online, yet at the same time it has proven impossible to stop offshore online gambling sites in a timely manner from operating U.S. facing web sites or criminals from operating web sites involved in all sorts of illegal activity. “It’s the height of hypocrisy,” says Adelson. “On one hand, high tech is not strong enough to stop bad people or bad things, but on the other hand, if you say it’s a regulation the high tech is strong enough.”

But Adelson also thinks that online gambling is “suicidal” for the U.S. casino industry in the long run and will destroy hundreds of thousands of jobs. In the short-term, Adelson predicts that U.S. casinos could make money from their branded offerings online, but that non-branded web sites would quickly saturate the market with financial incentives that casino-branded offerings would inevitably need to match to stay competitive, eating away at their profit margins. At the same time, Adelson claims, the casinos would be cannibalizing their existing land-based businesses, eventually hurting their revenues and making them vulnerable. As proof, he points to the impact he claims online gambling has had on land-based casinos in certain European jurisdictions. Inevitably, Adelson argues, the states will increase taxes on the online gaming businesses and social media companies will enter the online gambling market and crush the casinos. “In the beginning, it will be good for companies and I see strategically that unbranded competitors will eat into the market and buy the business and make their profitability much less,” says Adelson. “Then the coup de grace, the big social media sites like Facebook, like Twitter, like shmitter, like whoever or Zynga, will come in with a billion hits a day with the name that is popular and respected and a Google will say ‘play with me.’”

Adelson is quick to point out that his company is not too vulnerable to an online gambling assault in the U.S. because the vast majority of its income comes from Asia and his U.S. casinos are high-end properties. “I have 25 competitors just on the Las Vegas strip, have I ever trashed the Las Vegas strip? This is not a competitive issue,” he says. Adelson also claims that executives of his competitors who are pushing for online gambling are not thinking in a strategically sound way for the long-term. He added that New Jersey Governor Chris Christie was wrong to support online gambling in an effort to help Atlantic City. “I know that Chris Christie doesn’t want Atlantic City to fail, but I don’t think anything can save Atlantic City, it is surrounded by Delaware, Maryland, Pennsylvania, it’s surrounded by states that are legalizing gaming,” says Adelson.

The online gambling landscape changed dramatically two year ago after the Department of Justice flip-flopped on its long-held position that the federal Wire Act of 1961 made all forms of Internet gambling illegal. While the Unlawful Internet Gambling Enforcement Act of 2006 remains in effect, the Justice Department’s new 2011 position effectively unleashed states that want to allow forms of online gambling other than sports betting. Since then proponents of online gambling have been unable to push federal lawmakers to create a federal regulatory regime for online gambling, but states on an individual basis have started to move toward green lighting and regulating online gambling. It’s tough to get anything done in Washington these days, but Adelson will be armed with new polling data that shows the majority of Americans have a negative view of online gambling. He also will be backing efforts in various states.

Adelson will be taking on a number of other billionaires who are betting on online gambling and companies like MGM Resorts and Caesars Entertainment, which this week spun off ownership in its online gambling assets in a rights offering for publicly-traded Caesars Acquisition Corp. The biggest owners of Caesars, private equity firms Apollo Global Management and TPG, are trying to find a way to salvage a leveraged buyout of Caesars Entertainment that has left the casino company struggling under too much debt. Caesars is the U.S. casino company that has been most aggressive in pursuing online gambling, taking the position that any online business would help grow the land-based casinos and compliment its offerings.

“The extension of poker to the Internet is the next logical distribution channel for our product and brand and is supported by the entire gaming industry, except for Mr. Adelson,” Mitch Garber, chief executive of Caesars Acquisition Corp., said in a statement. “The suggestion that effective safeguards can’t be implemented or that online distribution is detrimental to the land-based business is antiquated and ignores the substantial technology available as well as the well-documented growth of land-based poker and successful exclusion of minors in the U.S. pre-UIGEA.”