- In 2011 Trump claims U.S. is ‘just missing out’ on online opportunities
- Trump-partnered Ultimate Gaming failed to make a market impact in 2013
- Realtionship with casino mogul, Sheldon Adelson makes future uncertain
Like it or not, Donald Trump is the U.S. President. Barring any unforeseen events, that will be the case for at least the next four years. There are many reasons people like or dislike Trump, but the focus here will be his impact on online gambling. You can look at several clues to determine what might happen next, but one clue stands out more than the rest, and it likely provides the answer to what the future holds in the online gambling space.
First, let’s go back to 2011, when Trump made the following comment to Forbes: “Internet gaming has to happen because many other countries are doing it, and like usual, the U.S. is just missing out.”
This would lead you to assume that Trump is for internet gambling. You might also think that’s the case because Trump used to play a big role in the gambling industry with his Atlantic City casinos. Those are logical assumptions, but there’s much more to the story.
“Internet gaming has to happen because many other countries are doing it, and like usual, the U.S. is just missing out.”
Donald Trump speaking to Forbes (2011)
In regards to Atlantic City, Trump originally obtained his gaming license for New Jersey in 1982. Soon after, he opened Trump Plaza Hotel & Casino. In 1995, he formed Trump Hotels & Casino Resorts. The business eventually went bankrupt, but Trump managed to collect $39 million despite the bankruptcy.
This is one of many reasons why the public is so mixed on Trump. Some believe that should be considered a failure while others consider it brilliance. There’s another debatable topic in regards to his failure vs. brilliance: online gambling.
When Trump Hotels & Casino Resorts failed, the name was changed to Trump Entertainment Resorts, which then partnered with Ultimate Gaming to create a real-money poker site in 2013. The idea was to operate the site in conjunction with the Taj Mahal so players could combine their rewards points. However, according to Ultimate Gaming, not being able to use the Trump name limited the brand’s potential, and revenue and cash flow were weaker than expected.
Ultimate Gaming had to close after just 19 months, also claiming that it was never paid by the Taj Mahal for two consecutive months, for a total of $1.5 million. It’s clear that Trump didn’t fare well in the online gaming space. What’s not clear is whether it should be deemed a failure, or once again brilliance because he managed to avoid the topic during the presidential debates.
Recently, the Associated Press spoke with Steve Norton – a casino consultant. Norton said, “Trump will ultimately oppose nationwide approval of Internet gambling, due in part to Sheldon Adelson’s opposition. But he won’t strip it from states that already have it.”
This is the key to the mystery: Sheldon Adelson, CEO of Las Vegas Sands. Adelson pumped $25 million into the Trump campaign. He did this because he doesn’t want competition for his Las Vegas Sands live casinos, and he knew that if he supported Trump’s campaign, Trump would return the favor.
Adelson announced that his New Year’s resolution was to ban online gaming, and he’s a major force behind the Restore America’s Wire Act, otherwise known as RAWA. This would lead to a nationwide ban on legal and regulated internet gambling. It would also override state laws, including states where online gambling is currently legal. It’s doubtful that Trump would go this far because he doesn’t want to be seen as someone who bows to others, but due to this relationship, Trump isn’t likely to loosen up online gambling regulations in the United States.
“Trump will ultimately oppose nationwide approval of Internet gambling, due in part to Sheldon Adelson’s opposition. But he won’t strip it from states that already have it.”
Steve Norton, casino consultant
Adelson’s company—Las Vegas Sands—is performing well. The stock has appreciated 15.80% over the past 12 months, and quarterly revenue and earnings have increased 7.50% and 9.30% respectively on a year-over-year basis. However, while Las Vegas traffic is up, fewer than 50% of visitors gamble, which represents a huge shift from previous decades. The cost-conscious consumer is alive and well in the states, which is potentially bad news for discretionary businesses in the near future.
Of course, American ingenuity has a tendency to lead to a rebound in the future, but Adelson has no interest in waiting, and he has no interest in relying too much on Macau (China). If he can get Trump to ban online gambling, then Adelson will be ahead of the curve and market share will shift back to the live casinos.
Given everything that has transpired and the enormous egos of those involved, the most likely scenario is that Trump doesn’t support online gambling, but will not go against states that already have it legalized.
There are two other factors to consider here. One, according to the Washington Post, Trump and Adelson had dinner last week. There has been much speculation about that conversation, but nobody truly knows what was said. Two, as of August 2015, the odds of Trump winning the presidency were 25-1. Therefore, when it comes to Donald Trump, you can never rule out the unexpected. He has made a career out of finding a way to get what he wants, regardless of who is in the way.
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