Over the next few months, there will be a slew of applications for Pennsylvania online gambling licenses as companies stake out positions in the new market. And despite sky high tax rates, several of the state’s brick-and-mortar casinos are expected to pony up anywhere from $4-10 million each to get their flags planted. Many will face a tough decision about whether or not to apply, given the upfront cost and uphill battle for profitability.
One company that can afford to speculate is Las Vegas Sands Corporation, which operates the highly successful Sands Casino Resort in Bethlehem, PA. And while LVSC majority owner Sheldon Adelson’s vehement opposition to online gambling is a matter of public record, Sands has been mum so far over whether or not they plan to pursue a license.
The timeline for licensing
Pennsylvania passed its gambling expansion law at the end of October, among other things legalizing online poker, casino games and DFS in the state. As the law is written, land-based casinos in PA have the first crack at licenses and can save $2 million on a comprehensive license (table games, slots and peer-to-peer poker) by applying in the first 90 days.
The Pennsylvania Gaming Control Board has yet to announce when they will begin accepting applications, but once they do, casinos that want to participate in all three product categories will rush to meet the deadline.
Adelson’s opposition runs deep
Sheldon Adelson, the 14th richest person in the United States, is no fan of online gambling, nor of Video Gaming Terminals (VGT), Satellite Casinos or pretty much anything else in the gambling expansion package. Adelson has his own political action committee around this issue and has repeatedly pushed for an outright ban at the federal level.
Adelson’s blanket opposition to iGaming has never really made a ton of sense. While numerous casino operators have opposed online gambling legislation, the opposition is nearly always related to the content of specific bills being debated, rather than the entire concept. Adelson has never appeared to be trying to negotiate anything; he just wants it banned.
There are plenty of reasons to assume, based on his behavior over the last few years, that Sands would want nothing to do with the coming regulated online gambling market in PA.
They still might apply
And yet, few believe Adelson’s opposition has ever been anything other than a pragmatic attempt to stave off online competition. While he’s taken his campaign to an extreme, no one I know really took him at his word when he said the following to Forbes in 2013:
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, and his company’s management, could be looking at this a little differently now after seeing how well the industry has done in New Jersey. While revenue took a few years to pick up in the Garden State, the five NJ online casino licensees will combine to generate right around a quarter billion dollars in 2017. And land-based casinos haven’t swung in the opposite direction as a result.
Indeed, Atlantic City as a whole is doing better thanks to the addition of the online vertical. New Jersey also has a pristine record when it comes to combatting the biggest concerns, including problem/underage gambling and proper geolocation.
Sands might simply concede that entering the online market is in their best interest, despite having lobbied against legalization for years.
An odd quandry
And yet, they’ve put themselves in an uncomfortable position. I doubt many of their potential customers are more than vaguely aware of Adelson’s political activity in this space, and I can’t imagine it’s too late for a change in messaging.
But Las Vegas Sands Corporation, as an organization, is at a bit of an inflection point. The company can’t very well become a licensed online operator in Pennsylvania while also continuing their lobbying efforts toward a federal ban. And Adelson is in deep on this issue, having staked out a very public position for years. His wallet is millions lighter as a result of this campaign.
While it may make sense from a business perspective for Sands to launch an online casino, their CEO may just personally be too far along the path of resistance to turn back around. My belief, as of today, is that they’re staying out.