Happy Thanksgiving from GGB; Newsletter Returns December 4

iGaming War Picks Up Steam

The war of words between the gaming industry and its largest company, Las Vegas Sands, heated up last week as the company circulated a letter issued by the FBI in September warning about participation of terrorist and criminal groups in the iGaming industry. LVS spokesman and former New York Governor George Pataki (l.) says it is proof that online gaming is dangerous.

The vitriol between the gaming industry and its largest company, Las Vegas Sands, over LVS’ opposition to online gaming got hotter last week. The Coalition to Stop Internet Gambling, which is funded by LVS, published an FBI letter issued last September that warned of illicit usages of iGaming by criminal organizations.

“Transnational organized crime groups might exploit legal online gambling to generate revenue, steal personally identifiable information, and engage in public corruption,” the FBI wrote to the late Rep. Bill Young, who asked about the consequences of online gaming.

The coalition said that the groups would “draw upon their experience” in the industry to legitimatize parts of their organizations.

Coalition spokesman and former New York Governor George Pataki said the letter is proof that iGaming is a dangerous enterprise.

“The FBI has said definitively that sophisticated technologies can be employed by terrorist groups and criminal organizations to move money undetected, conceal their physical locations, and entangle unwitting online players,” he said. “The FBI’s warning is part of a growing body of evidence that demonstrates how dangerous the expansion of internet gambling will be. Congress needs to do the responsible thing to protect American families and the innocent bystanders caught up in criminal schemes online. It must restore the long-standing federal ban on all forms of internet gambling.”

The FBI isn’t the first organization to warn about the dangers of online gaming. Jennifer Shasky Calvery, director of the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), spoke at G2E in September and threw down a challenge to the industry to stay in compliance.

“Every financial institution, casinos included, should be concerned about its reputation,” she said “Integrity goes a long way.”

Rep. Frank Wolf (R-Virginia), a longtime opponent of casino gaming expansion who launched the National Gambling Impact Study Commission in 1997, Wolf sent a letter to all members of Congress, repeating the FBI concerns.

“Millions of Americans suffer from pathological gambling and addiction that can destroy lives and lead to bankruptcy, suicides, corruption and the breakup of families,” Wolf wrote. “Bringing gambling to every computer, iPhone, and iPad in America will only exasperate this problem and, as we have recently learned, compromise our national security.”

The American Gaming Association defended the industry position.

“We appreciate Las Vegas Sands’ support of our organization and their membership, but we strongly oppose their approach,” Geoff Freeman, president and CEO of the AGA told a meeting of the National Council of Legislators from Gaming States. “We cannot force the internet back into the bottle. We no longer have to debate about do we want online gaming or do we not want online gaming.”

He said a prohibition simply would not work.

“Pretend prohibition of online gaming is a free ticket for shady foreign businesses and criminals to exploit the United States,” Freeman said. “Prohibition has succeeded only in creating a thriving black market that places consumers at risk.”

While Freeman says he still has hope that Congress will pass a law permitting online gaming, he says the AGA will support iGaming legalization in whatever form it takes.

“For the foreseeable future, the AGA’s efforts with regard to online gaming are going to be focused on preventing prohibition,” he says. “What’s done at the state level, in terms of compacts or whether states have poker-only or all games online, I’ll leave that to other interested parties.

“Our organization’s focus is on making sure that states have the ability to move forward. When it comes to compacts or poker-only, none of that will matter anymore if the other side is successful in getting prohibition through Congress.”