Another donor was that Washington-based poker group, the Poker Players Alliance, which has been one of the strongest proponents for legalizing online poker. It has unleashed torrents of social media attention on state and federal politicians, pre-writing tweets for its members to send. When the Massachusetts Gaming Commission held a forum on Internet gambling in March, the alliance’s vice president for player relations, Rich Muny, tweeted a link directed at Gov. Deval Patrick: “@MassGovernor I'm glad to see today's Gaming Commission Internet Forum. Please support Internet #poker for Massachusetts!” Within a day, dozens of supporters had sent the tweet.
The alliance was formed in 2005 by a group of poker players, and says it represents 1.2 million players around the country. But according to federal tax filings published by the website citizenaudit.org, nearly all of its money in 2005 came from $1.1 million given by Ruth Parasol and James Russell DeLeon, a married couple who started PartyGaming, one of the world’s largest online poker companies.
The couple, both born in California, were living in Gibraltar at the time, and their company eventually entered into a “non-prosecution” agreement with the Justice Department in 2009, after it had pulled out of the American market in response to the 2006 Internet gambling enforcement act. Under the agreement, PartyGaming paid a $105 million fine and acknowledged that some of its “customer transactions” prior to the 2006 law “were contrary to certain US laws.” In exchange, the Justice Department agreed not to prosecute the company for those transactions.
The company later merged with another to become Bwin.party, which announced in October that Parasol and DeLeon would divest their 14 percent stake as part of the company’s application for a license to operate in New Jersey (in its partnership with the Borgata Hotel Casino and Spa, in Atlantic City, the company holds about 40 percent of New Jersey’s Internet gambling market so far).
John Shepherd, a spokesman for Bwin.party, said the couple decided the time had come to part ways with the company, in part because they were in the midst of divorce proceedings. He said the company had some contact with the Poker Players Alliance prior to 2006, but that Parasol and DeLeon gave their own money to the group and that the company has never contributed money.
While the poker alliance hasn’t received funding from Bwin.party, John Pappas, the group’s executive director, said that most of its money does comes from other offshore online gambling companies, including the Rational Group, which owns PokerStars.
And as Lesniak and Brennan were pushing the law through New Jersey’s legislative process, the alliance was there to help it along. Pappas and other members met with Christie’s staff in January 2013 to urge him to sign the bill. The organization, Pappas, and four prominent poker players gave Lesniak a total of $15,600 after the law passed last year, along with $2,000 to the Union County Democratic Committee, which gave $144,089 to Lesniak. The alliance gave another $2,600 to Burzichelli, the maximum allowed under state law.
Lesniak, Burzichelli and Sen. Jim Whelan, a co-sponsor, received an additional $17,300 collectively from four law and lobbying firms and their employees and family members, including Princeton Public Affairs, that represented the offshore companies in New Jersey, Pennsylvania and Washington, D.C.
Licensed casinos are barred from contributing to politicians in New Jersey. But in 2013, the country’s largest casino companies and their representatives, several of which operate in New Jersey, gave at least $1.5 million to the Republican Governors Association, with $1 million coming from Adelson, the casino mogul. The RGA, in turn, spent $1.7 million last year helping reelect Christie as governor. In November, Christie became chairman of the organization, anointing him the chief fundraiser for the group. Adelson and his wife Miriam also gave $7,600 directly to Christie’s campaign last August, even though Christie had already signed the law legalizing online gambling, which Adelson opposes. Adelson does not have operations in New Jersey.
Jon Thompson, a spokesman for the RGA, said in an email that his organization does not solicit funds for specific races, and there’s no way to tie money from donors to individual contributions the RGA makes. A spokesman for Las Vegas Sands, of which Adelson is chairman and CEO, did not respond to repeated requests for comment.
Despite all the cash being thrown around in the Garden State, the revenue from Internet gambling has so far proved disappointing. The casinos pulled in $27.2 million since they began operating the new websites in late November, through the end of February. At that rate, revenue will fall well short of the $200-$300 million analysts had forecast for the first year of operation; Christie’s initial budget projections suggested even more.
But other states and casino firms still envision a potential Internet gambling bonanza. By the time Christie had signed the law, Nevada and Delaware had passed their own online gambling laws too, with Nevada legalizing only poker. In February, those two states announced an agreement to allow players from each state to place bets with sites based in the other. One of the biggest concerns for less populated states has been that casinos won’t have enough customers to run viable games, and early returns in Delaware have proved disappointing too.
Several other states are looking at Internet gambling this year, including Massachusetts, California, Illinois, Iowa, Minnesota and Mississippi, where a bill was introduced but failed to pass. Lawmakers in Louisiana held hearings on the issue.
The Rational Group, the firm that owns PokerStars, hired lobbyists in at least six states last year, including New York, where the company’s lobbyist met with an adviser to Gov. Andrew Cuomo in November, according to a report by Capital New York. In late March, a lawmaker introduced legislation to legalize online poker in the Empire State. But the bill’s language makes clear that companies that continued to offer U.S. betting even after the 2006 federal law limiting online gambling — with PokerStars the most prominent example — would have a hard time obtaining licenses in New York.
Rational Group declined to comment for this article.
While Nevada and Delaware have teamed up, it’s competition among the states that, more than anything, is driving the push for online gambling. The decline in revenue that so concerned Lesniak, Christie and others began in 2006, two years after Pennsylvania legalized casinos. New Jersey’s casinos have seen revenue fall each year since, and Pennsylvania’s casino revenue passed New Jersey’s in 2012, pulling in $3.2 billion.
Now Pennsylvania is finding itself in a similar situation to New Jersey. Since Ohio and Maryland legalized casinos in 2008 and 2009, Pennsylvania’s gambling growth has stagnated: last year was the first that the Keystone State’s casino revenue did not grow. It’s no surprise the state is now considering legalizing online gambling, with New Jersey as its model, offering a glimpse of how the debate may spread across the country in coming years.