Casino chiefs discuss industry vulnerability
October 4, 2012
LAS VEGAS — Two top casino executives and the heads of several gambling machine makers agreed Wednesday that Internet gambling is inevitable and that U.S. companies and customers are vulnerable to overseas Internet poker operations.But the chief executives of Las Vegas-based MGM Resorts International and Las Vegas Sands Corp. differed during a keynote panel discussion with four other industry leaders at the Global Gaming Expo about whether states or the federal government are best able to provide oversight.Las Vegas Sands chief Michael Leven outlined doubts that he said company magnate Sheldon Adelson has about the profitability of online gaming if myriad operators become involved. Leven also spoke of Adelson’s fears that online gambling attracts college students who lose big money online.“Nevertheless, we know it’s coming,” Leven said.Leven said he agrees with Adelson that states, not the federal government, should adopt regulations. “We have concerns about any bill that’s going to add more people to the federal government,” Leven said. “I’m a state’s rights guy. We don’t like to see the government getting any bigger.”Adelson is a billionaire and among the biggest contributors to Republican politics, including the campaign of presidential hopeful Mitt Romney against President Barack Obama. Leven drew laughter from the hundreds in the audience for the state-of-the-industry panel when he quipped: “You’re in the right building. You gotta vote the right way.” But he insisted that Adelson hasn’t been lobbying for his position on Internet gambling.Leven’s comments came during the annual conference at the Sands Expo Convention Center — part of Adelson’s flagship Venetian and Palazzo resorts on the Las Vegas Strip. Las Vegas Sands also owns a casino in Singapore, and its majority-owned subsidiary, Sands China Ltd., runs several resorts and casinos in the Chinese gambling enclave of Macau.MGM Resorts International chief executive Jim Murren said he saw some common ground with Leven in the acknowledgement that Internet gambling exists. MGM Resorts operates Las Vegas Strip casinos including the Bellagio, Mandalay Bay and The Mirage, and has an interest in properties in Macau.But Murren said MGM Resorts supports the American Gaming Association position that the federal government should adopt regulations to protect U.S. customers. “Americans are illegally gambling today online with no protections whatsoever,” Murren said, “whether they’re underage or have any type of addictive behavior.”He said he hoped federal regulations would provide “consistency … instead of a patchwork of regulations state-by-state that we as operators and potential participants, and customers, will have to navigate through.”The gaming association’s chief lobbyist, Frank Fahrenkopf Jr., said Tuesday that while 85 countries have legalized online gambling, and billions of dollars are at stake, he wasn’t sure Congress this year would pass a measure such as one backed by Senate Democratic Majority Leader Harry Reid of Nevada and Republican Sen. Jon Kyl of Arizona.U.S. laws currently prohibit Internet gambling across state lines. But after the U.S. Justice Department last December narrowed the application of the federal Interstate Wire Act of 1961 only to sports wagering, states including Nevada and Delaware began taking steps to allow online betting.Several casinos have been licensed in Nevada to offer online poker to residents within the state. Illinois has begun selling lottery tickets online.Gambling equipment makers on the panel said they saw opportunities for their businesses, with Internet poker introduced around the world and other casino games following.“Don’t think of it as threatening,” said Patti Hart, chief executive of Reno-based International Game Technology. “Think of it as layering. It allows the industry to grow again.”Brian Gamache, president and chief executive of WMS Industries of Waukeegan, Ill., said his electronic and digital gambling machine manufacturer has been doing business in the United Kingdom for three years. He called Internet poker a “stalking horse” that attracts players who later turn to other games that are more profitable for operators.Walter Bugno, the head of Las Vegas gambling systems maker Spielo International, called customer loyalty and retention the key challenge for companies offering Internet gambling.“It’s only one click of the finger and you’re gone,” Bugno said.