Sheldon Adelson, the Las Vegas casino magnate, and his wife, Miriam, contributed almost $100 million to Republican candidates and related organizations in 2012, and another $5 million in 2014. Not surprisingly, the billionaire wants something in return. That something is legislation to outlaw online gambling. But Adelson may have overplayed his hand by putting too much into the pot—and in the process providing a cautionary lesson in why spending so many millions may actually be counterproductive,
It all began in 2011. Up until December of that year, the Justice Department treated Internet betting as illegal—a violation of the Wire Act of 1961. But in late 2011, the Justice Department changed its position. It decided that only online sports betting was illegal; other types of betting like online poker—where most of the online gambling action is—were no longer prohibited. That was obviously bad news for brick-and-mortar casino owners like Adelson who have no online presence. If poker players could ante up in their pajamas, why travel to Las Vegas?
Earlier this year, the odds on Adelson’s online gambling ban looked good. In March, Sen. Lindsey Graham and Rep. Jason Chaffetz introduced the Restoration of America’s Wire Act, a bill to make online gambling illegal, and did so with solid bipartisan support, including Democrats Sen. Dianne Feinstein of California and Rep. Tulsi Gabbard of Hawaii as co-sponsors. House Speaker John Boehner appears to have been on board, Senate Majority Leader Harry Reid was on board, too. (Reid always had a detente with Adelson, given their mutual interest in the Nevada travel and tourism business.) But the bill lingered. Then, a House hearing was scheduled for December. The idea, it seems, was to get it passed quietly.
Then, last month, former Rep. Ron Paul spoke out, calling the bill payback to Adelson and therefore the worst form of “cronyism.” Amid dissension among the Republican ranks, the hearing was postponed. The quiet politics of doing Adelson a favor had become noisy. And the noisy politics of doing Adelson a favor are bad for those who would do the favor. Now there was no way to push the bill forward without it looking like the worst type of corruption. If I were a betting man, I’d put good money down that Adelson will not get his Internet gaming ban in this Congress.
If Adelson loses, should we then conclude that money doesn’t buy results? After all, if you spend $100 million and you can’t get your bill passed, what gives? As with all other ways we spend money, there are ways to spend money intelligently in politics and ways to spend it dumbly. So, what did Adelson do wrong?
Adelson’s biggest mistake is that he spent too much money. Spending $100 million in such public fashion is a great idea if you want to obtain a certain type of celebrity. It also works well if you want presidential aspirants begging for your largesse. But it’s actually a bad idea if you want to get anything done because it makes you the story. And unless you are a sympathetic character (which Adelson is most definitely not), it is not good to be the story.
Good politics might be described as the art of cloaking your special interest in the general interest. But when you become the symbol of big money in politics, it is very hard to pull off this sleight of hand.
Adelson caught on to this axiom late in the game. In February, he told Politico, “When I started to imagine what would happen with legalized Internet gaming, it scared the heck out of me … because of what’s it’s going to do to our society. … I’m concerned about college students. They are of age, and I’m concerned about poor people who really can’t afford to do it, that we’re putting all these temptations smack on their kitchen table.”
He’s doing his best to lend legitimacy and moral urgency to his cause. He’s set up the Coalition to Stop Internet Gambling, with former Arkansas Sen. Blanche Lincoln, former Denver Mayor Wellington Webb, and former New York Gov. George Pataki as co-chairs. He’s gotten Judicial Watch to investigate the Obama administration’s decision to change the interpretation of the Wire Act, alleging that the move “allowed companies—and big Democratic Party donors—with connections to Attorney General Eric Holder to amass huge profits.” The coalition has even taken to BuzzFeed with its highly shareable listicle: “10 Reasons Why Internet Gambling Is a Bad Bet.” Adelson even took a page from the old Jack Abramoff casino lobbying playbook, getting a laundry list of Christian family values groups to sign on to his anti–online gambling cause.
But online gaming companies aren’t sitting still. After all, they have their entire business at stake here. They’re fighting back—hard. They’ve activated the Poker Players Alliance, which channels the energy of those who love playing poker and don’t want to have their online poker cut off. They’ve aggressively lobbied on the issue and have a very active social media presence. And unlike Adelson, the online gaming industry does not have a visible mega-donor.
Specifically, the online gaming folks have built alliances among libertarians, including a special relationship with Grover Norquist. Norquist, along with leading conservative organizations like the Competitive Enterprise Institute and the American Conservative Union, has come out against the federal ban on Internet gambling. Right-wing think tanks like the Heartland Institute have taken to calling the bill “Crony Socialism.”
Of course, one could argue that had Adelson not given so generously, the bill to ban online gambling wouldn’t have gotten as far as it has, and instead nobody would be even discussing it. That may be true. But my guess is that if Adelson had given only a few hundred thousand to campaign organizations (still putting him among the ranks of the top donors) and instead put most of his $100 million into a message machine to call attention to the dangers of online gaming, he’d have been better off.
Adelson always faced longish odds. Defenders of the status quo (in this case the online gaming industry) always have a built-in advantage. Because Adelson needs a change in the existing policy, he needs to pass a bill. That is always hard to do, given the many veto points in the U.S. system of government, which is especially true in the current Congress. Adelson’s opponents only need to undermine the urgency for action, and creating doubt and dissent is a very good way to accomplish that.
Perhaps Adelson will still find a way to tuck his proposal into must-pass legislation, and we will read stories of how money directly buys policy. But if he gets what he wants, it will be because he built the necessary coalitions and alliances, neutralized the American Gaming Association on the issue, and then had his allies use congressional procedural legerdemain. He will have won, despite the fact that he spent his $100 million poorly.
Whatever happens, the larger point is that politics is neither a vending machine nor an auction. Strategy matters, and changing the status quo is always hard, especially when its defenders have their livelihood at stake. In Washington, money helps a great deal, but it isn’t a simple transaction.