A baccarat machine reads "No More Bets" at an International Game Technology booth at the Global Gaming Expo inside the Venetian Macao resort and casino, operated by Sands China Ltd., a unit of Las Vegas Sands Corp., in Macau, China, on Tuesday. Bloomberg News
MACAU—The group representing the U.S. casino industry has dropped its support for legalizing online gambling, citing a nasty split among the major casino operators over the issue.
The disagreement among casinos has made online gambling, "an issue that the association cannot lead on" so it has withdrawn from the fight, American Gaming Association chief executive Geoff Freeman said in an interview.
"One of the things I've learned in this industry is we are extraordinarily competent at shooting at one another," he said. "The snipers in this industry are of the highest quality, and if you let that be the focus, we'll kill each other."
Online gambling is banned in most of the U.S. but has exploded globally, generating an estimated €25.9 billion ($35.5 billion) in revenue, driven mostly by betting in Europe, according to research firm H2 Gambling Capital. The global online gambling market is more than half the size of the entire U.S. commercial and tribal gambling industry, which generated a combined $66.3 billion in revenue last year, according to a study by accounting firm RubinBrown.
A small number of U.S. states have legalized online gambling, which includes Internet poker. Gambling companies have been closely watching New Jersey, which is by far the most populous state to legalize online gambling, but the business has gotten off to a slow start, partially because some major banks won't let their customers use their credit cards to play.
U.S. casino giants have taken sharply different views in the debate over whether and how to regulate online gambling. Nevada heavyweights including MGM Resorts InternationalMGM -1.32% and Caesars Entertainment Corp. CZR -3.49% favor legalizing online gambling while Las Vegas Sands Corp. LVS -2.45% , which makes most of its money in Macau and Singapore, wants the practice banned.
Casinos favoring legalization say U.S. residents are gambling online anyway so the regulations are needed. "To protect consumers, MGM Resorts supports the federal legalization of Internet poker as well as state-by-state regulatory efforts," said Clark Dumont, MGM's senior vice president of corporate communications.
A representative for Las Vegas Sands didn't immediately reply to requests for comment, but CEO Sheldon Adelson is leading a national lobbying effort against the practice, which he has said hurts society.
"On this issue, we've agreed to disagree," said Jan Jones Blackhurst, Caesars' executive vice president of communications and government relations.
In December, Mr. Freeman submitted written testimony to a U.S. House of Representatives subcommittee stating that the prohibition of online gambling "simply does not work" and that "the government cannot put the Internet back in the bottle." He told the committee then that attempts to ban online gambling have just "created a thriving black market and driven its economic benefits offshore."
The association will focus its efforts on issues considered less divisive among casino operators such as the U.S. Treasury Department's increased scrutiny on possible money laundering at casinos, said Mr. Freeman during an interview at the annual G2E Asia conference in Macau. He said he wanted to work closely with regulators to "ensure our combined commitment to antimoney laundering policies."
He said the U.S. government's interest in U.S. casino operators' Macau business is "simply a cultural misunderstanding of the ability of people to spend money" in Asia.
"There are people here who...can lose $10 million and get on with their day," he said of gamblers in Macau, the world's largest gambling market with $45 billion in gambling revenue last year. "It doesn't by any means mean someone came across those funds in a nefarious way."