Sheldon Adelson And Rick Perry’s Fair-Weather Federalism

Jerry Rogers Founder, Six Degrees Project
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To say that Sheldon Adelson is a major political player would be like calling the Grand Canyon a big hole in the ground. Mr. Adelson certainly puts his money where his mind is or, perhaps one could say, where his interests lie. In 2012 alone, he donated around $100 million to Republican candidates and causes. So it’s little wonder that he is quite popular among many Republican politicians eager to gain his attention and his favor. Over the past year, Adelson has aggressively sought policy returns on his political investments, and he is leading some in the GOP down dangerously un-Republican paths.

Adelson recently penned an opinion piece in favor of amnesty for immigrants illegally in the U.S. saying, “As a Republican, it’s my view that efforts to complete immigration reform should be led by our party.” Apparently oblivious to the dramatic wave of young migrants illegally flooding the borders in response to Obama’s policy of granting amnesty for minors, Adelson goes on to advocate creating even more incentives for illegal immigration by rewarding illegal entry with work visas and drivers licenses.

It remains to be seen how many Republicans will follow Adelson off that particular political cliff but some Republicans have already stepped over the edge on another of Adelson’s pet projects — passing a federal ban on online gaming.

Nevada, Delaware, and New Jersey have legalized online gaming and nearly a dozen more states are considering following suit. Seeing this trend, Sheldon Adelson tried – unsuccessfully – to build an online gaming business. Since failing to capitalize on the market, his company, Las Vegas Sands, has been arguing that online gaming represents a competitive threat to the profitability of brick-and-mortar casinos. With more states looking to legalize online gaming, the threat appears to be growing. So Adelson is digging deep into his pocket of political friends, and he’s directing them to ban his competitors. Adelson launched the Coalition to Stop Internet Gambling, hired lobbyists to write congressional legislation (bills have been introduced in both the House and Senate), and convinced former San Francisco Mayor Willie Brown to switch sides (Brown was a vociferous proponent of online gaming until he wasn’t) to co-chair the entire crony scheme.

Adelson fears the competition from states legalizing online gaming, and he believes it is suicidal for casino interests not to seek a ban. Sites in California, or any state, could become serious rivals to brink-and-mortar casinos in Las Vegas. The Adelson legislation is about usurping states’ rights so that one billionaire can shield his business from competition – the epitome of cronyism.

Texas governor Rick Perry is one Republican who has foolishly joined Sheldon Adelson and Willie Brown in their crony assault on the Tenth Amendment. Despite his oft-stated disdain for federal meddling in state affairs, Governor Rick Perry recently sent a letter to Congress encouraging passage of Adelson’s ban on online gambling. Governor Perry even took to pages of the conservative National Review with an article ostensibly intended to reconcile the reality of the ban he advocates with the conservative positions he purports. He falls short. As the old adage goes, one can put lipstick on a pig but it will remain a pig. No amount of Maybelline-shaded obfuscation can conceal the realities of the federal overreach Governor Perry advocates. Such is the challenge for purported conservatives attempting to march to the time of Adelson’s drums.

The legislation written by Adelson lobbyists and backed by Perry is known as Restoration of America’s Wire Act. If passed, the bill would overturn legal, regulated gambling already passed in Nevada, Delaware, and New Jersey and prevent other states from legalizing it in the future.

Such a ban plainly usurps these states’ rights, increases federal regulation of the Internet, and set a dangerous precedent for further government interference. As a coalition of leading conservative groups recently put it: “this bill allows the federal government to take a heavy hand in regulating the Internet, opening the door for increased Internet regulation in the future. By banning a select form of Internet commerce, the federal government is setting a troubling precedent and providing fodder to those who would like to see increased Internet regulation in the future.”

The crux of the Governor’s argument seems to be that allowing states to exercise their rights to regulate gaming within their own borders will somehow lead to greater federal regulation. So according to Governor Perry, we must usurp states’ rights and violate the Tenth Amendment in order to protect the states.

This type of fantasy reasoning as a basis for undermining the Constitution also sets a dangerous precedent. The same hypothetical case could be made for undermining the Second Amendment. Without doubt, Governor Andrew Cuomo would make the case that Texas’ gun laws are causing harm to the people of New York. Who knows, maybe Willie Brown could be convinced to lead such an effort in the future? But that isn’t how the Constitution works. Powers not enumerated to the federal government are reserved to the states.

Governor Perry has made states’ rights a centerpiece of his policy portfolio, yet he attempts to get around this uncomfortable fact by invoking the Commerce Clause, the last respite of big government types, as justification for Congressional intervention. Perry goes on to further make the case for federalization of online gaming regulation using the Federal Aviation Administration (FAA) as an example. Saying, “What if the FAA didn’t exist and there were fifty different sets of aircraft regulations? Airplanes would have to stop at every state border to ensure they were in compliance with the next state’s rules.”

Mr. Perry’s use of both the Commerce Clause and the FAA as examples are both invalidated by the fact that the commerce in question is intra-state, technologically restricted to the states that have legalized online gaming for their residents. A more appropriate example might be same sex marriages and legalization of marijuana, both of which Governor Perry has recently stated should be left to the individual states.

In the end, Governor Perry’s claims fall flat and should remind other Republicans that the indefensible is, well, indefensible. Rep. Eric Cantor’s recent loss highlights the price of selling out one’s principles for special interests. Whether it’s Adelson’s pitch for amnesty or his crony gambling ban, Republicans should look long and hard before they leap.

Jerry Rogers is vice president at the Institute for Liberty, and the founder of Capitol Allies, an independent, nonpartisan effort that promotes entrepreneurship, economic growth, and free enterprise.