Online Casino Industry

Will Sheldon Adelson’s new scare tactics torpedo the pa gambling expansion bill?

Jul 31, 2017

Yes, Adelson's fight against VGTs in Pennsylvania could just be the scare tactics required to rule out the VGTs expansion plans!

 

The debate regarding Pennsylvania online gambling expansion seemed as it would start and end without too much involvement from the Sands owner, Sheldon Adelson. After all, supposedly MGM Resorts planned to buy Sands Bethlehem for an amount of $1.3 billion. With the sale, it seemed as if Pennsylvania online casinos were in Adelson’s rear-view mirror.

Now that the rumored deal is off though, Adelson is ready to fight with a fury in order to block gambling expansion in the Keystone State. Recently, he launched a $1 million ad campaign, but the main target is a little surprising.

 

Legalizing VGTS would lead to an influx of slot machine in PA

The area of concern about Video Gaming Terminals (VGTs) in the state is a divisive issue for casino operators. A few, like Rush Street and Penn National, have financial interests in VGT providers. These casinos would surely love to get VGTs in Pennsylvania. The reason being it would mean more cash in their pockets when people purchase the machines.

On the other hand, other casino operators worry that VGTs would cannibalize casino profits. Adelson and Sands fall into this group. The company is financially backing the organization called Pennsylvanians for Responsible Government, which is leading the ad campaign against VGTs.

A spokesperson for the group, Michael Bailey, spoke to the Allentown Morning Call in the context of the company’s chief concerns:

“This proposal would destroy the brick-and-mortar casino industry and risk the nearly $1.4 billion in tax revenues that these establishments generate annually. Worse yet, because VGTs are designed to operate without employees, the 18,000 people casinos collectively employ in Pennsylvania will be put in serious jeopardy.”

Anti-VGT ad claims nursing homes could end up as casinos

An amount of $1 million is being spent by the group on its media campaign. It includes a commercial which showcases the kinds of places where VGTs could end up.

Bars and truck stops were the primary targets for VGT placement in previous iterations. However, in the new ad, the organization suggests anywhere with a liquor license could “become a casino” together with some nursing homes.

In addition, the ad suggests this will result in corrupting Pennsylvania neighborhoods by putting “casinos” near schools and churches. Here is the full video to watch for yourself:

https://www.youtube.com/watch?v=WBU91I1NsX8

 

At present, there is no VGT bill on the table

It is most certainly not surprising that Adelson and Sands do not support VGTs. However, what is interesting, is that they chose to make a big noise about them now.

As it stands, the current gambling expansion bill passed by the Senate and in the House does not take into account the VGTs. It consists of online poker, online casinos, and daily fantasy sports. Many speculate VGTs will be part of the gambling expansion debate though. The current legislation fails to generate enough funds to meet budget expectations. Hence, lawmakers will inevitably discuss alternative solutions.

Rather than go after online gambling, as Sands has done in the past, the company is widely attacking VGTs. There are a couple of potential reasons for this course of action.

 

VGT threat killed MGM Resorts sale

For the past few months, Sands stayed pretty quiet about developments in online gambling. In addition, the company also stayed silent about a rumored Casino sale to MGM. Then, the deal unexpectedly fell apart. One theory points out that something in the gambling expansion bill scared MGM off. Taking into consideration that MGM is pro-online gambling, VGTs could be the matter, which broke up the deal.

 

Lack of support for VGTS makes them an easier target    

Another option is that Adelson’s group is going after the more polarizing component of gambling expansion to gather more support. VGTs are a much more contentious issue, particularly among casinos. By bringing this divisive element front and center, Sands can break up the united front of 10 casinos, which are supporting online gambling into factions.

The end result is more casinos besides Sands and Parx come out against the bill, causing nothing to get through the state legislature.

It increasingly seems like VGTs, not tax rates, might be the make or break in respect of the issue of gambling expansion this year. If that is the case, there is now someone with deep pockets willing to work very hard in order to ensure VGTs, and maybe the whole bill never comes to fruition.

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