Casino owners battle over online gambling in US

Meanwhile, the casino lobby has made the legalization and regulation of online gambling its signature issue for the year. Major members including Caesars Entertainment and MGM Resorts International are taking steps to get into the market.

The split, which erupted in an advertising battle this week, comes at a pivotal moment for the industry, following last year’s launch of online gambling in Delaware, New Jersey and Nevada. As many as 10 states – including California, Illinois and Pennsylvania – may consider similar legislation in 2014.

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The AGA has launched an ad campaign to push back against Adelson and Wynn – who chair Las Vegas Sands and Wynn Resorts, respectively – and promote what it claims are the benefits of legal and regulated internet gaming.
 
“Internet gaming is here,” said Geoff Freeman, AGA president. The choice for the industry was either to get involved or be pushed aside, he added. The prize is a US online gaming market that, if legalised and regulated, could be worth as much as us$ 13.4 billion within five years, according to H2 Gambling Capital, an industry research firm.

But Adelson, one of the Republican party’s largest donors, has vowed to spend “whatever it takes” to stop internet gambling. Wynn had remained publicly agnostic until siding with Adelson last week. Adelson has assembled other high-profile figures such as former New York Governor George Pataki and former Arkansas Senator Blanche Lincoln, to push his message at the state and federal levels.
 
The group launched a six-figure ad campaign on Monday urging Congress to restore the Wire Act of 1961 – which prohibited internet gambling until a 2011 Department of Justice ruling overturned the federal blanket ban and allowed states to decide for themselves.  “Internet gaming is here. The choice for the industry is either to get involved or be pushed aside,” Geoff Freeman, AGA President said.

“The main thing is to raise public awareness that this is happening. Ninety-five per cent of people have no idea that three states have authorised [internet gambling]. If they did, they would be very frightened by the prospect,” Pataki said.

The group has support from casino mogul Sheldon Adelson, CEO of Las Vegas Sands. The GOP mega-donor is the 11th-richest American, according to Forbes. Adelson has said he is willing to spend "whatever it takes" to stop the spread of Internet wagering.

The battle is turning into a boon for lobbyists and public relations experts in Washington, D.C., and state capitals around the country. Proponents formed their own group, the Coalition for Consumer and Online Protection, which is expected to launch its own six-figure ad campaign targeting federal decision makers.
 "The coalition will operate exclusively at the federal level — encouraging Congress to embrace regulation as the best means to protect minors, detect money launderers and eliminate a dangerous black market," American Gaming Association President Geoff Freeman said in an email to his board last week.
The new anti-online gambling ad features stock scary-voice narration and starts with a black and white shot of two men shaking hands in silhouette. "Right now, disreputable gaming interests are lobbying hard to spread Internet gambling across the country," the ad warns.

Established casino companies have regarded the rise of Internet gambling warily, wondering whether it will cut into profits from brick-and-mortar casino companies or revive the specter of corruption that the industry worked so hard to shed in the 1980s and '90s.

Some executives have decided that Internet gambling, or at least, Internet poker, can be properly regulated and boost the industry. But others have their doubts. Steve Wynn, CEO of Wynn Resorts, recently signalled that he had turned against online gambling for now. Morgan Stanley has predicted that by 2020, online gambling in the U.S. will produce the same amount of revenue as Las Vegas and Atlantic City markets combined: us$ 9.3 billion.
At least three congressional bills related to online gambling have been introduced this year. Two lawmakers introduced bills over the summer that would legalize some form of Internet gambling nationwide. This fall, Rep. Jim McDermott, a Democrat from Washington, introduced a bill that would tax federally sanctioned online wagering.

Gamblers wanting to bet from the privacy of their homes have had few options in recent years. The federal government cracked down definitively on Internet gambling in 2011. But the same year, the U.S. Justice Department issued a ruling making online gambling legal so long as it's permitted on the state level.
 Congress flirted with an online gambling bill in 2012, but industry infighting and partisan disagreement ultimately doomed it. When that legislation failed, states began moving ahead on their own.

 While Europe’s online and traditional casino markets have managed to coexist, the abundance of casinos in the US compared with Europe means that there are few international precedents to help predict who will win the high-stakes battle for the industry’s future.