Why Is Sheldon Adelson Seeking To Ban Interstate Online Casino Games In Nevada?

April 22, 2015
Why Is Sheldon Adelson Seeking To Ban Interstate Online Casino Games In Nevada?

Anti-online gambling zealot Sheldon Adelson is pushing for a federal ban on online casino and poker games that would roll back the legislation passed in New Jersey, Delaware, and Nevada. But in the Silver State, Adelson is also hedging his bets, considering he’s backing a bill, AB 414, that would simply limit the state’s ability to form interstate partnerships.

AB 414 is currently making its way through the Nevada legislature. The bill’s purpose is to restrict interstate online gaming compacts to poker.

The bill has been a bit of a mystery since it was first introduced, as it was unknown who was calling for the limitations on interstate compacts. As it turns out, Sheldon Adelson is behind the effort, according to a recent article in GamblingCompliance.

The bill hasn’t garnered all that much attention, mainly because it appears to prohibit something nobody is requesting, considering the bill simply disallows Nevada from entering into interstate agreements with other states for all online casino games with the exception of poker.

What Adelson, or anyone else for that matter, feels this will accomplish is not quite clear at this time.

Michael Alonso, a Caesars lobbyist, told GamblingCompliance, “Nothing is broken. We don’t know what they’re trying to fix.”

Still, there has to be some reason Adelson is championing AB 414.  Let’s see if we can figure out.

Online casinos don’t require liquidity

Before I delve into some of the potential reasons Adelson is backing this bill, it’s important to touch on why the bill seems (on its surface) to do next to nothing. And the reason is liquidity.

Online poker sites require players to run multiple games at multiple stakes. The more players you have, the more games other players have to choose from, and the bigger the prize-pools you can offer in your tournaments.

If an online poker player wants to play $5/$10 No Limit Holdem and no one else is willing to sit in that game, the game doesn’t run. On the other hand, an online casino only requires a single person to sit down at any table for the game to run, as the player is competing against the dealer.

There is no need for two or more willing participants at an online casino.

The only game at an online casino that would benefit from interstate agreements is poker, the only game Nevada has ever intimated it would be looking to partner with other states on to increase player liquidity.

Since nobody is seeking to increase liquidity through interstate compacts at their online roulette tables or slot machines, AB 414 is the online gaming version of passing a law that prohibits reading books backwards. The bill simply doesn’t make much sense.

So what is it Adelson and AB 414 supporters are hoping to accomplish?

Explanation #1: Eliminate progressive jackpots

If Adelson’s fear is truly cannibalization of land-based casinos, then AB 414 could remove one of his biggest competitors, online progressive slots and other progressive jackpots linked to machines nationwide. Whether in a land-based or online casino, these games are, for the most part, the only way for the average Joe to spend $20 and have the chance to hit a massive payday.

If these six- and seven-figure jackpots can only occur in a live setting, it might diminish the appeal of online slots, and in the minds of cannibalization adherents, keep players coming to brick and mortar properties.

Furthermore, should Nevada eventually expand and allow full online casinos, it would likely attract far more interest from other gaming entities than the state’s current poker-only approach, which has proven to be a bust in terms of revenue.

Therefore, if operators are limited (particularly in oft-marketed jackpots) in what they can offer, perhaps they will once again pass on getting involved in the industry.

Explanation #2: A shot across the bow

If Nevada is considering expanding their online offerings beyond poker (which would not require a new bill, as state law allows the Nevada Gaming Commission to approve any online casino style games an operator wishes to launch), AB 414 could simply be a warning shot to Nevada legislators – an indication that Adelson is going to fight any attempt to expand beyond poker.

Explanation #3: Just because

Sheldon Adelson is not a fan of online gaming, so perhaps this is simply his way of giving the middle finger to some of his competitors who are involved in the burgeoning vertical.

While it doesn’t make much sense to spend money lobbying for a bill that appears to be all bark and no bite, it happens all the time in Congress and in state legislatures.

And Sheldon Adelson has certainly spent some of his money on more foolish endeavors. Case in point: reportedly giving Newt Gingrich’s 2012 presidential campaign $50 million.

Explanation #4: We don’t know

This is the most likely reason Adeslon wants AB 414 passed, and since it’s the most likely reason it should also be one of the most concerning.

Maybe this is simply the start of some larger legislative process that would attempt to roll back online gaming in Nevada.

Maybe the passage of AB 414 allows for some parliamentary procedure to be used down the road.

Maybe AB 414 does something else no one has realized yet.

AB 414 would amend the 2013 bill that permits Nevada’s governor to sign interstate agreements with other states, so it should be monitored very closely to make sure there aren’t any shenanigans or last minute surprises.

The point is, you can say what you want about Adelson, but he’s no fool, and he could be playing chess while the rest of us are playing checkers.

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