Thursday, June 25, 2015

Why Sheldon Adelson is a lying sack of mule muffins

Sheldon Adelson is chairman and the largest shareholder of Las Vegas Sands, the world's largest casino gambling company. About three years ago, Adelson decided that Internet gambling is the root of all evil in the world, and pledged to stamp it out. 

Coming from almost anyone else in the world, this pledge would hold little water. But this one comes from a guy who has the 12th deepest pockets in the world (according to the 2014 Forbes Magazine Forbes 400), with an estimated net worth of $28 billion. Rest assured that this guy has undue influence over American politics, having contributed over $100 million to various campaigns in the 2012 election. Adelson said a few years ago that he was willing to spend $100 million to wipe out Internet gambling; in a recent Bloomberg News interview, he revised that number to "whatever it takes" (more on this in a minute).

Adelson is a smart guy. He has long supported conservative Republican candidates, some of whom don't have strong feelings about Internet gambling. But an aspiring presidential candidate without strong feelings on this topic can easily be swayed by a fraction of the money Adelson is willing to spend on this campaign. Take Marco Rubio (R-FL) as an example. Three years ago, his stance on Internet gambling consisted of his saying, "I'm not a big fan." Now, after having passed the gauntlet of the Sheldon Adelson Primary (a gathering at the Venetian, technically called the Republican Jewish Coalition Spring Meeting, but widely acknowledged as a tryout for Republicans looking for Adelson's support), Rubio is not only rabidly anti-Internet gambling; he's cosponsoring Adelson's attempt to ban online gambling at the federal level.

A little history here: back in 1961, the Interstate Wire Act was passed and signed into law. The intent of the law was to restrict transmission of sports gambling information across state lines. Over the 25 years or so since the Internet became part of our lives, there have been repeated efforts to use the Wire Act to threaten or prosecute online gambling sites other than sports, although none has been successful (more on this in a lengthy 2-part article here).

In 2011, less than a year after Black Friday shut down the world's most popular online poker sites (PokerStars and Full Tilt), the Department of Justice issued a stunning opinion letter in response to a state-level request for clarification about selling lottery tickets online. The key sentence in this letter, from US Deputy Attorney General James Cole, read:
“The Department’s Office of Legal Counsel (“OLC”) has analyzed the scope of the Wire Act, 18 U.S.c  § 1084, and concluded that it is limited only to sports betting.”
Anyone who read the Wire Act already knew this, but the DOJ's formal renunciation of their former interpretation of the Act left the US with no federal-level legislation that directly impacted online gambling except the Unlawful Internet Gambling Enforcement Act. The UIGEA, contrary to popular belief, didn't make any form of online gambling illegal. All it did was make financial transactions for illegal Internet gambling illegal, and it never defined what constituted illegal Internet gambling.

The heart of Adelson's anti-online-gambling campaign is a piece of legislation called the "Restoration of America's Wire Act." Keep that in mind as you read the rest of this story.

Let's go back in time a few years. In 2010, PokerStars was attempting to re-establish their presence in the US. One of these efforts was the North American Poker Tour, which was to consist of a series of events in the US and Canada. I have first-hand knowledge of this, because my wife Sharon and I both consulted with PokerStars on the project and were involved in the operation of the event.

When we first started discussions with the Venetian, Sharon and I met with Kathy Raymond, then-Director of Poker Operations for the Venetian. Before we had any serious discussions, Kathy informed us that the somewhat sensitive nature of PokerStars' involvement meant that their CEO needed to approve. That, of course, was Sheldon Adelson, and he did in fact approve PokerStars' participation. 872 players participated, generating a prize pool of over $4 million, of which over $200,000 went to the Venetian. But that was far from all - including rooms, events, meals, parties and all of the other revenue generated by an event this size, The Venetian took in no less than $1.5 million.

In fairness to Adelson, things did change after this, most notably Black Friday. I suppose Adelson could argue that Black Friday changed his thinking. But given his almost religious rhetoric describing online gambling as "sin," this seems unlikely. Somewhere along the line, Adelson became convinced that online gambling threatened his business, and took it on as a cause.

I'm not going to attempt to take a stand here - I think my attitude about online gambling is clear. But I'm going to dissect a very short video interview that Bloomberg's Betty Liu conducted with Adelson a few months ago to give you a sense of who this kingmaker is, and what he does with the truth (hint: it's not "telling it").

Here's the interview. I suggest you watch it, and then return when you stop laughing.

Following are my comments on this laughable effort to justify his position.

Adelson: "Why don't we legalize prostitution? ...Why don't we legalize drug addiction?"

Good questions, but they have nothing to do with this discussion. Gambling is a form of entertainment that is already legal, in one way or another, in 48 states. Neither prostitution nor drugs are.

Adelson: "The [air quotes] sin activity should be controlled."

OK. Which sins? Gambling? Oh, you mean just that online gambling stuff; never mind.

Adelson: "For instance, here in the land-based casinos, we're required to have the dealers shuffle a certain way. How do you do that in...on the Internet?"

This actually made me laugh out loud. (1) Allowing dealers to shuffle cards may be the individual biggest source of employee cheating in any casino. (2) Sands properties use ShuffleMaster machines extensively. What they do is nearly identical to the way cards are shuffled online. 

Adelson: "Here we're not supposed to allow underage people to gamble. How do you do that in (sic) the Internet? There's no technology a kid can't get around."

While it's true that no technology is unbeatable, there's another fundamental truth here: Every single player who plays online has to prove their identity and age. In live casinos, players at table games are often (not always) asked for ID, but players on slots are rarely asked - unless they win, in which case the win is voided if the player is found to be underage.

Liu: "But maybe, maybe, maybe the regulations have to catch up with the growth of the market."

Adelson: "No. There's nothing to regulate. I'm regulated in four jurisdictions. I don't know of one regulation that would apply to Internet gaming."

Once again, I had to choke back a laugh. That's true in the US, Sheldon. How about the United Kingdom? France? Australia? Your interpretation translates to, "We shouldn't regulate Internet gambling because there are no regulations."

Liu: "Your detractors say, look, the people that we've seen so far go online gambling, right, they're not visiting regular casinos."(We can debate the silliness of this statement another time.)

Adelson: "Because they're too poor."

Seriously, he said this. Can you conceive of anyone on the planet that is this tone-deaf? My best guess is that at least 50% of people who play online have visited a casino at least once. I'm probably off by a significant number, and it isn't down.

Liu: "Who's to say that's exploitation?"
Adelson: "I'm saying. And I'm the biggest guy in the industry."

I'm pretty sure I don't need to comment on that. The only thing he didn't say is, "I have $30 billion, and I say so."

Adelson: "Why should poor people, who cannot afford to lose that kind of money, be tempted with that kind of activity?"

This is a good reason for Adelson to shut down all of his casinos, no? Unless he's checking the bank accounts of every player who sits down to gamble at Sands properties, this is up there among his most disingenuous statements.

Adelson: "I can't tell (over the Internet) who's got financial difficulties. I can't tell who is not gaming responsibly. I can't tell whether money is being laundered. I can in the casino."

I'll give Adelson this one, provided that he tells me exactly what he does to find out if the guy playing $25 blackjack has financial difficulties. I'm pretty sure that I can just sit down at a table at The Venetian without providing a financial statement. He's right in the large - he can prevent money laundering to an extent, although his recent $27 million fine for money laundering says otherwise. But that is an issue for bigger gamblers - "poor people" aren't using the Internet to launder their money.

Adelson: "Do you think I'm bringing in unfortunate people to be exploited?"

I put that one in as a closing laugh.

What I've listed above is just a fraction of the blather that Adelson has spouted over the years. Here is another one that I'll let you watch on your own:

My favorite quote from that interview is one that will resonate with every poker player in the world. When asked about a carveout for poker because it's a skill game, his response was, "that (poker is) skill-based is just a bunch of baloney."

[Side note: keep an eye on the news for coverage of the upcoming trial of the lawsuit filed against Adelson by Steve Jacobs, former CEO of his Asian operation. Jacobs is suing for wrongful termination, accusing Adelson of money laundering (for which Sands Asia has already paid a $27 million fine), bribing public officials, having ties to the Chinese Mafia and...prostitution. None of these charges are proven, but the trial should be fun to watch.]

I know that everyone is entitled to their opinion. But this is a dangerous guy for our industry and our game. He has a personal, likely hidden, agenda, and he has limitless funds with which to implement it. There are bigger issues at stake than just poker - Adelson is a $30 billion blowhard intent on having his way. 

He's sure fun to watch, though.


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