Las Vegas Sun

November 28, 2014

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Sports books fight new rules

Race and sports books will be barred from offering big bettors the same incentives afforded to high-rolling baccarat or blackjack players under new regulations proposed by Nevada gaming regulators.

Bookmakers will also be responsible for identifying so-called "messenger bettors" -- who often place illegal bets for out-of-state gamblers -- and reporting them to the State Gaming Control Board if, as expected, the new regulations are adopted.

The Control Board issued proposed amendments to regulations governing race and sports book operations in October as a result of new laws passed by the state Legislature during the last session.

Since then, the board has scheduled public meetings to hear comments from book operators about the proposals, which include restrictions governing the use of new communications technology such as the digital pagers, cellular phones and the Internet.

After the final hearing Tuesday, the board set an April 27 deadline for written comment on the amendments. The Nevada Gaming Commission will act on the control board's final recommendations.

At Tuesday's hearing, the most vocal opposition from bookmakers came over restrictions on rebates to big race and sports bettors and the requirement they report messenger bettors to regulators.

The advent of pari-mutuel wagering, in which bets made at Las Vegas race books are co-mingled with bets made at race tracks, eliminated most of the risk of booking horse races. The result was that race books generally "win" -- or collect a gross commission of -- 16 percent to 17 percent of the amount wagered, called the "handle."

From the commission, Nevada race books pay tracks fees for disseminating live telecasts of races, pay employees and cover other expenses. The fees paid to California tracks, for example, average 3.5 percent of the handle.

That double-digit win percentage compares with the far smaller single-digit win rates recorded on most sports bets -- parlay cards excluded -- and gives race-book operators an extra incentive to increase the handle.

"In pari-mutuel wagering," Control Board Chairman Bill Bible said, "there's no risk for the house. You can increase your revenue from commissions by increasing the handle."

One way to do that is to offer big bettors rebates.

Suppose you're a race-book operator who wants to attract a horse bettor who'll wager $100,000 a day -- and there are some in Las Vegas. You know you'll post a gross "win" of $16,000 to $17,000 a day from that bettor. You might decide to "rebate" 5 percent of the amount he's wagered.

Similar tactics are used by operators of other casino games such as baccarat or blackjack to attract bettors. In some cases, players who gamble in the six- to seven-digit range get discounts of 10 percent to 20 percent of their losses. A gambler who's lost $1 million might end up paying "only" $900,000.

When local race books began offering rebates to big horse bettors, they lured several such players from tracks around the country to Las Vegas.

California tracks countered with a demand for a higher dissemination fee, which led to a blackout that kept races from those tracks from being simulcast in local race books. The track owners argued that if the books could afford to pay rebates, they could afford higher dissemination fees.

That dispute led to the new law passed by the Legislature prohibiting such rebates, and to the Control Board's bid to revise the regulations. It's a task made more complicated by the ingenuity of bookmakers, some of whom have devised clever ways of disguising rebates.

Some books have been known to structure a bet that's almost impossible to lose as a means of rewarding a big gambler. To skirt the ban, for example, a book might offer the bettor the field against a 99-to-1 longshot in an eight-horse race at minus $1.10.

What that means is a bettor who's "earned" a $5,000 rebate for his action -- betting $100,000 the previous day -- can bet $5,500 on the "field" of seven horses against the 99-to-1 longshot. If any horse in the field wins, the bettor collects $10,500 -- a $5,000 win.

In the unlikely event the longshot wins, the book may offer the bettor a similarly structured wager and continue to do so until he wins.

The new regulation will require books to offer the same terms to all bettors, and not structure a bet with odds offering no advantage to the house.

Several race book operators objected to the prohibition Tuesday, saying it would put them at a disadvantage to other games offered by casinos.

"If you rescind the law," said Bible, "you'll go back to ground zero and you won't get the signals from California."

The proposals also would require books to look for gamblers who fit the profile of "messenger bettors," who are hired to place wagers for big bettors. Often the big bettors live outside Nevada and use telephones or the Internet to give betting instructions to the messengers, a violation of federal interstate gambling laws.

According to the board's profile, a typical messenger bettor carries a cellular phone, pager or two-way radio he or she uses right after opening betting lines are posted or changed; makes large wagers several times a day, often on the same team; bets with a combination of gambling chips and cash to avoid currency transaction reporting rules; carries large amounts of cash, and isn't a guest of the hotel.

Book operators complained professional gamblers "conform exactly" to the messenger-bettor profile, and they shouldn't be required to investigate their customers.

"If he conforms to the profile, we'll investigate to determine if he's an independent bettor or messenger bettor," board member Steve DuCharme said.

"Most sports-book people know who the messenger bettors are," Bible said. "The intent of the regulation is to communicate that knowledge to the Gaming Control Board.

"Ninety percent of the sports-book operators will comply, while 10 percent will see this as an economic opportunity to take advantage of those who do comply with the intent of the law."

While race and sports books can accept bets from account holders phoning from inside Nevada, bets called in from other states are illegal. The regulations also bar casinos from accepting bets over the Internet, which prompted several comments from bookmakers.

"The Internet (could be) a big source of revenue for the gaming industry," said one bookmaker.

"This (ban) is just taking the money and giving it to the illegal guys offshore," said another.

"If we can prove to the board's satisfaction that the Internet is controllable and that the bets originate from inside Nevada, it should be legal," said American Wagering Inc. Chairman Vic Salerno. His firm operates Leroy's Race & Sports Books at more than 40 Nevada casinos.

"Why should we stop Nevada from getting potential revenue?"

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