Should Barney Frank’s Internet gambling legislation be introduced, then enacted, one American gaming analyst doesn’t expect most members of the United States’ land-based gambling industry to jump immediately at the opportunity to launch online.
In an April 2 note, Joel Simkins of Macquarie Research said that after surveying lobbying contacts in Washington, D.C., as well as a number of the United States’ land-based casino leaders, “most believe approval [of Mr. Frank’s legislation] would be a ‘significant uphill battle.’ “
“Given the more pressing economic concerns of industries that currently employ considerably more potential voters than online gaming ever will, we think the odds are very slim that online gaming will be supported on Capitol Hill,” Mr. Simkins added.
Mr. Simkins’ sober assessment captures the grounded but bearish outlook adopted by some gambling industry observers here. It contrasts sharply with that of the Safe and Secure Internet Gambling Initiative, a backer of Mr. Frank’s legislation that doesn’t lobby Congress.
Jeffrey Sandman, the initiative’s spokesman, told IGamingNews in an interview last month that despite the existence of prohibitive federal legislation, Americans continue to gamble online -- in increasing numbers -- with unlicensed, unregulated operators.
“So there's still the need for and keen interest in creating a regulated and secure marketplace with protections for American consumers,” he said.
As Mr. Simkins notes, members of the land-based gambling industry have historically maintained disparate views on Internet gambling.
Frank J. Fahrenkopf Jr., head of the American Gaming Association, the United States’ most powerful gambling lobby, told IGamingNews earlier this year that association members were unable to come to a unified position on Internet gambling at a board meeting in December 2008.
In that interview, Mr. Fahrenkopf identified Harrah’s Entertainment Inc. and MGM Mirage -- both of which launched unsuccessful online offerings in the early 2000s -- as the two terrestrial operators most likely to push for online regulation during the current session of Congress.
Harrah’s has made headlines this week as rumor surfaced of its decision to appoint Mitchell A. Garber, former chief executive of PartyGaming, head of a new online gambling subsidiary. The company has declined to comment on that rumor.
MGM, meanwhile, has kept a lower profile in the media on Internet gambling, but spent $100,000 lobbying Mr. Frank’s Internet Gambling Regulation and Enforcement Act in the fourth quarter of 2008. Harrah’s, by comparison, spent an estimated $66,250 lobbying various online gambling bills during the same period.
Mr. Simkins said some of the operators in his universe -- including Las Vegas Sands Corporation, Wynn Resorts Ltd. and Penn National Gaming Inc. -- are likely to adopt a wait-and-see approach to online gambling regulation in the United States.
“While several of the operators we follow will likely continue to keep a close eye on online gaming opportunities should they be legalized (particularly given their massive customer databases), we don’t see any player jumping back into the game any time soon, even if implementing legislation was passed near-term,” he said. “In the future, we think that partnering with smaller, nimbler tech/dotcom entrepreneurs or existing software providers may be a better path towards success.”
He believes suppliers -- particularly International Game Technology, which acquired its online arm, WagerWorks, in 2005 -- are the best positioned in the United States to capitalize on Internet gambling opportunities.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.