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Casino magnate Sheldon Adelson leads charge against online gambling

NationCasino and Gambling IndustryGamblingSheldon Adelson
Sheldon Adelson's outcry against online gambling has created all-out war within the gaming industry
Online gambling supporters say it could provide a tax windfall; its foes predict social and economic misery

Suddenly, the curtain of privacy dropped away, and there was billionaire Sheldon Adelson, one of the planet's most reclusive business magnates, taking a decidedly public stand on an issue he calls close to his heart: Internet gaming.

He calls it deplorable for America, and especially dangerous for children.

For years, the 80-year-old chief executive of Las Vegas Sands Corp. and GOP super-donor has kept his counsel to insiders, like a poker player fiercely guarding his hand. Now he's leading a major media campaign against Internet gaming that supporters call sincere and opponents dismiss as self-serving.

Adelson recently told an audience at University of Nevada-Las Vegas that having a casino on every cellphone takes advantage of those who can least afford it.

"I am in favor of gambling," said Adelson, whose $40-billion fortune comes mostly from gaming. "But I am not in favor of exploiting the world's most vulnerable people."

Critics consider Adelson a dubious torchbearer for social change. But the stalwart defender of Israel, whose quixotic causes include donating nearly $100 million to a host of losing Republican candidates in the 2012 national election and $16 million to help finance an Israeli moon launch, refuses to give ground.

Adelson's outcry has created all-out war within the U.S. gaming industry, which largely sees Internet gambling as a good bet. Competing groups are waging their own media offensive, swarming legislatures from Capitol Hill to Sacramento, each employing high-profile former legislators as lobbyists.

He has also enlisted the help of Republican state governors with national ambitions who have expressed opposition to Internet gaming, such as Rick Scott of Florida and Rick Perry of Texas. Many have received sizable campaign contributions from Adelson coffers — in Scott's case, more than $750,000 between 2010 and 2014, according to Florida campaign finance records.

At stake is an estimated $2 billion to $8 billion in Internet gambling revenue that supporters say could provide a tax windfall to local governments. But Adelson, who is joined by a few other online gaming opponents, including several Native American casinos, predicts only social and economic misery.

Industry analysts say it's still unclear whether online gaming will take business from brick-and-mortar casinos. Many see the future in Europe, which largely allows online gambling. "In our view," states a recent report by the global financial services company Credit Suisse, "online gaming in Europe has not cannibalized commercial gaming in Europe."

An April report by Deutsche Bank concludes that the glacial pace of the state-by-state rollout on online gaming and the goal of some to restrict it to poker could suggest that the "air has been let out of the balloon" of wildly optimistic online gaming forecasts.

Even if online gaming lowers profits from traditional casinos, some say the sites will provide their own revenue and establish "relationships" with new gamblers. Said one spokesman for a large casino that favors online gaming: "Over time, online gaming will be available around the world.... It's a future you just can't deny."

The battle lines were drawn in 2011 when the U.S. Justice Department decided that a 1961 law banning interstate sports betting did not apply to other forms of gambling. The move prompted Nevada, New Jersey and Delaware to offer some form of Internet wagering, while other states are considering it.

In March, Republican Sen. Lindsey Graham of South Carolina — a recipient of Adelson campaign funding — introduced legislation seeking to close the loophole and ban all online gaming, shutting down fledgling operations in the three states where it is already legal.

In Nevada, Republican Gov. Brian Sandoval called the bill an unwelcome effort to "undermine state law." And while the state's U.S. senators, Democratic leader Harry Reid and Republican Dean Heller, agree that the 1961 law should be reinstated, they're pushing for an exception for online poker.

Adelson's Coalition to Stop Internet Gambling says online wagering will expose children to gambling. In one spot, a boy brags, "With Wi-Fi, I figured out how to get on gambling sites," adding, "It's on my dad's credit card, so we can always pay it back."

A pro-Internet-gambling lobby, the Coalition for Consumer and Online Protection, says the industry needs the kind of regulation only legalization can bring.

The American Gaming Assn., a leading gambling industry group, has yet to take a stand on the issue, but Adelson is on its board and has threatened to quit if they go against his wishes.

The industry group's president, Geoff Freeman, did not respond to an interview request. But in a bylined piece in USA Today, he took Adelson to task without using the billionaire's name. "Opponents of online gambling will go to any length, coming up with outrageous claims that would lead us to believe that regulated online gaming will suddenly cause the sky to fall," Freeman wrote. "One even expressed fear of an 'Al Qaeda poker network,' which is patently absurd."

Washington insiders doubt Congress will vote on the Graham bill this year.

"Despite the hold he appears to have on much of the Republican Party with his campaign contributions, it's difficult to imagine this bill seeing the light of day anytime soon," said Jim Manley, a political strategist and former aide to Reid.

Experts say that although Adelson jumps into many frays, his success record isn't all that impressive. "If you look at his history, he's dabbled in a lot of different areas, from politics to public policy, but his track record isn't that great or we would have had a President Romney or Gingrich," said David Damore, a UNLV political science professor.

Denver's former mayor, Wellington Webb, who has campaigned on Adelson's behalf, says the casino owner is willing to go against the grain if he believes he's right. "People say he's on a limb on this one. Well, if you choose to stand alone, that just reinforces how strongly you care about the issue," he said.

Whether the battle is social or political, insiders say, Adelson intends to win.

"He has an unlimited cash flow and can put as much money into an issue as he chooses. There's no question he wields significant clout," said Jan Jones, a former Las Vegas mayor who now heads government relations at Caesars Entertainment, which favors Internet gaming.

"He's very bright, but has gotten more opinionated the wealthier he's become. I guess the richer you are, the smarter you get," Jones added. "But once he gets an opinion, he's not likely to change his mind."

john.glionna@latimes.com

Copyright © 2014, The Baltimore Sun
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