GamblingCompliance: Nevada Invites Businesses, Investors To Bet On Sports


Sports betting is a $4bn annual business in Nevada, but a change in state law has opened up a whole new range of opportunities for sportsbooks to increase their business by allowing wagers from out of state investors.

Call it mutual funds for sports bettors.

Legal “entity wagering” funds in Nevada work by allowing state registered businesses to accept money for bets from investors living outside the state. But like a 401(k) plan, the investor does not actually make the bets. The company in Nevada does.

Nevada race and sports books can refuse to accept these funds’ bets, just as they are free to turn down wagers from individuals, according to an executive with CG Technology.

CG Technology, which operates eight sportsbooks in Las Vegas, was one of the authors of Senate Bill 443 and helped guide the bill through the 2015 Nevada legislature.

Quinton Singleton, vice president and general counsel at CG Technology, expects entity wagering to have a noticeable impact on the race and sports book business.

The popularity of sports betting reached record levels in 2015, with Nevada sportsbooks taking in an all-time high of $4.23bn in wagers.

The Nevada Gaming Control Board said bookmakers won almost $231.8m last year on that record handle.

Singleton said that entity betting is simply an opportunity to grow liquidity and expand the marketplace by bringing in new people to the gaming industry, many of whom are setting up businesses in Nevada.

“They are bringing business to Nevada … that’s important to notice,” Singleton told GamblingCompliance.

He said these funds will also employ different investment strategies, similar to any mutual fund or hedge fund. Singleton noted that some funds might offer a minimum investment of $50 in an effort to get 1,000 people, while others might limit their pool of potential investors with a $50,000 initial investment.

So far, CG Technology, formerly known as Cantor Gaming, is the only Nevada gaming company to allow entity betting. The company has been getting requests and has published a guide to establishing an entity account on its website.

One of those entities that have placed bets with CG Technology is Reno-based Bettor Investments LLC. After attracting interest from more than a dozen initial investors, Bettor Investments placed its first bet on March 29.

“I lost my first bet, but won the second bet,” Matt Stuart, founder of Bettor Investments, told GamblingCompliance.

“It’s a brand new part of the business. I expect a deluge of people wanting to participate in our legal sports-betting investor fund.”

Since April 1, Bettor Investments has posted 11 wins; six loses and pushed two bets, according to a tally on the company’s website. Stuart said the fund has wagered on baseball, hockey, basketball and soccer games.

As of Tuesday, Stuart said there were more than 20 potential investors in the pipeline who are ready to deposit between $500 and $2,500 with Bettor Investments.

The maximum investment limit will be raised on an individual basis on July 1. Stuart said he developed “internal controls” at the start so he did not put “investor money at risk on a massive scale.”

Stuart declined to say how much money he has raised, or how much money he has wagered on his company’s first 19 bets.

“I’m excited that we were able to get this completed in time for the start of the 2016 Major League Baseball season.” said Stuart.

“It’s been a long nine months, but Nevada continues to show leadership when it comes to helping promote options for people outside the state to participate.”

Stuart said he has received interest from people all over the world, including Spain, Austria and Switzerland.

“I’ve even had one potential investor interested in a five [figure] investment with us, but I’ve asked him to hold off until July 1,” Stuart said.

Bettor Investments expects to launch additional funds later this year, especially an NFL betting fund in July. The idea is to collect money from investors who are only interested in professional football “right before week one before cashing out after the Super Bowl,” Stuart said.

In Las Vegas, Blue Chips Sports Advisors is an entity wagering firm that is still in the development stages, according to Rajeev Sharma, who founded the company with his partner, Maxwell Phillips.

Blue Chip Advisors fund will mirror that of a mutual fund, according to the company’s marketing materials. Fidelity defines a mutual fund as an investment program funded by shareholders that trades in diversified holdings and is professionally managed.

“Our goal is to begin operations by baseball season 2017,” Sharma said.

SB 443 was set up to be transparent, Singleton said. According to the law, each sports-betting entity must register with Nevada’s secretary of state, and the entity must disclose what is being wagered on to its investors.

Stuart told GamblingCompliance that he sends out a text to each investor after each wager on an event begins.

Each investor must submit their name, address, proof of identity with a government issued ID, and tax information to the betting entity. The entity is then required to disclose that information to Nevada regulators.

Investors must be 21 or older, and bettors have no say about what is being bet on.

The information will allow the race and sports book to do a background check to make sure the businesses and identities of those involved are suitable.

The sportsbooks are responsible for collecting the information, but Nevada gaming regulators have the option of reviewing a business entity’s members and investors.

Furthermore, an investment group’s funds must be deposited in a Nevada bank. Stuart said those funds will then be transferred electronically to CG Technology for the purpose of placing a wager.

Any profits will then be transferred back into the entity’s bank account to be either used to place additional bets or paid out to investors, according to Stuart. He said that he expects investors will be paid quarterly.

Singleton said entity-wagering is “square with all state and federal laws.”

He said the law does not violate the U.S. Wire Act, which specifically bans the use of telephones and the Internet to transmit across state lines any wagers and information regarding bets on sporting events.

“Casinos wire funds in and out all the time,” Singleton said. “They’ve been doing that for more than 20 years now.”

Daniel Wallach, a gaming lawyer with Becker and Poliakoff in Fort Lauderdale, Florida, was a bit more cautious in his assessment of entity wagering. Wallach said Nevada’s expansion of sports betting “is precisely what PASPA was passed to avoid.”

The Professional and Amateur Sports Protection Act (PASPA) is a 1992 federal law that restricts legalized sports betting to a handful of states, including Nevada, Delaware, Montana and Oregon.

“It can be seen as violating the spirit of PASPA, if not the law itself,” Wallach told GamblingCompliance.

“In all likelihood Nevada’s law will largely escape scrutiny from PASPA and the Wire Act. Without a willing plaintiff it is ruled … academic at this point.”


GamblingCompliance: The Curious State Of U.S. Online Gambling


Legal online gambling in the U.S. has produced little in the way of tax revenues over the last three years since Nevada, Delaware and New Jersey introduced well regulated markets that attracted companies offering everything from online slot machines to poker and blackjack.

Gaming executives, lawyers and analysts interviewed by GamblingCompliance agreed that the promise of hundreds of millions of dollars in tax revenues has fallen short. But each expressed confidence that more states would begin to legalize online gambling.

They cautioned that any new industry takes time to evolve.

In New Jersey, Republican Governor Chris Christie, who signed the legislation in 2013, expected Internet gambling to generate $150m in tax revenue in its first year to help balance the state’s budget.

Others were more conservative with their estimates. GamblingCompliance projected a market worth around $39m in tax revenue in the first year. At the end of the market’s first full year of operation in 2014, New Jersey’s 15 percent tax on online gambling generated taxes of $2.32m.

Taxes increased $22.3m on total online casino revenue of $125m in 2015, according to the state’s Division of Gaming Enforcement (DGE).

“It took a long time to gain some traction,” said Matt Davey, CEO of NYX Gaming Group.

“The New Jersey market has shown excellent growth. It’s about a $150m market … similar size to Sweden in terms of population. We expect it to grow to $250m over the next couple of years.”

The entry of PokerStars into New Jersey boosted New Jersey’s online revenues in March, despite the company being operational for less than two weeks. PokerStars earned about $600,000, according to the DGE.

Overall, online gambling in New Jersey generated $15.5m in March, a 17.7 percent increase over $13.1m earned in March 2015 and a monthly record total.

PokerStars launched its New Jersey website on March 21 and is the state’s largest poker network by poker traffic, according to the PokerScout website.

NYX Gaming provides slot games to PokerStars in New Jersey. Amaya, PokerStars parent company, along with William Hill and SkyBet, are investors in NYX Gaming.

Jeff Ifrah, a founding member of Ifrah Law in Washington D.C., said growth in New Jersey’s online gambling revenues would help convince other states to legalize online gambling.

“Things looked like they were happening in Pennsylvania and New York, but then [efforts] in both states got stalled,” Ifrah said. “It’s not clear we are going to get anything again this year.”

But, Ifrah said, as long as New Jersey’s online gambling industry keeps growing that will help “get Pennsylvania and New York over the hump.”

Nevada has been limited by legalizing only online poker, while online gambling in Delaware generated$299,789 in online gambling revenues in February.

The Nevada Gaming Control Board in November 2014 stopped reporting how much revenue the state receives from online poker specifically because there were not enough operators to warrant collecting the numbers.

Davey said Nevada’s decision to legalize only online poker showed why it was a difficult business model. He said the lesson that Nevada taught the industry and regulators is that states must “offer a broader list of products.”

Ultimate Poker, an online poker site launched by Station Casinos, closed in November 2014 after nearly 19 months in operation, leaving Nevada with two operating poker websites —, and Real Gaming, a website associated with the South Point Casino.

Caesars Interactive Entertainment (CIE), an online and mobile gaming subsidiary of Caesars Growth Partners LLC, owns the World Series of Poker Brand and its Playtika division. CIE posted record revenueof $209.2m for 2015 and operates real-money gambling sites in Nevada and New Jersey.

“We’ve been [able] to turn Nevada and New Jersey into a break even or better business,” Bill Rini, head of online poker at CIE in Las Vegas, said. “We are doing fairly well.”

Rini said that business could only improve as more states legalize online gambling.

He declined to speculate on how many states might legalize online gambling. Rini said as larger states legalize online poker it will allow for more compacts between states, enabling CIE to “get that economy of scale.”

Nevada and Delaware reached an interstate agreement in February 2014, connecting online poker players between the two states, and increasing the number of players online. The compact was launched in March 2015.

Still, the agreement’s initial impact on terms of revenue has been muted, leaving observers to urge continued patience as the U.S. online market develops.

“It’s a flat industry from a growth standpoint,” said Matthew Katz, CEO of the geolocation and KYC company CAMS LLC.

“2016 will be a year to ensure all systems are stable. It’s the calm before the storm.”

Katz expects the industry to “regain some momentum” next year, once the November elections are over. He said he seriously doubted that any politician would make online gambling a priority in an election year.

Katz also said daily fantasy sports (DFS) could be used to support the expansion of online gambling. He said that if DFS can be proven to generate substantial tax revenues, then online poker and other casino games might have an easier path to legalization.

Ifrah said the problem is lawmakers do not view DFS and online gambling as the same thing.

“Daily fantasy sports are important to their constituents,” Ifrah said. “Some legislators believe they will be punished for not supporting this. This is a reflection of the marketing that DFS does.”

So, which U.S. states are candidates to legalize online gambling in 2017?

Davey said that he expects between six to 12 states to legalize online gambling within the next five years.

“It will change, but it takes time. We don’t think there will be a federal model that will regulate online gambling, but it will be a state driven model. Each state will need to make a decision. Some will, some won’t. It will happen over time,” said Matt Davey, CEO, NYX Gaming.

Other industry observers believe New York and Pennsylvania are more likely than California to approve online gambling next year.

“The politics in California is a lot more complicated,” said Frank Fantini, CEO of Fantini Research. “In California, you have so many competing interests, from tribal gaming to racetracks and card clubs. Politically, it has been difficult to come up with a consensus.”

The newest effort to legalize online poker in California was introduced in the legislature in February. The biggest change over previous bills is Assembly Bill 2863, which would exclude racetracks from being operators in exchange for up to $60m a year.

“It’s a long process in California, with a lot of competing interests,” Rini said. “For us, every state presents its own opportunities and challenges.”

Meanwhile, the Pennsylvania legislature is considering a bill, House Bill 649, to reform the gaming laws in the state.

Online poker in New York is in limbo while lawmakers deal with constitutional issues over whether poker is a skill-based game or gambling.

Michigan on Friday became the latest state to consider online gaming with a bill in the state Senate that would regulate online poker and other casino games.

Senate Bill 889 would restrict access to players aged 21 and older, Michigan-based casinos and tribal casinos could apply for a license, but no more than eight licenses would be granted, a $5m licensing fee and a 10 percent tax on gross gaming revenue.

GamblingCompliance: California To Weigh Latest Bill To Legalize Online Poker


A coalition of tribal governments, card rooms and online operators will gather next week in Sacramento in support of Assembly Bill 2863, California’s latest online poker bill, as further hearings begin on whether the nation’s largest state will legalize Internet poker.

Assemblyman Adam Gray, who is the author of AB 2863 and chairman of the Assembly Committee on Governmental Organization, scheduled a committee hearing on the measure for Wednesday.

Steve Stallings, chairman of the California Nations Indian Gaming Association, said there is real optimism among supporters that online poker will be legalized this year.

He attributed their confidence to the work Gray has done settling a number of issues, including addressing the concerns of California’s tribes and racetracks.

“We are closer than we have ever been,” Stallings told GamblingCompliance. “It’s poised to go as long as we can get it out of the Assembly by the end of the month.”

On April 13, the so-called PokerStars coalition sent a letter of support for AB 2863 to Gray, saying the bill would protect consumers and create a regulated industry.

“On behalf of a broad coalition … we write in support of your AB 2863, your bill to protect consumers, create jobs, and strengthen our state’s economy by authorizing and regulating intrastate, Internet poker in California.”

The letter also reminded Gray of the work the coalition has done since 2008 to “vet this policy issue” with legislators and other interested parties.

“Authorizing online poker will be good for millions of consumers and poker players who will benefit from a safe, regulated, commercial gaming environment where they are protected and assured that the games are fair and honest,” the coalition said.

The PokerStars coalition includes its parent company, Amaya, the Morongo Band of Mission Indians, San Manuel Band of Mission Indians, The Gardens Casino, the Commerce Hotel Casino, and The Bicycle Hotel Casino.

The two-page letter heaps praise on Gray for his leadership skills, and his transparency in supporting online poker legislation in the Assembly.

Gray introduced the Internet poker bill in February.

The coalition did express some concern over AB 2863’s proposed restrictions on licensed online poker operators’ use of consumer databases. The coalition said it believes those restrictions “will only serve to stunt the growth of the iPoker market and the revenues available to the state.”

Efforts to pass an online poker bill in California have ebbed and flowed over the last nine years, with Gray hoping a proposed $60m annual revenue stream for racetracks will solve one of the most vexed issues facing legislation.

According to AB 2863, the payment comes from the first $60m of revenue in a given year, with the payment being split between various groups within the horseracing industry in California.

However, recent insider trading allegations brought by Quebec financial regulators against former Amaya CEO David Baazov and other executives might complicate efforts to legalize online poker in California.

The coalition’s letter did not address the insider trading charges and investigation into PokerStars’ parent company Amaya. Both Baazov and Montreal-based Amaya have denied the allegations.

But David Quintana, a lobbyist who represents the Viejas Band of Kumeyaay Indians and the California Tribal Business Alliance, said what Amaya’s problems have done is taken an issue that “is already very complex and political and now added a touch of combustibility.”

“If they thought they would get it passed this year, their road just got much more complex,” Quintana told GamblingCompliance.

“It’s going to be a tough haul with PokerStars. We would have had a bill two years ago, without PokerStars’ hand in this. It’s the PokerStars issue.”

On Thursday, an amended version of Gray’s bill was posted on the California Assembly Committee on Governmental Organization’s website.

Among the four changes to AB 2863 was that the bill no longer requires the approval of the Appropriations Committee, removing one barrier to the bill’s passage.

The other two changes to Gray’s bill dealt with companies allowing players to gamble on a website before being licensed.

“The bill would become operative when criteria are established by statute addressing involvement in Internet betting prior to the state’s authorization of Internet poker pursuant to its provisions,” said new language added to the bill’s Legislative Council’s Digest.

Those opposed to PokerStars participation in California cite the company’s so-called “bad actor” status for formerly serving U.S. residents without permission.

It was not clear if the new language in AB 2863 was added after a meeting with opponents of licensing PokerStars in California.

The U.S. Department of Justice shut down PokerStars in April 2011 charging the company with bank fraud, money laundering and operating an illegal gambling business. PokerStars settled those charges in July 2012 and agreed to forfeit $547m to the U.S., although the company admitted no wrongdoing.

Carlos Valdez, deputy director of public affairs for the California Nations Indian Gaming Association, said tribal leaders recently held a meeting with Gray where the focus was “suitability standards.”

In a statement emailed to GamblingCompliance, Valdez said he was “hopeful that we can come to a consensus on some of the outstanding issues.”

“The biggest issue is on suitability, we are supportive of stringent suitability standards that protect California players but allow the industry to thrive.”

GamblingCompliance: Boyd Gaming Posts Q1 Profit, Buys Three Casinos


Boyd Gaming on Tuesday posted its seventh consecutive quarter of revenue growth, as the Las Vegas-based company continues to expand, spending $610m to acquire three local casinos which cater to residents of southern Nevada.

Boyd expects those three investments — Aliante, Cannery and Eastside Cannery casinos — to add millions of dollars to the bottom line.

On a conference call Tuesday, Keith Smith, Boyd’s president and CEO, assured analysts the prices the company paid “for the three assets were very fair … given the future opportunities.”

Meanwhile, the Las Vegas-based gaming company reported net revenue of $33.1m, or 29 cents per share, a slight decline from $35.1m, or 31 cents per share, in the same period last year. Analysts surveyed by Yahoo Finance had expected earnings of 25 cents per share.

Boyd reported net revenues of $552.4m, up from $550.6m in the first quarter of 2015.

“Our company continues to perform at a high level and deliver strong results, as the positive trends we saw in 2015 carried into the first quarter of 2016,” said Smith.

Smith said a “strengthening southern Nevada economy” helped Boyd’s Las Vegas business achieve its best year-over-year revenue comparison in more than a decade.

Revenues in Las Vegas were $158.4m, a 5.4 percent increase from the $150.3m reported in the first quarter of 2015. Smith reiterated that the company has experienced “broad based growth” throughout its entire locals business.

Borgata Rebounds

Smith said first-quarter net revenues at Borgata were $190.3m, an increase from $182.6m in the same period last year. The company attributed the increase to the Atlantic City casino being able to capture new customers since the closure of four of 12 casinos in 2014.

The Atlantic Club, Showboat, Revel and Trump Plaza all closed in 2014.

Smith said PokerStars, which went live in March, did have some impact on their poker businesses in New Jersey.

“But it also expanded the market,” Smith told analysts.

Analysts interviewed by GamblingCompliance in late March expected PokerStars to help push April Internet poker revenue up to an estimated $2.5m.

Boyd Acquisitions

Boyd’s quarterly earnings release was held one day after it announced the acquisition of Cannery Casino Resorts’ Las Vegas operations for $230m, strengthening its position in the Las Vegas locals market.

The deal for two casinos comes less than a week after the company agreed to buy Aliante Casino Hotel and Spa for $380m. As with the Aliante deal, Boyd said it would fund the transaction with cash in hand.

The Cannery deal is expected to close in the third quarter, pending approval from Nevada gaming regulators and the Federal Trade Commission.

As for future acquisitions, Smith said the company’s “focus in the near term is closing these two deal deals and integrating them into the company.” Beyond that, Smith said, the company looks at a lot of opportunities.

“We’ll keep our eyes open,” Smith told analysts on Tuesday.

Boyd expects the Cannery acquisition will add $32m in earnings before interest, tax, depreciation and amortization (EBITDA) during the company’s first full year of ownership. Both deals are also expected to bring “$16m in year one synergies.”

“This transaction is a great tuck-in acquisition that further expands our presence in the Las Vegas locals market at an attractive price,” Smith said.

“Our southern Nevada assets have delivered the strongest revenue growth in our company over the last two years, and this acquisition will broaden our portfolio in this promising market.”

Boyd’s Las Vegas properties accounted for 28 percent of its net revenue in 2015, up from 22 percent in 2014. Las Vegas generated $610.1m of Boyd’s $2.19bn net revenues in 2015, compared with $592m of $2.7bn in 2014, according to an SEC filing.

Once the Aliante and Cannery acquisitions close, Boyd will own 12 casinos in Las Vegas in southern Nevada. The company also owns other properties in Illinois, Indiana, Iowa, Kansa, Louisiana Mississippi and New Jersey.

Gaming industry analysts said they remained “bullish” on the Las Vegas locals market and believed there was value in Boyd’s acquisition of Cannery.

“We believe the Cannery assets are complementary to Boyd’s portfolio, including the pending acquisition of Aliante,” John DeCree, an analyst with Union Gaming in Las Vegas, said in a research report Tuesday.

DeCree expected the “bulk of the value in the acquisition” lies with the Cannery casino in North Las Vegas, especially when coupled with the Aliante customer base.

The deal will give Boyd control of the Cannery casino, near its Aliante casino, and Eastside Cannery, next to Sam’s Town, which Boyd already owns on the eastside of Las Vegas.

“We think the deal makes sense, given Las Vegas’ revenue growth and opportunities to leverage economies of scale,” said Cameron McKnight, a senior analyst with Wells Fargo Securities.

“More Las Vegas locals exposure makes sense. Boyd currently generates roughly 33 percent of EBITDA in Las Vegas. Pro-forma, exposure will be just under 40 percent.”

McKnight was also sold on the stability of the Las Vegas economy.

“Key Clark county economic indicators such as wage growth, taxable sales and home electric grid installations remain positive.”

Before Cannery sold its Las Vegas properties to Boyd, the privately-held company sold its Pittsburgh-area Meadows Racetrack and Casino to Gaming and Leisure Properties Inc. (GLPI).

The $465m deal is expected to close in the second half of the year. GLPI is Penn National Gaming’s real-estate investment trust spin-off.

Once both deals close, Cannery will have sold off its portfolio of properties. Messages left Tuesday with Bill Wortman, a principal with Cannery Casino Resorts in Las Vegas, to discuss what is next for the company were not returned.