For nearly a decade, the Department of Justice (DOJ) ignored a Fifth Circuit Court of Appeals ruling declaring that the (Federal) Wire Act covers only sporting events, not games of chance. The DOJ reversed itself in 2011, returning to states the right to regulate online gambling.
This was an excellent move for states’ rights. Legal gambling sites use technological methods to restrict their business to the states where online gaming is allowed, so states that don’t permit such gaming are not affected. And the DOJ’s previous interpretation of the Wire Act was incredibly broad – it effectively banned all Internet gambling, even within a single state.
Nevada, Delaware, and New Jersey have legalized online gaming and nearly a dozen more states – including Michigan – are considering following suit. Seeing this trend, Sheldon Adelson tried – unsuccessfully – to build an online gaming business. Since failing to capitalize on the market, his company, Las Vegas Sands, has been terrified that online gaming represents a competitive threat to the profitability of brick-and-mortar casinos. With more states looking to legalizing online gaming, the threat appears to be growing. So Adelson – “the world’s orneriest casino mogul is spending millions to stop online gaming” – is pushing Michigan legislators to ban his competitors. He launched the Coalition to Stop Internet Gambling and hired lobbyists to advance his economic interests:
“Adelson’s astroturf lobbying front, the Coalition to Stop Internet Gambling (CSIG), was represented [at the] Michigan House hearing on the topic. The hearing was scheduled in conjunction with the introduction of two new regulatory measures by Rep. Brandt Iden, and it drew prominent forces on both sides of the debate.”
Some conservatives have been chafed by Michigan’s attempt to regulate online gaming. However, these conservatives fundamentally misunderstand the issue and the facts of Michigan’s online-gambling bill, HB4926. First, HB4926 is not an overreach intended to allow unfettered, unregulated online gambling. In The exact opposite is true. Rather than allow for unfettered gambling, the HB4926 will establish regulatory protections for gaming where none currently exists. And second, opposition to HB4926 isn’t about safety: Foreign sites operate without child safeguards or financial protections.
Adelson fears the competition from states legalizing online gaming, and he believes it is suicidal for casino interests not to seek a ban. Sites in Michigan, or any state, could become serious rivals to brick-and-mortar casinos in Las Vegas. The Adelson opposition to Michigan’s HB4926 is really about one billionaire attempting to shield his business from competition – the epitome of cronyism.