Sheldon Adelson’s Battle Against Pennsylvania Online Gambling

The US online gambling industry has had its fair share of protestors throughout its relatively short history who spout age-old moral and ethical platitudes to support their cause. But over the past few years, there’s been no more vocal opponent of internet gaming than Las Vegas Sands CEO Sheldon Adelson, the casino billionaire now wielding his substantial political influence in the state of Pennsylvania.

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While state lawmakers have flirted with legalizing iGaming in the past, Pennsylvania finally passed its comprehensive gambling expansion law in October of 2017. The law, among other things, legalizes online gambling, daily fantasy sports and a certain number of video gaming terminals (VGTs) in the state.

Adelson, whose company owns the Pennsylvania’s Sands Bethlehem Casino, was vehemently against two parts of the expansion bill – legalized Internet gambling and the amendment to include up to 40,000 VGTs in businesses which hold liquor licenses. (Ultimately a compromise was reached on VGT’s, allowing far fewer than originally proposed.)

During efforts to pass this law, Pennsylvanians for Responsible Government (PRG), funded largely by Adelson, responded by unleashing a full-scale barrage of TV and social media ads in opposition. But this is only one facet of the tycoon’s fight against the industry.

Let’s take a closer look at Adelson, his continued battle against online gambling, and his ultimately failed effort to stop legalization in the Commonwealth.

Meteoric Rise from Poverty

Born in 1933, Sheldon Adelson rose from humble beginnings and a childhood of financial hardship to become a self-made billionaire with a reported net worth of $30.4 billion.

A New York City college dropout, Adelson went on to become the founder, chairman and CEO of the Las Vegas Sands Corporation (LVS), the largest land-based casino company in America.

In 2004, Adelson’s Sands became the first company to launch a Las Vegas style casino in the Chinese gambling enclave of Macau. Three years later he opened his second casino in the territory, the Venetian Macau Resorts hotel. Both investments paid off spectacularly, and turned the CEO into one of the richest men in the world.

In 2009, Adelson expanded into the Keystone state, opening the Sands Bethlehem after having won a coveted slots license by the Pennsylvania Gaming Control Board (PGCB) three years earlier.

Republican Party Kingmaker

Adelson, who once identified as a Democrat, decided to switch his political affiliation to the Republican Party in 2012. In a Wall Street Journal op-ed (paywall) written at the time, he gave his opinion that Democrats weren’t doing enough to support Israel, offering that as one of the main reasons for his about-face.

Since that time, the tycoon has spared no expense in his pursuit of political influence, regularly doling out millions of dollars in donations to his favored GOP candidates. In the 2012 election cycle, Adelson gave upwards of $100 million to the campaigns of Newt Gingrich and Mitt Romney, in a failed bid to put a Republican in the Oval Office.

Adelson’s War on iGaming Begins

In November 2013, a scant six months after Nevada dealt its first hand of online poker and the very same month that internet gambling soft launched in New Jersey, Adelson went on record with his very noisy anti-iGaming stance, making it clear that he was determined to stop what he painted as a scourge on the most vulnerable members of our society.

In November of that year, Forbes quoted Adelson in his first interview since the Washington Post revealed that he had hired an army of lawyers and lobbyists to sway Congress to ban online gambling.

“I am willing to spend whatever it takes,” he said. “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.”

Adelson’s declaration of war on internet gaming shocked a casino industry that was preparing for the opportunities and healthy revenue streams expected to come from the launch of Internet gaming, particularly in the states of New Jersey, Delaware and Adelson’s home state, Nevada.

Restoration of America’s Wire Act

To accomplish his goal, Adelson has used his political clout to push an anti-online gambling bill known as the Restoration of America’s Wire Act (RAWA). The legislation (House bill, Senate bill), written by one of the CEOs own lawyers, seeks to ban online gaming at the federal level by reversing the 2011 Justice Department opinion which ruled that The Wire Act only applied to sports betting, not to Internet casino and poker games.

RAWA was dutifully introduced in Congress by Lindsay Graham (R-SC) and Jason Chaffetz (R-UT) in March 2014, but failed to gain traction. Coincidentally, both have been beneficiaries of Adelson’s largess.

RAWA Threatens States’ Rights

The bill has come under fire by even Republican lawmakers, however, who say that it would take away states’ rights to choose whether or not to legalize gambling. It would also shut down the fully functional iGaming industry in Delaware, New Jersey and Nevada.

In addition, opponents say that the bill could put a halt to online lottery sales, an important source of revenue for some states. Former libertarian Rep. Ron Paul strongly opposed the legislation in a 2014 op-ed, arguing that it was “blatantly unconstitutional” and was written for the benefit of “one powerful billionaire” (i.e. Adelson).

RAWA reared its head again in 2015 when it was reintroduced by Graham and Marco Rubio (R-FL), two men who were no doubt interested in currying Adelson’s favor before their 2016 bids for president.

The Coalition to Stop Internet Gambling

Adelson has also created the Coalition to Stop Internet Gambling (CSIG), which ostensibly works to protect society’s most vulnerable from “losing their homes” through the “click of a mouse” and stopping minors from illegally logging in and becoming addicted to gambling.

The organization has produced several over-the-top ads which argue that iGaming could help fund terrorist groups or that criminals could use the platform for money laundering.

Adelson’s Warnings Ring Hollow

In over four years of legal iGaming in NJ, NV and DE, there is virtually no evidence to support any of Adelson’s arguments against the industry. The billionaire has been fond of saying that online, you can’t really “know your customers” since you can’t actually look them in the eyes. In reality, though, operators know virtually everything about their online patrons, due to the extensive personal information required to create an account.

In fact, legal US operators have shown themselves more than capable of offering online gambling with stringent security measures and regulations, which exceed even those employed by Adelson’s own land-based casinos.

In one notorious example, an activist clandestinely filmed underage players gambling, drinking alcohol, and cashing in chips inside Adelson’s Venetian and Palazzo casinos with no problem whatsoever. In comparison, there have been virtually no known cases of underage gamblers accessing a gaming site, nor have there been any instances of fraud or money laundering. Sands’ casinos, however, are routinely fined for allowing underage players to partake.

Cannibalization Fears Unfounded

Adelson’s naysayers argue that online gambling is, contrary to his opinion, a boon to the core casino industry and creates jobs and opportunities for Americans to spend their money on gambling at times when they can’t make it to a land-based casino. And so far, there’s no hard evidence to prove them wrong. In fact, a 2014 study conducted by researchers Kahlil S. Philander, Brett L.L. Abarbanel, and Toni Repetti concluded that iGaming was complementary to brick-and-mortar casinos, and did not pose a threat to cannibalize their land-based businesses.

Moral Crusader or Self-Serving Capitalist?

A more pragmatic assessment is that Adelson’s motivation comes from a belief that online gambling is “suicidal” for the US casino industry long-term, and will eventually devour existing land-based businesses and revenues. The bottom line for the Nevada resident is more likely concern for his multi-billion dollar bank balance.

Pennsylvania – The New Target of Adelson’s Fury

On April 16, 2015 at the Pennsylvania Legislative Hearing on Online Gambling, Andy Abboud, Senior Vice President of Government Affairs for Las Vegas Sands, argued that there would be negative repercussions for making gambling available on every Internet device.

Significantly, Mr. Abboud echoed the concerns of his LVS boss Adelson, whose focus has been not on the technical legal questions surrounding online gambling, but on stressing the moral impact to families. Mr. Adelson has been acutely vocal about the dangers of online gambling as it pertains to addicts and children, repeatedly sharing concerns about crime, fraud, and “bad actors” taking advantage of these vulnerable groups.

Adelson Singles out Rep. John Payne and HB 649

In October 2015, CSIG told Pennsylvanians in an attack ad that their kids aren’t safe online, and warned of the dangers posed by PA Rep. John Payne’s online gaming bill HB 649.

The video titled “Are Pennsylvania Kids Safe Online?” promotes scare tactics to persuade the moral majority to the Coalition’s way of thinking at the expense of demonizing Payne, a man who simply championed the citizens of the Keystone State and their right to gamble online should they so choose.

Along with expanding civil freedom, Payne’s proposed bill to legalize online gambling was aimed at raising revenues to help balance Pennsylvania’s state budget deficit. The effort earned him the ire of the billionaire casino operator.

The Trump Administration

Adelson’s fight spilled over to the following year. While some, including pro poker player Mike Matusow, expected a Trump presidency to be a rubber stamp for online gambling, they underestimated the Adelson-Trump connection.

Having gifted the Trump campaign the astronomical sum of $25 million, Adelson will surely be hoping to get something in return. That’s how modern politics works, and should Congress get a federal bill to Trump’s desk outlawing online gambling, the odds of him signing it are high.

Lindsay Graham is also determined to keep the prospect of banning iGaming alive, and even made a point of asking Atty. Gen. Jeff Sessions whether he would oppose the industry in the US during his confirmation hearing. The AG responded that he opposed the 2011 DOJ ruling and promised to revisit the topic after “careful study.”

Shifting Gears to Counter the VGT Threat

More recently, Adelson has proven that his anti-online gambling stance has not waned with time. On June 6, 2017, the tycoon’s Sands Casino Resort Bethlehem spearheaded an aggressive $1 million ad campaign via Pennsylvanians for Responsible Government to fight the proposed legislation which threatened their stronghold on gambling activity and revenue in the Keystone State.

What’s most surprising about the fight this time around is that Adelson’s venom seems to have shifted from the issue of online gambling to keeping certain Pennsylvania establishments from installing VGTs, which offer real-money blackjack, poker, and other casino games.

The ads predict doom and gloom if VGTs are permitted in locations outside of the licensed casino environment, with a dire outcome for PA neighborhoods that could ultimately cost the state over $1 billion in tax revenue.

The campaign’s claims are largely unsubstantiated, and skew the reality to mislead viewers about what the bill is proposing and the impact it might have. Currently, Sands is the only one of Pennsylvania’s 12 casinos participating in the PRG alliance.

Only Time Will Tell

While Adelson’s seems to stand alone in his tenacity to dominate politics and public policy through the sheer power of money, it’s yet to be seen whether the efforts will pay off. There is a feeling in the state that Adelson is out of touch with what most Pennsylvanians want, the freedom of choice to play their favorite casino table games and slots titles online.

Adelson’s next move will be telling, now that legalization efforts have culminated in a win for online gambling supporters – he could continue to focus on a federal ban, make efforts to reshape the Pennsylvania landscape or simply give in and participate in the new opportunities that are available.

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