Las Vegas Sun

September 21, 2014

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Jon Ralston:

The clear and present danger to Nevada’s economy

The economic skies are brightening in Nevada.

The signs are all around. Gov. Brian Sandoval has been saying since late last year that various indicators — sales and gaming taxes, tourism numbers — indicate a gradual recovery is in the works. And Gov. Sunny also has a new economic development plan that envisions 50,000 new jobs by 2014 — an ambitious but admirable goal, perhaps. Only a Chicken Little would say anything but that blue skies are ahead.

If I may cluck — quietly, I assure you, so as not to darken the mood — has anyone considered what is really going on in the gaming world? No, I am not referring to the billions some companies are spending half a world away in the most important gaming destination on the planet. No, Macau is but a trifle compared with what is happening across the United States, a quiet temblor so far but one that could start registering on the economic Richter scale with cataclysmic consequences for this state’s economy.

Sorry, Gov. Sunny, for the apocalyptic language, but the federal government’s failure to act on Internet gaming, and that Christmas gift to lotteries and the states on web wagering could undo all that you are trying to accomplish.

Let me explain:

The Department of Justice changed the playing field on Dec. 23 by reversing its long-held position that the 1961 Wire Act banned all online gaming — the new interpretation only prohibits sports betting on the Internet. Without any federal governor, that opened up two new frontiers. One was for lotteries to expand their presence onto the web; the other allowed states to authorize intrastate Internet gaming, and, perhaps, form compacts with other states.

It doesn’t take Bill Gates to realize what this could mean. Like the Internet itself, web gaming is an unstoppable phenomenon that will eventually be accessed by tens of millions of people in the U.S. It’s not a matter of if, but when.

And that’s where Gov. Sunny and the rest of the state’s Poylannas better take notice. About half the states are considering web poker or Internet gambling legislation — and the list will soon grow. Some examples:

• California: A bill would permit unlimited Internet gambling operations

• Florida: A proposal would allow the Florida lottery to provide poker on the Internet.

• Illinois: State officials hope to launch an Internet platform this month.

There are many more, all leading in the same general direction: Legislation enabling some form of Internet gambling this year.

Nevada’s law is predicated on the federal government taking action, but so far that has not occurred for a variety of reasons. Senate Majority Leader Harry Reid has not been able to use his mastery of legislative legerdemain because of all the roadblocks. And the recent public opposition from Gondolier Numero Uno Sheldon Adelson, who says he worries about underage gamblers, has all but entombed the efforts in the House, whose GOP leaders like Adelson almost as much as they like his money. Adelson said in an interview with Politico recently he would testify in Congress against web gaming. I think he’s adamant.

What’s ironic is that with the proliferation of online lotteries, underage bettors are likely to explode much more quickly than they would with poker or games that only allow adult participation. That is a real possibility, considering where some of these states are going.

Most of the major Nevada gaming companies are ready to launch and would have a leg up on the competition because of their brands. No welovepoker.com site is going to be able to match what Caesars or MGM or Boyd could offer. But in the current universe, companies such as GTech and Scientific Games will get their feet in the web door first and be able to establish operations before the Nevada companies know what hit them. With billions upon billions at stake, this industry could lighten the load on some of the Strip giants. No one knows the ultimate impact if it happens without them, but there will be a substantial one.

I acknowledge that since Atlantic City came, ahem, online in 1977, there have been a succession of faux apocalypses for the Nevada economy — Indian gaming, Bible Belt gaming, California gaming, international gaming. But if the Chicken Littles were wrong then, will they be wrong again when the Internet comes alive with lotteries and slots and web poker?

Yes, some of these Nevada companies have made their own beds, portraying Indians, Mississippians, Asians as the enemy until they found it more lucrative to lie down with them for the money. But that doesn’t make the threat any less real of a burgeoning Internet gaming market that leaves out Nevada, a scenario that would darken Gov. Sunny’s world and allow the Chicken Littles to point and cluck.

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  1. What you are saying is oh so true, Jon. Our LAWMAKERS and Nevada's gaming brokers are taking some major missteps that will effectively disable Nevada's gaming economy.

    Simply unbelieveable! But it is happening, or not, as the case may be. As long as Government continues to be so dysfunctional, little will be done that makes any kind of common sense.

    And our dear Governor has the usual focus, accentuate the positive and avoid the negative on all this. Even though the "sky is falling," he views it that we still have air. Way to go in running a state with NO plan, just words.

    Blessings and Peace,
    Star

  2. It is also possible some of the psycho-social dynamics of gambling will kick in as cyber-gaming advances. For, giving people that taste of gambling could be just the thing to get people who would not have been interested in Las Vegas interested. It could bring in a whole new generation of gamblers.

  3. Like Indian casinos and state lotteries, all non-Nevada gaming simply introduces millions of new people to gambling every year. Once they get the taste of it, the overwhelming majority want to go and experience the big leagues, that being Las Vegas. I think Las Vegas will continue to be to gaming what Disney World is to all other amusement parks. The ultimate destination. There's nothing else like it. The worst thing Las Vegas has done is try to take everything up market, pricing out the middle and lower end customers. While places like Wynn, etc. are really fine places, companies like Harrah's and Boyd (How's that echelon thing working out?) need to keep some of their business in the Imperial Palace, Harrah's, Stardust categories in order to attract the largest number of customers.

  4. The RepubliCONs continue to attempt to ride the coat tails of President Obama and Harry Reid. Pretty Boy Governor of Nevada continues to sit on his rear as the previous mindless RepubliCON Governor of Nevada. Governor, it is time to stop talking and start doing, create jobs NOW. GET TO WORK GOVERNOR OF NEVADA!

  5. I agree with UTE, once people get a taste of it they will want more. What Las Vegas has over all of the other gambling areas is entertainment and weather. Once you have been to Las Vegas the other places seem like a county fair compared to Disneyland. One other thing to keep in mind the other states who are on the band wagon to legalize gambling take a huge cut of the profits. They believe people will bet like they buy lottery tickets. How wrong they are because the lottery is the only outlet they have. What Las Vegas needs to do is figure out how to get more people there They need to work with the air lines to make this happen. Keep the faith most other state governments are just as screwed up as Nevada's all they want is more money to waist. One other thing most areas are not built to handle the amount of people that travel to gamble and be entertained like Las Vegas and they can not afford to invest $$$$ to make it so. This will drive people to Las Vegas it is called Customer satisfaction.

  6. Some of you are counting on online gaming to help Las Vegas. Maybe it will, maybe it won't. Don't count on it. Big difference in spending money at home and close to home vs. flying to Vegas.

    Gamblers who will use the online gambling will do it for one reason: so they can do it WITHOUT going to a casino. My guess at least 95% will have already done the casino gambling and now, when the urge strikes, they can sit at their computers in their pajamas and gamble away. I know a couple of people who love to gamble and can't wait for the online gambling because, in their words, "we'll never have to go to the casino again, we can stay home and blow our money!" Sure, the "on-liners" will still visit casinos and the "newbies" may get the "taste" and decide to go to a casino, but since there are casinos everywhere, Las Vegas may get just a small portion of those on-line gamblers. People will still stay close to home.

    I think online gambling is going to bring about more people addicted to gambling. At least in a casino, you can control your money, ie not going to the ATM a 4th time (if you can, that is). At home, you can just keep pissing away your money or running up your cash advances on your credit card. Unless they put a limit on how much you can gamble, I see this breeding a whole new generation of addicted gamblers. Too easy.

  7. I always wondered why Nevada didn't join the "Megaball" or Powerball lotteries or start it's own lottery of some sort. Even if people never step foot into a casino, they buy those lottery tickers along with the "scraper tickets". Nevada lost out on that one.

  8. Why come to Vegas and risk getting assaulted or killed by P.O.O.C.'s (Police Officers Out Of Control)?

    Oh, and how much water will Nevada still have, and at what price, in 10 years?

    You're SPOT ON AGAIN Jon, but we have a lot of major problems that King Sunny just doesn't want to talk about, sadly!