Sheldon Adelson, top 2012 donor, launching campaign against Internet gambling

Billionaire casino magnate Shel­don Adelson, whose record-breaking campaign spending in 2012 made him an icon of the new super-donor era, is leveraging that newfound status in an escalating feud with industry rivals over the future of gambling.

Adelson, best known for building upscale casino resorts in Nevada and more recently in Asia, wants to persuade Congress to ban Internet betting. He says the practice is a danger to society and could tarnish the industry’s traditional business model.

Nearly all of his competitors, including Caesars Entertainment and MGM Resorts, disagree. They say regulated Internet gambling can be done safely and can boost the industry.

To make his point, Adelson is preparing a public campaign to portray online gambling as a danger to children, the poor and others who could be exploited by easy access to Internet betting.

Three states have moved to legalize online gambling, with New Jersey scheduled to go live this month. At least a dozen others are expected to consider it next year.

The new push against Internet gambling is Adelson’s biggest foray into a legislative debate directly related to his business, and it sets up a test of the influence that a mega-donor can exert when lawmakers know he is willing to spend enormous sums to influence elections.

Adelson has begun hiring lobbyists and public relations experts in Washington and in state capitals nationwide to press his case in what is shaping up to be one of the most heavily lobbied debates of 2014.

In January, Adelson plans to roll out an advocacy group, the Coalition to Stop Internet Gambling, that aides say will include advocates for children and others who are considered vulnerable to the temptations and ­potential harms of online betting. The coalition hopes to enlist organizations representing women, African Americans and Hispanics, all seen as likely to be sympathetic to the cause.

Advisers to Adelson say he is intensely focused on the coming battle and talks about it every day with his staff. He has about two dozen experts working nearly full time on the issue.

“In my 15 years of working with him, I don’t think I have ever seen him this passionate about any issue,” said Andy Abboud, Adelson’s top political adviser.

Rival firms view Adelson’s initiative as a major threat and say they will mount a counter­offensive arguing that his proposed ban would foster a dangerous, unregulated black market.

Some competitors noted that Adelson, whose chosen political candidates lost last year, could not guarantee success, even with his ability to tap a seemingly bottomless bank account.

“We don’t make a habit of picking fights with billionaires,” said John Pappas, executive director of the industry-aligned Poker Players Alliance. “But in this case, I think we’ll win, because millions of Americans who want to play online will oppose this legislation, along with dozens and dozens of states that want the freedom to authorize any kind of gaming they see fit.”

Still, Adelson’s industry rivals say they are struck by his new assertiveness. They point with trepidation to his campaign expenditures last year, which dwarfed those of the entire industry.

Adelson, whose Las Vegas Sands properties include the Venetian and the Palazzo on the Las Vegas Strip and elaborate new casinos in Macau and Singapore, created a stir in last year’s elections when he and his wife spent nearly $100 million, according to the Center for Responsive Politics, to help Republicans. He almost single-handedly kept Newt Gingrich alive in the Republican primaries and spent generously on ads in congressional races.

His lavish spending followed 2010 court decisions permitting unlimited political donations by individuals, corporations and labor unions.

Adelson, 80, has been known primarily as an ideological donor. He has spent millions in support of Israel and its Likud party, and last year he backed conservative causes in the United States beyond presidential and congressional politics. He helped bankroll anti-union and anti-tax initiative campaigns in California.

Aides say his effort on Internet gambling is entirely bipartisan and is unrelated to his past or future political contributions.

Adelson has hired three former elected officials as national co-chairs to speak on behalf of the coalition: Wellington Webb (D), the first black mayor of Denver; former U.S. senator Blanche Lincoln (D-Ark.); and former New York governor George Pataki (R).

Abboud pointed to a cautionary tale in the experience of the tobacco industry, which faced a damaging public backlash after it was accused of marketing its products to children.

“This could be our ‘Joe Camel’ moment,” he said, referring to the cartoon character that critics said was used to subtly market Camel cigarettes to kids.

Adelson's competitors question his concern about the social costs of Internet gambling.  They note that his company obtained an online gambling license in 2003 in one of the British Channel Islands, though Abboud said that was a “small exploratory effort” that was quickly abandoned. 

The rivals say they worry his approach would effectively encourage expansion of offshore gambling sites, beyond the reach of U.S. regulators who already have tools to regulate online betting more closely than casino gambling.

“Sheldon’s approach would endanger everything he professes he wanted to protect,” said Jan Jones Blackhurst, executive vice president for government relations at Caesars Entertainment. Adelson argues that a strictly enforced federal ban would effectively shut down black-market gambling.  

Until recently, there was a widely held view that most online gambling violated federal law. But a 2011 Justice Department legal opinion cleared the way for states to allow many forms of online betting.

Several casino companies and allied groups have tried pushing federal legislation to allow regulated online gambling. Meanwhile, they have found success selling the idea as a source of revenue for cash-strapped states, which can use technology to make sure only people from those states log on.

Adelson’s stance puts him at odds with one of his party’s leading 2016 presidential contenders. New Jersey Gov. Chris Christie embraced the idea as a way to help bolster Atlantic City, where casinos have been struggling to survive but will benefit by operating that state’s online gambling. Christie called the measure a “responsible, yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole.”

Delaware and Nevada have also legalized some forms of online gaming. Fights are expected next year in California, Pennsylvania, New York and Florida, among other states.

People familiar with Adelson’s effort said his team is preparing to hire lobbyists when necessary in numerous state capitals.

His Washington effort to push for a congressional ban will be directed by a team of lobbyists from two high-powered firms, Patton Boggs and Husch Blackwell, according to people familiar with the effort.

One person involved in the planning said that lobbyists have met with “dozens” of congressional offices and that some lawmakers are circulating draft legislation to stop all online gaming and direct the FBI to study potential law enforcement issues related to the practice. Adelson has also retained a GOP polling firm, the Tarrance Group, which this month produced a survey showing that about seven in 10 voters have negative feelings about Internet gambling — a finding that Adelson’s rivals dispute.

Adelson will fly to Washington as soon as January to meet with lawmakers.

The three former elected officials on Adelson’s payroll — Webb, Lincoln and Pataki — will be dispatched to deliver speeches and write op-eds highlighting the threats that online betting poses to the public.

Pataki is expected to emphasize law enforcement concerns, including the risks of money laundering and fraud. Lincoln will address threats to children and families.

Webb said he would speak to mayors about the potential for lost revenue when taxpayers go broke by gambling on their mobile devices. He said he would encourage civil rights leaders to join the coalition.

On his partnership with the country’s biggest GOP benefactor, Webb said he saw his decision as a pragmatic one.

“I don’t believe this issue is about him, because if it was about him, I wouldn’t do it,” Webb said. “Unlike where he was in the presidential, he’s on the right side of this issue.”