Gaming and Fantasy Sports Blog

How Far Off-Reservation Should Off-Reservation Indian Casinos Be?

2009-11-27T14:51:00.000-08:00

The Associated Press reports on the cases of Indian tribes looking to off-reservation locales for new tribal casino properties. There have been some of these off-reservation locales applications in the past, usually involving tribes that have recently obtained federal recognition and needed to acquire lands for a reservation. Some of these locations could be located near lucrative population centers.

However, there are instances of tribes with reservations located great distances from population centers attempting to locate casino properties within close proximity to those sources of customers (i.e. you and me). The story discloses that the Bush administration decided that these off-reservation casinos could only be within commuting distance of the reservation. That seems like a reasonable restriction. The Bush administration, for example, rejected 20 applications for off-reservation casinos, one an astounding 1,400 miles from the reservation. Fourteen hundred miles? Well, you can't blame the tribe for trying!

Well there's a new administration in Washington, and the Bureau of Indian Affairs is reconsidering the commuting distance rule. If the rule is overturned, and tribes can extend their casino properties far from their reservations, tribal casinos could be even more of a threat to non-tribal casino properties. What if tribes could have off-reservation casinos on Fisherman's Wharf in San Francisco, the Gaslamp District in San Diego or Times Square in NYC?

There are two options in case this rule is amended. The first deals with the recently recognized tribes and tribes with no casinos yet established. The former will of course try and locate their new reservations as close to population centers as possible, but that wouldn't be required. The latter would be tribes with reservations in very sparsely populated, remote areas. It doesn't make sense to locate a casino on those lands as there is no customer base. They will be able to locate their new casino wherever they can obtain land.

The second option deals with tribes that have smaller, and perhaps not optimally located casinos. Those tribes might want to relocate their casino to a better location, closer to larger population centers. Why keep a location when a better location might be feasible? A recent post discussed the closing of a tribal casino, one not located in a prime locale.

If this change occurs, non-tribal casinos will be in even more peril. As discussed in a previous post, Nevada casinos have been suffering due to competition from California-based Indian casinos. Ceasar's Palace can't move from the Las Vegas Strip to LA, but tribal casinos might be able to do just that. This rule, if liberally modified, could open the door to Nevada casinos getting hurt to a much greater degree than what is happening now.

Further Evidence Smoking Bans Harmful To Gambling Revenues

2009-11-07T10:09:00.000-08:00

Several months ago, I posted on the topic of smoking bans playing into the hands of online gambling operators, to the detriment of land-based casino operations. The data from Illinois showed gambling revenues down approximately 20% after the smoking ban took effect. Montana has recently implemented a similar ban and the gambling revenue impacts are similar. According to the story by MontanaNewsStation.com, gambling revenues across the state are down 16% to 18%, just after one month. This is in line with the experience from Illinois casinos.

In my original post, I made the point that online gambling venues may benefit as if someone could smoke in their home and gamble might be a more attractive option than traveling to a smoke-free casino. Play the same games at home and smoke if you want.

In Montana, the competition can be online gambling, but a more clearly defined alternative is the tribally-owned casino in Montana. Tribally-owned casinos are exempt from the smoking ban as reported by the Flathead Beacon. According to a related story by the Great Falls Tribune, "some businesses on the state's Indian Reservations, which are not subject to the Montana Clean Indoor Air Act, are now marketing to people who like to have a cigarette with their cup of coffee, meal or adult beverage or while gambling - indoors."

What Montana has done in addition to eliminating smoking in more indoor venues is actually provide a sustainable competitive advantage to the state's tribal casinos, to the detriment of the other gaming competition. That likely wasn't an objective.

Most legislative bodies are chock full of lawyers. But like most lawyers, there is one law that they haven't been schooled in and continually run afoul of - the law of unintended consequences.

Lack of Parity in NFL Increases Sportsbook Risk

2009-10-30T13:37:00.000-07:00

The Chicago Sun-Times has a nice article on the lack of parity in this NFL season. The NFL has been touting the "any given Sunday" line for years, stating that any week any team can beat any other team. This year, that tagline has been shown to be completely inaccurate. Do you really think the St. Louis Rams or the Oakland Raiders have a snowball's chance in hell of beating the New England Patriots, Minnesota Vikings, Pittsburgh Steelers or Indianapolis Colts? Nope.

Now TV ratings are not suffering, but there has been some impact with regard to attendance at the home stadiums of the poor teams. The lack of on-site attendance will have a future impact with regard to finances of the poorer teams as although there is sharing of television revenue, the teams use attendance revenue to assist with singing bonuses, etc. So, in this case the rich get richer and the poor get poorer.

Sportsbooks also suffer from lack of parity. That's due to the particulars of spread betting. Bettors put up $110 to win $100. So, for example if the Raiders and Chiefs were playing, with the Chiefs favored by 3 points, if you bet the Chiefs, they would have to beat the Raiders by more than 3 points in order to win the bet. If they won by just 3 points, the bet would be returned and if they won by less than 3 points (or lost the game outright), you would lose.

The sportsbook makes money by taking $110 from bettors on both the Raiders and Chiefs. They take in $220, pay the winner their $110 plus the winnings of $100, and the sportsbook keeps $10, or about a 4.5% profit.

This system works to ensure the sportsbook makes money if you can get equal bets on both sides - in the example equal bets on both the Raiders and Chiefs. Point spreads are set to help ensure this occurs. When the two teams are evenly matched, the spread is low, with the converse when they are unevenly matched. In theory, you can set the spread large enough to attract equal action. In practice, that doesn't always happen.

This is the problem with the current lack of parity in the NFL. If some teams are just horrible, they are just not going to attract betting interest, unless the spreads are set to a dangerous level. Usually, a very high spread may be 13 points. With the current disparity, a game between between a top team and a bottom team might have to have a spread of 20 points or more to attract ANY betting interest on the poor team. So far, favorites are winning and underdogs (particularly of the poorer teams) aren't winning (even against the spread). If all the betting action is on the favorites and the favorites win, there aren't losing bets on the underdogs to finance paying the winners. That means the sportsbook has to pay out of their pocket, which means the sportsbook actually loses money.

Parity in the NFL isn't just good for the fans - it's good for the sportsbooks too.

Audit Determines Montana Lottery Breaking State Law

2009-10-24T19:27:00.000-07:00

Montana station KFBB and the Helena Independent Record reported on the results of an audit by the Audit Division of the Montana Legislature. The audit focused on the implementation of fantasy sports wagering by the Montana Board of Horse Racing and the Montana Lottery.

The basic findings are that:

The Board of Horse Racing's agreement with the Lottery circumvented rule-based procedures;
The Board of Horse Racing and the Montana Lottery did not proceed according to statute in implementing HB 616; and,
The involvement of the Montana State Lottery is not in compliance with statute.

According to the well researched and public legislative audit as opposed to the allegedly poorly researched (if at all) and non-public "due diligence" from the Board of Horse Racing and the Montana Lottery, the Lottery is outside its statutory authority to offer a gambling game of this kind. Since Montana gambling law is very strict, in that all gambling is illegal unless specifically authorized, the audit found the Montana Lottery is breaking the law. Because of that, the Montana Lottery may be considered to be an illegal gambling enterprise, a term that has specific liabilities in both Montana law and federal law.

A previous post discusses how in Montana bettors that lose money participating in an illegal gambling enterprise can sue to get their money back. This audit could make the persuasive case for an attorney with some time on their hands and a desire to perhaps pick up some contingency case cash.

What has not been reported and was kept out of the audit findings is going to be revealed. This blogger assisted in the audit by providing internal YouGaming.com information that showed to what extent other parties could have offered a pari-mutuel fantasy sports gambling game compliant with HB616 well before the beginning of the 2008 NFL season, completely negating the lame arguments from the Board of Horse Racing that no one else but the Lottery and their vendor partner could offer a game and therefore were deserving of the "sweetheart" 8-year sole source agreement.

If a private entity in Montana was operating a game like this, it is very likely that entity could be facing both Montana and federal criminal charges of operating an illegal gambling enterprise. However, it appears that according to Montana law, it doesn't matter if the improperly operating entity is a government or private entity. Illegal gambling is illegal gambling.

The current game is not very popular, as discussed in previous posts, here, here, and here. With several horse racing board members' terms expiring in January, we'll see if some new and more competent thinking will come to the fore and put an end to the joke that is the Lottery's fantasy sports gambling game, Montana Sports Action.

What is lost in this discussion is another loser - the Montana horse racing industry. By placing their trust in the Board of Horse Racing, they placed a bet that may have doomed live racing in the state.

Tribal Gaming Is Good, But Not Invulnerable

2009-10-13T19:46:00.000-07:00

The Kitsap (WA) Sun had a story back on September 28th that reported on the closing of the inaccurately named Lucky Dog Casino, owned by the Skokomish Tribe. It wasn't a large property, but even the modest employee base of 120 people losing their jobs is very sad. The casino management is stating the closure is just for the winter, but with the economy in its current state, there are no guarantees for next spring.

Management is pointing to the economy as the key driver of the closure. The general manager is quoted as saying, "people who used to come in three times a week were coming in three times a month." That's a very telling indicator regarding slowing patronage. With their winter slow season approaching, that was the final straw to move to close.

Not all tribal casinos in the state are doing that poorly. Net revenue for 2008 was $2.11 billion vs. $1.96 billion in 2007, according to state gambling commission records. It is possible the Lucky Dog may have had issues other than just the economy.

The story further reports that certain gaming products, such as lottery, are holding up well in the economy. Other products, like bingo and card rooms, are suffering. This recession is putting to rest the notion that gaming is a recession-proof industry.

NBA Owner Seeks to Build Casino

2009-09-28T19:05:00.001-07:00

Sports leagues generally oppose gambling. UNLESS...they get a piece of the action.

The Cleveland Plain Dealer reports that the majority owner of the Cleveland Cavaliers would be in the catbird seat with regard to casinos in major Ohio metro areas if Issue 3 passes in November.

The article states that the proposed casino in Cleveland would cost approximately $600 million, so not a small investment. As a comparison, Forbes.com estimated the value of the Cleveland Cavaliers NBA franchise at approximately $477 million. The Cavaliers are listed as the 5th most valuable franchise, after the Knicks, Lakers, Bulls and Pistons.

So when you see sports leagues wring their hands regarding the evils of gambling, can you be certain that the angst has more to with their inability to get their hands on that gambling money rather than the gambling itself?

Delaware Lottery Shows Montana Lottery "How It's Done"

2009-09-23T21:39:00.000-07:00

Although Delaware is limited to NFL parlays as its sports betting option, they launched their offering for week 1 of the NFL season. The handle wagered wasn't as high as hoped but still a promising number - $257,870. The story from Philly.com is here. They have a ways to go to reach the desired level of better than $1.2 million per week in handle. At current rates, the state will net only approximately $600,000 for the current NFL season. Delaware has recently appealed the recent decision of a panel of the 3rd Circuit and requested the entire 3rd Circuit hear the case. That story can be found here.

Let's compare this sports betting game offered by the Delaware Lottery to what the Montana Lottery is doing with their game, Montana Sports Action. Currently Montana Sports Action has games for racing and football. Where the Delaware game generated over $250,000 in handle, the Montana game generated a pathetic $6,500. How sad. What is sadder is that the geniuses in Montana have been running games for over a year and this is just the first week for Delaware.

If you think that this paltry sum is just a bad week for Montana, think again. This is probably one of their BETTER weeks. You see, when the Legislature was debating the law to allow to allow pari-mutuel fantasy sports wagering, they were estimating that the games would generate about $11.9 million in handle per year, or about $230,000 per week. That's similar to what Delaware did in its first week. Unfortunately, since inception, Montana's sports betting game, Montana Sports Action, has only generated around $190,000 in handle. Talk about lame. Delaware did in its first weekend what Montana hasn't done in over a year. The Legislature's Audit Division just completed an examination of this game, which is posted here.

The people in rural areas often get viewed as "rubes," fairly or unfairly. Using Montana Sports Action as a measure compared to Delaware, the term may have merit, particularly with regard to the Montana Board of Horse Racing, the Montana Lottery, and perhaps even the Governor's office.

Tribal Gaming Important Economic Engine

2009-09-14T19:24:00.000-07:00

The gaming industry definitely has an impact on the US economy. This post will focus particular attention on the impact of tribal gaming. Gaming is generally on a for-profit basis with exceptions for certain charitable organizations, e.g. church bingo. One could claim that the church is definitely a for-profit enterprise, but I'll leave that argument aside.

Tribal gaming proceeds are applied to improving the general welfare of the tribes. Typical areas of focus are law enforcement, health care, education, water and housing. Specific guidelines are outlined in federal law, the Indian Gaming Regulatory Act.

According to the National Indian Gaming Association 2008 economic impact report, tribes:

generated almost $26 billion in gross gaming revenue
generated over $3 billion in related hospitality revenue (lodging, F&B, etc.)

which in addition to helping the economic and quality of life of the tribes:

$150 million to local charities
$100 million to local governments
$2.5 billion to state governments
$8 billion to the federal government

Oh, and not to be underestimated, tribal gaming directly and indirectly support 636,000 jobs nationwide. To put in perspective, that number of jobs is comparable to the total employment of the US Postal Service.

Some states are particularly impacted by Indian Gaming. A recent editor's letter in Casino Journal magazine reported that the two major tribal casinos in Connecticut, Foxwoods and Mohegan Sun are responsible for 12% of the entire state's job growth since 1992! Also, just these two Indian gaming properties are contributing 60% of what the state of Connecticut receives in corporate tax revenue. Would you think that just two tribal casinos would have that large of an economic impact to a state? Huge impact.

In addition to providing revenues to charities, local, state and federal governments, tribal gaming provides revenues to help tribes help themselves develop after centuries of oppression and neglect. A true win-win.

References:

IndianGaming.org (2009). The Economics of Indian Gaming. Retrieved September 14, 2009, from: http://www.indiangaming.org/info/pr/press-releases-2009/NIGA_08_Econ_Impact_Report.pdf.

Rutherford, J. (2009, September), A sharing problem, Casino Journal, 4.

2009 NFL Fantasy QB Rankings For FREE!

2009-08-28T23:31:00.001-07:00

If you liked last year's post concerning the accuracy of fantasy football prognosticators, you'll like this one. Remember in that post, we empirically showed that taking the previous year's performance as the projection for the upcoming year wasn't significantly more inaccurate than the projections the "experts" (which many of you pay $$ for) provide. We'll take the hypothesis that saying that QB performance for this year won't be significantly different from what happened last year and apply that to this year's QB projections.

But it's a new year and what the heck do I know, right? Go ahead and pay out that money to buy magazines and subscribe to sites that provide "projections based on research," "most up-to-date rankings," blah blah blah. I took a couple of magazines and flipped through the pages. The first magazine had a page that introduced the magazines' staff. They had pictures, some generic personal information and some very high level fantasy predictions. OK...I'm not sure how really important that is to a fantasy player. Does anyone during a draft pore over a magazine's publishing staff page?

It gets better. I pick up another magazine, supposedly from another dot com fantasy company. They also have a staff page with the same kind of information. I looked at the pictures...they're the SAME PEOPLE! Yes, of the twelve people on the staff of the first magazine, eleven are on the staff of the second magazine, supposedly from another dot com fantasy company. What's up with that? Both magazines cost $7.99. If you think that picking up a couple of magazines, from different dot com fantasy companies will give you a more balanced and robust perspective? Not necessarily true.

I will give you some FREE fantasy predictions! You will, at least, get your money's worth... :-)

I will take last year's QB rankings and use the premise that the rankings from last year will be the same as this year. There will be a couple of adjustments. If for example, a QB moves from one team to the other and will be the starter, I'll keep that QB at the same ranking, even though they changed teams. QBs coming back from injury will be replaced with the highest rank position from the best of their replacements (i.e. Brady for Cassel). They will be projected at the ranking level that their substitute had last year. Finally, I put in Mark Sanchez in the slot held by Gus Frerotte (#29). Frerotte is not in the league at this point and Favre is now in Minnesota.

Could that cause some inaccuracy? Yes, but to keep the level of my "expert analysis" to a minimum, I'll keep the adjustments paltry and simplistic. You will also see by doing this just the few instances where you can intuitively (i.e. for free) make your own adjustment and not pay $7.99 to read something you basically already know. I made one adjustment to be fair to the magazines, dealing with Brett Favre. They didn't have him in their top rankings so I assumed that they would place Favre in the position of the top rated Minnesota QB (#27).

Shown below is my FREE 2009 NFL QB fantasy "Top 30" quarterback ranking! To show you the comparison with the two "different" magazines, I will also place the ranking the "experts" project for that player (with the Favre adjusment explained above). I don't promise accuracy. I don't promise that you'll be a "fantasy god" or that you will "dominate your league." However, I also don't charge you $7.99 and provide you my picture either!

#	Quarterback	Magazine A	Magazine B
1	Drew Brees	1	1
2	Aaron Rodgers	3	3
3	Jay Cutler	13	12
4	Philip Rivers	5	7
5	Kurt Warner	6	6
6	Peyton Manning	2	2
7	Tom Brady	4	4
8	Donovan McNabb	8	8
9	Matt Cassel	18	16
10	David Garrard	14	15
11	Chad Pennington	25	26
12	Tony Romo	7	5
13	Eli Manning	16	14
14	Brett Favre	27	27
15	Matt Ryan	9	9
16	Jason Campbell	17	19
17	Kyle Orton	19	18
18	Joe Flacco	20	21
19	Ben Roethlisberger	10	10
20	Jake Delhomme	24	24
21	Matt Schaub	12	13
22	Byron Leftwich	31	30
23	Trent Edwards	23	22
24	Kerry Collins	26	28
25	Shaun Hill	28	20
26	JaMarcus Russell	21	23
27	Marc Bulger	29	29
28	Ryan Fitzpatrick	41	41
29	Mark Sanchez	30	34
30	Matt Hasselbeck	15	17

Early 2010 Super Bowl Odds Posted

2009-08-20T19:38:00.000-07:00

For those of you looking for pre-season guesses as to who will win Super Bowl XLIV in January 2010, SBR Global Sportsbook has posted early odds. They are:

Arizona 30/1
Atlanta 23/1
Baltimore 23/1
Buffalo 50/1
Carolina 23/1
Chicago 18/1
Cincinnati 63/1
Cleveland 75/1
Dallas 18/1
Denver 63/1
Detroit 150/1
Green Bay 30/1
Houston 40/1
Indianapolis 12/1
Jacksonville 40/1
Kansas City 63/1
Miami 50/1
Minnesota 14/1 (before Brett Favre's addition)
New England 4.5/1
New Orleans 18/1
New York (N) 11/1
New York (A) 40/1
Oakland 80/1
Philadelphia 10/1 (before Michael Vick's addition)
Pittsburgh 8.5/1
San Diego 8.5/1
San Francisco 63/1
Seattle 50/1
St. Louis 100/1
Tampa Bay 41/1
Tennessee 18/1
Washington 40/1

New England, Pittsburgh and San Diego are the early favorites, which make sense since Tom Brady is back for New England, Pittsburgh is the defending champion and LT and Shawne Merriman are back for San Diego. To me, Green Bay at 30/1 and Arizona at 30/1 seem like good bangs for the buck, but the oddsmakers aren't dumb.

The odds on both Minnesota and Philadelphia are likely to drop with the adds of Brett Favre and Michael Vick (aka Ron Mexico), respectively. Given that Detroit didn't win a game last year, I'm not so sure that 150/1 odds are high enough...perhaps 1000/1?

Las Vegas Gaming Revenue Hasn't Hit Bottom

2009-08-13T06:32:00.000-07:00

The struggling economy continues to pound Las Vegas as well as Nevada overall. Las Vegas isn't the only gambling center suffering - Atlantic City and Macau are also suffering revenue declines. The advantages of those other venues is their close proximity to very large populations. Nevada is still a draw, but not a quick commute from Southern California as Atlantic City is from New York. The Bloomberg article has the full details.

With jobless claims still rising, the economy has not bottomed. The temporary slight drop in the unemployment rate is just that, temporary. Do not be surprised if unemployment doesn't break the 10% level or higher before the economy turns.

Perhaps the folks in Las Vegas should read an earlier post concerning what Nevada can do to exploit a latent sustainable competitive advantage. What Vegas can't do is think they can just ride out this storm. There are secular trends that are impacting Nevada that can't be ignored. If they just keep offering what they offer, or cut prices, that will easily be matched by competing venues and the final result will be worse than the situation before the price cutting.

However, if you would like to visit Las Vegas, you are likely not going to get any better deals than now.

MLB, NFL, NBA, NHL and NCAA Sue Delaware to Stop Sports Betting

2009-07-25T11:57:00.001-07:00

Yesterday, the major sports leagues (MLB, NFL, NBA, NHL) and the NCAA sued Delaware in an attempt to block the state from offering single-game sports wagers, and keep Delaware limited to offering only parlay sports wagers. The USA Today article has more information on the history and quotes from the various parties as well as a link to the actual pleading.

This blog has previous posts which discuss issues with the Delaware effort, particularly the problems with the government tax structure and the parlay-only offering. Those posts can be found here and here.

The leagues can't stop Delaware from offering parlays, as even the federal law, the Professional and Amateur Sports Protection Act (PASPA), allowed Delaware as one of the four states grandfathered (the others being Nevada, Oregon and Montana) to offer sports betting. Delaware, having offered parlays before, can resume that game whenever they wish. Offering single-game betting is being viewed as an expansion of previously offerings.

From the lawsuit, the leagues claim single-game sports betting in Delaware "would irreparably harm professional and amateur sports by fostering suspicion and skepticism that individual plays and final scores of games may have been influenced by factors other than honest athletic competition." OK...but Nevada's been doing this since like...the 1940s. If any harm would have occurred, wouldn't it have occurred by now?

Besides, the leagues know gambling is an important component to their games' popularity. Why are point spreads published in just about every newspaper in the country, even though sports betting only happens (legally) in Nevada? Why does the NFL publish their injury reports publicly and not just send them confidentially to the various teams? Because they want information in the hands of sports bettors, both legal and illegal.

According to the federal law, the sports leagues have the authority to seek an injunction against operators of sports betting operations - those that aren't grandfathered in. Since Delaware is looking to expand, this might appear to fall outside the grandfathered area. Until now, the leagues have never tried to exercise the law. This is where the situation could get very interesting, and very dangerous for the leagues.

PASPA had some very strong arguments during its deliberation that it is unconstitutional. In essence, the argument was that you can't say 4 states can do something the other 46 can't. Also, since when does the goverment say a private entity has the authority to enforce federal law? States generally have sovereign immunity, so by and large they are immune from being sued unless they allow it. That immunity could be an easy defense. New Jersey has recently challenged the constitutionality of PASPA. A post discussing that case is here, which I recommend reading to learn more of the flaws in this law.

It is in Delaware's interest to keep PASPA in place so that Delaware would have a competitive advantage over neighboring states. It could have sports betting where the others could not. With the New Jersey suit challenging PASPA, Delaware was not likely going to join in as it would not be in its best interest. With the leagues going after Delaware, Delaware will have to fight back. If successful, it will be able to allow single-game sports betting. If unsuccessful, it will only be able to allow parlays.

Here's something very interesting. What if Delaware was too successful in its defense? What if it succeeded in throwing out PASPA? If that happened, every state could offer sports betting if it wanted and Delaware's current advantage would disappear. How Delaware responds to the lawsuit will be telling. They may use the sovereign immunity defense as well as use their constitution saying that a single-game sports bet is basically a one-game parlay. They may not challenge PASPA, or if they do, limit the challenge to the ability of private entities to enforce federal law...not challenge the law in its entirety. Delaware wants the competitive advantage. For that to be maintained, PASPA needs to stay in force.

It will be very interesting to see how this case turns out.

Some Advantages of Online Casinos

2009-07-09T22:03:00.001-07:00

The convenience of online casinos is well known. Where else can, in theory, you can hang out in your pajamas and play slots, blackjack or poker? Or, if you're the boss, play the same at work (I do not recommend this if you are NOT the boss). What you don't get online is the true feel of the crowd and the gaming experience. But that may actually be an advantage.

The Casino Journal reports that casinos and bingo parlors in several provinces in Argentina have been closed due to fears over the Swine Flu. Apparently that government has just publicly declared a health emergency for the month of July, due to the flu. Those brick and mortar operations are closed, not generating a dime of revenue. Online casinos are still open! Can you get sick from a person sitting next to you in an online poker game? Not likely. Advantage online casino!

That's not all. GamingIntelligence.com cites a news item from the Remote Gambling Association, referencing a study from MHA Consulting of money laundering in online gambling operations. The essence of the study that "the absence of cases and examples of money laundering and terrorist financing within the remote gambling industry indicated that the risks were low, highlighting a strong commitment within the industry to prevent and detect any occurrences, to comply with the various legislative and regulatory requirements, and to co-operate with the authorities."

In addition, "online gambling is not a likely accessible avenue for money laundering because the identities of the gamblers are known, the financial transactions between the bettors and operators are all in electronic format, and all of the wagering is recorded." Again, advantage online casino!

If you wanted to launder money in small amounts over a period of time, you likely could do that anonymously in a brick and mortar casino. If you didn't sign up for a Players Club card, used cash, and kept your wagers under a few thousand per day, it is possible that you would not attract much attention, particularly if you did not frequent the same property.

So for a player at an online casino, you get convenience, some protection from disease transmission and knowledge that the site has the capability to hinder the improper use of the facility for money laundering for nefarious purposes. All that and entertainment! Woo Hoo!

Losing Money at Montana Sports Action? Can You File a Lawsuit to Get Your Money Back?

2009-07-03T14:34:00.000-07:00

The Montana Lottery and the Montana Board of Horse Racing have been fighting off questions and complaints about the new sports wagering game, Montana Sports Action, for almost a year - even before the game was commercially launched. In 2007, Montana passed a law legalizing pari-mutuel wagering on fantasy sports in an attempt to help put more funds into the declining Montana horse racing industry. There are related posts regarding Montana Sports action in this blog, with the three most recent being found here, here and here.

One of the key issues that is brought up against the Lottery running this game, in addition to the pathetically poor revenue, is the issue of the legal authority the Lottery has to run a game of this nature. Montana law is that gambling is prohibited unless specifically authorized. Article III, Section 9 of the Montana constitution states:

Section 9. Gambling. All forms of gambling, lotteries, and gift enterprises are prohibited unless authorized by acts of the legislature or by the people through initiative or referendum.

Following the constitution, Montana code Title 23-5-151 states:

23-5-151. Gambling prohibited. Except as specifically authorized by statute, all forms of public gambling, lotteries, and gift enterprises are prohibited; and,

23-5-111. Construction and application. In view of Article III, section 9, of the Montana constitution, parts 1 through 8 of this chapter must be strictly construed by the department and the courts to allow only those types of gambling and gambling activity that are specifically and clearly allowed by those parts.

Now a lottery is authorized, but only under certain parameters. Montana code Title 23-7-102 states:

23-7-102. Purpose.
(1) The purpose of this chapter is to allow lottery games in which the player purchases from the state, through the administrators of the state lottery, a chance to win a prize. This chapter does not allow and may not be construed to allow any game in which a player competes against or plays with any other person, including a person employed by an establishment in which a lottery game may be played.
(2) The administration and construction of this chapter must comply with Article III, section 9, of the Montana constitution, which mandates that all forms of gambling are prohibited unless authorized by acts of the legislature or by the people through initiative or referendum. Therefore, this chapter must be strictly construed to allow only those games that are within the scope of this section and within the definition of "lottery game".
(3) The state lottery may not:
(a) operate a slot machine or carry on any form of gambling prohibited by the laws of this state; or
(b) carry on any form of gambling permitted by the laws of this state but which is not a lottery game within the scope of this section and within the definition of "lottery game".

The Lottery Commission has restrictions on what games it can operate. Montana code Title 23-7-302 states, in part:

23-7-202. Powers and duties of commission. The commission shall:
(1) establish and operate a state lottery and may not become involved in any other gambling or gaming.

So, what's a "lottery game?" Remember Montana authorized a lottery in 1985, so the concept of a lottery at the time was a game such that each entry had the same chance of winning as any other entry, where the winner was determined at random. No skill is involved - a game of chance.

Montana code Title 23-7-103 states, in part:

23-7-103. Definitions. As used in this chapter, the following definitions apply:
(4) (a) "Lottery game" means any procedure, including any online or other procedure using a machine or electronic device, by which one or more prizes are distributed among persons who have paid for a chance to win a prize and includes but is not limited to weekly (or other, longer time period) winner games, instant winner games, daily numbers games, and sports pool games.

It may be problematic for the Lottery Commission to claim that fantasy sports wagering doesn't fall into the "any other gambling or gaming" category. Or does it? Doesn't the law allow sports pool games? Wouldn't Montana Sports Action fit into this category? Assuming yes, then why does the Lottery claim to be running the game in accordance with the pari-mutuel fantasy sports wagering law passed for the benefit of the Board of Horse Racing? That law specifically is not designed to be a game of chance, but of skill. Besides, as stated during a legislative hearing, if the Legislature intended for the Lottery to run this game, they would have made that clear.

OK, so then let's take another viewpoint and state that the Lottery is merely donating money to the Board of Horse Racing and is actually operating a sports pool. Will that excuse fly? Maybe not. If you look at sports pools in Montana and how they operate, they appear to be different from how Montana Sports Action operates.

Here are pertinent excerpts from the Montana code regarding sports pools:

23-5-501. Definitions. As used in this part, unless the context clearly requires otherwise, the following definitions apply:
(1) "Sports pool" means a gambling activity, other than an activity governed under chapter 4 or chapter 5, part 2, of this title, in which a person wagers money for each chance to win money or other items of value based on the outcome of a sports event or series of sports events wherein the competitors in the sports event or series of sports events are natural persons or animals; and,

23-5-503. Rules.
(3) (a) Except as provided in subsection (3)(b), the winners of any sports pool must receive a 100% payout of the value of the sports pool. The winner of a sports tab game must receive at least 90% of the total cost of the 100 sports tabs. The operator of the sports tab game may retain the remaining money for administration and other expenses.
(b) A nonprofit organization that maintains records and opens the records to inspection upon reasonable demand to verify that the retained portion is used to support charitable activities, scholarships or educational grants, or community service projects may retain up to 50% of the value of a sports pool or sports tab game; and,

23-5-512. Sports pool design -- department rules.
(1) A sports pool must be designed to ensure that:
(a) there is at least one winner from among the participants in the pool; and
(b) each participant has an equal chance to win the pool.
(2) Competitors in a sports event or series of sports events must be randomly assigned to each participant in the sports pool.

So, for a sports pool, outcomes of sporting events are the basis of the game, 100% of the proceeds are paid out in prizes (except if run by non-profits), each participant has an equal chance to win the pool and competitors in the event(s) must be randomly assigned to each participant. This isn't at all like Montana Sports Action. I think that it would be difficult to prove that Montana Sports Action is a sports pool game envisioned by the language that authorizes what games the Montana Lottery can operate.

If Montana Sports Action falls outside those boundaries, then the Lottery could be considered to be offering a game outside its charter and the Lottery Commission could be considered to being involved with another gambling game in violation of its powers and duties. This might be construed to find that the Montana Lottery is operating an illegal gambling game. Not that another party could operate the same game legally, but the Lottery has certain restrictions, which according to Montana law, must be STRICTLY construed.

What does all this have to do with anything, you may ask? Maybe plenty, if you have bet money on Montana Sports Action and lost, or you are an attorney with some time on your hands. If the Lottery is not specifically allowed by statute to operate Montana Sports Action, it might be considered to be an illegal gambling enterprise, even if it is a state agency.

Montana code Title 23-5-112 states, in part:

23-5-112. Definitions. Unless the context requires otherwise, the following definitions apply to parts 1 through 8 of this chapter:
(18) "Illegal gambling enterprise" means a gambling enterprise that violates or is not specifically authorized by a statute or a rule of the department.

Here's where it gets interesting to the losing bettor or attorney with time on their hands. Montana code Title 23-5-121 states:

23-5-131. Losses at illegal gambling may be recovered in civil action. A person, or his dependent or guardian, who, by playing or betting at an illegal gambling device or illegal gambling enterprise, loses money, property, or any other thing of value and pays and delivers it to another person connected with the operation or conduct of the illegal gambling device or illegal gambling enterprise, within 1 year following his loss, may:
(1) bring a civil action in a court of competent jurisdiction to recover the loss;
(2) recover the costs of the civil action and exemplary damages of no less than $500 and no more than $5,000; and
(3) join as a defendant any person having an interest in the illegal gambling device or illegal gambling enterprise.

To date, approximately $150,000 has been wagered on Montana Sports Action games. Not a lot, but in this economy, if you've spent some money and lost on this, maybe you might want your money back? If you were an attorney and could say the phrase "class action," maybe 1/3 of $150,000, or $50,000 is a nice payday? With the size and scope of the entities involved in offering Montana Sports Action, perhaps it might be viewed as a "target-rich environment" to an attorney?

Not that I foresee any lawsuits being filed along these lines anytime soon, but who knows? If it did occur, it would definitely stir up the government types and bring even more negative publicity to something that had the promise of helping the horse racing industry in Montana, but appears to be failing in that promise.

Goldman Sachs Predicts US to Legalize Online Gambling, a $12 Billion Market

2009-06-29T19:19:00.000-07:00

As reported by EGamingReview, a Goldman Sachs report predicts that the US will legalize online gambling, creating a $12 billion market. Not that this market doesn't already exist, but now the revenues can be captured (and taxed) legally.

The article focuses on poker and other casino games, and is silent on sports betting. That is where the REALLY large revenue lies. There have been old estimates from law enforcement that up to $1 billion is wagered illegally each week during the NFL season. That doesn't include any other sport, Super Bowl, March Madness, etc. Given the current politics, legalizing online poker and casino games is the easiest first step, not that you should diminish the prospect of legalizing a $12 billion market!

This prediction that online gambling will be legalized isn't that much of a stretch given the Democrats control both houses of Congress and the White House. There are polls and studies that support legalization. A post that discusses a poll supporting legalized online gambling can be found here. A post that reports on the university study recommending legalizing online gambling can be found here. In addition, this blog has other posts regarding this topic.

Mozambique Improves Gambling Climate

2009-06-24T21:17:00.000-07:00

AllAfrica.com is reporting that last week, Mozambican parliament, the Assembly of the Republic, on Wednesday voted to relax restrictions on gambling. The law will now allow casinos to be built pretty well anywhere in the country, updating the previous law that put certain areas out of bounds.

The new guideline for land-based casinos is that instead of a minimum room requirement (250), the casino must be built in association with one or more hotels with at least a four star ranking. So, align the casinos with quality properties, not just those of a certain size. The older minimum room requirement is actually similar to what still is on the books in Nevada.

Mozambique also legalized online gambling! Here we are in the US, with the UIGEA, which Congress is attempting to overturn, and Mozambique sees the situation clearly, and moves to improve their economy by allowing regulated wagering, even online.

They changed their regulatory structure by transferring the oversight of casino operations to their Tourism Ministry, while the former oversight organization, the Finance Ministry, still oversees the money aspects. That is probably a good move if the Tourism Ministry can ensure the proper licensing of casinos and key employees. In the US, the states usually have a separate department devoted solely to gaming regulation.

There is hope in the US to overturn the UIGEA in the political and the legal arena. There is currently a legal challenge to the UIGEA in the courts, which may hear oral argument in the near future. In Congress, US Congressman Barney Frank's bill to legalize online gambling, HR 2267, is gaining co-sponsors, bringing the total up to 30. The Online Casino Reports article is here.

With the change of presidential administration, and with Democrats in control of both houses of Congress, the chances have improved much, but the bill is still in its infancy and has not yet passed any committees.

NCAA Not Happy With Montana Sports Wagering?

2009-06-06T21:37:00.000-07:00

The NCAA is examining sports gambling in Montana to determine if the NCAA should adopt a policy that would ban any post-season or championship play within the state. A Montana TV station's recent article describes the issue, and the reaction by the locals.

According to the article, the NCAA policy is:

"No session of an NCAA championship may be conducted in a metropolitan area with legal wagering that is based upon the outcome of any event (i.e., high school, college or professional) in a sport in which the NCAA conducts a championship."

I suppose the easiest response from Montana is that since the population of the entire state is approximately 1 million, the concept of metropolitan area doesn't apply since there aren't any. Therefore, Montana isn't in violation of the policy. However, if you define the population small enough, any town can be considered a metro area. According to Census data, there are only 3 cities in the state with populations over 50,000, with the largest, Billings, barely topping 100,000. Compare that to India, where they cite the minimum population to be considered a metropolitan area to be 4 million.

Montana got ratted out when NCAA threatened similar action if Delaware approved sports wagering. According to an ESPN article, a NCAA spokesman stated that the University of Montana should not have been allowed to host playoff games last season due to an "administrative oversight." That is possible since the sports betting game in question, Montana Sports Action, was inaugurated in the fall of 2008. For those interested in Montana Sports Action, you can review several posts in this blog on that game.

What is a bit puzzling is how long it takes the NCAA to recognize administrative oversights. For example, how could the NCAA miss a bowl game that is played in Nevada, a state that until recently had a de facto monopoly on legal sports wagering? Perhaps the name of the bowl game was vague and NCAA officials never attended a game in person? How could the NCAA miss a bowl game called the Las Vegas Bowl, played in Las Vegas at the football stadium of the University of Nevada, Las Vegas? Perhaps the NCAA doesn't consider Las Vegas to be a metropolitan area or maybe that the NCAA doesn't know that legal sports betting occurs in Nevada? Of course, sports betting in Nevada has only been around since the 1940s, so perhaps it's too recent of an event for the NCAA to be aware.

Actually the policy is targeted at championship play, rather than general post-season play, so certain bowl games could get a pass. However, how can the NCAA be ignorant of the Western Athletic Conference routinely hosting championship play in Nevada? Approximately in the last year, women's soccer, basketball and golf all had their championships hosted in Nevada. Given the NCAA policy, maybe you can excuse soccer, but does Nevada allow bets on golf and basketball? I think yes.

If wagering on outcomes is the issue, Montana has a good story, whereas Delaware and Nevada do not. Fantasy sports, depending on the scoring methodology, generally is not tied to the outcome of an actual game.

Montana likely walks on this but the NCAA will go through the motions (but perhaps with a warning not to expand sports gambling to include betting on games). If the NCAA does place a ban on Delaware, they may have to do the same to Nevada. My guess is that they will let all of this go away and pretend it doesn't exist.

Different Sport, Same Result: The Failure of Montana Sports Action

2009-05-27T18:52:00.000-07:00

(Data Source: Montana Sports Action)

This is another post that discusses the implementation of a fantasy sports wagering game by the Montana Lottery (Lottery), on behalf of the Montana Board of Horse Racing (BHR or Board). You can review the other posts in order of publication here, here and here. I strongly recommend reading them because in my very humble opinion, they are quite good. Actually, one of these posts was read into the record (not by me) as testimony to the Montana Legislature earlier this year during a committee hearing on HB 503 that sought to amend the fantasy sports wagering law.

After promises of improvement from the Lottery after their inept fantasy football wagering game last year, they perform even worse with their current game based on NASCAR. Although the pitiful result could have been easily predicted, to be fair, enough races needed to be completed to have a reasonable base of results in order to make an assessment.

Now I don't want to brag about my prognostication skills, but I did predict that the auto racing game would be less attractive than the football game with a similar handle trend - some initial interest, realization that the game is poor, and a steady gradual decline in handle. The chart above appears to bear out that hypothesis. To the racing game's credit, it is generating almost 90% of the football game's handle, but 90% of little isn't really that much of an accomplishment.

As disclosed in one of the earlier posts, projections for fantasy sports betting were on the order of $12 million in handle per year. So far, being in operation almost 9 months, the geniuses at the Montana Lottery haven't even generated $150,000 in handle with a SPORTS BETTING GAME. There are possibly bookies in Billings generating that kind of handle. If the game was generating handle as projected, approximately $9 million would have been wagered to date. The game under current management is only generating one-sixtieth (1/60) of the handle projected.

Relevant statistics for the racing game (after 12 races):

Cumulative Handle (Est) - $58,660
Horse Racing Revenue (Est) - $9,385
Lottery Revenue (Est) - $3,520
Retailer Commission (Est) - $2,345 (divided among approx 175 retailers)

This is pretty sad since fantasy sports betting was supposed to generate sufficient revenue to keep the Board of Horse Racing operating and allow live racing to survive in Montana.

Given the continued contraction of live racing dates, perhaps someone at the Board of Horse Racing might be bright enough to figure out that the Lottery handling this isn't working? Oh, that's right, those Einsteins at BHR signed a sole source agreement with the Lottery for, as it is understood, 8 YEARS. Horse industry in Montana, don't worry! Apparently the Board can exercise an out clause giving 1 year notice. However...the Board had the chance earlier this year to do just that, but didn't, when given a bona fide request by a party in January to offer a game in compliance with HB 616. That story will be told in more detail in a future post.

Need to Brush Up on Math Skills? Gamble!

2009-05-17T16:58:00.000-07:00

What, you say? How dare I try to make a claim that gambling has a societal benefit? Don't take it out on me! Take it out on Teri Hatcher, one of the lead actresses on the television series Desperate Housewives. A news item reported on ContactMusic.com that Teri takes her daughter to racetracks (Teri's apparently a horse racing fan) and uses gambling problems to hone the youngster's math skills. As Teri is quoted, "I do use the opportunity to make her understand math and what you're betting and what you get back... so we work on math. It's fun."

There 'ya go. See, responsible gambling can be used to teach kids math! According to the American Academy of Family Physicians, alcoholism affects between 8%-14% of the population. But the Connecticut Department of Mental Health and Addiction services reports that only 2.7% of Americans suffer from problem gambling. Why is this relevant? Because you see much more opposition to gambling than you do to drinking. Seems to me that if these people wanted a more lucrative target, they would oppose drinking. Oh, wait...did that a few years back. How did that work out? Right, no one's drinking anymore. Hmm, tried something similar for internet gambling with UIGEA a couple of years back. How did that work out? Right. No one's gambling online anymore.

So what's going on here? What's going on is that an adult properly instructing her child using a form of entertainment for adults, handled responsibly, isn't such a bad thing. If anything, gambling would be a means to teach math. Addition, subtraction, multiplication, division, probability - gaming math covers all these things.

If you think this is a rare exception, think again. Now not gambling, fantasy sports is also mathematically-focused. There is actually a published mathematics curriculum used in schools right now that leverages fantasy sports to teach mathematics. Effective? Here's a couple of data points:

75% of the teachers agreed that students understand mathematical concepts more now than they did before they used Fantasy Sports and Mathematics

The percentage of 8th grade students who tested proficient at Woodbine School in New Jersey increased from 10% to 54% in one year after using fantasy sports

(FantasySportsMath.com)

There you have it. Find interesting and entertaining ways to teach kids - and they learn. What a concept. Isn't this better for the kids than handing out condoms and phone numbers to abortion clinics?

Delaware Sports Betting Bill Passes House

2009-05-10T10:00:00.000-07:00

The Dover Post reports that the sports betting bill, finally passed the House on Friday. Earlier in the week, the bill had actually failed. The rumor has it that the state's casino operators were in opposition to the original bill, due to the higher gaming taxes and unclear path forward for table games. This blog described other issues with the original bill in a previous post.

The modified bill reduces the increase in taxes so that operators now only will have to pay 43.5% of their gaming revenue. That is a problem. The state should have kept the gaming tax rate at the 37% level. What Delaware is doing is not just adding new gaming options, but increasing the taxes on all gaming revenue.

Let's consider a fast food example to clarify the issue. You have a burger joint. You sell hamburgers, fries and soda. For those items, you pay 10% of the gross profit (price of items minus cost of ingredients). Now, the county health department will allow you to sell cheeseburgers and milkshakes. The price for this expansion is that you will have to pay an upfront fee of $10,000 every year to give you the right to sell cheeseburgers and milkshakes. Not only that, but the tax rate for all food items moves up from 10% to 15%. So, you see in this example, it doesn't really seem like that good of a deal for the burger joint. It isn't.

The original bill was worse, but that was defeated earlier this week. The modification is only slightly better. The increase in the gaming tax rate was reduced to 6.5% from 8%, so the casinos will be paying 43.5% on all gaming revenue. The annual sports betting license fee was cut a paltry half a million to $4 million. The best improvement was putting the table game approval path on a 75 day track to hash out details to present before the legislature.

Politicians seem to live in a world of "orthogonal tuning" when it comes to taxes and revenues. For example, if taxing an item at 20% generates 10 million in taxes, then to a politician it is obvious that raising the taxes on that item to 40% would generate 20 million. Easy! Not so. The politicians, although experts at laws, most of them being lawyers, seem to be oblivious to the law of unintended consequences. When tax rates increase, that has impacts on behaviors and responses. What the government might find in this case that the increase in the tax rate actually results in the decrease in tax revenue.

With regard to the sports betting bill, the casinos will have to operate more lean and mean to survive. As stated in the earlier blog post, the parlay game may not be sufficient to generate lots of interest. Initially, sure, as it is new, but if the game isn't really that good, interest will wane.

What if the casinos, in order to survive, even with table games and sports parlays, had to reduce staff? Is that what Delaware wanted? They might get more revenue from the casinos, but what if one of the casinos close? Will all the revenue move to the remaining casinos? Probably not. With the new legislation in Washington looking to regulate online gambling, it may be in a year or two people can play slots and table games from their home. Why go to a Delaware casino when you can play at home? The only thing the Delaware casinos will have to differentiate themselves is the sports parlay game, which may not be enough.

New Jersey Residents Favor Legalizing Sports Betting

2009-04-29T22:00:00.000-07:00

Fairleigh Dickinson University’s PublicMind conducted a survey of New Jersey residents to get their opinions on making sports betting legal. New Jersey filed suit against the US stating the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional and violated states' rights. You can refer to a recent post on this blog.

The topic is relevant, and the results are interesting. I would have assumed that, even if a plurality of residents favored legalizing sports betting, that a majority of conservatives would have opposed. That is not the case. With the sole exception of the question of online or internet sports betting, residents approved of the legalization of sports betting in casinos, racetracks and off-track betting (OTB) facilities.

Overall, men are in favor more than women, and liberals and moderates are more in favor than conservatives. But, all groups had a majority (and in some cases, strong) in favor of sports betting. Regardless of what the sports leagues may want, it appears that the people seem to approve of the concept.

The survey questions and responses, broken out by sex and political temperament are shown below, courtesy of the FDU PublicMind website.

a. Would you favor or oppose making sports betting legal in New Jersey at Atlantic City casinos?
	All	gender			ideology
	All	men	women	liberal	moderate	conservative
Favor	63%	69	58	70	67	56
Oppose	32%	27	36	27	28	38
Unsure	6%	4	6	3	4	6

b. Would you favor or oppose making sports betting legal in New Jersey at horse-racing tracks?
	All	gender			ideology
	All	men	women	liberal	moderate	conservative
Favor	63%	65	61	68	67	57
Oppose	30%	29	31	27	26	37
Unsure	7%	6	8	5	7	6

c. Would you favor or oppose making sports betting legal in New Jersey at off-track betting parlors?
	All	gender			ideology
	All	men	women	liberal	moderate	conservative
Favor	48%	51	45	52	51	46
Oppose	43%	42	44	42	42	45
Unsure	9%	6	11	6	7	9

d. Would you favor or oppose making sports betting legal in New Jersey by telephone and the internet?
	All	gender			ideology
	All	men	women	liberal	moderate	conservative
Favor	26%	30	23	34	27	23
Oppose	66%	63	69	63	65	70
Unsure	8%	7	7	3	7	6

(FDU PublicMind)

Harrah's Names New Online Gaming Head

2009-04-14T19:17:00.000-07:00

Some commentators may make more of this than just the obvious, but it is another indicator that the trend for online gaming in the USA is on the upswing after the disaster of the UIGEA. RecentPoker.com reports that Harrah's has named an ex-CEO of PartyGaming as chief of its World Series of Poker and Internet operations. The site quotes the Sunday Times as speculating that Harrah's, by combining these two divisions and installing a seasoned online gambling executive at the helm, may be preparing to possibly expand by acquiring other online gambling assets.

That is speculative, but it does appear that Harrah's is reading the legislative trends in the US, and that their view may be that online gambling is going to make a legal comeback. With the Democrats firmly in control of both houses of Congress plus the White House, the UIGEA could be very short-lived. Please refer to earlier posts here and here with regard to online gambling.

At the state level, it is rumored that California may pursue legalizing intrastate online poker and Delaware is moving ahead with legislation to legalize sports betting, as discussed in a recent post.
This momentum would most certainly been much more muted if the Republicans had won the White House. With the Obama administration, online gambling is viewed as a revenue source and not a vice.

Delaware Sports Betting Bill Progressing

2009-04-11T16:39:00.000-07:00

The legislation to authorize sports betting in Delaware passed a legislative hurdle this week. The Delaware House Gaming and Parimutuels Committee released the bill from their committee this week. Certain gaming interests, the NCAA, NFL and anti-gambling interests had been against expanding sports gambling, but the State's need for revenue to relieve a projected shortfall outweighed the special interests' lobbying. More detail on the bill can be found in the Forbes.com article.

The bill keeps the number of casinos at three, but increases the tax rate on slot revenue and institutes a $4.5M sports betting license fee, split among the three casinos. I understand the need for revenue, but increases in gaming taxes don't always translate to increased revenue. In addition, it is important that the casinos are able to generate a profit as well. They are the entities that are taking the business risk.

The sports betting license fee is a bit steep. Assuming the win % on sports betting is 5%, the casinos would have to generate $90M in wagers just to cover the license fee. That doesn't take into their costs of betting lines, sports book property, plant and equipment, advertising and labor costs. The sports bets provided had better be attractive in order to generate sufficient wagering interest. If Delaware just sticks to a sports lottery, requiring a parlay of two or more bets, that offering alone may not be sufficient.

Delaware needs to offer the full spectrum of sports wagers, to include the new pari-mutuel fantasy sports wagers. Fantasy sports is big business, and the three Delaware casinos are racetracks as well, very familiar with pari-mutuel wagering. Also, these tracks already have the proper pari-mutuel equipment in place, just requiring minor software modification to allow pari-mutuel fantasy sports wagers. With almost 30M fantasy sports players in the US, there's a large potential market. Since the population base within a 90 minute drive from Delaware is approximately 35M, there may be as many as 3.5M fantasy sports players as an addressable market by Delaware casinos.

With the pari-mutuel concept, the takeout is much higher than that for parlay bets or straight bets. Pari-mutuel takeout percentages are often 18% or higher. Assuming just a 15% takeout,
only $30M in pari-mutuel fantasy sports wagers would be required to generate the $4.5M to cover the annual license fee. Since the significant portion of the pari-mutuel infrastructure is already in place, this concept could be an easy and profitable portion of the overall sports betting offering.

To learn more about pari-mutuel fantasy sports wagering, see the YouGaming.com website.

New Jersey to Legally Challenge PASPA

2009-03-23T20:19:00.000-07:00

In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA). It should have been called the Nevada Legalized Sports Betting and Illegal Sports Betting Monopoly Act. The law grandfathers four states that had some kind of legal sports betting to be able to allow sports betting, but restrict all others from having legalized sports betting. The four grandfathered states are: Nevada, Oregon, Montana and Delaware. Nevada, is by far the state with the largest amount of legal sports betting. Note that illegal sports betting wasn't hampered by this law. All the law did for 46 states was ensure the "Sopranos" didn't have any legitimate competition. How sweet of Congress to take care of the illegal bookies like that!

Congress knew the law was weak and had iffy Constitutional strength. The Department of Justice (DOJ) actually opposed this law on the grounds that it violated states rights. The reference to the DOJ is here. In addition, the DOJ highlighted the issue that the law allowed professional and amateur sports organizations to bring civil injunctions against states. Professor I. Nelson Rose in his article on PASPA mentions that the US Supreme Court has ruled that states can not be sued without their consent. Professor Rose makes the point that if a state can't be sued by an Indian tribe, what real chance would a sports organization like the NCAA have in getting their case allowed?

The law had never been officially challenged - until now. With state governments scrambling for cash, gambling is looking good. As gambling becomes more prevalent, competition for gaming dollars is heating up. Delaware, as mentioned in a previous post, is considering exercising its rights under PASPA and legalizing a sports betting game. This is causing concern among neighboring states which aren't allowed by PASPA to follow suit.

A New Jersey group comprised of gaming and racing interests filed suit challenging the constitutionality of PASPA in US District Court. The link to the Reuters article is here. It likely won't be decided for quite a few months, but the process is started. Will the DOJ fight the suit even though they are on record questioning the law's violation of states' rights?

I think PASPA should be declared unconstitutional and tossed. Then each state can decide if it wants to allow sports betting and get that betting that is currently unregulated going to bookies become above board, regulated and taxed. Everyone wins...except those with losing bets. Even if PASPA was declared invalid, that would not allow interstate sports betting. That would still be in violation of the Wire Act. This would allow intrastate sports betting. So, the betting books and pools would have to be contained fully within the state, similar to how sports betting in Nevada operates now.

If PASPA is declared invalid, it should increase the value of YouGaming's patents. YouGaming could offer very attractive games to these new markets. Fantasy sports is still growing and pari-mutuel wagering offers a higher intrinsic takeout compared to wagering typical of typical sports wagering.

What's the Best Betting Value in the NCAA Tournament?

2009-03-16T20:16:00.001-07:00

So, who will win the 2009 NCAA men's basketball tournament? I haven't a clue, but it will be one of 65 teams. I know, that's a great insight - you can thank me later. Looking at the initial odds posted by the Las Vegas Hilton (referenced in a story in the Las Vegas Sun), there may be some teams that based on the odds relative to their seeding, might be worth a gamble.

I took a look at the odds posted for the various teams and mapped them to their seeding. I averaged out the odds per seed level and looked for teams that the posted odds were significantly above the average. Before I give you the possible values, here's the average odds per seed level:

Seed Avg Odds

5.75
14.25
28.75
47.5
71.25
56.25
100
175
250
200
475
175
400
200
200
200

You can see that there is a natural trend that the lower the seed, the higher the odds, except for the lowest seeds. The LV Hilton sportsbook has most of the teams with discrete odds, with a field entry for everyone else. The field entry for this tournament consists of all 14-16 seeds, plus Northern Iowa and Akron. I don't think the field entry is a value bet, even though you get a chance on 14 teams.

Notice that the 5, 9 and 11 seeds on average pay more than the next lower seeds. We'll look there and also look at other seed levels to determine if a team or two is being offered at a significant differential to the average odds for the seed level.

If we set a level of differential to identify those teams whose odds are 75% higher than the average odds of their seed level, here's what we get:

4/Xavier - Odds 100:1/Seed Avg Odds 47.5:1
6/Marquette - Odds 100:1/Seed Avg Odds 56.25:1
9/Siena - Odds 500:1/Seed Avg Odds 250:1
11/Utah St - Odds 1,000:1/Seed Avg Odds 475:1
13/Cleveland St - Odds 1,000:1/Seed Avg Odds 400:1

If we lower the value threshold to 40% higher than the average odds of their seed level, these other teams appear:

5/Utah - Odds 100:1/Seed Avg Odds 71.25:1
5/Illinois - Odds 100:1/Seed Avg Odds 71.25:1
8/BYU - Odds 300:1/Seed Avg Odds 175:1
10/Minnesota - Odds 300:1/Seed Avg Odds 200:1
12/W. Kentucky - Odds 300:1/Seed Avg Odds 175:1

This will be interesting to see if any of these make a Cinderella run, or, if the oddsmakers are right, they make an earlier exit than expected.