Will Nevada Ever Jump onto Online Bandwagon?

As online casinos march forward, Adelson will either halt that march or miss the boat.

The rise of online gambling appears to be unstoppable, and many observers are speechless as to why Las Vegas does not accept the inevitable. The online format offers more convenience to players as they no longer have to take long, expensive trips to casino hotspots like Vegas and Atlantic City. New Jersey and Delaware have already legalized online casinos, and websites were launched last year.

Despite the writing on the wall, Vegas gambling interests refuse to move into the online sphere, and are fighting tooth-and-nail against legalization. Legendary Las Vegas casino magnate Sheldon Adelson continues his personal crusade against online casinos in the United States. He recently told reporters “I am willing to spend whatever it takes” to stop the legalization of online gambling. He discussed his stance at length with the Washington Post.

“My moral standard compels me to speak out on this issue because I am the largest company by far in the industry and I am willing to speak out. I don’t see any compelling reason for the government to allow people to gamble on the Internet and nobody has ever explained except for the two companies whose special interest is going to be served if there is gaming on the Internet, Caesars and MGM.”

The State of Nevada Today

– KPMG reported that between 2008 and 2012 the global market for interactive gaming grew by 42 percent, while the overall gaming market grew by only 15 percent

– Within the interactive gaming market, mobile gambling is the fastest growing sub-sector

– In 2012 Macau’s land-based casinos earned $38 billion in revenue, dwarfing the $6.2 billion pulled in by Las Vegas

There is no doubt that Las Vegas, Nevada has lost much of its luster. It took a big hit following the financial crisis in America. It has been overtaken by Macau as the world casino capital. Now it is facing stiff competition from online casinos. Vegas bigwigs like Adelson have two choices: get into the online game before it’s too late, or use their resources to prevent it from getting off the ground.

One Vegas mainstay, Caesar’s Entertainment, has chosen to add the online platform to its arsenal. In 2013 it launched three online casinos in the state of New Jersey. It owns a large land-based casino in Atlantic City, and some feared that the online casinos would “cannibalize” revenue from it. However, executives have stated that the two markets are complimentary, not competitive.

Nevada did make gambling news by legalizing online poker sites last year. However, they provide less competition, as most visitors to land-based casinos go to play slots and blackjack, not poker. The state has blocked legalization of online casinos. We know that Caesar’s Entertainment is not behind the prohibition, so we would probably bet our money on Adelson being the culprit.

What about this Adelson fella?

Adelson and his Las Vegas Sands empire have chosen the latter course: block legalization as much as possible. He has used his impressive stack of cash and political clout to prevent online casinos from coming to Nevada. While he could not prevent legalization in New Jersey and Delaware, he is taking the fight to the federal level.

After decades of fed opposition to online gambling, in 2011 the Justice Department reversed course and announced it would not challenge state laws in favor of legalization. In effect, there are no American gambling laws, merely state gambling laws. Adelson is trying to change this, lobbying the House of Representatives to pass legislation banning online casinos nationwide.

He recently gave testimony to the house, arguing that online casinos pose a social threat to America’s youth and low-income groups, as well as threaten the online health of the gambling industry. Gambling on the internet, he says, will prove impossible to regulate effectively and will eventually lead to low profit margins for casino operators.

While it seems ironic that a man who has made a fortune off of other people losing money would object to online casinos for moral and ethical reasons, he may have a point. Worldwide, online gambling sites have proven difficult to regulate. One particular issue is the fact that underage users can access them by lying about their age.

Online Casinos March Forward in America

Adelson is the 11th richest American according to Forbes and has numerous powerful cronies in the US government. If anyone can block legalization of online gambling sites in America, it’s him. But it looks like the march of time is working against him. The Justice Department made a major decision in 2011, and we all know how slowly the US federal government moves. It’s unlikely they will change their stance anytime soon.

In addition, Delaware and New Jersey withstood an assault from Adelson to push through legalization. They are home to online casinos which are popular with many locals as well as provide tax revenue. Many other states allow sportsbetting via internet and have indicated possible openness to new platforms. Adelson couldn’t even stop his home state from legalizing online poker rooms.

In addition, online gambling is legal in Europe and many other parts of the world. American gamblers seeking to make wagers from their bedrooms or offices can simply type in a European url. Even if opponents get their way and the feds ban online casinos, gamblers will take their business elsewhere. Land-based casinos in America will still lose money.

Will Mr. Adelson have his way?

Internet technology is too universal to be ignored for long. Whether they choose to visit land-based casinos or not, millions of gamblers love the convenience that online casinos provide. Adelson can spend every penny in his war chest and buy every politician in the country. He may block legalization for a long time. But the march of technological innovation is inexorable. As long as the internet exists, online casinos will become increasingly popular.