Bloomberg News

Adelson Effort to Outlaw Online Gambling Faces Long Odds

November 19, 2013

Adelson’s Efforts to Outlaw Internet Gambling Facing Long Odds

Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands Corp. and chairman of Sands China Ltd., in Macau. Photographer: Daniel J. Groshong/Bloomberg

Las Vegas Sands Corp. (LVS:US) Chairman and Chief Executive Officer Sheldon Adelson faces opposition in Congress and from casino-industry colleagues in his longshot effort to stop Internet gambling.

Adelson, 80, who cites moral concerns, has hired lobbyists and public relations consultants in Washington. He has formed an advocacy group led by former Denver Mayor Wellington Webb, a Democrat, ex-New York Governor George Pataki, a Republican, and former Arkansas senator Blanche Lincoln, a Democrat.

The team has a challenging mission: push legislation that would ban online gambling already under way in two states, with operators in New Jersey poised to begin taking bets on Nov. 26. Other states are considering similar steps. To reverse it in Congress, Adelson would have to overcome Senate Majority Leader Harry Reid, who has led the effort to legalize online gambling nationally.

“The horse is already out of the barn,” Joseph Kelly, a professor of business law at Buffalo State University in New York, said in a telephone interview.

Nevada and Delaware started taking online bets this year from residents and visitors. The states acted after a 2011 Justice Department opinion removed some legal hurdles, and they wrote their laws to ensure the businesses would be run through incumbent casinos. That helped to secure industry support.

Adelson’s group, the Coalition to Stop Internet Gambling will push for legislation banning Internet betting in the U.S., according to Webb, the former Denver mayor. The group also wants the Federal Bureau of Investigation to study related law-enforcement issues.

“I’m concerned that if you make something so contagious that easy, you could have kids doing Internet gaming on their iPad,” Webb said in a telephone interview.

Powerful Friends

Reid, the Democrat from Adelson’s home state of Nevada, has pressed for federal legislation that would legalize online betting. In 2012, aided by then Senator Jon Kyl, an Arizona Republican, he tried unsuccessfully to work online poker legislation into a tax and spending deal.

“Senator Reid supports legislation to legalize online poker because he believes it is important to Nevada,” Kristen Orthman, a spokeswoman, said in an e-mailed statement.

Adelson views online betting as “a social evil that must be stopped,” Sig Rogich, a former Republican White House aide who worked as a government affairs consultant to Adelson, said yesterday in a telephone interview.

States’ Plans

The casino executive, who is worth an estimated $33.6 billion, according to the Bloomberg Billionaires Index, expressed his concerns in a June article at Forbes.com. He cited the potential for betting by young people and the poor, and difficulties deterring problem gamblers. Players at brick-and-mortar casinos are supervised, he said.

Richard McGowan, a professor of finance at Boston College, calls Adelson’s opposition “ironic,” asking “How much of a moral issue is gambling at his own casinos?”

Other U.S. casino owners are more diversified geographically, and states are giving priority to local operators in their gambling laws, McGowan said.

Adelson said in the Forbes article he isn’t worried about competition from online gambling in the U.S.

Las Vegas Sands generated just 14 percent of its $3.24 billion in second-quarter revenue in the U.S., with all of that from Nevada and a single casino in Pennsylvania. More than 85 percent of revenue came from Macau and Singapore.

The company offers online sports betting at its Venetian Casino in Las Vegas, according to its website. That business is run by an outside firm, Cantor Gaming, according to Ron Reese, a spokesman. Adelson wasn’t available for comment, he said.

GOP Clout

Adelson put his fortune to work during the last presidential election, donating $93 million to Republican candidates and causes, making him the largest contributor of 2012.

The Adelsons used $15 million in private funds to sustain the candidacy of former House Speaker Newt Gingrich, and spent tens of millions more through super-political action committees backing eventual Republican presidential nominee Mitt Romney.

Adelson’s company, Las Vegas Sands, has stepped up its lobbying this year. Disclosure reports filed with Congress list “Internet gaming” as a top issue. Sands spent $220,000 on two outside lobbying firms in the first nine months of the year, according to disclosure reports. That’s up from $130,000 in all of 2012 and $120,000 in 2011, the reports show. The company contracts with Patton Boggs LLP and Husch Blackwell LLP.

Adelson’s plans, reported yesterday in the Washington Post, have drawn criticism from the American Gaming Association, the Washington-based casino-industry trade group that includes Las Vegas Sands as a member.

“Time and again, government efforts to prohibit use of everyday products have failed,” Geoff Freeman, president of the group, said in a statement. “In 2012, Americans spent nearly $3 billion gambling with rogue offshore operators. The Internet cannot be forced back into the bottle.”

To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net; Julie Bykowicz in Washington at jbykowicz@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Jeanne Cummings at jcummings21@bloomberg.net


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Companies Mentioned

  • LVS
    (Las Vegas Sands Corp)
    • $64.54 USD
    • 1.62
    • 2.51%
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