Not to drudge up the past, but I’ve been thinking lately about Harry Reid and all the talk surrounding his poker bill that was never passed. Those of us involved in the industry, especially inquisitive folks like Bill Rini and F-Train noticed very quickly and weren’t quiet about the fact that Harry Reid’s biggest campaign funders were MGM and Harrah’s (now Caesars) and how that bill was theirs, not Harry Reid’s.
Sure, the Reid bill died during the lame duck sessions in December, but since then there have been numerous bills at the state level (with Nevada most recently proposing their online poker bill) popping up all over the poker industry’s media outlets. Only natural, since legalization on the federal level seems like a long way away with our now Republican dominated Congress. The giant elephant in the room is what’s amidst these online poker bills, and it’s still MGM and Caesars. What got me thinking on this topic was a recent article I read about MGM pulling out of the New Jersey gaming arena (more on that later), it made me think there’s so much we’re not saying.
Et tu, Brute?
New Jersey is one of many states trying to push through a bill to legalize online poker. The bill, however was recently met with rejection as Governor Chris Christie vetoed it stating that he didn’t want to violate the U.S. Constitution and wasn’t sure if New Jersey residents wanted legal internet gambling. Was anyone else left scratching their heads?
It seems quite obvious that a ton of internet gambling is taking place in this country already, even though it’s not regulated. So, his claim that it’s not necessarily wanted doesn’t seem like the real reason. What’s real is that Caesars is quite vocal about their opposition to state bills and they say it’s because legalization at the federal level will be better for our country. Well, that may be true, but it’s not the real reason. The vetoed New Jersey bill would have encouraged Atlantic City casinos (Caesars owns 4) to partner with primarily offshore online gambling sites who operate here already. You think Caesars, a powerful force in NJ and the owner of the World Series of Poker brand would want to share? My guess is no, and I’m sure they let Christie know that.
The Mirage of MGM
Caesars isn’t the only one opposing state bills, MGM is too. While it’s obvious that MGM would have the same reasons as Caesars to not support a decrease in their potential market share of online poker in the U.S., the behavior of MGM is even more concerning and selfish.
For those unaware, MGM is almost $13 billion dollars in debt. Not only this, but soon they will no longer do business as a gaming licensee in New Jersey. Quite a far cry from their October 2007 announcement that they would be building a $5 billion casino next to the Borgata called “MGM Grand Atlantic City”. What’s even more concerning is that they’re pulling out of Atlantic City all together because the New Jersey Division of Gaming Enforcement found MGM’s partnership with Pansy Ho in the Macau gambling market unsavory. Why? Because Pansy Ho is the daughter of the Chinese casino operate Stanley Ho, who has notable ties with organized crime. In New Jersey’s investigation it’s shown that the majority of money Pansy Ho has tied in investments with MGM, the majority of it came from her father.
Is MGM so desperate that it will overlook ties with organized crime in order to obtain some kind of presence in Macau (the largest source of gaming revenues in the world) even if it means pulling out of some U.S. markets? It doesn’t seem like that would be best for the U.S. economy or its citizens, and only seems to discredit their stance for rejecting state laws in order to obtain what’s best for players by way of federal regulation. Nice try, but I’m not buying. Not that I blame them for wanting a presence in Macau, but get your hand out of the cookie jar.
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Sara Williams is a regular poker writer over at OnlinePoker.org, loves traveling and is fascinated by the good and bad of the U.S. business industry.
Kim–
Is the possibility that NV is so tied to gambling that the average voter/businessman on the street realizes that if a “true” national bill goes through, it will be difficult for the NV gaming board to maintain control of the industry as well as keep those few jobs/revenue in NV. If a national bill goes through that does not really push those jobs into NV then the future of gaming is headed to either a tech center or will stay off shore with a shell in the US like many other industries. Headquarters in the Bahamas, call centered in India, etc. With Caesars moving to Delaware or the lowest cost location for talent.
I think the future interests of NV are not necessarily the future interests of Caesars or MGM. However, things that spur the creation of land based businesses within NV which bring income to the region will garner votes in the future and hopefully keep Vegas from turning back into desert. Additionally, any business that were to start at the state level in NV would get a head start putting the infrastructure together to compete nationally, just a question of scale.
I hold Christie killed internet gambling to make himself a better contender for the presidency, hard to play to a conservative base in 2012 or 2016 if you gave a thumbs up to online gambling, no matter how much money it brought into the state. But if you turned the Barbarians back at the gates and shrunk the footprint of Atlantic City you will be a hero throughout the Bible belt, or at least passable.
I also find it laughable that a gaming board in NJ would have any issues with money from organized crime. We are talking about New Jersey! The big question, is who is the big dog if MGM moves out of NJ?
Thanks Sara,
I think this brings me to the part that befuddles me. Because it goes against what some people have told me over the years. If all this is true, it sounds like MGM and the others have failed in a sense since the piece of legislation moving forward in Nevada is not the piece of legislation they prefer. Right? And I can’t understand how they can have enough power in NJ to block that bill but be unable to stop a bill they don’t want on their own back porch in Nevada. Maybe I’m wrong, but that’s what it sounds like.
My comment about MGM being out of action was probably just a misunderstanding of what you wrote. I thought the were already out due to the Macao connection and hence had no reason to back that bill.
I didn’t mean that the Reid bill was “legit” as such. I merely meant that it was sidelined by politicians, not gaming lobbyists (if a line can even be drawn between the two)
Am I right in remembering there being two bills being pushed in Nevada? One originated from Pokerstars and another originated somewhere else. If so, which one is gaining momentum?
Re Kim:
I don’t know if I’d classify the Reid bill “legit” political grounds considering the only reason he did it was to appease his campaign backers (Caesers and MGM). However, it was the bill they Caesars and MGM wanted because it would of kept offshore companies *out* of the US industry for a significant period of time since the bill gave precedence to US Casinos who have been in operation for at least 5 years.
I am confused about your notion that MGM would of been out of action in NJ, sure they are *now* backing out of the state because NJ would not approve of their ties in Macau – NJ gave MGM opportunities to stay in the state, and I am curious what their decision would have been if online poker had been legalized.
Also, I’ll point you to some news stories that communicate that Caesars and MGM *did not* support the Nevada bills when they initially stated. They have *always* said they are in strong favor of only federal bills. I think after the Nevada Assembly Committee hearing they had to discuss the NV bill (which seemed to go pretty well) Caesars & MGM are *now* starting to explore partnerships with online poker sites. What does this tell you? That the bill has a good chance of passing, not that Caesars & MGM want it to.
Also, here’s an article about the Nevada Hearing, in which it’s stated:
“Not attending the hearing were representatives from either Caesars Entertainment – the owners of the World Series of Poker – or MGM Resorts International. The two casino powerhouses, which operate some of the most well known properties in Las Vegas, have come out in firm opposition to any proposed regulation of online poker in Nevada.”
The reason (in my opinion) that they haven’t backed this bill is because they don’t want to partner with offshore companies to bring online poker to the US. Even though PokerStars has stated they would open a center of operation in the States (creating the jobs we’re looking for).
Thanks for the clarification Chaz, you’re right…that is different and it makes sense, but it’s still to me a facade for what’s really going on. We know that with technology there are ways to circumvent that problem. And even with that issue, I think having *no law* is probably worse. But that’s just my opinion! 🙂
“New Jersey is one of many states trying to push through a bill to legalize online poker. The bill, however was recently met with rejection as Governor Chris Christie vetoed it stating that he didn’t want to violate the U.S. Constitution and wasn’t sure if New Jersey residents wanted legal internet gambling. Was anyone else left scratching their heads?”
Don’t mean to nitpick, but Governor Christie was referring to the NJ state constitution which requires all wagers to have originated from Atlantic City. This is a far cry from him stating that he didn’t want to violate the U.S. Constitution.
Hmm.. see if I can phrase this right…
The gaming giants wanted the Reid bill to pass. But it fell on “legit” political grounds. They blocked the NJ bill because it was an intrastate bill and because it might actually leave them (MGM at least) out of the action. Recognizing that a federal bill is a long time away they turn to Nevada and now back several bills(?) (can someone clarify the different Nevada bills) because it’s their home turf and because these are interstate bills essentially equating them to a federal bill?