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Steve Wynn’s Online Gambling Switcheroo

wynn-resortsA recent story appearing on Jon Ralston’s popular “Ralston Reports” blog has the online gambling world wondering if the American internet-gaming scene will ever emerge from its Middle Ages.  In a recent interview with Ralston, Wynn Resorts chief Steve Wynn has averred that he’s going to join fellow casino magnate Sheldon Adelson in his newly pledged war against online gaming.

Ralston, who has been a friendly supporter of the Adelson camp for some time, reports being sent over to check on Wynn’s changed stance during a brief interview with Adelson:

When I reached Wynn to try to confirm what Adelson had told me, he was quite passionate about what he now sees are the pitfalls of web gaming, including the government’s ‘insatiable appetite for revenue’ that would probably make it problematic as well as the potential for an industry-blackening moment if an underage scandal were to occur.

‘This is not a good entrepreneurial opportunity,’ Wynn, who knows a little bit about entrepreneurship, said. ‘Where is the business opportunity? The big problem I see is I don’t see the government letting us keep the money.’

Wynn said he had seen all of the modern technology to track players and block minors demonstrated by the likes of Tom Breitling of Ultimate Gaming and others, people he respected. He had heard them argue the systems are virtually impregnable and concluded, ‘I’m sure it was impressive if you were a cyber guy. But it was bullsh—’

Ralston Reports, “Wynn joins Adelson crusade against web gaming

As many industry observers noted, at least Wynn wasn’t hiding behind a false flag, pretending he was concerned about anything other than the money.  That also doesn’t mean the stance isn’t every bit as hypocritical, as it was Wynn who signed a major deal with PokerStars founder Isai Scheinberg just months before Black Friday that would have produced a global Wynn / Stars partnership for both online and live events.

Wynn backed out of that deal after PokerStars and Scheinberg himself were indicted by the Department of Justice in 2011, but don’t believe for a moment that Wynn didn’t know that Scheinberg was already well entrenched in a gray area with regards to US law at the time the deal was made; stories of the deal’s genesis had Wynn flying to meet Scheinberg on Isai’s Mediterranean yacht, since Scheinberg couldn’t come to the US under fear of a sealed indictment already being in existence against him.

Then there’s Wynn’s plans in Nevada and New Jersey, where the corporation has gone ahead with seeking licensing and regulatory approval without really committing to an upfront investment in the new market.  Just this week, New Jersey gaming regulators announced that a deal with Caesars and online company 888 that would allow a Wynn-branded online room as part of 888’s new All American Poker Network had been approved.  However, in a follow-up to the Ralston piece, a Wynn spokesman confirmed to the Las Vegas Sun that any Wynn plans are on hold for the time being, approval or not.

Again, this appears to be all about the money.  Early returns from all three US states who have approved online poker to date have shown slower than expected growth, in large part due to some of the banking difficulties and other hurdles to entry that remain in place for consumers; registration and getting to live play has been anything but a piece of cake for many players.  Delaware, the smallest and newest of the three states to go live, reported that as of the end of the year, the state had signed up only about 4,000 players and generated a paltry $253,000 in revenue.

Wynn may be holding back in hopes that some US state — possibly New Jersey — comes up with some sort of ‘sweetheart’ deal, involving little or no corporate taxes, such as what has developed in Gibraltar over in the last decade.  Gibraltar, which charges a flat rate for a license but is otherwise tax free, has thus become the new home of most of Europe’s large gambling firms … to the consternation of most other European countries, especially the United Kingdom.

Yet right now, the online firms themselves are getting the best of it, and that’s part of the reason why Wynn probably doesn’t want to charge uphill in opening the new online American scene, nor open its doors too wide to all those European competitors.

If there’s a story to Wynn’s recent shift, it’s that it may restore a traditional policy split in the American Gaming Association.  The AGA, the United States’ largest pro-casino lobbying group, fell behind the curve in pushing forward proposals for online gambling legislation in the years after the 2006 Unlawful Gambling Enforcement Act (UIGEA) was passed.  That footdragging was due almost entirely to two major AGA constituents: Adelson’s Las Vegas Sands Corporation and Wynn’s Wynn Resorts.

It was only when Wynn temporarily softened his stance that the AGA really committed itself to backing online gambling legislation, and if this latest Wynn flip-flop proves true, it’ll be curious to see how AGA policy itself is affected.  The general sense is that Wynn just seems to be letting other firms such as Caesars do the political heavy lifting in opening these markets, while Wynn may be waiting to swoop in on opened opportunities.  The recent Massachusetts casino-licensing difficulties have also pitted Wynn and Caesars interests on opposite sides of a billion-dollar battle that’s likely to go to the courts, and that’s yet another incentive for Steve Wynn to act cool himself toward US-based online gambling, where Caesars is a proactive force.

That’s just gamesmanship.

If you step back and look at it objectively, what’s happening right now in the United States appears to be a giant turf war.  The field is so convoluted and there are so many distinct players in the game — state and federal rights ad tribal gaming interests, just to name some others — no one’s quite sure how it’ll all play out.  Sheldon Adelson’s hoped-for reversal of the 2011 Wire Act reinterpretation and a strengthening of the UIGEA is an unlikely scenario for any number of reasons, but it’s still one of the extreme possibilities that must be considered.

The US online market, licensed, unlicensed or whatever, remains a hotbed of activity.  2014 is likely to be a pivotal year in how quickly online gaming is accepted in the States, and Steve Wynn and Wynn Resorts, by accident or by positioning, are right in the middle of it.

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