A player in online gambling pays Pat Lynch, sees an opening in Cuomo's Albany
If gambling on Indian reservations laid the groundwork for racinos, and if racinos are laying the groundwork for the legalization of table gambling in New York State, will that, in turn, clear the way for online gambling?
Richard Bronson, a former top aide to casino magnate Steve Wynn, and one of the chief crusaders for the legalization of online gambling in the United States, thinks so, and has been working with Albany lobbyist Patricia Lynch Associates to make it happen. Lynch used to be communications director for Assembly Speaker Sheldon Silver.
“In New York, we’re looking at various opportunities,” said Bronson, in a phone call from his Beverly Hills office. “We’re looking at smart ways of doing this. We’re talking to existing stakeholders.”
According to public records, U.S. Digital Gaming, of which Bronson is founder and chairman, paid Patricia Lynch Associates $75,000 in 2010 and the first half of 2011. The lobbying effort is one part of a nationwide, state-by-state effort by U.S. Digital Gaming to legalize online gambling, which, in its patchwork strategy, is not dissimilar from the movement to legalize same-sex marriage, medical marijuana, or, for that matter, brick-and-mortar gambling.
To be clear, online gambling is not going to happen anytime soon in New York. No one is sponsoring legislation to legalize it. There is no great influx of lobbying and advertising money like the wave of cash that preceded the legalization of casino gambling recently. Bronson and his lobbyists aside, it has no local political constituency to speak of.
But he thinks all that will happen here, eventually.
Earlier this week, Governor Andrew Cuomo signaled his support for the legalization of table gaming in New York State, as part of his “comprehensive plans to create jobs and grow the economy.”
“The Leaders expressed support to work with the Governor and request support from their respective majorities to put a constitutional amendment up for a vote,” read a joint statement from Silver, State Senate Majority Leader Dean Skelos and the governor.
That’s something the gaming industry, particularly Genting, the Patricia Lynch client which recently opened a racino at the Queens Aqueduct, has been lobbying hard for.
When asked what bearing that support for table gambling had on the campaign for online gambling, Bronson said, “It’s a positive.”
“Here’s the bottom line,” said Bronson. “When Steve Wynn and I were in business 20 years ago and going around the country and talking to states to legalize casinos, it was like abortion or the death penalty, a highly controversial subject. Today it’s not even controversial anymore in that regard. States now look at gaming revenue as legitimate revenue sources. There are currently 23 states that have full casino gambling.”
U.S. Digital Gaming has been talking about the legalization of online gaming in Albany for the better part of a year now. But there are some potential issues. Namely, the murkiness surrounding the actual legality of state-sponsored online gambling. Some worry that, like the legal haze encompassing medical marijuana in California, legalizing it will lead to a proliferation of lawsuits.
Bronson doesn’t see it that way.
“These are states' rights issues, meaning Tenth Amendment states' rights issues,” he said. “Just like gay marriage will never be legalized on a national level, and the sale of marijuana will never be legalized on a national level, but can be legalized on a state-by-state level.”
That hasn’t stopped some elected supporters of online gambling from trying to legalize it on a national level. Barney Frank, the liberal Democratic congressman from Massachusetts, has been pushing an online gaming bill in partnership with Texan Republican congressman Joe Barton, arguing "that virtual betting could boost tax revenue and even create jobs.”
Morgan Stanley estimates that the U.S. online gaming industry is worth $14 billion annually. Assuming taxpayers got a 25 percent share, that would amount to an additional $3.5 billion in revenue.
A number of states have also begun selling lottery tickets, a form of gambling, online. New York State is set to offer individual lottery ticket sales as early as next year. And states like Iowa and New Jersey are looking at legalizing at least some aspects of online gambling.
That’s where U.S. Digital Gaming is hoping to cash in. The company plans to market a soup-to-nuts platform for anyone looking to establish an online gaming presence. That platform includes age-verification technology and geo-location software to ensure that non-residents don’t partake in an activity that is illegal in their own state. U.S. Digital would also provide the games themselves, as well as the banking systems that would allow a gambler to transfer money into and out of an online gaming account.
The firm has acquired some heavy-hitting investors, including, according to Bronson, Steven Roth, the chairman of Vornado Realty Trust, and Herbert Simon, of Simon Property Group, America's largest real estate company.
“They all know this is a marathon and not a sprint,” said Bronson. “But I do believe, and we’ve been at this almost three years, I do believe in 2012 there will be legal online poker in at least one or two or three states in the U.S. I know it. I’m sure of it. It’s been coming down the pipe here. And that’s what’s going to happen.”