Before I write anything else here, let me first make note that Sheldon Adelson is clearly a very sharp guy. A City College of New York dropout, Adelson built his own path through business and life by spotting opportunities that others didn’t see.
In the 1960s he sold toiletry kits – something everyone needs – and he got in on the nascent travel industry running charter tours. He saw in the 1970s that the future was going to be computerized and developed the COMDEX computer expo, which saw the computer industry through its adolescence into full maturity as one of America’s leading business sectors. In the late 1980s he saw Las Vegas’ potential as a convention setting and bought the Sands Hotel & Casino; after building Vegas’ only privately-owned convention center across from it, he then razed the casino in 1996 to make way for a new mega-resort casino. The Venetian opened in 1999 and was expanded with a new tower in 2003, booming at the same time as the larger Vegas economy. And then there are his bets on the Asian market, which has seen his footprint there expand with three resorts in Macau and another in Singapore. (Their success helped him rebound to a net worth of $21.5 billion after losing some $24 billion during the financial crisis of 2008.)
While it’s clear that Adelson has historically made some very astute observations about the direction particular markets have been heading and profited greatly by putting his money behind them, lately he’s been making bets that don’t look anywhere near as secure as those that made him his fortune. It may be that he’s more willing to bet on a long-shot when he’s betting small – as he is here compared to the type of money he has laid out to buy casinos and licenses in restricted markets – but he is betting long nonetheless.
The first of his long-shot bets came out back in December when the Las Vegas Sun reported that Adelson opposes the legalization and regulation of online poker in the United States. On the one hand he said he was against online poker on “moral grounds,” a bit of a laugh given he’s a casino owner. (His moral objections are all about the children, of course.) But on the other hand, Adelson said, he didn’t think online poker would be profitable. He also believed it was a Trojan horse for the eventual establishment of full online gambling that would crush the American gambling industry as we currently know it, despite evidence that online gambling actually reinforces people’s desire to visit brick-and-mortar casinos. If Adelson were right, all the other casino companies in Las Vegas would be right there with him…and yet they’re not. It will take some time, but it’s doubtless that online poker is going to be legalized in the U.S. – after all, Adelson’s competitors in Vegas are the ones pushing the hardest for it.
Adelson’s other long-shot – and now easily the more prominent of the two – is his backing of the presidential campaign of Newt Gingrich. Last year Adelson donated $1 million to Gingrich’s political action committee, American Solutions for Winning the Future. Then, just a week and a half ago, he made another donation to the PAC – this time of $5 million. Within a day of his gift the New York Times was reporting that American Solutions for Winning the Future had just spent $3.4 million on advertising in South Carolina, where the former Georgia Congressman is currently polling second and is expected to have his last (although best) chance of making a mark on the campaign.
That New York Times article about Adelson’s donation characterizes him and Gingrich as “especially close,” so it’s understandable that he might support his friend. That’s why his $1 million gift last year makes sense. But a $5 million donation? Just as Gingrich is one bad primary showing away from going the way of Michele Bachmann and Jon Huntsman because his messages resonate with the public as much as those other failed candidates’ did? At this point Adelson isn’t backing a presidential candidate – he’s just serving as Newt Gingrich’s personal unemployment insurance provider.
A bet against the eventual legalization of online poker is bad enough, but betting on the presidential aspirations of Newt Gingrich is a triple long-shot. The first long-shot is that Mitt Romney, who probably right this moment has the receipt for buying the Republican nomination in his wallet, won’t win the Republican nomination. The second long-shot is that the weapon that will take Romney down, in a Republican primary, is an advertising buy with the message that Romney is an evil capitalist. And the final long-shot is that when Romney falls, the last man standing will be Newt Gingrich. It’s like betting before baseball season begins that not only will the Texas Rangers not win the American League championship, but they’ll be dethroned by the Kansas City Royals, who will achieve their greatness through the astute management of the Pillsbury Dough Boy. Seriously, I’ve read science-fiction novels about sentient alien races that were far less fantastic than the thread spinning a fabric called The American People Rally Behind The Vision Of President Gingrich.
That said, it’s likely that Adelson is making a value bet just in case the sky over Mitt Romney’s head falls tomorrow. A small investment now to look at a huge return down the line can be attractive to any gambler, and by Adelson’s standards that’s what $5 million to an almost-guaranteed loser is. Still, I’m open to the possibility that Adelson knows something I don’t. I just hope, in this case, that he doesn’t “President Gingrich” has a dull ring to it.