US: AGA withdraws support of Internet gambling

"One of the things I've learned in this industry is we are extraordinarily competent at shooting at one another," Freeman said.

Online gambling is banned in most of the U.S. but has exploded globally, generating an estimated 25.9 billion euros (US$ 35.5 billion) in revenue, driven mostly by betting in Europe, according to research firm H2 Gambling Capital. The global online gambling market is more than half the size of the entire U.S. commercial and tribal gambling industry, which generated a combined US$ 66.3 billion in revenue last year, according to a study by accounting firm Rubin Brown.

A small number of U.S. states have legalized online gambling, which includes Internet poker. Gambling companies have been closely watching New Jersey, which is by far the most populous state to do so, but the online-gambling business has gotten off to a slow start, partially because some major banks, concerned about regulatory risks, won't let their customers use their credit cards to play.

U.S. casino giants have taken sharply different views in the debate over whether and how to regulate online gambling. Nevada heavyweights including MGM Resorts International and Caesars Entertainment favor legalizing online gambling while Las Vegas Sands, which makes most of its money in Macau and Singapore, wants the practice banned.

Casinos favoring legalization say U.S. residents are gambling online anyway so the regulations are needed. "To protect consumers, MGM Resorts supports the federal legalization of Internet poker as well as state-by-state regulatory efforts," said Clark Dumont, MGM's senior vice president of corporate communications.

A representative for Las Vegas Sands declined to comment, but CEO Sheldon Adelson is leading a national lobbying effort against the practice, which he has said hurts society because it lets people gamble from home. "On this issue, we've agreed to disagree," said Jan Jones Blackhurst, Caesars's executive vice president of communications and government relations.

In December, Freeman submitted written testimony to a U.S. House of Representatives subcommittee stating that the prohibition of online gambling "simply does not work" and that "the government cannot put the Internet back in the bottle."

He told the committee then that attempts to ban online gambling have just "created a thriving black market and driven its economic benefits offshore."

The association will focus its efforts on issues considered less divisive among casino operators such as the U.S. Treasury Department's increased scrutiny on possible money laundering at casinos, said Mr. Freeman during an interview at the annual G2E Asia conference in Macau. He said he wanted to work closely with regulators to "ensure our combined commitment to anti-money laundering policies."

He said the U.S. government's interest in U.S. casino operators' Macau business is "simply a cultural misunderstanding of the ability of people to spend money" in Asia. "There are people here who…can lose US$ 10 million and get on with their day," he said of gamblers in Macau, the world's largest gambling market with US$ 45 billion in gambling revenue last year. "It doesn't by any means mean someone came across those funds in a nefarious way."

Poker Players Alliance executive director John Pappas said this news did not come as a surprise, as the AGA had cut back on lobbying in the past couple of months. "I think they've really scaled back on activity for some time now, it's just now becoming public that they scaled back on activity," Pappas told PokerNews in a phone interview. "There's been some other stories that the AGA is taking a neutral position now because of the split, mostly with Sands. Obviously, when reported in the Wall Street Journal it becomes a bigger story."

AGA members have been funding rival coalitions. Sands created the Coalition to Stop Internet Gambling, and Caesars and MGM responded by backing the Coalition for Consumer and Online Protection to stop a congressional ban on online gaming.

With online poker up and running in three states and many of the casino members of the AGA operating sites, Pappas doesn't think a lack of lobbying from the AGA will have a significant impact on efforts to expand licensing and regulation on the state level. "What we'll have is other organizations coming in to fill the void that can be laser focused on internet gaming, like the Coalition for Consumer and Online Protection," Pappas said. "Obviously, the PPA will always be there, and I think individual casino companies will continue playing a major role in lobbying and funding efforts to see legalized internet poker."