Adelson Exit Could Pave Pennsylvania’s Path To Online Gambling Regulation

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Pennsylvania’s path to legal and regulated online gaming got a whole lot clearer last week when news broke that iGaming’s biggest opponent could soon be leaving the state.

While it’s far from a done deal, MGM Resorts International has reportedly been involved in talks to purchase Sands Bethlehem for somewhere close to $1.3 billion.

Sands Bethlehem, which opened in 2009 and quickly became one of the state’s most popular casino properties, is owned by Las Vegas Sands Corporation and casino mogul Sheldon Adelson, who also happens to be one of the country’s biggest opponents of Internet gambling.

Adelson’s online gambling beef

Adelson has long argued against legal and regulated online gambling on moral grounds, claiming there’s no way to keep kids, gambling addicts, and intoxicated gamblers from playing online. He’s also paid lip service to the idea online casinos would cannibalize existing brick-and-mortar operations like the ones he currently banks millions off of.

He’s spent many of those millions backing lobbying groups like the Coalition to Stop Internet Gambling and efforts to re-enact the Federal Wire Act, which would effectively snuff out iGaming operations in states which have already legalized them, including Nevada, Delaware and New Jersey.

There’s little doubt Adelson will continue to fight iGaming on the federal level, but if he’s left without any skin in the Pennsylvania game, there will be one less opponent inside the state, making Pennsylvania infinitely closer to passing legislation and opening up the market before Adelson gains any kind of ground in Washington.

Parx plays for the other team

Of course, a representative from the state’s biggest casino, Parx, made it all too clear at a joint legislative committee hearing on the issue last week that it stands with Adelson, for now.

In fact, Parx CEO Tony Ricci warned committee members that in his opinion, legalizing and regulating online casinos will actually lower the tax revenue generated by the casino industry and “effectively kill the golden goose.”

That goose Ricci’s talking about generated more than $3.2 billion in gaming revenue in 2016, of which close to $1.39 billion was paid in taxes to the state. It would be a shame to kill it, or wound it in any way, but outside of Adelson and Ricci, most of the rest of the casino industry seems to believe iGaming will only help the numbers grow.

Alongside a number of differences between Pennsylvania and New Jersey, including the population’s proximity to land-based casinos, and concerns over cannibalization, the crux of the issue for Ricci appears to be the difference between the 59 percent tax Pennsylvania brick-and-mortar casinos are currently paying and the 15 percent rate the state is proposing to charge online gambling sites.

You can’t teach an old dog new tricks

The thing is, tax rates can be negotiated. It’s infinitely more difficult to convince an 83-year-old casino mogul to get off his high horse. Teaching an aging luddite a few new tricks about advancements in Internet security is probably impossible.

MGM clearly stands at the opposite end of the issue. It’s the kind of company that embraces new technology, rolling out an online platform last year that gives players at its Las Vegas properties the chance to gamble on smartphones and tablets while on site.

MGM also owns Borgata in Atlantic City, which is currently the market leader in online gaming in New Jersey.

Majority rules

Like MGM, the rest of Pennsylvania’s 12 brick and mortar casinos seem to like the idea of legalized and regulated online casinos.

The state itself is facing a $3 billion budget deficit and has yet to find a better way to start clawing its way out than online gambling. In fact, despite what Parx says, industry analysts like Robert DellaFave have been shouting from the rooftops Pennsylvania could generate more than $420 million in tax revenue during legalized iGaming’s first five years in the state. That’s a hell of a start.

Several opponents to online gaming in Pennsylvania still exist, but if MGM can somehow get Adelson out of the way, that would leave Parx as the only major casino opposed to the measure, and ultimately put online gaming legislation as close to passing in Pennsylvania as it has ever been.

Martin Derbyshire

About

Martin Derbyshire has more than ten years of experience reporting on the poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.

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