INSIDE ASIAN GAMING | December 2013 4 Inside Asian Gaming is published by Must Read Publications Ltd 5A FIT Center Avenida Comercial de Macau Macau Tel: (853) 8294 6755 For subscription enquiries, please email
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[email protected] EDITORIAL A TangledWeb S ay what you want about Sheldon Adelson, he does keep it interesting. The latest is he’s tapping into his bottomless bank account to head off the spread of Internet gambling in the United States. He wants Congress to outlaw a business model that a good portion of the rest of the country’s land-based industry is looking to for a growth story. Time was when U.S. casinos could always count on jurisdictional expansion. That’s mostly gone away over the last six or seven years after the tide started out onmake-believe home values, sparking the financial crisis that sparked the Great Recession that left millions of overextended consumers high and dry in the worst job market in decades. It’s Chinese high rollers keeping the Las Vegas Strip afloat, the Indian tribes have the rest of the West blanketed, and there aren’t enough Han in Gary or Columbus or Dubuque or Dover or Wheeling or Finger Lakes to prevent newmarkets this late to the game from slicing the existing pie thinner. In 2006 there were 20 states with commercial casinos and racinos, 496 venues in all. Last year there were 23 states and 513 venues. Gaming revenues over this time have grown at a compound annual rate of 2%. Or take the very stark example of Atlantic City, where revenues since 2006 have fallen 40%. Revel’s tumble into bankruptcy earlier this year, within 11 months of opening, was a coda to whatever faith remained that the market could be revitalized with meaningful new visitation. But with New Jersey now the most populous state to legalize Web gambling, estimates of the upside for the ailing seaside resort range from $200 million a year to more than $1 billion. There are at least eight more states with regulatory schemes on their agendas. Suddenly, America is a growth story again. Forecasts of the legal online market over the next five years range as high as $9 billion. And here comes the pugnacious chairman of Las Vegas Sands with his fortune, the 11th largest in the country, bent on spoiling it all. Mr Adelson sees Internet gambling blowing up in the industry’s face because of the outsized threats he believes it poses to children and the poor—“a societal train wreck waiting to happen,” he calls it. This resonates with politicians, no government wanting to appear pro-gambling, however much they like the tax revenues, the jobs and related spinoffs. Which make it a dilemma for them as well, a bit of a head-spinner, morally speaking.Vietnam, for instance, has sought to protect its citizens by banning them from the country’s casinos only to recognize that they’ll have to let go of that to attract the foreign investment in resort development they believe the economy needs. In fact, Mr Adelson was in Hanoi last month talking up the benefits of the billions he’ll invest there if they do. Macau, the source of more than half of Las Vegas Sands’ EBITDA, is a place many Americans—some of them in Washington—view as a den of smugglers and money-launderers. The government of Singapore, the source of another 35% of that EBITDA, shares Mr Adelson’s hostility to the Web, and in their ongoing battle against problem gambling they’re cracking down with measures aimed at blocking site access and payment-processing and advertising. But they, too, are finding an arm’s length relationship with the industry increasingly more difficult to maintain as market growth on the land-based side gets harder to come by. Mr Adelson is going toWashington in January to make his pitch to lawmakers personally, timing the trip to coincide with the launch of his advocacy group, the Coalition to Stop Internet Gambling, which plans to fill its ranks with organizations representing women, African Americans and Hispanics, most of them expected to share his concerns, few expected to have much in common with the tycoon’s politics. But he’s got two prominent Democrats on board as the coalition’s national co-chairs, he’s hired some K Street pit bulls to work the corridors of power, and Republican pollsters the Tarrance Group are on the payroll to deliver public opinion. “In my 15 years of working with him, I don’t think I have ever seen him this passionate about any issue,” says Andy Abboud, his top political advisor. The American Gaming Association, of which Sands is a member, is scrambling to mount a counter-offensive. They advocate national regulation, but even with Harry Reid in their corner they can’t get a bill through Congress. John Pappas, who heads the AGA-aligned Poker Players Alliance, says he’s not scared. “We don’t make a habit of picking fights with billionaires. But in this case, I think we’ll win, because millions of Americans who want to play online will oppose this … along with dozens and dozens of states that want the freedom to authorize any kind of gaming they see fit.”