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Clinton v Trump - The gaming industry’s great unknown

IAG examines the relationship between the gaming industry and the United States’ presidential hopefuls ahead of the 2016 presidential election in November.

Monday, 18 July 2016 16:35
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What can the gaming industry expect from this wildest and most unpredictable of US presidential elections? Put it this way – what if someone told you six months ago that the next leader of the free world could well be a self-proclaimed billionaire property tycoon and reality TV star with four corporate bankruptcies to his credit, who’s running on a pledge to ban the world’s Muslims from entering the United States and wants to build a wall across the country’s 1,900-mile border with Mexico?

Or that a former secretary of state and US senator, the very embodiment of establishment politics and the smart money choice for the White House going on eight years – not to mention a lady who had once been mistress of the place – would have her hands full beating back a challenge to her nomination from a 74-year-old socialist from the tiny state of Vermont who’d been the longestserving member of Congress never to belong to any political party? “There’s an old Southern saying: ‘This one’s full of fleas’,” says historian and author Michael Green, who teaches at the University of Nevada, Las Vegas. “And that takes in this whole election, not just the race for president.”What’s happening is that large swaths of the American electorate are in open revolt against a Washington political establishment they perceive as self-serving, irredeemably corrupt and hopelessly out of touch with their needs and values. It’s the howling of a wind that’s sweeping through every corner of the globe, stoked in different ways and in varying degrees by economic stagnation, income inequality, immigration, terrorism, political destabilization, refugee crises and the breakneck pace of technological change. Broadly speaking – a sense of disempowerment centered on a belief that control of one’s life and destiny has been ceded to inscrutable forces rigged to benefit elites. There are certain parallels in the Umbrella Movement in Hong Kong, in Taiwan with the triumph of the pro-independence party in national elections earlier this year, and in the rise of a budding strong man in the Philippines who promises like Donald Trump to heed no one and offend just about everyone.

Mr Trump has been particularly adept at playing to the fears of the everyman with his brash talk and sloganeering about “making America great again” – echoes of which were heard in the UK Independence Party’s successful Brexit campaign and in the strident nationalism that’s on the ascent across Europe. Former Alaska Governor and Republican vice presidential nominee Sarah Palin, the darling of the anti-government Tea Party movement of the last decade, trotted it out in her opening for Mr Trump at a recent conservative political rally: “We’re going to take our country back,” she cried, “and either you’re with us or against us!”

 “WE’RE USED TO THIS”

As veteran online gaming consultant and broker Sue Schneider sees it, “All bets are off. This ‘throw the bums out’ change for change’s sake, this is all new. There are no predictions. You just have to sit back and watch and see how it plays out.”

Which is pretty much what the gaming industry is doing if presidential campaign contributions are any indication. To date, the industry has spread slightly more than US$500,000 across the entire field of candidates, according to the latest Federal Election Commission figures compiled by the Washington DC-based Center for Responsive Politics – a pittance compared to the tens of millions banks and hedge funds, insurance and pharmaceutical and health care companies funnel to their choices.

The split between Republicans and Democrats has slightly favored the former, 55% to 45%. But Democrat Hillary Clinton has been the industry’s top recipient at US$164,337. Surprisingly, Bernie Sanders ranks fourth, only US$200 behind former Florida Governor Jeb Bush, the son of a president, brother of a president and the Republican who was supposed to take his party’s nomination in a cake walk. Actually, the Republican the industry clearly favored was Ohio Governor John Kasich, a reliably conservative career politician who served 18 years in the US House of Representatives and was a commentator for Rupert Murdoch’s Fox News. As for Mr Trump, the presumptive Republican nominee heading into the party’s national convention later this month has received all of US$4,561.

Excepting Sheldon Adelson and probably Steve Wynn, “I do not expect most of the rest of the gaming industry to be strongly for Trump – unless it looks like he’s going to win,” says Professor Green.

The problem, says Andrew Klebanow – a long-time industry marketeer and founder of gaming consultancy Global Market Advisors – is that, “You just can’t predict what his presidency will look like.”

Gaming, like most corporate communities, tends to tilt Republican, but as Professor Green points out, “This is an unusual election.

“The Republican Party in the last half-century has had this internal conflict between the evangelical [Christian] side and the libertarian side,” he says. “And gaming industry leaders historically have wanted the libertarian side to win out. Libertarianism stands for fewer taxes and regulations on business, which of course includes tourism. But that also relied on a degree of consistency within the Republican Party, which does not exist right now with Donald Trump. Presumably, as a businessman, he understands their concerns. But are they able to trust him? The concern is not only whether he’s a Republican, but whether he even knows himself what he is. We haven’t exactly seen a lot of policy statements.”

As for Native American gaming, a US$28 billion industry in its own right, Democrats have historically been more supportive overall than Republicans. Certainly there is no love lost between the tribes and Mr Trump, who once secretly backed a smear campaign in newspapers and radio aimed at turning public opinion against a New York tribe seeking to open a casino in the southeast of the state. Fearing that expansion in New York would hurt his struggling casinos in Atlantic City, he approved ads that depicted the tribe as violent criminals and drug dealers.

Several years before this, in 1993, when tribal gaming was just beginning to find its legs, he appeared before a committee of the House of Representatives to testify against expansion in terms that might be described generously as inflammatory and were construed by many at the time as blatantly racist. Conversely, a decade later, he would invest heavily in a tribal casino near Palm Springs, California, in exchange for what turned out to be a shortlived management contract.

“It’s not a party issue, we work with Democrats and Republicans,” says Victor Rocha, editor of an influential California-based Indian news site called Pechanga.net. “In this case, it’s the individual, not the party.”

Perhaps the biggest concern for the Native American community, gaming and non-gaming, is the key appointments the president controls over who will head the cabinet-level Interior Department, which includes the Bureau of Indian Affairs and the National Indian Gaming Commission – an independent federal regulatory agency that operates within the department.

“Under Clinton, the Interior Department will look favorably on Indian gaming and Clinton’s policies will favor Indian issues generally,” says Mr Klebanow.

“It makes a difference,” adds Mr Rocha. “We have a history of working with Hillary and Bill Clinton was president during an explosion of tribal gaming. The Clinton administration was a great ally … but as I say, we’ll work with whomever. I’ve worked with several presidents and I see how the tribes respond to the changing of the guard. We’ve been around forever. We’re used to this.”

So far in the 2015-16 federal election cycle, 14 of the 20 largest gaming industry contributors to all campaigns have been Indian tribes.

“THEY VOTE, THEY BREATHE”

The appointment powers of the president are not limited to the departments of the government but extend to federal judgeships – including the justices of the US Supreme Court – and the office has amassed over the years a vast array of administrative and executive powers. Taken together with the president’s control over foreign policy and his power to deploy the military, it vests the office with a decisive say in matters of international trade, war and peace. But it’s still Congress that controls the purse strings and makes the laws – and there are issues the industry knows are critical to its future. Among them are repealing a nationwide ban on sports betting, tribal-labor relations and online gambling – or from Mr Adelson’s perspective, its prohibition – all of which will be decided on Capitol Hill.

Paul DeBole, an assistant professor of political science at Lasell College in Massachusetts who writes and speaks frequently on gaming issues, says, “When you’re talking about power, it’s Congress.”

And that’s where the big gaming money is going – more than US$13 million to date spread among partisan advocacy groups known as political action committees, to party committees and to the campaigns of individual candidates. The split is even more closely divided than in the presidential race – currently 51% Republican and 49% Democrat, according to the Center for Responsive Politics – and that’s not surprising given what’s at stake. The GOP commands a 60-seat majority in the House which has enabled it to block any legislation it doesn’t like, but it cannot control its own far right wing so even proposals it does like go nowhere. As a result it’s been legislative paralysis through most of the Obama presidency.

“They’re all jockeying for power. They can’t get out of their own way,” says Mr DeBole. “You’ve got 435 members who can’t agree today is Tuesday.”

Where this gets interesting is that the entire House is up for reelection in November – all 435 seats. Control of the 100-seat Senate has been more fluid. Republicans hold a nine-seat majority, but they have the most to lose in November: 24 of the 34 seats up for grabs are theirs and the loss of just four or five of them will be enough to turn the upper chamber Democrat.

Mr Adelson, the 15th richest person in the country, does not want that to happen. “Which goes to the question of what kind of election we’re having – what effect would a Trump presidency have and what effect his candidacy will have down the ticket,” says UNLV’s Green.

Five years ago, determined to deny a second term to Mr Obama whom he deemed insufficiently passionate about Israel, Adelson single-handedly kept Newt Gingrich in the race for the Republican nomination, spending US$15 million on the celebrity conservative’s forlorn bid. He blew another US$30 million on Mitt Romney in the general election. When the dust settled he and his wife, Miriam, had spent an estimated US$92 million.

The couple is being considerably more frugal this time around, contributing a little more than US$1.6 million to date – 96% of it to GOP and conservative groups. At US$1.3 million, Las Vegas Sands is the biggest industry spender in the congressional races so far, shelling out more than twice as much as anyone else and all of it to Republicans. Note that none of this includes any socalled “dark money” contributions to advocacy groups which are organized as charities under tax laws and don’t require donors to reveal their identities.

Mr Trump hasn’t benefited from Adelson’s largesse as yet, but it’s certain the checkbook will come out once he’s officially anointed the Republican nominee later this month. “Trump was in Las Vegas and has met with Adelson,” notes Klebanow. “I know Adelson supports a Trump presidency. But I haven’t seen anything indicating huge financial support. I haven’t heard anything yet.”

Professor Green sees this as an “oddity.” “I don’t pretend to traffic in the Tao of Sheldon Adelson, but Hillary to me sounds more supportive of Israel than Trump. It’s one of her core issues. But I guess Adelson feels he would have more influence in a Trump White House than a Clinton White House.”

Of course, whether he will is another matter entirely.

“That’s a good question,” says Klebanow. “With any other Republican candidate I would say yes. But with Trump you just don’t know. Is he going to be conservative or liberal? I don’t know and I don’t think anybody knows.” 

Then there are Mr Trump’s pronouncements on trade, particularly his vow to declare China a currency manipulator which fairly crackles with risk for the massive Macau investments of LVS, Wynn Resorts and MGM Resorts International.

“Trump’s foreign policy is very anti-Republican. He’s not free trade. His nativist views are clearly antithetical to that,” says Klebanow. “If President Trump tries to strong-arm China there will be repercussions and they could be deleterious. My biggest fear is what are the long-term effects? Macau is where the impact will be most directly felt.”

The belief among Mr Trump’s gaming supporters, says Professor Green, is that he will “settle down” once in office and heed their counsel. “The problem is they’re not the only ones who will be talking to him about this … in politics everyone knows that eventually you have to do some rationalizing. But how does that work with someone with no political record? This is truly a wild card. Donald Trump is the perfect candidate for someone with a casino mentality. If you’re a gambler this is an interesting bet.”

For Klebanow it calls to mind something an executive of the World Wrestling Federation once told Sports Illustrated. “He was talking about the fans and said, ‘There are only two things that scare me about wrestling fans – they can vote and they can breathe.’

“You can say the same thing about the American electorate.”

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