Adelson-Backed Lobbying Against Web Gaming Makes Sessions Fold

(Bloomberg) -- A coalition backed by billionaire casino executive Sheldon Adelson has asked the U.S. Justice Department to reconsider a 2011 decision that cleared the way for states to allow online gambling.

But the group’s choice of lobbyist has complicated that request by forcing the recusal of a potential ally for online-gambling opponents: Attorney General Jeff Sessions, who said earlier this year the decision should be reviewed.

The Coalition to Stop Internet Gambling hired Charles Cooper, a longtime friend of Sessions, last month to lobby Justice Department officials. This month, Sessions announced that he, too, had hired Cooper -- as his personal lawyer amid an investigation into Russian meddling in the 2016 election.

As a result, Sessions will recuse himself from the gambling issue, said Sarah Isgur Flores, a Justice Department spokeswoman.

Adelson, a Republican mega-donor and the chairman of Las Vegas Sands Corp., has said he opposes internet gambling on moral grounds, saying online platforms make it too easy for children or the poor to wager. The coalition’s lobbying effort at the Justice Department comes as several states -- including Pennsylvania, where Las Vegas Sands runs a casino -- are considering whether to legalize online gambling.

Ron Reese, a spokesman for the Las Vegas-based casino company, declined to comment.

Cooper said in an interview that he’d already completed his work on behalf of the coalition. He said the timing of asking officials to reconsider the earlier decision was pegged to the arrival of a new administration.

‘Sufficiently Questionable’

“There’s been a change in administrations, and that’s when fresh looks take place,” said Cooper, who disclosed his lobbying work in a federal filing June 15. “This particular legal issue has certainly struck us as sufficiently questionable that it ought to be reconsidered.”

Sessions had signaled at least some sympathy for that position during his confirmation hearings earlier this year -- though he stopped short of calling for an outright reversal. In testimony, he said he was “shocked” in 2011 when the department determined that a 1961 law prohibiting the operation of certain types of betting businesses didn’t apply to online gambling.

“I would revisit it and I would make a decision about it based on careful study, and I haven’t gone that far to give you an opinion today,” Sessions said when asked about the department’s 2011 determination.

Sessions’s boss, President Donald Trump, ran casinos in Atlantic City, New Jersey, for years and may have a different view. He considered entering the online gambling business in 2011, according to a filing with the Securities and Exchange Commission. The White House press office didn’t respond to a request for comment.

Adelson’s Contributions

Adelson didn’t embrace Trump’s presidential campaign until he became the presumptive Republican nominee in May 2016. Ultimately, however, he and his wife gave almost $1.5 million to Trump’s campaign, the Republican National Committee and the Trump Victory joint fundraising committee. Overall, the Adelsons gave more than $80 million to conservative candidates and causes during the 2016 election cycle, including $10 million to the Future45 super-PAC, which supported Trump as the nominee.

After Trump won, Adelson set a record by contributing $5 million to the president’s inaugural fund. He dined at the White House in February. Adelson’s net worth is estimated at $33.1 billion by the Bloomberg Billionaire’s Index.

The implications of a new interpretation by Justice Department officials regarding the Wire Act of 1961 weren’t immediately clear. Flores, the Justice Department spokeswoman, didn’t comment on the agency’s timeline for any reconsideration or how it might affect Nevada, New Jersey and Delaware, which have already legalized online gambling. Cooper said he didn’t know what the department would do regarding such states.

State Lawmakers

A reversal by the Justice Department might not just stop the expansion of online gambling, it could kill it in states that already allow it, according to Dennis Neilander, a former chairman of the Nevada State Gaming Control Board and now an attorney in Carson City. “In theory the DOJ could bring criminal actions against the licensees in those states for violating the Wire Act,” he said.

Meanwhile, states including Pennsylvania, Illinois, New York and New Hampshire are considering moves to legalize internet gambling.

In Pennsylvania, home to Adelson’s Sands Bethlehem casino resort, Democrats in the state Legislature estimate that legalizing online gambling could raise $100 million in the first year in licensing fees and tax revenue, a spokeswoman said. The state faces a roughly $3 billion revenue shortfall.

Both sides of the issue are warning of potential lawsuits and lost jobs -- no matter the outcome, said State Representative Scott Petri, chairman of the Pennsylvania House’s Gaming Oversight committee.

Slots in Bars

“It’s like trying to herd billionaires,” said Petri, a Republican who opposes the legislation.

While the coalition has posted statements on its website about the Pennsylvania debate, Adelson’s efforts in the state have shifted to trying to defeat another part of the same bill that would allow slot machines in bars and airports. Sands is spending almost $2 million on TV, radio and other advertising to thwart that expansion, said Michael Barley, a lobbyist in Harrisburg who’s working for the company.

Putting slot machines in taverns would cost jobs and “be very detrimental to the casino industry,” Barley said.

The Coalition to Stop Internet Gambling, which formed in 2013, has spent $50,000 a quarter on lobbying over the past year. In addition to Adelson, the coalition’s members mostly include conservative groups, including Concerned Women for America, and it has focused its message on moral issues, such as preventing children from gambling.

Adelson echoed that message last year in an interview with Yahoo, saying he thought online gambling exploits “young people and poor people.”

In that interview, Adelson said his own father, a cab driver, “couldn’t stop going to the racetrack,” and said he thought internet gambling is too accessible.

“You could do it in the bathroom, you could do it in your kitchen, you could do it anywhere, privately, or publicly,” he said. “I don’t want people to be incentivized to make it so easy to play on your cellphone. It gets young kids, just like marijuana.”

--With assistance from John McCormick

To contact the reporters on this story: Ben Brody in Washington at btenerellabr@bloomberg.net, Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.

To contact the editors responsible for this story: John Voskuhl at jvoskuhl@bloomberg.net, C. Thompson