SPORTS BOOK BET BARONS
Here’s what’s going on in the sports betting industry
By Buzz Daly
With slim pickins’ in the sports books this month, Las Vegas endures triple-digit temperatures that lull sun-baked sports bettors into letting their bankrolls hibernate, while the boys that take our bets are plotting ways to kick start the action for the coming football season. The sidewalks might be melting, but our friendly book makers are fast at work in air-conditioned bliss devising incentives that will encourage their customers to exceed last year’s record handle of $4.2 billion.
Here are a couple of sports betting issues percolating during the time of year when bikinis and iced brewskis draw more attention than LED video walls and lines on the WNBA.
CG Technology Faces Regulators’ Wrath For Deliberately Underpaying Bettors
Right now, one of the state’s largest sports book operators has bigger fish to fry than figuring out ways to bring bettors into its shops. CG Technology, formerly Cantor Gaming, is awaiting punishment by regulators for neglecting to fix a computer software glitch that resulted in underpaying 20,000 parlay bets by over $700,000. Curiously, another 11,000 bets were overpaid by $100,000.
The company apparently ignored the glitch for several years and never notified customers of the payout problems. To its negligible credit, CG did provide correct payouts to customers who did their own computations and brought the mistake to the attention of the company. But the majority of bettors trustingly accepted the erroneous payouts noted on the ticket.
This sloppy payment procedure would presumably have gone on indefinitely if not for action by a bettor who complained to the Nevada Gaming Control Board. He said he had caught CG in four instances underpaying him, and the company corrected the errors. The final straw for this player was when he was shorted on a winning round-robin parlay made at the Silverton, and he complained to the Board.
Upon being alerted, regulators launched a full-scale investigation which uncovered the egregious extent of the company’s negligence. Recurring underpayments had been going on for years due to software issues well known by CG. It all started in 2011 with a bookmaking system for its mobile sports wagering, where winning parlay bets were miscalculated for several years.
In 2014, the company expanded the system to include counter wagers; incorrect payments continued. CG did correct some payments, but only to bettors who complained. The Board said the company took steps to identify and correct the parlay wagers and affected customers only after the investigation was underway.
CG was severely disciplined two-and-a-half years ago for a serious offense. It was fined a record $5 million and warned that future transgressions could result in license revocation. In that case—an 18-count complaint—regulators said CG should have known its former director of risk management and a vice president accepted illegal wagers and acted as an agent to recruit bettors.
While the company could forfeit its license for the current complaint, I have been told by a knowledgeable source that although the punishment will likely be severe, it will not include license revocation. “That would cause a serious upheaval within the betting marketplace and be overkill given the nature of the violations,” he explained.
CG manages race and sports books at the M Resort, Hard Rock Hotel, Tropicana, Cosmopolitan, Venetian, Palms and Silverton. Under the various agreements, casinos lease space to CG and split profits with it. However, the casinos are exempt from any disciplinary action.
e-Sports Could Open New Horizons For Las Vegas Sports Bet Shops
The prospect of Las Vegas sports books running legal sports wagering throughout the land is a tantalizing concept but still essentially a mirage. However, the quest for expansion into new, lucrative sports-related markets just won’t be discouraged.
Coupling the synergy of millennials and their obsession with video games would easily generate enough profits to allow wagering on e-sports that could be the Next Big Thing. The growing industry of competitive video gaming—from fighting and shooting to battle arenas and strategy— could be used by casinos to lure a vast youthful market onto their properties.
If some members of the Nevada Gaming Policy Committee have their way, the video game industry could add significant economic development to sports books, assuming regulators agreed to accept wagers on these games.
Currently, wagering on such events is not allowed in Nevada but is standard fare at international sports books, including the United Kingdom. The Downtown Grand has an e-sports lounge. Last April, 10,000 fans squeezed into the Mandalay Bay Events Center for an e-sports competition.
Many e-sports tournaments draw huge crowds of youthful enthusiasts. All that is missing is the ability to make wagers via a legal, licensed agent. The usual compliance and policy questions need to be resolved: league regulation, policing, how games are standardized and the ability to punish those who violate rules.
If approved, customers could wager on the outcome of player matches, or players could bet on themselves, or a pari-mutuel model for wagering could be offered.
Even without wagering, e-gaming is projected to bring in $1.8 billion by 2018. Moreover, it is an industry easily integrated into Nevada’s primary economic resource, gaming and tourism.
In the not-too-distant future, it is likely that Super Bowl-like competitions will feature victorious e-sport jocks winning a trip to Silicon Valley rather than Disney World.
Sports Wagering Growth: Sports Books Are Thriving
If gambling in general has hit a wall regarding growth in Las Vegas—and it has most recently—the industry’s poor relative, sports betting, is taking up the slack.
Despite lackluster results for the gaming industry during April, the most recent month for reporting data, sports books generated a record $293.2 million wagered, according to the Nevada Gaming Control Board. This is not an isolated occurrence. Sports books have enjoyed an increase in handle during 32 of the last 36 months, revealed the Board’s senior research analyst Michael Lawton.
For the month, sports books won $13.5 million from bettors, a nearly 70 percent increase over the same month last year. “Sports betting is a bright spot in what we are seeing in the gaming numbers,” Lawton added. For the year to date (April), sports action on the Strip is up 16 percent over the same period in 2015.
It doesn’t take a rocket scientist to see how the results of our nation’s obsession with sports translates into equally fanatic interest in wagering on sports events. In a world that is increasingly beset by ominous events along with monotonous everyday living for multitudes of workers in cubicles or otherwise dreary jobs, sports is a welcome outlet to relieve boredom and frustration.
Wagering on sports, backing opinions with cash, is a natural progression for many Americans, as gambling is no longer a taboo subject, or seen as an undesirable vice. Factors such as high TV ratings along with humongous media contracts for popular events and sales of sports-related merchandise exemplify how sports dominate our culture.
In Las Vegas a key element of increased betting volume is the popularity of mobile betting apps. Virtually every Vegas sports wagering operation now offers these devices which allow customers the freedom and convenience of placing bets from anywhere within the confines of Nevada. Add the expansion of in-game and proposition betting driving up the handle, and sports betting is a phenomenon that sports books are happy to exploit with full complicity from customers.
Is this growth an aberration, a spike that cannot be sustained? I think not! We are on the cusp of fantasy sports being added to the legal sports betting menu. When that rocket is launched, sports books will start fulfilling their destiny as key contributors to casinos’ bottom line.
The highly anticipated financial potential of sports betting when sports books were first added to casinos in the 1970s was never fulfilled. But now, given all the societal factors and the cooperation of technology the promise of sports betting as a gambling industry staple is within our grasp.