"I see no benefit, and coming from a family -- the working class family, a less-than-working class...people that are going to be exploited, that are going to be abused the most. I don't want those people to get abused. Because when I look at people like that, I see the faces of my parents."  -- Sheldon Adelson, speaking at G2E 2014

When most of us have strong opinions on certain issues, we might post on an Internet forum, tweet about it, or write a letter to a politician. Las Vegas Sands (NYSE:LVS) chairman and CEO Sheldon Adelson, on the other hand, is playing a different game entirely.

Since Adelson first revealed his opposition to online gaming in late 2011, he's been on a bit of a rampage. After taking a break to spend $93 million in an effort to influence the 2012 elections, Adelson penned a June 2013 op-ed on Forbes.com announcing definitively his desire for a federal ban on online gaming, calling online gaming "fool's gold" and "a societal train wreck waiting to happen." Later that November, Adelson told Forbes.com that he was "willing to spend whatever it takes" to stop online gaming, and shortly after launched the Coalition to Stop Internet Gambling (CSIG), whose mission statement notes ominously that Internet gambling targets "the young, the poor, and the elderly where they live."

This past March, Adelson-backed Sen. Lindsey Graham (R-S.C.) and Rep. Jason Chaffetz (R-Utah) introduced the Restoration of America's Wire Act (RAWA) to the Senate and House of Representatives, respectively, seeking a federal ban of online gaming while including carve outs for horse racing and fantasy sports. The proposed ban included no such exemptions for Nevada, New Jersey, and Delaware -- the three states which had already legalized and launched regulated online gaming.

With the newfound support of his friend Steve Wynn, Adelson forced the American Gaming Association (AGA) to withdraw its support for online gaming in May. Wynn Resorts (NASDAQ:WYNN) had just joined the AGA the previous December.

In June, Adelson made even fewer friends in the poker world when the Venetian in Las Vegas -- an LVS-owned property -- outright banned the PokerNews website from its ubiquitous live reporting of the Mid-States Poker Tour (MSPT) event being held at the Venetian, a decision admittedly related to Adelson's opposition to online poker.

And then in August, Adelson's anti-online gaming influence caused an even bigger uproar in the online poker community when Newsweek published a one-sided piece titled "Poker Face: How Washington Opened the Floodgates to Online Poker, Dealing Parents a Bad Hand." The article relied heavily on the testimony of the Adelson-backed Jason Chaffetz -- the same Rep. Jason Chaffetz who introduced RAWA to the House of Representatives in March -- while conveniently leaving out the other side (I shall defer to this 11-point rebuttal of the Newsweek piece by Chris Grove of the Online Poker Report).

Perhaps not surprisingly, Adelson has become so hated in the online poker community that Adelson bashing has become quite the fashionable sport.

Why is Sheldon Adelson against online gaming?
We've known for nearly three years now that Adelson is against online gaming, but it's never really been clear why. Some have speculated that Adelson is afraid of having to compete in the online gaming space; others have suggested he is afraid that online gaming would damage LVS' brick-and-mortar businesses in Las Vegas and in Pennsylvania; still others have postulated that Adelson is only fighting against online gaming in order to help nudge the debt-ridden Caesars Entertainment (NASDAQ:CZR) -- which, along with MGM Resorts International (NYSE:MGM) are arguably the two companies likely to gain the most from the legalization of online gaming in the U.S. -- into bankruptcy.

But those explanations are extremely unlikely. Could it be that Adelson really is just fighting online gaming for moral reasons, as he has said from the start?

During the 2014 Global Gaming Expo (G2E) at the LVS-owned Sands Expo and Convention Center in Las Vegas earlier this month, Adelson spent 15 minutes of an hour-long keynote answering the online gaming question. And in those 15 minutes, Adelson presented a much clearer view -- among all of the noise he has created -- of why he is really against online gaming, and what his core objections to online gaming are.

We can break down his commentary into three basic categories:

  1. The catalysts
  2. The core arguments
  3. The strategic arguments.

The Catalysts
Adelson talked about growing up in a poor family in Boston. His father, who had a sixth-grade education when he moved to the U.S. from Lithuania, drove a cab. He was also a frequent visitor of the Suffolk Downs racetrack in Boston "with whatever money he had," and later the horse tracks, dog tracks and jai alai spots in Florida.

"He was poor," Adelson said, "but he loved to gamble."

"I saw the cost of a family immersion into losing money on gaming."

"When I look at people like that, I see the faces of my parents."

Adelson also spoke of losing a son from his first marriage to a drug overdose. He used his teenage sons as an example of how skillful younger generations are with electronics -- and how such generations are (allegedly) more prone to addiction -- noting that his kids can "do wheelies" and "burn rubber" with their iPhones.

Adelson also referenced the work of his wife, Miriam, a physician with a specialty in chemical dependency who has opened drug abuse clinics in Las Vegas, Tel Aviv, and Macau.

"To me, it's a matter of principle. I don't want it because I was raised in a family that suffered from the scourges of uncontrolled gaming. And I am absolutely certain raising at my age two teenage kids, and I see how they easily get addicted...somebody cannot tell me that kids are not going to find their way around whatever user identification is."

His family and addiction are constant themes, and fundamentally are the why.

The Core Arguments
The core arguments are the ones Adelson likely feels most strongly about. These are his best arguments, and ones he repeated several times during his keynote:

  1. That age and ID verification can never be 100% perfect.
  2. That there's no "compelling reason to put a casino in the hands of 318 million people."

Adelson argued that complete age and ID verification is impossible where a person of age can log on to an online gambling site and hand off his phone (or laptop or whatever) to an underage gambler, or to an otherwise unidentifiable gambler. Like it or not, this is a legitimate argument, and anybody who has been on a college campus in the last decade or so knows that this is precisely what happens -- a kid will sit down and play a tournament or cash game, and sometimes hand off to a friend, whether of age or not.

Adelson also argued that "there is no compelling reason to put a casino in the hands of 318 million people," equating a mobile phone to a casino, and where everybody in the U.S. has one ("Everybody's got a cell phone"). This might seem like nonsense, but it is a better argument than you might think, particularly as we look at the riverboat and other regional casino states, where the gaming laws have been designed to specifically limit gambling to specific locations -- chiefly on a river or on the site of a pre-existing racetrack.

The Strategic Arguments
The strategic arguments are the ones that Adelson may not personally feel strongly about, but are arguments that Adelson has a strong strategic incentive to make. Namely:

  1. That online gaming is a federal issue, and not a states' rights issue.
  2. That online gaming will materially cannibalize existing land-based casino revenues.

In his keynote presentation, Adelson argued that online gaming is a federal issue -- and not a states' rights issue, as gaming has largely been since the beginning of the United States -- because the Internet is everywhere, in every home, and is a cross-border issue.

"There is no place the Internet doesn't exist," he said.

This is an argument Adelson has a strong strategic incentive to make, as it would be far easier to achieve an all-encompassing one-shot ban at the federal level than it would be to try to fight 50 states on the issue individually -- particularly the three states that have already legalized and launched regulated online gaming.

Adelson did not bring up the second argument -- that online gaming will materially cannibalize existing land-based casino revenues -- during his keynote at G2E, but it is an argument he has brought up previously on several occasions. In the late 2011 interview with Global Gaming Business in which he first revealed his opposition to online gaming (technically, GGB wound up getting scooped by Jon Ralston of the Las Vegas Sun), Adelson said that he had goaded European Casino Association Chairman Ron Goudsmit into guessing that the impact of online gaming on the European brick-and-mortar casinos might be in the 5 percent to 10 percent range, though Goudsmit had already admitted to not being able to quantify it.

Later in the June 2013 Forbes.com piece, Adelson cited "recent research from a number of European countries" as showing "that the proliferation of Internet gaming has, as a start, resulted in a 20 percent decrease in visitation to the land-based casinos in those countries." And then in a December 2013 special to the Las Vegas Review-Journal, Adelson referenced "the fact that the land-based casinos, particularly regional ones, have a very high risk of losing at least 20 percent from their top line."

Well for starters, a "20 percent decrease in visitation" is not the same thing as "at least 20 percent from their top line." That said, to my knowledge, Adelson has not publicly produced this report to date, and I am highly skeptical that anyone could definitively demonstrate that online gaming has cannibalized land-based gaming to a material degree:

  1. Planet Poker -- the first online poker room -- launched in 1998. It would be difficult to construct a time period that would definitively demonstrate that online gaming materially cannibalized land-based gaming without resorting to cherry-picking data (i.e. cheating). As it was, brick-and-mortar casino revenues in the U.S. spiked across the board for much of the 2000s.
  2. If online poker was cannibalizing land-based gaming to a material degree, then we would have seen a boom in gaming revenues across the U.S. following Black Friday in April 2011, which saw PokerStars, Full Tilt, and Absolute Poker -- accounting for 95 percent of the U.S. online poker market at the time -- shut down and out of the U.S. market. That has not been the case; instead, all of the talk over the past couple of years has been in regard to saturation of the regional gaming markets.
  3. The $10 million or so in gaming revenue that online poker is on track to produce in Nevada in 2014 is not likely to be putting much of a dent to the brick-and-mortar casinos in Nevada, whether it be locals casinos or otherwise.

The impact of online gaming may or may not be zero, but it's certainly not "at least 20 percent" off the top line. Which is probably why Adelson did not bring this argument up at G2E, instead referencing the poor initial performance of legal online gaming in the U.S. as evidence that the upside of online gaming is not worth the social cost.

That said, Adelson has (or had) two strategic reasons to argue the cannibalization point. The first is that as Chairman and CEO of Las Vegas Sands, Adelson has a fiduciary duty not to engage in a personal fight at the expense of other shareholders; by arguing both that online gaming is bad for LVS' land-based businesses and that the business opportunity is not there, he is able to cover his behind. And the other strategic reason is to encourage support and/or discourage opposition from other brick-and-mortar casino aside from Caesars or MGM.

The Wynn argument: Little upside, a lot of downside
The day before Adelson's keynote presentation, Steve Wynn had his own keynote event, which according to AGA President Geoff Freeman marked the first time Wynn had ever spoken at G2E. Wynn spent the first half-hour talking about the importance of the non-gaming side of the business in driving the gaming side, noting that when he opened the Mirage in 1989, Bellagio (1998), Wynn (2005), and Encore (2008) on the Las Vegas Strip, each property set Nevada state records for gaming revenue in a single year (the combined Wynn-Encore in the latter case), and yet each time had generated more non-gaming revenue than gaming revenue.

Wynn then took questions from the audience. When asked for his thoughts on Internet gaming, Wynn answered "Not much."

In contrast to Adelson, Wynn's objections to online gaming are less personal and more pragmatic, and are in part related to the risks of taxation: "Where's the business opportunity? You think Uncle Sam is going to let the private enterprise get this money? Baloney."

Another of Wynn's objections is the blowback that will come when something goes wrong, which Wynn sees as inevitable.

"The legislator that votes for legalized Internet gaming...he has nothing really to gain from it. But if he votes for it, and anything goes wrong in that community, he's gonna get blamed for it. That's why there's no support for it in the House of Representatives.

Number two: When something goes wrong -- sure as hell -- some regulator will jump in and decide to throw a whole bunch of new stuff on the backs of all of us, including those of us that have these kinds of buildings and are not in the Internet business.

Add all of those factors together, and I take a pass on the Internet -- just like Adelson."

The important thing to realize about Steve Wynn is that he is 72 years old, and has accomplished as much or more than anybody else in the history of the gaming industry -- rivaled only by what Sheldon Adelson has done in Macau and Singapore. That said, the fact is that Wynn Resorts currently operates in only one state (Nevada) in which online gaming projects to be irrelevant, with only one more state (Massachusetts) in the pipeline.

The point is that there's little-to-no upside in online gaming for Steve Wynn, and a lot of potential downside.

Personally, I don't get the impression that Wynn feels strongly about online gaming one way or another; I think the reality is that all he wants to do is build masterpiece hotel casinos. He didn't actually come to G2E to talk about online gaming; he only answered the online gaming question when prompted by the audience.

But if you press him, he will defend his friend Sheldon Adelson's view against it -- a view which Wynn can at least identify with at a fundamental level.

Adelson: Separating the man from the arguments
If you're a poker player, it's tempting to want to believe that Sheldon Adelson is just an evil man with ulterior motives out to get online gaming. And if you're a poker player, it's also tempting to want to believe that every argument that Adelson has made against online gaming is just plain wrong.

However, I don't believe this view of Adelson is accurate. Rather, I think the simple truth is that Sheldon Adelson is fighting online gaming for reasons which are deeply personal; for reasons which are sincere; and for reasons which -- for better or for worse -- he has the money to back.

For starters, the ulterior motive theories don't add up. The idea that Adelson would fight online gaming for the sole purpose of ensuring the bankruptcy of Caesars Entertainment does not hold water, as he has little to gain from that outcome, particularly relative to the time and money he is throwing at this. In fact, I don't particularly get the impression that Adelson even really sees Caesars as a serious rival to his business; certainly not on this planet, anyway.

Nor does it make sense that Adelson is fighting online gaming because he is afraid to compete, or because he is afraid that online gaming will damage his land-based casino business. Because much like Wynn, LVS only operates in two states -- Nevada and Pennsylvania -- and as such has little to gain from online gaming. The fact is, the bulk of LVS' current operations and future projects are in Asia. Meanwhile, the high-end customer that visits LVS' Las Vegas properties is fundamentally different from the customer gambling online on his phone or at home.

Moreover, Sheldon Adelson has in my mind at least two core arguments, which -- whether you agree or disagree with them -- are legitimately debatable.

This isn't to say that Adelson hasn't earned the general distrust and widespread backlash of the online poker community; nor is it to say that the rest of his arguments are reasonable, because they're not. For one thing, I don't believe any bill that seeks a federal ban on online poker while exempting horse racing and fantasy sports -- such as the Adelson-backed RAWA -- can be defended on moral grounds, as there is no fundamental reason in my mind why betting on horses and fantasy sports online are OK, but online poker is not. Rather, the only real reason to exempt horse racing and fantasy sports from an online gaming ban is a strategic one, in that doing so produces less opposition.

Meanwhile, the further we get from the core arguments, the closer we get to arguments that can best be described as inflammatory. This is particularly true of arguments (Internet gambling targets "the young, the poor, and the elderly where they live") or actions (barring PokerNews from covering a live poker event at the Venetian, even though live coverage is a good chunk of what PokerNews does) made by parties either directly influenced by Adelson, or otherwise influenced by Adelson by extension of the parties he is backing.

Even worse was the Newsweek piece, which -- in addition to relying heavily on the Adelson-backed Chaffetz for testimony -- also relied heavily on a professor from McGill University (in Montreal) for problem gambling statistics and commentary. Citing this professor, the author notes that "5 to 8 percent of university students are what he would classify as 'at-risk' gamblers."

My question: Why go all the way to Canada for a problem gambling statistic, when some of the world's leading problem gambling experts are right here in Las Vegas, Nevada?

The one thing that is certainly true is that Sheldon Adelson is entitled to an opinion, and has a right to be opposed to online gaming. But even with good intentions, Adelson has shown that he can and will fight online gaming by any means necessary, and in the process has created a lot of noise that have muddied what I believe are his core and legitimately debatable objections to online gaming.

For more online gaming coverage from Jeff Hwang, check out:

Fool contributor Jeff Hwang is a gaming industry consultant and the best-selling author of Pot-Limit Omaha Poker: The Big Play Strategy and the three-volume Advanced Pot-Limit Omaha series. Jeff's latest book, The Modern Baseball Card Investor, was released in July. Jeff owns shares of Wynn Resorts, MGM Resorts International, and Las Vegas Sands. Follow Jeff on Twitter @RivalSchoolX.