Essentially mutual funds for sports bettors, the law makes it legal for the state’s sports books to accept bets from investor groups that have been set up for the sole purpose of placing racing and sports wagers.
And while the entities must be based in Nevada, individual investors can come from just about anywhere. The biggest caveat is that the individual investors have no say on how the money is being bet by the entity.
When the bill passed last summer it was met with some enthusiasm.
— RGJ.com (@rgj) June 17, 2015
The law left it up to each book to decide whether to allow entity betting. And until recently a sportsbook had yet to put into place a process to allow for it.
But that is no more. Las Vegas-based CG Technology — which operates the book at The Venetian in Las Vegas among others and was a driving force behind the law — has finalized its plan to allow for this style of wagering.
One of these new entities is Reno-based Bettor Investments LLC, which is hoping to make its first wager on March 1 with a group of about 100 investors.
“I started this in August (2015) so it has roughly taken six or seven months, which isn’t too bad,” said Matt Stuart, who is the founder and managing member of Bettor Investments. “It’s a little longer than we had hoped, but regardless it is going to happen.”
So far CG Technology, formerly known as Cantor Gaming, is the only Nevada company to allow entity betting. It has yet to take a bet, though, even though it had originally hoped to by the beginning of the NFL season.
With its process now in place, CG is now vetting applications from betting entities and expects to begin taking bets for the first in the coming weeks, said Quinton Singleton, the vice president and general counsel of CG Technology who helped write the bill.
CG believes that entity betting will help with growth, Singleton said.
“We see this is an opportunity to grow liquidity, have a greater handle, and to expand the marketplace,” Singleton said. “The idea is to grow the marketplace for sports betting.”
CG has been getting “regular requests” from entities so far, and Singleton expects the interest to grow before it begins taking bets in the coming weeks.
Sports betting syndicates are nothing new, but when CG takes the first wager it will officially become the first company in Nevada to accept such bets under the new law.
As of yet, though, other major sports books in Nevada have yet to take on entity betting.
Jeff Silver, a Las Vegas gaming attorney, told the Las Vegas Business Press in June that some books may abstain altogether because of the risk of vetting each entity and the risk of accepting significant wagers from professionally run entities.
“The effect of this bill is unknown at this point in terms of the use of this particular bill,” Silver said in the interview. “We really don’t know the affect this will have because it depends upon the books themselves to actually provide the resources to accept the wagers. They have to satisfy themselves that all conditions and requirements of the new law have been met. They are putting themselves somewhat at risk.
CG, though, believes that the risk will be somewhat mitigated.
“In the long run, we expect a marketplace where you have smart people on all sides,” Silver said.
Despite not being able to place bets, Stuart has been trying to attract investors for months. And the interest has been significant.
“I have had contact from people all over the world as far away as the Philippines, Spain, Australia, and even the occasional scammer from Nigeria,” said Stuart with a laugh.
The law was set up to be transparent. According to the law:
Furthermore, an investment group’s funds must be housed in a Nevada bank. At CG Technology, those funds will then be transferred electronically to The Venetian’s sportsbooks for the purpose of making bets. Wagers will then be made by the entity manager through a CG Technologies app.
Any profits will then be submitted from The Venetian back into the original bank account to be either reinvested or paid back to the group. And each transaction will have an electronic record.
“Everything is transparent,” Stuart said. “We don’t have to worry about duffel bag full of cash to a sports book, which what people have been doing.”
In the case of Bettor Investments, Stuart will use analytical software he created to select betting opportunities that show the greatest chance for a positive return on investment.
Stuart is a poker player who comes from the world of information technology and was turned on to sports betting after moving to Nevada in 2007. An avid hockey and baseball fan, Stuart has posted results from his picks over the current NHL season that show a 15 percent ROI through games played on Jan. 9.
Stuart, who plans to contribute his own money into his betting pool, expects to pay his investors quarterly (there will be some modest fees for running the entity, Stuart added). But he also wants investors to understand that Bettor Investments is the same as posting a $20 parlay bet on a given NFL Sunday.
“People have to understand that this is an investment opportunity,” Stuart said. “This is not a betting scheme, and this is not a spin on roulette hoping to hit black. If people want to gamble, that’s OK, but this is completely different.”
Stuart expects that other Nevada sportsbooks will eventually allow entity bets.
“Over time as other sports books see this as an opportunity to gain access to other sports bettors, hopefully that’ll give us access to other books,” Stuart said. “But I’m not going to count my eggs before they’re hatched.”
There could be some other snags, too. Not the least of which is questions about whether or not the Nevada law runs counter to the federal Professional and Amateur Sports Protection Act (PASPA).
PASPA goal: stop spread of state-sponsored sports wagering. New NV sports betting entity law could be seen as contravening that goal.
— Daniel Wallach (@WALLACHLEGAL) June 3, 2015
Stuart envisions a day in which sports betting becomes more widespread in the coming years, where he can place bets at books in states other than Nevada.
Until then he expects to use mainly word-of-mouth and personal relationships to spark growth in his group. He is also being cautious, building his entity with relatively low minimum ($500) and maximum ($2,500) investments.
“Obviously I will get more from people who know me personally, have met me, shaken my hand and we’ve talked over time, as opposed to somebody who just called me out of the blue and says ‘Yeah, I’ll try it,’ ” Stuart said. “That’s why I’m keeping the investment levels low, just to give people the opportunity to participate without breaking the bank.”
The pioneers of legalized entity betting are hoping that this is just the beginning of something much larger. But only time will tell if legalized entity betting is truly a significant industry innovation that will help spread legitimate sports betting.