If a prominent lobbying organization is unable to offer a position on the most important issue facing the industry it represents, what purpose does that lobbying group have? That’s the conundrum facing the American Gaming Association, with online gambling, including poker, being the issue that’s temporarily brought the lobbying group to its virtual knees.
Terming online gambling “an issue that the association cannot lead on,” AGA Chief Executive Geoff Freeman announced the group’s reversal this week in an interval with the Wall Street Journal. “One of the things I've learned in this industry is we are extraordinarily competent at shooting at one another,” he added.
A reversal, this really is: It was only last year that the AGA finally announced its support for online gambling in an industry-wide sense. And as such, it represents a major failure for both the AGA and its new head, Freeman, who took over from the retired Frank Fahrenkopf last year.
Besides the meaning of the new announcement -- meaning that the AGA would no longer stake out a formal position in the battle over the formal legalization of internet gambling – it demonstrates the hard way that a lobbying organization is only as strong as the group’s unity, and a group that represents a coalition’s general interests is never, ever its own boss. Regarding online gambling, the AGA has failed to unite its member constituents, with its own perceived power significantly crippled as a result.
The behind-the-scenes combatants are already known, and as usual, its online-gambling antichrist Sheldon Adelson, the CEO of Las Vegas Sands, Inc., anchoring down one side. He’s been joined by another ultra-rich casino magnate, Steve Wynn of Wynn Gaming, and one or two smaller casino groups to the cause. Their stance is one of pure market protection for their land-based casino empires.
On the other side are several casino/entertainment organizations who have wanted to use the AGA as a pro-iGaming lobbying force. Among them are Caesars Entertainment, Boyd Gaming, Fertitta Interactive (representing the Station Casinos interest) and several others. By number they significantly outweigh the Adelson faction, but not in wealth. Buoyed by Adelson’s illicit Macau billions, it’s Adelson and Wynn who have the deepest pockets when it comes to funding a lobbying group such as the AGA.
In fact, when Freeman and Sands veep Andy Abboud went head-to-head last December before the US Congress over the issue, there was a veiled threat issued toward the AGA. It’s now quite certain that Adelson followed up on his threat, demanding a retraction/reversal on the AGA’s stance regarding online gambling.
The AGA doesn’t represent all American casino corporations, anyway – just a large portion of them. The potential loss of Las Vegas Sands, Wynn Gaming the Reno-based Atlantis Group would have taken away a significant chunk of the AGA’s own lobbying revenue base. So Geoff Freeman caved, losing his first major internal battle as AGA chief.
However, while the AGA has been kept intact, what exactly is the group supposed to do, now that online-gambling discussions are off the board? That’s the inherent problem that Freeman failed to resolve – a lobbying group without a strong stance on an important issue isn’t really a lobbying group at all.
Adelson isn’t really fooling anyone. His faux-Luddite approach regarding online gambling goes against the empirical evidence that shows that online gambling does not cannibalize land-based casino revenues, and there’s no doubt he’s aware of it. What this appears to be, instead, is an attempt to cripple his US-based casino competition, the Caesars and Boyds of the world. And simply by taking the AGA off the board, he weakens those competitors as a result.
Caesars in particular has looked toward the online market as a way to bolster its sagging land-based revenues, but those properties have stagnated under a massive Caesars debt load traceable to the mid-‘00s bursting of the global real-estate bubble. US casinos haven’t been a growth market in recent years, but much of that is due to external market forces.
Which all comes back to the AGA. Facing these difficult market conditions and a highly divisive issue, the AGA has proven itself a show pony. Perhaps Freeman decided that the AGA could have disintegrated had he not caved, but that possibility remains regardless; this supposed emperor no longer has any clothes… nor teeth.