Shifting Momentum for Online Gambling

Legalizing online gaming is one of the major issues of the gaming industry. Over the last few years there have been wide swings in the fortunes of online gambling in the U. S. When the feds jumped on the online operators taking bets from American gamblers in April, 2011, it appeared to be dead forever. But pressure from some major gaming corporations, poker players and states in need of additional cash slowly brought it back. Caesars, in particular, has been a very strong advocate for legalizing online gambling. The American Gaming Association took up the mantle and some congressmen joined the efforts. Nevada, New Jersey and Delaware legalized it within their borders; the momentum had definitely switched and federal legislation legalizing some form of gambling online seemed certain.

Until relatively recently legalization of online gaming appeared to have universal industry support, but the support was an illusion. MGM and Caesars have been very vocal in their support of legalization; Stations and Boyd have been less vocal, but have been actively marketing their online product. The rest of the industry was silent. The first break in the silence came when Sheldon Adelson began mounting a well-funded campaign against it. Adelson convinced Steve Wynn to join in condemning the idea. Adelson and Wynn seemed to be standing alone, but that too was an illusion.

Even though they had been silent, many smaller operators felt threatened by online gaming. They feared it would undermine the viability of bricks and mortar casinos and offer no offsetting opportunity, except for the large corporations with millions of players in their data bases. Behind the scenes, a group of the smaller operators organized and began lobbying in Washington and with the American Gaming Association. The AGA felt the pressure and withdrew its support for federal legislation, declaring the issue was too divisive for AGA to support.

Nevada, New Jersey and Delaware have not had the success with online gambling that had been expected when the enabling legislation was approved. The online revenues have been disappointing and have been much less than advocates had predicted. The supporters are scrambling, trying to find what is wrong and fix it. The governor of New Jersey has a great deal of political capital invested in online gambling. The governor and his supporters touted online gaming as the solution to loss of tax revenues from Atlantic City. Thus far, it has failed to come even close to predictions. The lack of success has slowed the momentum in other states and the growing pressure from the “silent majority” within the gaming industry has slowed the momentum in Congress. Last year online gambling appeared certain to gain federal approval and if that failed to materialize, to spread state by state. This year, online gambling appears to be headed for the scrap heap.

But I wouldn’t put my life’s savings on it, nor would I recommend that you do. The momentum has switched so many times already that a person could get dizzy trying to follow it. Maybe what the industry needs is a good compromise. Jon Ralston in his Ralston Reports says there is a new bill wandering around Capitol Hill. The bill would legalize online poker only and prohibit all other online gambling. It is not the first time a poker bill has surfaced, but the times are different now. The debate within the industry has flushed out most of the issues and of all the possibilities. Poker would offer the least threat to the bricks and mortar casino industry. Like the other bills it would benefit Caesars the most, but this one would not harm the other operators. So, maybe all of that back and forth momentum has created the conditions for a compromise. The internet is not going away and no industry, including the casino industry, can escape it completely.

A draft of a new poker-only bill is being floated among lawmakers on Capitol Hill. According to Ralston Reports, Caesars Entertainment is likely the backer of the measure, which is titled “The Internet Gambling Prohibition and Control Act of 2014.” The bill would not allow for other casino table games on the Internet. The new bill comes as other efforts have been made, with the backing of Sheldon Adelson’s Las Vegas Sands Corp., to ban all forms of online gaming nationwide. There is also still a poker-only bill from Texas Congressman Joe Barton, but that hasn’t made any progress. The casino industry hasn’t really supported Barton’s version. Brian Pempus, Card Player Magazine, 5-30-14


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June 2014
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