This is a bad week for supporters of live horse racing in Montana. The Montana Board of Horse Racing, in its infinite wisdom, made key decisions that are certain to mark the de facto death of the 2013 racing season before it starts. This will be the second straight year that racing aficionados and bettors will have to look elsewhere. Unfortunately, the drive to California or New York where racing still lives is a bit of a long drive in a 1975 Chevy on the interstate.
It is a simple problem for the Montana Board of Horse Racing: generate revenue to regulate and protect the sport it runs. Now, the only things running are the Board Members’ mouths. The horses certainly are not running, nor are they likely to with the current Board’s actions. Track operators, owners, trainers and spectators are getting the shaft, and if it is any indication when someone creates a monster, the villagers will start coming out with pitchforks and torches.
With the estimated increase of three racing days to eight, given current revenue estimates, the Board seeks to soothe the savage beast, somehow hoping to give the impression to someone that they are actually running a racing season. Given that, the Board’s action to authorize twenty- five days of racing at their January meeting even though they admit there is not enough funding to support it seems odd. The hard numbers speak for themselves. California, for example, runs four major tracks (Golden Gate, Hollywood Park, Santa Anita and Del Mar, not including the fair circuit), with racing basically year-round. This also does not include substantial harness and Quarter Horse racing. No one claims that Montana may be compared directly to California, but what the Montana Board of Horse Racing is doing is akin to putting a Band-Aid over a gushing artery. It is time to stop the bleeding before horse racing is fully and finally dead in Montana. It is more than a shame - it is a tragedy of mismanagement over an industry that has over a 100-year history in the state.
The Board’s debt service cripples it, but at the same time it is not creating enough revenue to support live racing. With response to naysayers that there is new leadership and direction on the Board, this current Board conducted fewer meetings in 2012 than 2011. This Board has not published meeting minutes on the MBOHR website since April of 2012 - so much for openness and transparency.
What happened this week should not have been a surprise. On Monday, an advisory panel for the Missoula County fairgrounds recommended scrapping the existing horse racing facility, and hence horse racing in Missoula. Specifically, the panel recommends not considering horse racing in future development plans for the fairgrounds. If the county commissioners adopt that recommendation, the racetrack will be likely torn down and the area redeveloped for other purposes. When will another track bite the dust? The Board should heed this rather severe wake-up call and answer to the industry. The Board needs to consider proposals for additional revenue streams from investors and entrepreneurs now. Without racing days, without tracks, no one wins a purse, the vendors don’t sell their hot dogs and brew, and Little Johnny doesn’t get a race day with his dad this year. This poor outcome is the fault of the Board of Horse Racing, and not the state's horse racing industry. Pull out your pitchforks - the monster is on the loose.
The Montana Board of Horse Racing consciously and openly refuses to pursue approaches that still have a great chance to generate as much as several hundred thousand dollars a year in supporting live racing in Montana, not to mention still servicing the existing debt. Circle the wagons to save Montana horse racing. Maybe the Missoula facility will not be lost after all. If the horse racing industry in Montana does not wise up soon and realize what is really going on, it may be too late to salvage horse racing in the state.
Stories on this continued Montana debacle can be found here and here.
Showing posts with label Montana. Show all posts
Showing posts with label Montana. Show all posts
Wednesday, February 6, 2013
Monday, April 30, 2012
Montana Horse Racing Path Forward (Part 2 of 2)
Following up from Part 1, this post describes what Montana racing can do given its current fiscal predicament. To recap, the Montana Board of Horse Racing has a large debt to service and currently two paltry revenue streams. Simulcast has been shut down and it will take capital to infuse into that option in order to restart. Even after that is done, the revenue generated will likely be smaller than what had existed before due to the lack of tracks to wager, to include lack of all the Triple Crown races.
Lots of debt and mediocre income or even income potential - what to do? Well the Board as well as its Advisory Council had great ideas! Here they are:
The Business Advisory Council's final recommendation (of three) was "maximize funding sources." (the other two recommendations were in essence to set a budget and pay their debt)
The Board of Horse Racing's recent minutes had this item, "look at other income sources that will bring in income without large setup costs."
All I can say is...wow. If they keep going the way they are, in my opinion Montana racing is toast. That would be a shame.
But there is something that is a new income source and doesn't have large setup costs! What is it? Really simple. Implement pari-mutuel fantasy sports wagering in alignment with what was authorized under HB 616. It can use the existing tote equipment and there isn't a requirement of an upfront payment that the various tracks are demanding for their signal. It is a game based on professional sports, so what can/can't be done with regard to horse betting is irrelevant to this revenue stream. It meets exactly what the Business Advisory Council and the Board of Horse Racing identified as an income source.
There are two issues - the game authorized under HB 616 is covered by patent and the revenue breakouts per HB 616 may not be aligned right to keep all stakeholders happy. There's an easy fix. The stakeholders (Board of Horse Racing, patent holder, pari-mutuel provider and retail outlets) need to agree on the takeout for each entity, and then the parties by contract will adapt the HB 616 takeout. Again, easy fix. With approximately a 26% takeout in total per HB 616, there's enough of the takeout pie to go around.
By implementing HB 616-compliant pari-mutuel fantasy sports, the Board of Horse Racing will get additional revenue which it can use to pay debt and get simulcast restarted, adding that revenue stream. These new combined revenues should put the Board on a more solid footing to dig themselves out of their financial hole as well as begin to revive live racing in the state.
If they don't follow this approach, do not be surprised if racing in Montana will be put out of its misery to the anguish of those that put their faith in the Board of Horse Racing to do the right thing.
Lots of debt and mediocre income or even income potential - what to do? Well the Board as well as its Advisory Council had great ideas! Here they are:
The Business Advisory Council's final recommendation (of three) was "maximize funding sources." (the other two recommendations were in essence to set a budget and pay their debt)
The Board of Horse Racing's recent minutes had this item, "look at other income sources that will bring in income without large setup costs."
All I can say is...wow. If they keep going the way they are, in my opinion Montana racing is toast. That would be a shame.
But there is something that is a new income source and doesn't have large setup costs! What is it? Really simple. Implement pari-mutuel fantasy sports wagering in alignment with what was authorized under HB 616. It can use the existing tote equipment and there isn't a requirement of an upfront payment that the various tracks are demanding for their signal. It is a game based on professional sports, so what can/can't be done with regard to horse betting is irrelevant to this revenue stream. It meets exactly what the Business Advisory Council and the Board of Horse Racing identified as an income source.
There are two issues - the game authorized under HB 616 is covered by patent and the revenue breakouts per HB 616 may not be aligned right to keep all stakeholders happy. There's an easy fix. The stakeholders (Board of Horse Racing, patent holder, pari-mutuel provider and retail outlets) need to agree on the takeout for each entity, and then the parties by contract will adapt the HB 616 takeout. Again, easy fix. With approximately a 26% takeout in total per HB 616, there's enough of the takeout pie to go around.
By implementing HB 616-compliant pari-mutuel fantasy sports, the Board of Horse Racing will get additional revenue which it can use to pay debt and get simulcast restarted, adding that revenue stream. These new combined revenues should put the Board on a more solid footing to dig themselves out of their financial hole as well as begin to revive live racing in the state.
If they don't follow this approach, do not be surprised if racing in Montana will be put out of its misery to the anguish of those that put their faith in the Board of Horse Racing to do the right thing.
Saturday, April 28, 2012
Montana Horse Racing Continued Trouble (Part 1 of 2)
As discussed in a January 2012 post, horse racing in Montana is in very dire straits. Due to mismanagement by the Board of Horse Racing, the Board ran up an operating deficit somewhere in the $500,000 to $600,000 range, depending on the current state of the financial audit. Simulcast operations have been shut down since the end of last year. Multiple board members have been replaced, and both the Board's Executive Secretary and legal counsel have been released. Those are positive moves, but are these moves too late? Possibly.
There are those that are still attempting to revive things and repair the damage. A former simulcast outlet is attempting to restart operations, but is having trouble due to previous unpaid bills. Tracks that are owed money by the Board of Horse Racing aren't willing to send signals to the new simulcast operation until they are paid, and in some cases are demanding upfront deposits to ensure they maintain a positive account balance with regard to Montana.
A story in the Missoulian describes the situation. The current board chairman is quoted that he was informed that Churchill Downs "don't trust Montana at at all" as they declined to allow signals to Montana for the Kentucky Derby. Similar rejections were mentioned in the article with regard to carrying the Belmont Stakes.
The Triple Crown races are some of the biggest betting days for racing each year, so missing out on those will have a material impact on any full-year measure of handle, assuming simulcast operations in Montana ever restart. A more recent story in the Montana Watchdog confirms the loss of the Kentucky Derby this year to any revived Montana simulcast. This does not mean that Montanans can't wager on the Derby, as they can use previously licensed Advance Deposit Wagering (ADW) outlets and wager online. There just won't be the ability for off track betting (OTB) sites to have wagering.
The existence of the ADW option is a problem for simulcast, even if they could restart operations. Why would a person travel to an OTB to place a wager if they can have an equal or greater amount of tracks/races to choose from with an ADW and wager online from home? The OTB has to provide an experience that is superior or an experience that can only be had at the OTB. Limiting the experience to horse and dog racing wagers isn't going to do the trick. I find it unlikely that even if simulcast is revived, that the wagering handle will amount to very much. Examining the minutes of previous board meetings, simulcast was losing customers to ADW competition.
To help the Board of Horse Racing retire its debt and to provide funds for its operation as well as support live racing meets in the state, they're going to need much more money than is being provided by its only remaining revenue streams - ADW and the Lottery-run fantasy sports game. The revenues from those sources may not even be enough to meet their annual debt repayment plan. Where is the Board going to get the money needed to pay the deposits now required to allow simulcast to restart operations and cover their initial startup costs? We're not even thinking about where the money is going to come from to support live race meets. Too much debt, paltry current revenue and a simulcast operation that won't provide a superior alternative to existing ADWs is a bad combination.
With regard to the Lottery-run fantasy game, there is a danger. That danger was highlighted by the Audit Division of the Montana Legislature. Their finding was that the fantasy sports game as currently run was outside of statute, thereby illegal. Given that finding, it could be possible that bettors that lost money playing that game could sue to get their money back. If so, then the revenues counted on to pay back debts may be in jeopardy. The post on that audit can be found here.
I don't see Montana horse racing digging out of this mess if current efforts continue. Is there another potential path forward? That possibility will be discussed in Part 2 of this post, which can be viewed here.
There are those that are still attempting to revive things and repair the damage. A former simulcast outlet is attempting to restart operations, but is having trouble due to previous unpaid bills. Tracks that are owed money by the Board of Horse Racing aren't willing to send signals to the new simulcast operation until they are paid, and in some cases are demanding upfront deposits to ensure they maintain a positive account balance with regard to Montana.
A story in the Missoulian describes the situation. The current board chairman is quoted that he was informed that Churchill Downs "don't trust Montana at at all" as they declined to allow signals to Montana for the Kentucky Derby. Similar rejections were mentioned in the article with regard to carrying the Belmont Stakes.
The Triple Crown races are some of the biggest betting days for racing each year, so missing out on those will have a material impact on any full-year measure of handle, assuming simulcast operations in Montana ever restart. A more recent story in the Montana Watchdog confirms the loss of the Kentucky Derby this year to any revived Montana simulcast. This does not mean that Montanans can't wager on the Derby, as they can use previously licensed Advance Deposit Wagering (ADW) outlets and wager online. There just won't be the ability for off track betting (OTB) sites to have wagering.
The existence of the ADW option is a problem for simulcast, even if they could restart operations. Why would a person travel to an OTB to place a wager if they can have an equal or greater amount of tracks/races to choose from with an ADW and wager online from home? The OTB has to provide an experience that is superior or an experience that can only be had at the OTB. Limiting the experience to horse and dog racing wagers isn't going to do the trick. I find it unlikely that even if simulcast is revived, that the wagering handle will amount to very much. Examining the minutes of previous board meetings, simulcast was losing customers to ADW competition.
To help the Board of Horse Racing retire its debt and to provide funds for its operation as well as support live racing meets in the state, they're going to need much more money than is being provided by its only remaining revenue streams - ADW and the Lottery-run fantasy sports game. The revenues from those sources may not even be enough to meet their annual debt repayment plan. Where is the Board going to get the money needed to pay the deposits now required to allow simulcast to restart operations and cover their initial startup costs? We're not even thinking about where the money is going to come from to support live race meets. Too much debt, paltry current revenue and a simulcast operation that won't provide a superior alternative to existing ADWs is a bad combination.
With regard to the Lottery-run fantasy game, there is a danger. That danger was highlighted by the Audit Division of the Montana Legislature. Their finding was that the fantasy sports game as currently run was outside of statute, thereby illegal. Given that finding, it could be possible that bettors that lost money playing that game could sue to get their money back. If so, then the revenues counted on to pay back debts may be in jeopardy. The post on that audit can be found here.
I don't see Montana horse racing digging out of this mess if current efforts continue. Is there another potential path forward? That possibility will be discussed in Part 2 of this post, which can be viewed here.
Friday, January 6, 2012
Montana Horse Racing In Huge Trouble
Horse racing in Montana has been in trouble for quite a while. There have been efforts to revive the industry, most notably the passage of HB 616 in 2007, which authorized pari-mutuel wagering on fantasy sports. Unfortunately, the implementation of the fantasy sports game by the Montana Lottery (Montana Sports Action), can only be assessed as a huge disaster. There have been several posts on this topic, with the most recent here and here.
The last sentence of the October, 2009 post may have been extremely prophetic. It stated, "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." How true those words may have been. The Board of Horse Racing continued its cavalcade of errors by stripping the simulcast wagering license from Montana Simulcast Partners, an entity that had been profitable and providing needed revenue for approximately 20 years, with a new provider, which didn't even last 2 years before being shut down amongst a torrent of complaints. The Board then doubled down on stupid by not only NOT trying to revive Montana Simulcast Partners last year, but took over the simulcast wagering operation itself!
It did not turn out well. Barely a year later, the Board of Horse Racing, due to its mismanagement of its operations, to include the simulcast wagering operation, had generated a budget deficit of over $500,000. Those that looked into the Board's operation noted that the Board even lost money running the wagering operation. As a "closing the barn door after the horse has left" move, the Executive Secretary of the Board was fired. More details of this fiasco committed by the incompetent Montana Board of Horse Racing is contained in the story from the AP in this article published by the Washington Examiner.
What is being attempted is to try and figure out a way to revive the simulcast wagering operation within the next couple of months, in addition to implementing other fixes to the obviously disfunctional and inept Montana Board of Horse Racing. Will it be enough to save live racing in Montana, or is it too late to save the patient and the only thing to do is pull the plug?
The last sentence of the October, 2009 post may have been extremely prophetic. It stated, "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." How true those words may have been. The Board of Horse Racing continued its cavalcade of errors by stripping the simulcast wagering license from Montana Simulcast Partners, an entity that had been profitable and providing needed revenue for approximately 20 years, with a new provider, which didn't even last 2 years before being shut down amongst a torrent of complaints. The Board then doubled down on stupid by not only NOT trying to revive Montana Simulcast Partners last year, but took over the simulcast wagering operation itself!
It did not turn out well. Barely a year later, the Board of Horse Racing, due to its mismanagement of its operations, to include the simulcast wagering operation, had generated a budget deficit of over $500,000. Those that looked into the Board's operation noted that the Board even lost money running the wagering operation. As a "closing the barn door after the horse has left" move, the Executive Secretary of the Board was fired. More details of this fiasco committed by the incompetent Montana Board of Horse Racing is contained in the story from the AP in this article published by the Washington Examiner.
What is being attempted is to try and figure out a way to revive the simulcast wagering operation within the next couple of months, in addition to implementing other fixes to the obviously disfunctional and inept Montana Board of Horse Racing. Will it be enough to save live racing in Montana, or is it too late to save the patient and the only thing to do is pull the plug?
Saturday, October 24, 2009
Audit Determines Montana Lottery Breaking State Law
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:
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.
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.
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.
Wednesday, September 23, 2009
Delaware Lottery Shows Montana Lottery "How It's Done"
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.
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.
Friday, July 3, 2009
Losing Money at Montana Sports Action? Can You File a Lawsuit to Get Your Money Back?
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.
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.
Saturday, June 6, 2009
NCAA Not Happy With Montana Sports Wagering?
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.
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.
Subscribe to:
Posts (Atom)
