Entity Wagering Could Grow Nevada Sports Betting Business
The potential for legalized sports betting has been debated since National Basketball Association Commissioner Adam Silver wrote a New York Times op-ed piece in 2014 suggesting that gambling on professional sports be allowed. The debate on legalizing sports wagering nationwide is still an active discussion. The 1992 Professional and Amateur Sports Protection Act restricts sports betting to four states. While Nevada is the only state with full-scale sports wagering, Delaware, Oregon, and Montana offer small-stakes sports betting and New Jersey has been attempting to legalize sports betting by allowing its Atlantic City casinos to open Las Vegas-style books. The state is awaiting a ruling on the issue by the U.S. Third Circuit Court of Appeals.
Nevada, even with its full-scale sports wagering, continues to find ways to fine tune its laws covering sports betting in order to enhance wagering opportunities for its sports book industry.
In June 2015 lawmakers and state gaming regulators approved new regulations covering entity wagering, which now allow the formation of business groups to place race and sports bets. Investors can join the entities and share in the profits and losses from large wagers at Nevada sports books.
This concept could grow the Nevada’s sports betting industry, which took in more than $4.23 billion in legal wagers in 2015, $231.8 million of that collected from sports books winnings. In fact, backers of entity wagering and gaming industry analysts believe the idea has the potential to triple Nevada’s sports gambling business over the next five years.
CG Technology (CG), one of Nevada’s largest independent race and sports book operators, was an early proponent behind entity wagering. Under advisement, CG leadership authored Senate Bill 443, the initial legislation that was signed into law by Gov. Brian Sandoval in June 2015. CG also helped write the regulations that were approved five months later.
Executives from CG (which operates eight Las Vegas sports books), believe that entity wagering solidifies Nevada’s place as the epicenter for sports wagering in North America.
Under the new regulations, Nevada-based business entities can open sports wagering accounts with participating sports books for the purpose of betting on sports and racing. Participants from outside the state are welcomed to invest in the qualified funds. However, the investors are not permitted to direct the wagering activity.
Investors have to be age 21 or over and must submit to the entity their background information, including a government-issued identification card and taxpayer number.
Sports betting investment funds can employ various investment strategies. The structure allows for small minimum investments to increase the number of participants, or larger investments to limit the fund’s size. Profits from any wagers are deposited into the entity’s bank account and used for future wagers or for payouts to investors.
Entity wagering in Nevada does not violate the U.S. Wire Act because the wagers are not transmitted across state lines by the telephone or the Internet.