Saturday, February 22, 2014

Nevada Gambling Hypocrisy On Parade

Here are a couple of recent stories that highlight the hypocrisy that arises when you deal with an industry that has a strong regulatory component.  These stories are in addition to my recent post regarding casino heavy hitters fighting each other over expanded gambling, which you can see here

The first story details the news that Nevada's senators (one Democrat, one Republican) are teaming up to introduce a bill to outlaw all online gambling in the US except for poker.  Why?  Because they are trying to stop the "wild West" of gambling.  You see, yes they are doing this to protect their Nevada casinos, but you shouldn't only think of their more noble motives of protecting YOU from evil gambling.  As you of course may realize, Nevada only offers good and pure that's OK and should be protected.

This bill is going to be bi-partisan because, let's be clear, the Democrat, Harry Reid, isn't very popular among Republicans, which is probably an understatement.  He needs his fellow Nevada senator, a Republican, to help weasel this bill through.  Of course, the bill would also have to get through the House of Representatives, but one step at a time.

My view is that this bill shouldn't get through the Senate, but it indeed may.  When?  After the November elections during Congress' lame duck session.  This bill will be inserted into another bill that due to its content would be deemed a "must pass" bill.  Think of something like a bill to authorize the budget for the armed forces, or removing a tax impediment for disabled elderly people.  No one will stop those bills, so Harry Reid as Senate Majority Leader will add this bill to that one and force people to vote for this or they will be viewed as hating old people, the military, etc.  Watch for the news on this bill to go very quiet until after the election, then watch these lame duck bills come up in November and December.  The article on this bill can be found here.

Now, where's the hypocrisy?  Well the Nevada view that their gambling is good and everyone else's is bad is hypocritical, but let's add in the other story to buttress the hypocrisy.  This story discusses how Nevada regulators are allowing slot players to use prepaid access cards.  Now similar means are used for sportsbook and poker players, but doing this with slots isn't exactly the same.  It would take some time for a sportsbook player to place their wagers, similar with a player in a poker game.  Slot machines are fast.  You can get a new spin about every 6 seconds if you're fast enough.  Also, sports betting and poker have a skill component, where a slot machine does not.

Here's a quote from the article:

"Here’s how it would work: A player who wants to use an access card in a slot machine would first have to register at a casino with identification that verifies a player’s address and date of birth. Registration would also tie a player to a casino’s loyalty card. Players could then load the cards at their banks by transferring funds from a checking or savings account.  Harry Hagerty, president and chief financial officer of Sightline, said his company’s agreement with banks puts limitations on the amount of money that a player could load to an access card — a maximum of $2,000 a day, $4,500 a week and $10,000 a month, and the most a player could put on a card at any time is $25,000.  Regulators also said a player wouldn’t be able to use the card for at least 15 minutes after transferring the funds."

Wow, very responsible of Nevada to make sure the maximum on a card is $25,000 and they have a whole FIFTEEN MINUTE cooling off period. (sarcasm alert)

Here's the Nevada hypocrisy.  One the one hand, they want to make it easier for people to spend their money on slot machines, ahem, THEIR slot machines, which they must think is a good thing.  On the other hand, they are seeking to pass a federal law to outlaw online slot machines, because those are generally not Nevada slot machines, which of course must be assumed to be bad.

So, in essence, NO NO NO don't put your money in those non-Nevada slot machines because they are bad and evil because they are electronic and online and you could go through your money very fast.  Put your money in our slot machines because we're pure and decent and we limit the money you have on your prepaid card to $25,000 dollars!  Right, I stand corrected thinking about hypocrisy here!  (sarcasm alert)

Wednesday, February 5, 2014

Big Money Heavyweights Fight Over Gambling

Fighting over gambling usually isn't about gambling, it's about who gets the money from gambling.  There are a couple of recent news articles that highlight this fact very well.  The first is an article about a couple of casino heavyweights (Genting and Las Vegas Sands) fighting for expanded gambling in Florida.  That article can be found here.  Now, the opposite side is Disney, which although not exactly pro-gambling, is pro-theme park and wanting to maintain their stronghold without new competition for tourism and convention dollars from additional casino gambling venues.  This no doubt is a money fight.  The argument isn't really if gambling is good or bad as Florida does allow casino gambling (eight Indian casinos are authorized).  However, a study did purport to state that new full-service casino resorts would generate an additional $1.5 billion in spending.  You know who is really winning in this fight?  Politicians and lobbyists.  Money is coming into the political fight big time.  The saying goes, "money is the mother's milk of politics" and milk is surely flowing into Florida's gambling expansion battle.  Note that Las Vegas Sands, controlled by Sheldon Adelson, is on the pro-gambling side in Florida.

Now the same Sheldon Adelson is backing the front group Coalition to Stop Internet Gambling, which is attempting to get Washington DC politicians to stop internet gambling.  So fight for gambling in Florida, but fight against gambling in Washington DC.  I'm confused...

Now, this coalition is being opposed by the Coalition for Consumer and Online Protection, backed by MGM Resorts and the American Gaming Association.  The story on that development can be found here.  Isn't it interesting that these players construct these proxies with names that sound good, but aren't really what they are about?  What if these industry heavyweights named their front groups in a way more in line with their objectives?  What if you had groups named Group that Opposes My Competitors From Making Money That I Can't Capture Because I Didn't Grasp the Market Opportunity or Group that Opposes Anything that Might be Good for that Guy Because Perhaps I Don't Like Him and it's Personal?  Wouldn't that be refreshing?

Again, lobbyists and politicians are loving it as the money is coming in!  Do you think this fight will be over soon?  As long as the money is coming in, the politicians and lobbyists really don't have an incentive to see this issue get resolved.  Stay tuned.