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Emily D. Swoboda

Insights: Land Lobby to the Rescue?

17 July 2008

Not surprisingly, politicians will say the United States is not in a recession, but two-thirds of the nation's top 52 economists polled in an April survey by USA Today disagree.

Oil prices are at an all-time high, and investment banks like Bear Stearns have gone belly up, left at the mercy of government bailouts. Meanwhile, Fannie Mae and Freddie Mac, the country's top two mortgage lenders, are on the verge of the same fate.

Even Las Vegas, the gambling and entertainment mecca of North America, has proven that it is not recession proof. In fact, Sin City's casinos are facing their most severe downturn ever.

Four casinos have gone into bankruptcy this year, while others have reported losses. And several Las Vegas building projects have stalled due to financial problems.

According to the Las Vegas Convention and Visitors Authority, gambling revenues have dropped 4 percent this year -- the current slump is only the second Las Vegas has seen since 1970. The last was immediately following the 9/11 attacks.

Recently, Moody's Investors Service downgraded 17 United States casino companies, with 11 more in review. Furthermore, Peggy Holloway, a senior analyst at Moody's, said in a report last month that the recession is likely to affect revenues in Las Vegas for the next 12 to 18 months.

With the United States economy on the ropes, and its land-based casino industry feeling the effects, IGamingNews asked the experts: Will the gambling lobby step up its efforts to influence the liberalization of America's revenue-generative online space?

J. Daniel Walsh: I doubt there's any nexus between the two. If they perceive an opportunity to make money they'll pursue it. Whether they're doing well or doing badly, if there's another revenue stream available to them I think they'll pursue it. I don't think they're stepping up their efforts in Washington to lobby for licensing and regulation. It's not that there aren't any efforts. I think it's just the same effort level we saw before.

Mr. Walsh is a director of governmental affairs at Greenberg Traurig's office in Washington, D.C.

Anthony N. Cabot: I do not believe that land-based casinos will step up lobbying efforts for the regulation of Internet gambling. The land-based casinos do not see the potential for Internet gambling to provide substantial revenues in the short term. Simply, any legislation implementing regulation and the adoption of those regulations are many years away regardless of whether such regulations are entrusted to the state or Federal governments. Even after adoption of regulations and licensing, the industry would be faced with implementing a long term business strategy to exploit the opportunity. Therefore, legalization of Internet gambling is unlikely to be on any casino executive's short list for dealing with the current economic downturn.

Mr. Cabot, an attorney with Lewis & Roca in Las Vegas, has practiced gaming law for over 23 years with an emphasis in traditional gaming law and Internet gaming, sweepstakes and contests.

Simon J. Holliday: I do agree that the major land-based players will step up their lobbying efforts for the legalization of Internet gaming. We still have the issue of a study to enable them to make the u-turn, though even this position may change.

My view is based on:

  • Need for additional revenues

  • Accessibility of Internet gambling when oil and so travel is so costly

  • Affordability of Internet gambling when personal budgets are squeezed

  • The ongoing success of those privately owned sites that continue to target the US market -- still less mature than land-based / reasons 2/3 above

  • The fact that typically deregulation in gambling is easier to gain in times of economic downtown as public budgets are pressed

  • We see more chance of legalization under (Barack) Obama -- particularly with his spending plans

Mr. Holliday is a founding partner at Global Betting and Gaming Consultants, a United Kingdom consultancy serving the land-based and Internet gambling industries.

Insights: Land Lobby to the Rescue? is republished from
Emily D. Swoboda
Emily D. Swoboda