The Coalition to Stop Internet Gambling

Formed in January of 2014, the Coalition to Stop Internet Gambling is a lobbying group tasked with convincing state and federal legislators to maintain current prohibitions banning the top online gambling companies from operating throughout America.

The Coalition to Stop Internet Gambling is funded and directed by billionaire business magnate Sheldon Adelson, owner of the Las Vegas Sands Corporation, an umbrella company that owns and operates the Venetian and Palazzo casinos in Las Vegas, in addition to several brick-and-mortar gaming establishments around the world. As perhaps the most vocal opponent of online gaming domestically, and certainly the most well-funded, Adelson uses his estimated $28 billion fortune to influence the political process through direct lobbying and donations to various campaigns and causes.

Adelson launched the Coalition to Stop Internet Gambling in response to recent legislative action taken by various states to legalize and regulate online gaming within their jurisdictions. These statewide actions come just a few years after the online gaming industry was effectively shut down by federal intervention.

Following the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, which “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law,” online poker companies continued to operate domestically.

On April 15^th, 2011 – a date better known as “Black Friday” within the poker world – federal authorities unsealed an indictment against the industry’s three primary operators: PokerStars, Full Tilt Poker, and Absolute Poker. The indictment charged the three online poker and gaming providers with violating elements of the UIGEA and other federal laws. According to a press release issued at the time by Manhattan U.S. Attorney Preet Bharara, “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to ensure the continued flow of billions in illegal gambling profits.”

Online poker providers immediately halted their American operations, declining transactions with American customers and shuttering their sites domestically. Within days, the previously thriving, multibillion-dollar online gaming industry was effectively disbanded on American soil.

In the wake of Black Friday many unregulated poker sites, such as Bovada and America’s Card Room, continued to operate in violation of the law, while unregulated online casinos also flourished. Many states, however, saw the potential benefits of online gaming returning as a fully regulated – and thus fully taxable – activity within their boundaries.

As has always been the case when it comes to gambling in the United States, Nevada was at the forefront of this effort, passing legislation to regulate online gaming on February 21^st, 2013. Just days later, Delaware joined the fray and passed similar legislation of its own. After Senators Harry Reid (D-NV) and Jon Kyl (R-AZ) tried and failed to pass nationwide legislation to regulate the industry, New Jersey became the third state to do so on an individual basis in February of 2013.

In addition to this triumvirate of jurisdictions where online poker and casino gaming is currently legal, several other states – including Pennsylvania, California, Illinois, and Massachusetts –are currently mulling similar action.

As a staunch conservative who regularly donates millions of dollars to pet political causes, one with a vested interest in restraining the public’s ability to gamble legally to brick-and-mortar casinos, Adelson launched the Coalition to Stop Internet Gambling in response to these state measures. With rival gaming entities like MGM and Caesars Entertainment diving headlong into the newly regulated industry, by operating online gaming platforms in Nevada and New Jersey, Adelson contracted a legion of lobbyists and lawyers to oppose further legalization on both the state and federal levels.

According to Adelson, who was interviewed by Forbes shortly after the Coalition to Stop Internet Gaming was announced, he is firmly entrenched in his position and willing to fight this battle to the end:

“I am willing to spend whatever it takes. 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 Coalition to Stop Internet Gambling has attracted the support of many prominent political figures on both sides of the aisle, with the former Governor of New York George Pataki, a Republican, joining former Mayor of Denver Wellington Webb, a Democrat, in vocally advocating for the group.

The stated mission of the Coalition to Stop Internet Gambling is as follows:

“The Coalition to Stop Internet Gambling is a national partnership of over 60 religious organizations, civil rights groups & family advocates working to protect the young, poor and elderly from the dangers of predatory online gambling. Targeting the young, the poor and the elderly where they live, Internet gambling takes gambling too far. Internet Gambling crosses the line of responsible gaming by bringing gambling into our living rooms and onto our smartphones, tablets and home computers 24 hours a day without necessary protections. Congress must protect United States residents and citizens by restoring the longstanding federal ban on Internet gambling.”

While Adelson, Pataki, and Webb – all acting on behalf of the Coalition to Stop Internet Gambling – are currently aligned against the industry, all three have held differing opinions on the subject over the years. Pataki was declared to be “perhaps the most pro-gambling governor the state has ever had” by The New York Times in 2001, after pushing a budget agenda that relied on an expanded state lottery system, new Indian casinos in the state’s Western half, and slot machines being installed within horseracing tracks. Webb, meanwhile, has stated that internet gaming preys on so-called “chumps,” but during his mayoral term, Denver’s city government readily and repeatedly accepted funds from its own state lottery program.

As far as Adelson is concerned, his renewed opposition to online gaming comes only after the Las Vegas Sands Corporation – of which Adelson serves as President and CEO – attempted on numerous occasions to make entry into the industry. As Adelson told The New York Times in 2007, following seven years of exploratory efforts aimed at adding online gaming to the Las Vegas Sands Corporation empire:

“As an industry evolves, sometimes it changes in different directions and then one has to find an opportunity where he can. If the market sees a way into expanding in electronic gaming, we’ll be in it.”

As revealed by the Las Vegas Sands Corporation’s 2001-2002 and 2002-2003 filings to the Securities and Exchange Commission, Adelson voted in favor of online gaming well before he was against it:

“The Company is actively pursuing the possibility of developing and operating an Internet gaming site and is currently exploring other business opportunities for expansion. The Company entered into a joint venture agreement to assess the feasibility of developing and operating an Internet gaming site…the Company is committed to contributing approximately $1.0 million.”

In 2006, with his initial efforts having proved ineffective, Adelson turned his eye toward a potential online gaming enterprise in the United Kingdom. As stated by Bill Weidner, then the President and COO of Las Vegas Sands Corporation:

“As the Internet gaming landscape continues to evolve this effort will put us in a strong position to evaluate and react to other potential opportunities.”

To date, Adelson’s efforts to derail online gaming legislation under the auspices of his Coalition to Stop Internet Gambling have made plenty of headlines, but not much headway.

Despite the launch of an extensive, six-figure advertising campaign in late October, one aimed at Pennsylvania voters and legislators, that state recently saw its House Gaming Oversight Committee pass HB649 by an 18-8 margin. With the first hurdle cleared, Pennsylvania’s online gaming bill is now set to be voted on by the full House and Senate, with many industry experts and political insiders expecting the bill to secure full passage sooner rather than later.