iGaming North America: Abboud-Garber igaming debate draws 500-strong crowd

21 March 2014

By Marco Valerio 

Andrew Abboud, head of government affairs with Las Vegas Sands and spokesperson for LVS boss Sheldon Adelson’s Coalition to Stop Internet Gambling (CSIG) in the US, told iGamingBusiness that despite the fact that he disagreed with much of the 500-strong crowd in attendance, he was pleased he took part in the debate with Caesars Interactive Entertainment chief executive Mitch Garber over whether online gambling should be regulated in the US. 

The discussion was the highlight of the opening day of the iGaming North America conference currently running in Las Vegas and co-organised by iGaming Business. Abboud said his group's stance was supported by much of the US public in polls, to which Garber said the polling was biased, and CSIG's position had always been consistent. “We're not fans of online gaming. It's not so much that it's a Pollyana-ish, moralistic view. I think we're concerned about the state of the industry overall and where it could go in such a rapid fashion.”

He also warned that the igaming industry should not be overoptimistic about the US market’s potential: “If it (igaming regulation) does happen, it's a limited market. I don't think there's going to be room for everybody in this market. If they think that everybody is going to be able to compete in a nationwide online marketplace, it's not there” and brought up the subject of “bad actors”, hitherto a largely unheard of target of the CSIG campaign.

“We're not worried about the Mitch Garbers of the world. We're worried about what's going on next door in California. It's not all well-suited, vetted and regulated companies that are trying to get into the business.”

Abboud was referencing a recent report claiming that PokerStars is working with some cardrooms and at least one tribe in California to keep “bad actors” language out of local Internet poker legislation. “When you read an article that PokerStars wants to make sure the bad actors can be in the business, then that's bad news for the industry.”

It came Garber's turn to speak. “Surprisingly, I like a lot of the things Andy said.” Garber's company, Caesars Entertainment, has attempted to block efforts by PokerStars to re-enter the U.S. market after Black Friday, although this was never mentioned by either speaker during the debate.

“I think that, unfortunately,” continued Garber, “what Andy just said is not consistent with the position that Sheldon Adelson has put out there, which is 'Internet gaming is bad, I don't like it, it cannibalises (casino play), minors are at risk, and I'm prepared to spend as much money as I need to make this not happen.' Nothing about bad actors or Mitch Garbers or anybody else.”

Garber contradicted the notion that US-regulated online gaming is holding out a welcome mat for shady foreigners. “The fact is, it's people like me who, in the US, are licensed to run Ultimate Gaming, 888, WSOP.com, PartyPoker... The same licensing process that we go through for land-based casinos, we went through for online casinos.”

Fears overplayed 

Garber was emphatic that many of Sheldon Adelson's proclaimed anxieties about the safety of Internet gaming are almost entirely unfounded. “I have 21 years in this business,” said Garber, who started out in the early 90s as a gaming attorney before becoming chief executive of PartyGaming in 2006.

“The fact of the matter is, in all my years, through all the billions of dollars of transactions and revenue that I've seen, the issues of problem or minors gambling have not come to pass, any more than they come to pass in land-based gaming. The incidences of money-laundering and terrorism have not come to pass.”

“What has come to pass is that there are many rogue operators today facing the US, generating billions of dollars of non-taxed, non-regulated revenue.”

By his own admission, Garber's resentment of US-facing igaming operators headquartered offshore was on par with Abboud's and Sheldon Adelson's, though for different motives.

“There are illegal online sites today taking business from Nevadans,” said Garber. “I want that business. I paid a lot of money and tax for that business. I've invested in infrastructure for that business. I want the US government to shut down every site that's offering illegal igaming, in Nevada and in New Jersey. Illegal gambling can be shut down and I hope law enforcement will start to do a greater job of shutting it down.”

Both men argued about “the reality of the Internet” and the next generation of gamblers. Garber took the view that more and more players are becoming used to doing everything over the Internet, and thus, gambling online will eventually not be much more out of the ordinary than ordering a book through Amazon.

Abboud felt that was a poor comparison. “We're not Amazon. I don't compulsively read books. I don't buy the same book 50 times in a row. I don't think this is a retail thing. This is gaming. We need to be careful and very transparent about who we are and the risk that we have.”

Perhaps the most divergent disagreements were heard when the topic shifted to the technology that exists to prohibit, or minimise, minor and problem gambling participation online. Garber, a veteran of the igaming space, naturally made a favorable case. “The controls that we have online are not dissimilar - in fact, technologically they're superior - to the ones we have in our offline casinos.”

Garber stated bluntly that he was upset nobody from Las Vegas Sands had ever reached out to him or to other members of the iGaming industry to learn more about the subject.

He charged Abboud and LVS with “spending a lot of money on things you don't know about. From our point of view, the technology in online gaming is more sophisticated than the human technology in land-based gaming. You don't know where almost any of the money is coming from in your Macau casinos from your Chinese gamblers.”

He continued: “I think it's hypocritical of you to never ask us a single question about what we know. Not one time have you asked any of us, because you're prepared to go aggressively, with as much money as it takes Sheldon Adelson, with all the things you don't know.”

Abboud suggested this was a lie. “I have sat down with your company and was debriefed, and the technological presentations that your company made - they lost me. An entire room of people walked me through the technology in D.C. and I said, one, I don't believe it, and two, I think it's a barrier to the market, until you shut down the illegal operators.”

Abboud argued that it was of course in Caesars Interactive's best interest to protect the integrity of its online games since the company had a lot to lose in the brick-and-mortar world if it failed to do so.

“I don't deny that your company is very dedicated and committed to great technology and understands the importance of it, because you have this building [Planet Hollywood, owned and managed by a Caesars subsidiary] at risk. If your company makes a mistake, your brick-and-mortars are at risk. PokerStars doesn't have that fear.'”

Abboud continued to express doubts that keeping children from gambling online was possible. “A lot of people think we're naïve because they think 'you can't stop the Internet.' We just suffered one of the largest corporate cyber-attacks in history. Scary as can be. When that happens, it doesn't just scare your customers, it scares everybody. And that's the world that we live in today. So is it naïve for us to think that it's not safe? Or would it be more naïve for us to really believe that kids aren't going to play on the Internet?”

“Imagine the class-action lawsuits,” continued Abboud, drawing comparisons to a class-action lawsuit, settled last year, by a group of parents who accused Apple of making it too easy for children to use credit cards to make in-app purchases. “We are going to be a lawyer's dream in class-actions lawsuits, a dream for litigators.”

Wire Act restoration 

On the subject of federal legislation, Abboud was in line with views previously expressed by Sheldon Adelson and CSIG: broad support for a “restoration” of the Wire Act and/or a federal bill outlawing all forms of Internet gambling.

“We're asking for a bill that disallows my company the opportunity to make more money, because we just think that [online gambling] is bad public policy. The day the Wire Act was overturned was not the day it became safe to gamble on the Internet. Simply because you can do it on the Internet, doesn't mean you should do it on the Internet.”

After a lot of back and forth that included a side discussion about the merits of poker-only versus all online casino, Garber accused Abboud of being “all over the map” with his positions. Abboud held up his own smartphone in his hand and said, “We're saying that turning every one of these into a casino is too much.”

Abboud also said that “right now we don't see a position for compromise.” In his closing remarks, Abboud looked directly at the crowd, which contained a diverse assembly of gaming industry executives, technicians, attorneys, legislators, tribal leaders and regulators.

“I'd say, the luckiest guy in this room is the guy that works for Facebook. The unluckiest people in this crowd are the Indian tribes and the smaller gaming operators - there is never going to be a market for you. Ever. Either it's going to crush your brick-and-mortar or you just won't be a part of it. The really smart operators are going to partner with the gentlemen from Facebook or Google or any of those companies, because they know it better than any of us. The rest of you probably don't have much of a shot, and you should know that up front.”