New Tribal Casino Near San Francisco Offers Close Alternative to Nevada Casinos

Nevada casinos have been facing the threat from California tribal gaming for years.  Having a large property within an hour's drive from San Francisco ups this by a couple of notches.  The San Francisco area has around 11 million people.  Having a large gaming property within a 60-90 minute drive can not be good news to Lake Tahoe and Reno casino properties.

The Casino Journal reports "after years of planning and 16 months of construction, Graton Resort & Casino officially opened its doors to the public earlier this week. The $800‐million facility is the closest full‐service casino to the Bay Area, and ushers in a new level of sophistication and excitement to Northern California."  The property will have 3,000 slot machines and almost 150 table games, along with over a dozen restaurants.  This is a big operation and will definitely draw, in my opinion.

What is new is that with this property near San Francisco, this property might draw customers that would have traveled to other Northern California tribal casinos.  A previous post regarding a tribal property near a large metro area is here.  Do not be surprised if more tribes will attempt to build facilities as close as possible to the major population centers.  That effort might run into trouble with regard to on/off reservation regulations regarding properties, historical lands and the like, but with so much money in gambling, the trend is set.  Another post regarding tribal casino economic impact can be found here and a post highlighting the strong competition California tribal gaming is to Nevada casinos is here.

I've discussed earlier what Reno and Lake Tahoe casinos could do to combat this threat.  It is controversial in nature, but desperate threats could make controversial solutions more palatable.  To learn about what Nevada casinos could do to differentiate themselves from California casinos, read this post.

Nevada Lawmaker Seeks To Allow Betting on Presidential Elections

A Nevada senator introduced legislation to allow casinos to accept bets on US political elections.  Wagering on elections would be new in the US, but is common in other countries such as the UK.  The Las Vegas Sun article covering the story reports that the Irish online gambling company, Paddy Power, took $1.6 million in wagers over last year's presidential election.

The legislation would potentially allow wagering on more than just the presidential election.  Quoting from the article, "the law would allow betting on Senate, congressional and presidential campaigns. Segerblom said he would be open to allow bets on state elections as well, and said the law could also allow bets on the Academy Awards and other cultural events."

This is great news for YouGaming's patented pari-mutuel fantasy concept.  The concept, covered by three US Patents, covers pari-mutuel fantasy wagering on any human event or contest in both a skill game and a wagering game implementation.  To try out the feasibility of these kind of games, YouGaming's skill game website, ProContest.com, crafted a US Presidential fantasy game and an Academy Awards fantasy game on the site and tested game logic.

The wagering games being proposed in Nevada can easily be implemented in both a fixed odds as well as a pari-mutuel format.  The pari-mutuel format will allow the casinos to offer games freely without the worry of loss due to the setting of an improper payout odds or betting line.  In pari-mutuel wagering, the house just takes its percentage off the top, with the rest being paid to the winning bettors.  In these new game areas, pari-mutel will be a safer approach for the casinos and very likely more profitable, due to the higher takeout percentage.

Read more: http://www.lasvegassun.com/news/2013/mar/25/betting-presidential-elections-nevada-state-senato/#ixzz2P28l0Ckc

Horse Racing in Montana Continues to Die the Slow, Painful Death – With Deepest Thanks to the Montana Board of Horse Racing

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.

No Chance for Federal Poker Bill in 2012

The Las Vegas Review Journal recently reported that the attempt by Congress to legalize online poker won't happen this year.  The AGA as well as those that wanted to have centralized control of iGaming in the US have been pushing for Washington to create a one size fits all approach.  That plan was thwarted for a couple of reasons, mostly due to politics.

First, this was an election year.  Not much was going to happen this year anyway.  The normal partisan environment was even more so.  Due to the even more partisan contest, any chance at a bipartisan approach to this issue was squelched.  Harry Reid, the Senate majority leader from Nevada, was very keen for this legislation.  No way were the Republicans going to do any favors for Harry Reid.  I would be surprised if this acrimony doesn't carry over into next year.

Second, with the fiscal cliff issue top of mind, that's what's going to be worked on as the primary topic, not online poker.

For now, online poker will move forward on a state by state basis.  A few more states implement on their own, and the window for any federal-level approach will be permanently lost.  That may likely happen as soon as 2013.

Online Poker Lobbying Group in California Quits

The reality that online poker is NOT coming to California soon finally reached consensus with a lobbying group specifically created to push for legalization.  The California Online Poker Association announced its winding down earlier this month, reported by GGBiGames.com.

The politics of the various tribes sunk the opportunity.  The tribes have a great deal of influence in California politics, particularly when it comes to gaming.  Since the tribes were not in alignment, online poker wasn't going anywhere.  Something eventually will come along, but probably not until enough other states move forward and California is faced with falling behind and losing revenue.

New Jersey Moving Ahead with Sports Betting

The Associated Press is reporting that New Jersey plans to begin issuing licenses for sports betting as early as January of next year, even though the lawsuit attempting to block this expansion of betting is still in process.  New Jersey continues to be aggressive, putting more pressure on the legal process to concede that historically the conduct of gambling within a state's borders has historically been up to the states due to the states' plenary police power, not given to the federal government under the Constitution.

New Jersey, if it prevails, will have shown its methodical attack on the legality of PASPA was well crafted and executed, both on a legal and political basis.  It is my view that New Jersey will ultimately prevail and each state will decide for themselves if they desire to have sports betting within their borders.

Sports betting is desired by the voters of New Jersey, as shown in this year's poll.  Also, Californians are also in favor of sports betting, with a bill to authorize getting just a step away from making it to the governor's desk for signature.  I expect that bill to be revived next spring.  You can read the blog posts on these polls here and here.

For online operators, don't expect any opportunities in the short-term as this betting will be done at physical locations, not online.  Only online pari-mutuel horse race betting will be the only authorized online sports-related gambling in the USA for quite some time.

Australian Betting Operator Argues For More Regulation To Level Playing Field

The Melbourne, Australia paper Herald Sun reported on remarks made by David Attenborough, the chief executive of Tabcorp, a leading Australian gambling company. His remarks were made at a luncheon of the American Chamber of Commerce in Australia. As an aside, I find that an interesting name of an organization. I understand an Australian Chamber of Commerce, but an American Chamber of Commerce in Australia? They however are legit and focus on international commerce, particularly between the two countries.

His point was that Tabcorp was following the law and allowing sports betting via telephone but not online. However, there were operators taking online sports bets that were not being taken to task for violating the restrictions contained in the Interactive Gambling Act. That is reasonable. If a government is going to place restrictions, the legitimate operators are competitively hurt if they are the only ones to follow the law.

But what I feel are the most poignant comments by Mr. Attenborough were the generic comments regarding sports and sports betting. He is spot on and governments need to grasp and accept this reality. His two key points are:

1. Sports betting is becoming "part of everyday entertainment"
   
2. "Sport is much more exciting when you bet on it"

Absolutely true and blatantly obvious if you look at the amount of sports betting going on globally, both legal and illegal.

The skill game of fantasy sports also benefits from these truisms. Those who play fantasy sports do have their enjoyment of the event enhanced by tracking their team, interacting with the other participants in their league, etc.

Governments need to get on the winner of regulation rather than the loser of prohibition. Prohibition does not prohibit anything if the activity is in high demand - it just creates a lucrative and unregulated black market, which is not at all helpful.

Even with this issue, Australia does seem to get it much better than the U.S. There is an earlier post that discusses partnerships between Australian professional sports teams and online gambling firms. For additional information on Australian gambling, check out this post from January of 2011.

For those interested in a not so well published topic, this post discusses the linkage of the founders of professional football (NFL) in the U.S. and gambling. Also the post discusses how the NFL works with the legal bookmakers to help protect the integrity of the games by detection and reporting of unusual betting patterns. This idea is another good reason for Australia to further embrace legal and regulated sports betting, even online.

Exchange Wagering Going Nowhere Fast in California

A working committee of the California Horse Racing Board (CHRB) met in February to obtain industry feedback on the implementation of exchange wagering in California. Exchange wagering was approved by the legislature, with the crafting of rules delegated to the CHRB. The Thoroughbred Times reported on the four-hour meeting with the result that the committee would make no recommendation to the full board for implementing exchange wagering at this time. According to the story, "committee members said there appeared to be too much opposition from key industry players to current plans and suggested more discussion is needed."

Opposition? That's an understatement. Were there some proponents? Sure. Betfair (the company that is prepared now to offer exchange wagering), Del Mar racetrack and the Horseplayers Association of North America (gamblers). It only makes sense that Betfair would be in favor as they would operate the wagering platform. The horseplayers are naturally in favor of any wagering modification that reduces takeout (vigorish).

Del Mar racetrack could be considered a non-profit, as opposed to other tracks in California, such as Golden Gate Fields and Santa Anita. Both of those for-profit venues were strenuously opposed to exchange wagering. Representatives for those entities stated that those tracks would not approve exchange wagering on their races, even if the CHRB approved rules. There may have also been a threat of legal action if the CHRB approved exchange wagering at Santa Anita and Golden Gate Fields without those tracks' approval.

The current issues with exchange wagering apparently are:

• Cannibalization of current pari-mutuel pools
• The ability to bet on horses to LOSE (danger danger danger)
  
• Lack of protection of jockeys from arbitrary charges of race fixing
• Insufficient takeout and increased handle to compensate for lower pari-mutuel handle
• Possible "cost-plus" takeout scheme for exchange wagering operators
  
• De facto monopoly for the lead vendor proponent (Betfair)
• Not all entities economically benefit from exchange takeout compared to current scheme
  

That's a LOT of issues. I read the entire 199 page transcript of the proceeding. If you like, you can do the same by clicking here. There was much more than what was reported by the Thorougbred Times. It appeared to me reading the transcript that Betfair may not have as elegantly made their case to the point that some may come to the conclusion that Betfair may have been more spin-heavy as opposed to just stating solid facts and evidence in support of the exchange wagering concept. (Yes, I'm being deliberately diplomatic in my language).

In my opinion, exchange wagering is not going to happen in California anytime soon, if ever.

New Jersey Governor Signs Sports Betting Bill

New Jersey Governor Chris Christie signed the recently passed sports betting bill into law. This does not mean that sports betting (the legal kind - I'm sure the Sopranos are still open for business) will be available at Atlantic City casinos and New Jersey racetracks anytime soon. It does mean that there is now a true controversy to allow a lawsuit challenging the constitutionality of the Professional and Amateur Sports Protection Act (PASPA) to proceed.

A similar lawsuit was filed by State Senator Ray Lesniak a couple of years back, but that was thrown out on procedural issues, namely sports betting wasn't currently allowed by law and the suit needed to be filed by the state. A November referendum, which passed by an almost 2-1 margin, the recent bill, and the governor's signature eliminate the procedural issues. The next step is for the Attorney General to file the revived challenge in federal court.

In my opinion, the federal government is going to have a very difficult time justifying a law which says that some states can engage in a particular economic activity, while others can't. And in addition, that prohibited activity has been historically within the rights of the states to control. Furthermore, this activity can be directly tied to how a state can raise revenue. All these factors are hugely in favor of the right of any state to decide how to control gambling within its borders and how to raise state tax revenues. Of course, highlighting the fact that the current prohibition basically ensures a monopoly for big Nevada casinos may have some impact on a federal judge who sits on the bench in New Jersey.

The CBS News article can be found here. Other posts regarding New Jersey sports betting can be found here, here and here.

New Jersey Legislature Passes Sports Betting Bill

As expected, the New Jersey legislature passed a bill allowing betting on professional and college sports at casinos and racetracks. This was going to happen after the voters approved a non-binding vote wanting sports betting back in November by almost a 2-to-1 margin. The measure passed on the last day of the legislative session by wide margins, 73-0 in the Assembly and 35-2 in the Senate.

The next step in the process is for Governor Christie to sign the legislation, which is a given as he has made public statements in support of the bill. The hard work will then begin which is to revive the federal lawsuit challenging the constitutionality of the Professional and Amateur Sports Protection Act (PASPA). That suit could go either way, but on the surface, a law that allows 4 states to have sports betting but prohibiting the other 46 states doesn't seem logical.

If New Jersey can have sports betting, it will be a huge advantage for their state, at least until neighboring states do the same. There is a potential political maneuver that could extend New Jersey's advantage for a long time. That maneuver would be the federal government adds New Jersey to the allowed list of states, but keeps the law in place. Nevada may be in favor of this as it recognizes the writing on the wall, but limits the infringement on its de facto sports betting monopoly in the U.S.

The Press of Atlantic City article can be found here.

Hawaii Again Considers Gambling

KITV reports that the Hawaii legislature is considering legal gambling. Specifically, the current proposal is to allow slot machines and video poker machines in hotel and resort properties. It is a good start, but not really the best. Hawaii should allow full casino gambling in their hotel properties. Slot machines and video poker will generate good revenue to be sure, but the addition of table games would be the attractant to pull the full measure of gambling visitors, particularly Asian patrons, who enjoy Baccarat.

I posted about this topic last year, which you can read here. Casino gambling is a great fit for resort properties. The patrons will enjoy outdoor activities during the day, and enjoy gaming during the evening. The property will garner great revenues both day and night.

The time for this has come. Hawaii, you have the chance to become THE gaming/resort destination in the US. If you added top-notch entertainment, you may beat Las Vegas at its own game. I don't think Las Vegas would want you legalizing gambling. If they don't, does that tell you something?

California Tribal Casino Opens Hotel Putting Further Pressure on Northern Nevada Gaming

The Sacramento Bee reports on the opening of a 300-room hotel, spa and amphitheater at the Thunder Valley Casino, north of Sacramento. This is bad news for gaming properties in northern Nevada. Northern Nevada has definitely been hit by the recession as well as the explosion of tribal gaming in California. By adding lodging to their property, Thunder Valley is even that much more of a draw for gamblers that want to spend the night at a property, but not drive all the way to Nevada. This is a good move for Thunder Valley and bad for Northern Nevada.

I had a post last year that discussed a radical approach to helping Lake Tahoe and Reno hotel casinos compete - putting legal brothels in the properties. That idea was discussed in a Casino Operations class at UNLV last spring and it was not rejected out of hand by the students. What should be noted is that I'm not the first to pose the idea. The mayor of Las Vegas, Oscar Goodman, posited the same idea for Sin City back in 2007. He took some heat for his position, but an opinion piece in the Las Vegas Review Journal supported him. I do too. It makes sense for Las Vegas but makes even more sense for Northern Nevada gaming properties. In fact, it might be a matter of survival.

New Jersey Still Looking at Sports Betting

The AP reports that New Jersey wants voters to decide this fall if sports and internet betting should be legalized in the state. Several Democratic legislators are pushing for a ballot initiative for the November ballot. In addition, they have called for a gambling summit that would assemble legislators, gambling industry figures and policy advisers.

The story quotes State Senator Steve Lesniak, " 'There are billions of dollars of gambling money that we're leaving on the table," said Lesniak, who represents a district in northern New Jersey, near where the Meadowlands racetrack wants to offer slot machines to attract new gamblers. That's something Atlantic City has vowed never to let happen.' "

Senator Lesniak has already sued the federal government over the Professional and Amateur Sports Protection Act (PASPA), which effectively bans sports betting in all but four states: Nevada, Oregon, Montana and Delaware. He is challenging PASPA based on constitutional grounds.

In recent years, other states have expanded their gambling offerings, pulling market share from Atlantic City. Senator Lesniak is quoted, " 'Atlantic City is dying,' Lesniak said. 'The Meadowlands is dying. Our racetracks are dying. We have time to get this right and craft a constitutional amendment that will maximize revenues for the state and for our tourist destinations.' " I think he is correct. If New Jersey doesn't do something, Atlantic City gaming will become a shell of what it once was.

Other posts on this topic can be viewed here and here.

First Casino in Singapore Opens

February 14th marked the opening day of the first full-blown casino resort on Sentosa Island. Resorts World Sentosa, operated by the Genting Group, beat the Marina Bay Sands for the honors of being the first integrated casino resort open. The Marina Bay Sands should be open in the May timeframe. Perusing the website, the resort is not done. The resort will also be home to Universal Studios Singapore, opening on March 18th. Singapore is a great locale and this casino does nothing but enhance the attractiveness of Singapore.

Singapore licensed two large casinos in order to satisfy the growing gaming market, but only two in order to balance the benefits of gaming with the potential for abuse. An interesting wrinkle is the selective cover charge levied on Singapore citizens and permanent residents. Singaporeans and permanent residents pay a $100 Singapore dollar cover charge to enter the casino. No charge for visitors/tourists naturally.

In addition, a previous post discussed how Singapore is going to the extent of excluding patrons from the casinos that are on public assistance or have unresolved bankruptcies. That post is here. Overall, Singapore is entering the gaming market in a very measured, but well thought out manner. With Singapore's excellent central location in Asia (few major cities longer than a 7 hour flight) and excellent economy and business focus, I expect the casinos to be a success.

Should People on Welfare Be Allowed To Gamble?

Channel News Asia has a very interesting story regarding Singapore's upcoming casinos. There will be very strict regulations in place regarding the admission of prohibited persons. What will happen is that casinos will face penalties for admission of barred persons that could be as much as $1 million Singapore dollars or even the loss of the casino license. Other jurisdictions have policies and regulations regarding problem gamblers, forbidden persons and the like. Singapore is breaking new ground with what is called "third party exclusion orders."

What this means is that an outside party (like a government) is mandating certain persons to be excluded. Obviously known cheats or criminals would be normal persons subjected to a third party exclusion. In Singapore's case, the National Council on Problem Gambling is excluding people that don't fall in these obvious categories. They are excluding those that have undischarged bankruptcies and those on public assistance. This is a great idea. Why should deadbeats and welfare recipients be allowed to patronize casinos? They should be either paying their debts or getting a job, respectively.

This is something that should be implemented in the US but won't. Casinos want business and will scream if the states pushed this regulation on them but exempted state lotteries. Lotteries typically are played by lower income groups, many of which are on public assistance. People on welfare or disability really shouldn't be spending the money they get from taxpayers on gambling. Singapore, even though they are a small country, have a whole lot of common sense.

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

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

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.

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

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.

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.

Mozambique Improves Gambling Climate

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.