Sheldon Adelson is involved in several big stories, as one might suspect of America’s richest gaming executive.
2015 had a number of big news stories that dominated the headlines. Writing a news blog gives a person a good sense for how impactful each topic is. Below are the biggest stories of 2015, which should continue to impact the American gaming industry for years to come.
I could have included Atlantic City’s fall, but there appears to be a lull in news at the moment. 2014 was a disaster for Atlantic City, while 2016 should be the pivotal year for the Boardwalk’s economic fortunes. That’s when a new vote on a North Jersey casino bill will be decided, which should determine the fate of AC. Showboat Casino and Revel Casino migth re-open in some form, but 2015 left things up in the air.
Casino licensing and building in New York, Massachusetts, and the Las Vegas Strip continued to be big stories. Once again, those remain peripheral, until the grand opening of those casinos. In 2016 and 2017, those stories should be much bigger in the news.
It was legislation, licening, bureaucratic, and judicial decisions which dominated the gambling news in the United States in 2015. With that in mind, here are the Top 5 stories of the year.
5. PokerStars Licensed in New Jersey
In late-September 2015, the New Jersey Division of Gaming Enforcement finally licensed PokerStars for operations in the state. The announcement has several positive implications for the gaming company, as well as New Jersey’s online gambling industry. First, the inclusion of PokerStars should up the stakes in New Jersey’s online card rooms, drawing more customers and challenging the status quo. Morris Bailey’s Resorts Casino now has an online presence, and it should be a big one when it comes online in 2016.
Beyond that, the approval of the DGE is big for PokerStars and Amaya Gaming, both in the United States and outside it. New Jersey’s gaming regulator is one of a handful of agencies that other states consider when licensing. The DGE’s stamp of approval should help PokerStars in other US states. It also should help it get licensed in other non-US states, especially in Latin America, where the agencies often look to the United States when vetting companies. The move should normalize operations for PokerStars somewhat in the Western Hemisphere.
4. New Jersey Keeps Its Challenge of PASPA Sports Betting Law Alive
New Jersey continues to challenge the Professional and Amateur Sports Protection Act (PASPA) and there are signs the challenge is working. Most people still do not believe Chris Christie’s crusade to strike down PASPA has a hope. Convention opinion is hard to refute, since New Jersey has faced on defeat after another in its court cases versus the NFL, NBA, MLB, NHL, and NCAA since 2012.
The positive signs stem from an appeal of one of those defeats. Back in August 2015, the US 3rd Circuit Court of Appeals upheld a decision by District Judge Michael Shipp that New Jersey cannot legalize sportsbooks by simply ignoring law enforcement. Shipp’s contention was New Jersey’s decision to ignore Monmouth Park sports betting while continuing to prosecute illegal bookmakers was discriminatory, and amounted to tacit regulation.
The 3rd Circuit Court of Appeals ruled 2-1 that Shipp was right, but New Jersey appealed the decision and asked for an “en banc” ruling, which would require all 24 judges of the Third Circuit to render a decision (instead of the 3). An 11-member panel of those judges decided to hear the case, meaning New Jersey has at least 6 votes in its favor in the coming 24-member vote. That is the most positive sign in years of litigation. Beyond that, NBA Commissioner Adam Silver and MLB Commissioner Rob Manfred each seem more open to legal sportsbooks across the US than their predecessors did.
3. Caesars Bankruptcy Case Gets Complicated
When Caesars Entertainment filed for bankruptcy in January 2015, the gaming company looked like it had its creditors in line with its reorganization plan for the Caesars Entertainment Operations Corporation (CEOC). 80% of the stockholders — called the first lienholders — agreed to the plan. In February 2015, the remaining 20% of the creditors — called the junior shareholders — filed a lawsuit against Caesars, claiming the CEOC plan was leaving them holding about $7 billion of debt unfairly. The case appears ready to be litigated over a several-year process, which could hold back Caesars’s growth.
The CEOC lawsuit stems from actions Caesars took in the summer of 2014, moving several casinos out of the control of CEOC and back to the parent company. When CEOC declared bankruptcy 6 months later, it was fairly obvious that move was to hide the assets from creditors in a bankruptcy plan. Caesars’ plan is to split CEOC into two units — the standard operating company and a real estate investment company — with the first lienholders receiving valuable stock in the real estate unit. The junior shareholders would get stuck with the worthless CEOC unit shares, so this lawsuit was more or less inevitable. Making the bankrutpcy fight more complicated was the inclusion of a second lawsuit by a New York City bank, which claims Caesars Entertainment defrauded them in the same plan. This is going to get very murky, before the picture clears.
2. Macau Casino Industry Implodes
Meanwhile, the other three members of the Big Four American casino companies — MGM Resorts, Wynn Resorts, and Las Vegas Sands Corporation — are mired in trouble over their Macau assets. Ten years ago, Jim Murren of MGM Resorts, Steve Wynn of Wynn Resorts, and Sheldson Adelson of Las Vegas Sands each invested heavily in the Macau casino industry. Those investments paid off handsomely, as Macau surpassed Las Vegas as the world’s leading gambling destinated. Macau surpassed Vegas by a lot, drawing in a full 7 times the revenues of the Las Vegas Strip in 2013. That fueled a meteoric rise of those companies’ stock prices, especially for the new leader of the world casino industry, Las Vegas Sands. Sheldon Adelson went from a second-tier gaming executive in Las Vegas to the world’s 8th-richest man, capable of affecting politics in the United States and Israel with his major contributions to politicians (in the US) and media groups (in Israel).
Then the government in Beijing began cracking down on corruption in the Chinese system in 2013. President Xi Jinping came to power in 2012 as a supposed reformer, but no one had any clue he would be such a crusader against corruption. The crackdown seemed to have little effect on Macau in 2012, 2013, or the first half of 2014, but then it hit Macau like a tidal wave.
The credit system of Macau was investigated, completing wrecking how high rollers got to the gaming enclave and gambled. For 18 months and counting, Macau has seen massive decline in its revenues. LVS Corp, MGM Resorts, and Wynn Resorts have seen their stock prices decline by 40% to 50%. Sheldon Adelson lost more than $10 billion, though he still qualifies as the 18th-richest person in the world.
Still, the decline of Macua has a tremendous effect on the American gambling industry, because it affects several of the American gaming giants. The fact is, those three companies have been getting more revenues from China than America for years now. Stay tuned for the lingering effects.
1. Anti-Online Gambling Legislation Languishes in Congress
In the United States Congress, the anti-online gambling legislation — variously called “Restore America’s Wire Act” or “Restoration of America’s Wire Act” — continues to stall in committee. Sheldson Adelson’s favorite piece of legislation hopes to squelch the nascent online gambling industry, which is going in New Jersey, Nevada, and Delaware. States like California and Pennsyvlania continue to discuss legalizing online gambling in order to boost tax revenues, but Adelson’s RAWA bill would ban iGaming in 50 states.
With key figures in positions of power ready to help RAWA, the bill continues to be discussed, despite having little popularity among Washington power brokers. The main friction appears to be between Republicans. On the one side, Rep. Jason Chaffetz, Sen. Lindsey Graham, Sen. Marco Rubio, and David Hoppe (chief of staff for Speaker of the House Paul Ryan) support RAWA. On the other side, Sen. Rand Paul, ex-Rep. Ron Paul, and NRA Vice President Grover Norquist are against the bill. Those against are concerned for the implications of an 50-state online gambling ban, which would allow the federal government tremendous power to overrule states on other issues, such as abortion and gun control.
The biggest news appeared on December 9, when Republicans on the House Oversight Committee joined with Democrats in challenging Chairman Jason Chaffetz on the RAWA bill. Chaffetz received such a rebuff that he let someone else chair the second half of the meeting, as if he was washing his hands of the matter.
The votes do not appear to be there for RAWA. At the same time, Sheldon Adelson has allies better-positioned than any time since RAWA was introduced to push the bill through. Concerned parties should remember that UIGEA did not have the votes, either, but was attached to the Safe Port Act, because no one in their right mind would have voted against that bill. Online gambling is still in danger in the United States, despite its unpopularity. One lone gaming executive has that much power over the process.
Biggest Casino Industry News of 2015
Stay tuned for more on those news stories. Each is a developing part of the American gambling industry. 2016 should include exciting news like skill-based slot machines, a North Jersey casino vote, and the final resolution to DFS regulation and New Jersey sports betting. The news never stops in the US gaming niche.
