In 2018 proponents for legalizing sports betting throughout the United States got their wish when the Supreme Court overturned an antiquated PASPA law. But much more happened to alter the landscape of gambling in North America. Toronto may get a casino again, Steve Wynn was pushed out as CEO of Wynn Resorts and horse racing saw another Triple Crown winner in Justify. The stories below are the top gaming stories of 2018, numbers six though 10. The #1 gambling news event will be revealed in part two of the top 10 North American gambling stories of 2018.
10. The return of Jon Kyl
No name is more reviled in the gambling industry than Jon Kyl. The Arizona Senator almost single handedly killed the U.S. facing offshore gambling industry thanks to his introduction of the Internet Gambling Prohibition Act in 1997 and his incessant lobby of others to take up his cause. When introducing his bill he stated:
"Children can access Internet gambling sites on the family computer, wager with Mom’s credit card, click the mouse and lose the house."
He was successful at convincing others too since he first won a 90-10 vote in the Senate on his bill and only lost in the House when the horse racing industry, the Tribes and the lottery fought him because they viewed the Internet as a way to grow their products. When that vote failed, he got involved with similar bills introduced in later years by Jim Leach, Robert Goodlatte and eventually Bill Frist who got a version of Kyl’s original bill passed in 2006 via the UIGEA. That bill was a watered-down version of Kyl’s bill, but it also changed the gambling landscape forever. Numerous gambling sites withdrew from U.S. markets, sold their operations to other companies or simply shut down. It also indirectly led to the loss of NETeller for U.S. gamblers as a payment option.
Kyl wasn’t in the gambling pages again until 2012 when he joined forces with Nevada Senator Harry Reid to try and get poker legalized, but make online gambling illegal under all circumstances. The bill titled “The Internet Gambling Prohibition, Poker Consumer Protection and Strengthening UIGEA Act of 2012,” aimed to legalize online poker but exclude Poker Stars and other sites that previously catered to U.S. customers for 5 years and to expressly declare online gambling illegal and rewrite the 2010 DoJ opinion that allowed online gambling to take off. The bill was clearly designed to give the public something that it wanted, and most land-based casino operators viewed as an indifferent (i.e. poker), while some land-based casino operators viewed banning online gambling as a threat to their businesses. The bill failed to get much traction, but the next year Sheldon Adelson started his campaign to stop online gambling and enlisted politicians to introduce his bill called Restore America’s Wire Act (RAWA) which aimed to make all online gambling, including that which was already happening, illegal. The timing seemed to indicate that Kyl was likely in cahoots with Adelson in the introduction of both RAWA and the 2012 Kyl bill.
Kyl didn’t run for re-election and wasn’t heard from again until September of 2018 when Senator John McCain died of cancer and was replaced by Jon Kyl on an interim basis. That appointment has many in the online industry reeling. It’s clear that Kyl will not get involved with sports betting or poker since those aren’t his concern, but skeptics have no choice but to think that he is working behind the scenes to somehow get online gambling banned. There is also a concern that Kyl will use Donald Trump as a pawn and somehow get him to agree to support a gambling ban in return for some other political favor. Any way you slice it, the fact that Jon Kyl is again on the scene has to make those in the online gambling industry uncomfortable and makes him the 10th biggest gambling story of 2018.
9. The Greater Toronto Area casino merry go round
The Toronto casino has been a blessing and nightmare for casino operators across the U.S. and Canada. When the Ontario government first announced its gambling modernization plan, which was to include a Toronto resort casino, companies from around the world came calling. The Greater Toronto area is the 4th largest metro area in North America with over 5 million people and millions of others visit the city each year. All the big casino companies like Caesars, MGM and Las Vegas Sands viewed it as a gold mine and poured resources into landing the bid. Caesars along with two Canadian companies pushed to have a casino built near the CN Tower and Metro Convention Centre while MGM sought to have a casino built on the Ex Grounds. The Toronto mayor at the time, Rob Ford, seemed to support the MGM bid while his successor John Tory seemed to favor the Caesars bid, wanting to keep the Ex Grounds as green space and a family destination. In the end it didn’t matter. Toronto’s left-wing council chose not to support any casino and all the casino companies left frustrated with their tales between their legs. MGM, which apparently spent over $10 million on its bid was particularly upset and called the process a big waste of time and money.
t long after the casino was turned down, the newly elected Toronto council decided to allow a casino at Woodbine racetrack. The track said that land was already zoned for gambling, so it made no sense for council to lump them in with the bids for the Ex Grounds or the Convention Centre. To make it more appealing the Ontario government announced that the bid would be a bundle that would include a casino in Durham Region (an eastern suburb) as well. This would include the slots only facility at Ajax Downs and the native casino in Port Perry plus they could look at other options as well. The city of Pickering pushed to have a resort casino built in the southwest area of its city and called it Durham Live although it received objections from neighboring Ajax, Port Perry and Whitby which wanted to leave the region as it was. The city held a referendum and Pickering residents voted in favor of the casino. The bid for the GTA bundle was held and the winner was Great Canadian Gaming which ran numerous casinos in Western Canada as well as in Washington state.
Not long after winning the bid it was revealed that a Vancouver property belonging to Great Canadian, the River Rock Casino in Richmond B.C. was involved in money laundering that included Asian nationals exchanging hockey bags full of $20 bills that were obtained from illicit activities in exchange for chips which were then cashed out for larger denominations to hide the true nature of the source funds. It was also revealed that the head of the money laundering scheme was involved in drug trafficking and loan sharking and the RCMP released a report suggesting casino operators should have been more attuned to what was going on. Not surprisingly opposition parties in the Ontario government along with anti-gambling skeptics on city council wanted the contract cancelled but the Ontario government said there was nothing they could do, and the bid stood.
Great Canadian gaming announced in 2018 that it was in favor of Durham Live which caused a protest and outcry by the city of Ajax and its Member of Parliament was defeated in the last election and the mayor stepped down due to the anger that was directed at them over the announced casino win by Pickering. Fast forward to the summer of 2018 and an Ontario election was held. The Liberal Party who were in power for the last 15 years and approved the Great Canadian bid were trounced in the election losing official party status, and the new ruling party was the Conservative Party headed by Doug Ford, the brother of the former mayor of Toronto Rob Ford who was in favor of the MGM bid. One of the newly elected members in Ford’s cabinet was Rod Phillips, who was formerly in charge of Ontario Lottery and Gaming and was the Member of Provincial Parliament for Ajax. Phillips apparently sought to have the Great Canadian announcement for Durham Live scrapped but after much consultation with the company and others in the government they came to an agreement to allow both casinos to operate. Durham Live would go forward with a full casino as planned while Ajax Downs would keep its current slots setup. The Port Perry casino apparently will be unaffected too. But more importantly Doug Ford tabled legislation as part of an economic statement that includes a clause to dissolve the corporation and public board overseeing management of Ontario Place (a prime piece of real estate near downtown Toronto by the waterfront and abutting the Ex Grounds), which was appointed by the previous Liberal government. The decision on what to do with the property would then be decided by the new Conservative government and likely Doug Ford directly. And speculation is that Doug Ford wants that land used for a downtown Toronto casino. It’s uncertain whether Ford can convince Toronto council to support it but there is also speculation that if they don’t the province may run it by itself. There is also a question whether any former casino bidders would be interested now and lastly there is a question whether this new casino would violate any contracts with Great Canadian Gaming. Any way you look at it, the Toronto casino issue is a carousel.
8. The decline of cryptocurrency value and the effect on offshore gambling sites
Near the end of 2017 everyone was wondering how high the value of cryptocurrencies like Bitcoin could rise and now everyone is asking how low it can fall. Bitcoin peaked on December 19, 2017 at $19,536 per share but it has tumbled since. Various actions by multiple countries and particularly China to block cryptocurrencies as legitimate forms of payment along with announcements by skeptics like Warren Buffet on its legitimacy has seen the currency tumble to its current value of just over $3,500 per bitcoin. Similarly, Ethereum has seen its value tumble from almost $1,400 per ETH to just over $100 today with the value dropping below $100 for some time and other currencies accepted by offshore companies like Litecoin, Monero and Bitcoin Cash are seeing similar massive declines. Most offshore companies that accept crypto as a form of payment say it really doesn’t matter since they trad their crypto daily and don’t actually hold anything, but others admit that isn’t always the case.
"There are some sites that convert the cryptocurrency to USD when a payment is made and then pay out in the same cryptocurrency at the current rate of exchange and that’s fine," one site admitted “but it doesn’t work if the site is holding the crypto as speculation. We have our own crypto exchange, so fluctuations don’t hurt us,” the site manager said "but I know of one business who took deposits of 50 BTC over 2 months from 3 specific customers when it was trading around $8,000 a share and the business never traded those BTC for USD. The customers wagered in U.S. dollars and when they asked for a payout of $500,000 they were paid in BTC at the current rate when those BTC deposits are now only worth about $200,000. So, the $100,000 those customers won became a loss to the company of $300,000. It was a silly risk."
More concerning to the future of gambling with crypto isn’t with companies that convert crypto to USD but rather those that use crypto specifically for gambling including as deposits, for gambling and for withdrawals.
One crypto only site I spoke to said that the decline in the price of Bitcoin has turned his website from Grand Central Station at the end of 2017 to a virtual white elephant today.
"Bettors are just frightened right now to do anything with cryptocurrency. It’s no different than the stock market. When stocks are in a bull run everyone is buying but when it turns to a bear they wait on the sideline. No one likes uncertainty and they hate the fact they can lose money when winning. We tell all our clients that it’s best to always manage their deposits well to avoid massive fluctuations but with miner’s fees and the slow processing time that isn’t always possible. And the fear is often justified. We had one bettor who deposited 3 ETH in early 2018 when it was trading at $900. He told us that he bought the ETH on the market at that price for the sole purpose of wagering with our company. He has turned that deposit into 25 ETH thanks to big runs in blackjack and baccarat, but he said he can’t justify taking it out now because he would lose money. The 25 ETH today is worth about $2,500. He paid $2,700 for his deposit so his 800% profit has turned into a loss. I feel sorry for him but there’s nothing we can do. It sucks for him and for us."
There’s no question that cryptocurrency is the most efficient way to gamble but it’s also true that the price fluctuation makes it unattainable since people still must use fiat currency to pay for day to day expenses. And with the massive drop in price people who bought bitcoin at its high must feel today like they purchased Blackberry or Kodak stock at its high. The effect this drop has had on the enthusiasm to use crypto as a new funding source for gambling makes it the #8 story of 2018.
7. Steve Wynn's fall from grace
When one thinks of casino magnates the names that always come to mind are Sheldon Adelson and Steve Wynn. Wynn was involved with Las Vegas real estate in the 1990s and 2000s and oversaw the expansion of many casinos on the strip. He started a company called Mirage Resorts and built many of the casinos at the heart of the strip including the Mirage, Treasure Island and the Bellagio along with the Golden Nugget downtown and in 2000 Wynn sold Mirage Resorts to MGM. This made Wynn a multi-millionaire and he started his own company Wynn Resorts Ltd. In 2002. Wynn took the company public in that year and in 2005 he built Wynn Las Vegas followed by a second resort called Encore and he opened 3 Wynn casinos in Macau and planned to open a Wynn casino near Boston in 2019. Wynn’s net worth was over $3 billion by the end of 2017 and he predicted great things for the company in the coming years.
Wynn’s fortunes turned quickly in January of 2018 when multiple female staffers came forward with charges of sexual harassment which was a death knell considering the Me Too movement. Upwards of 100 women indicated some form of sexual harassment to the Wall Street Journal, including one manicurist who was on record as being forced to have sex with him on a massage table and later settled out of court for $7.5 million.
As soon as the charges were announced Wynn stock tumbled by over 10%. Wynn denied the allegations. Not long after the stock price fell, 2 groups of shareholders, the Norfolk County Retirement System of Massachusetts and the Operating Engineers Construction Industry and Pension Fund filed a suit against Wynn Resorts Ltd. for breach of fiduciary duty. The lawsuits said that the Wynn board of directors allowed Steve Wynn to conduct countless acts of sexual harassment and coercion to occur despite knowing about it. At first Wynn blamed the allegations on his wife but the lawsuits and investigations into his affairs by gambling regulators in Nevada, Macau and Massachusetts was enough to convince Wynn to resign as CEO and Chairman of his own company.
Since that time Wynn’s name has turned to mud which has seen the stock price tumble by over 30% in 2018 and the status of the Boston casino is on hold after Steve Wynn filed a lawsuit against the Massachusetts Gaming Commission and Wynn Resorts Ltd. to block the release of a report into his sexual misconduct. Wynn claims that his former company shared documents with the Massachusetts Gaming Commission that they shouldn’t have since it was protected by client-attorney privilege. The Commission is anxious to move forward in deciding whether to allow the casino to open next summer as planned but said they can’t do so until all public information is released including the report on what Steve Wynn did, when it happened what the board did to try and stop it. Unconfirmed reports say that Wynn’s net worth has dropped substantially as a result of the lawsuits and the plummeting worth of the stock.
6. Justify’s Triple Crown win and it’s effect on horse racing handle
One of the Cinderella stories of 2018 was a Bob Baffert trained horse that didn’t race as a 2 year old but went on to win the Triple Crown. Justify started his career in February winning a 7 furlong maiden race at Santa Anita by almost 10 lengths. One bettor apparently wagered $500 at 300/1 odds at Wynn Sportsbook following that race to win the Triple Crown, winning $150,000 in the process. Justify followed his maiden win with a 6 ½ length victory in an allowance race and a 3-length win in the Santa Anita Derby before heading to the Triple Crown races. Despite his impressive victories he was a tepid favorite in the Kentucky Derby since no horse since 1885 won the Kentucky Derby without being raced as a 2-year-old. Justify sat just off the lead and pulled away in the Kentucky Derby for a 2 ½ length win. Interest in Justify started to grow quickly since only Seattle Slew won the Triple Crown undefeated plus Justify had the running pattern of previous Triple Crown winners. Justify followed up his Kentucky Derby win with a short victory over Bravazo in the Preakness in a slow time making some wonder if he was just going to be another horse who wins the first 2 legs of the Triple Crown only to be defeated in the Belmont Stakes, but Justify did not disappoint in the final Triple Crown race and won wire to wire by almost 2 lengths over a fast closing Gronkowski.
Justify’s Triple Crown win garnered at least as much attention as American Pharaoh did only a few years prior and it was reflected in horse racing handle for the 2nd quarter of 2018. Wagering on U.S. races from April to June was up 14% from just over $932 million in 2017 to $1.06 billion in 2018 and the average wager per day was up almost 11%. Almost everyone agrees that the increase could be attributed in large part to the renewed interest in the sport thanks to Justify’s Triple Crown. Unfortunately Justify was retired from racing after the Belmont Stakes when Baffert discovered a lesion on the horse’s hoof, but horse racing handle was still up the rest of the year albeit not nearly as much as in the 2nd quarter. Justify skipped the Breeders Cup Classic which was a big blow to the event which saw a slight increase in overall handle but a decline from 2017 in bet per race since there were 4 more races added for the 2018 version of the Breeders Cup, and there was a sharp decline in betting on the Classic from 2015 when American Pharoah ended his career in that race to complete the Grand Slam.
That said, the excitement that was garnered as a result of Justify’s Triple Crown win including with young people and its impact on handle for all of 2018 makes Justify the #6 story of the year.
Check out the top 5 gambling stories in North America for 2018, including online gambling, sports betting and the Top Gambling story of 2018 tomorrow.
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