Off Shore Gaming Association

The NFL is sure going to be busy in 2010. And not promoting its product outside the United States or ramping up its fledgling TV network. No, the NFL, or should I say the NFL’s lawyers, are going to be busy fighting new legislation introduced this week from several states and a Supreme Court fight.

Last year, the tiny state of Delaware spent over $600,000 in legal fees to ensure passage of a very watered-down version of a sports betting bill. However, by providing just multi-game betting (parlay and teaser cards), the state still turned a profit. Now, Delaware Gov. Jack Markell has announced a decision to appeal an August ruling, by the 3rd circuit U.S. Court of Appeals, to the Supreme Court! That’s gonna incur some legal fees. Still, the state has to convince the court to hear the argument, thus, expanded sports betting in the 1st State is still a long shot.

The NFL and other sports leagues were able to convince the Third Circuit Court that Delaware should only be allowed to offer sports betting in the fashion that it was offered before the passage of the Professional and Amateur Sports Protection Act (PASPA) that was passed in 1992. The federal law includes a partial exemption for Delaware, Nevada, Montana and Oregon, allowing them to have sports betting “to the extent” it was “conducted” previously. PASPA is really the one piece of legislation that is stunting any hope for the growth of sports betting in the U.S. If the case does get heard by the land’s highest court, it will be, as far as I know, the first time the Supreme Court has heard a challenge to the federal law.

However, help may be on the horizon in other cases that are sure to be heard throughout the land. Perhaps on the success of Delaware, the State’s lawyers may be getting assistance from newly sponsored legislation in two states to void PASPA.

New Jersey made a bit of a play last year as State Sen. Raymond Lesniak introduced legislation to allow sports betting in Atlantic City, mainly as a way to bolster the dying casino town’s revenue stream. He was able to garner support from then-governor John Corzine and had the assistance of iMEGA, but his bill did not gain much traction. Just two weeks into the New Year and Leasniak is already making another play. He has introduced an act “permitting wagering at casinos in-person and through an account wagering system using telephone, Internet and other means on the results of professional and collegiate sport or athletic events”. Talk about going for the gusto! Lesniak is not only including sports betting, but, in the face of certain litigation by the NFL and NCAA, he is also adding in the Internet. Yes, internet wagering has made it into his 2010 version of the bill. So, the Justice Department will most likely also have something to say about this piece of legislation.

But Lesniak is serious, already ramping-up the rhetoric. He has been quoted as saying, “People are doing it. They’re doing it every day. They’re doing it for the NCAA tournament. They’re doing it for the Super Bowl and professional football. But we can’t regulate it and run it in the state of New Jersey.” Finally, someone who gets it - gamblers are gonna gamble. In fact, I just got doing it, and I want to do it again! Lesniak is also considering suing the Federal Government to overturn the PASA law.

Also this week, out of left-field, came a House Resolution from legislators in Missouri, of all places. Can it be that Gary Kaplan and David Carruthers are working their St. Louis jailers over to have their lawmakers allow sports betting? After all, the state probably owns the URL betonsports.com after taking down one of the largest sports gambling houses on the Internet. Was this really the whole reason that BOS was indicted and convicted - to pave the way for legal sports betting in the state?

The piece of legislation, House Concurrent Resolution No. 22 urges the United States Congress to remove the federal ban on sports wagering. The best line in the document is when the State legislators declare, I guess after the demise of BOS and little or no change in the gaming landscape, that “the federal sports wagering ban is not effective in curbing illegal sports gambling.” I wonder when the light bulb went on to figure that out? But cynicism aside, this resolution is being sent to the Majority and Minority Leaders of the United States Congress and to each member of the Missouri Congressional delegation. Hopefully, it will have some impact.

So, all of this legislation and legal wrangling could be a perfect storm for the NFL, NCAA and other sports leagues. PASPA was passed nearly two decades ago and all that has happened since then is the explosion of the multi-billion dollar Internet gambling industry and the continued expansion of gambling throughout the country. Following the success that Delaware has seen with just multi-game wagering, in just their first year of operation, and with states looking for any way to generate revenue, perhaps this is just the leading edge of the PASAP perfect storm. Next week Florida is going to discuss Internet wagering in the state capitol and Indian tribes in California are attempting to build a consensus on Internet poker issues. Perhaps we are approaching a perfect storm for Internet wagering as well.

My prediction for all of this for 2010? If states continue to struggle to find revenue, PASAP will have a tough time continuing to be the law of the land. I expect to see other states put pressure on the Federal government as well. And, oh, yeah, a whole bunch of lawyers are going to make a whole bunch of money!

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Yesterday marked the rebirth of sports betting in Delaware. The NFL had their day in court and smoked the smallest state in the Union. The State and three state-approved racinos went ahead anyway. The existing three racinos dumped a reported total of 11 million into the betting facilities and September 10, 2009 may become a day sports bettors remember . . . with Parlay Cards, Teaser Cards, Super Teaser Cards and ‘off the board’ betting.

That’s right, the games are varied in nature. There are the Parlay Cards and Teaser Cards. Parlay Cards will be limited to $2-$100 bets, but the state will also take ‘off the board’ parlays with a $5 minimum and a $3000 max wager. ‘Off the board’ bets use updated lines from the electronic tote board, as opposed to the pre-printed parlay cards, but offer slightly lower payouts. The different types of cards resemble the ones that I saw all throughout my youth, but they all have ½-point spreads – there will be no pushes in Delaware. The Parlay Cards are just like any other and the two Teaser Cards are for either a point differential of 5-7 points or 9-11 points (Super Teaser). Both teaser cards are quite interesting because the points teased are not the same on each game or each card (the Teaser Card uses 12 points total and the Super Teaser , 20 points total). For example: in the Teaser Card for last night’s game (Steelers -6.5, again, there can be no even spreads), the Steelers were teased down to -1.5 (5 points) and the Titans were moved to +13.5 (7 points). The Dolphins/Falcons game is teased at an even 6 points on the Teaser Card but on the Super Teaser Card the Dolphins are given 9 points to leave them at +13.5 while the Falcons were granted 11 point to move their number to +6.5.

This is not the case on every game, but for certain games (especially those revolving around 3 or 7) it looks like the house is hedging a bit. After all, does anyone think that the Fins are going to lose by more than two touchdowns or that the Titans were going to get pasted last night? Obviously not Brandywine Gaming, who runs the backend lines and systmes forDelaware.

An example where the mighty number 3 comes into play reveals a bit more how Delaware is playing the game this time around. The line on the Parlay Card for the upcoming Rams/Seahawks snooze-fest is Seahawks -8.5. A six point teaser would bring the Seahawks margin of victory under the magic 3. The state apparently will have none of that type of advantage to the player and thus moved Seattle to -3.5 and the Redskins to +13.5 ( 7 points). In a bold showing, the Super Teaser will only allow the Chargers to be teased on Monday night down to -1.5, a mere 8 points. But, that does open the door a bit for Raiders bettors who are now getting 21.5 points on the Super Teaser card.

The bottom line is that each game must be looked at to play the teaser cards. It’s not as simple as putting in a 6 point teaser on the Internet and having every game calculated to 6 points right before your eyes. It also may give the Internet player an advantage seeing how the house is shading the line on a particular wager. One thing is for sure, the favorites are almost always going to be a bit pricier in Delaware.

We were particularly interested in the odds that the State was going to offer to gamblers. We figured to insure that the state would fill the coffers, players were looking at 5-1 or worse 3 team parlays. But the state can say they offer the highest parlay odds in the world – at least on three team parlays. The printed payout odds on the back of the card are 6.5 -1 for a 3-team parlay, 11-1 for a four teamer and 20-1 for five correct. The State offers all the way up to 10 team parlays, and these pay 800-1. Shocked, I knew immediately that the three team parlay were at very competitive odds. In fact, as-high-as-you-can-find odds. Offshore, only two outfits offer 6.5-1 on 3 teamers, BetOnline and Payoffs Plus. Interestingly, both used to offer 7-1 but those days are gone. Delaware even has very competitive odds the whole way up the board. Still, most offshore outfits will beat the odds offered by Delaware for 4, 5, 6 and even up to nine by a few bucks (12-1 on a 4 team parlay offshore vs, 11-1 in DE.). But if you play 10-team parlays, the Delaware Racinos would be heaven. No book on the Internet, comes close to 800-1 on a 10 teamer. I may just play one every week for two bucks…..at 800-1, as that is damn close to true odds. The highest we could find on this wager offshore is 642-1.

I once spoke with a book owner offshore after a weekend where the books went a bit sideways – some made a few bucks and some lost a few bucks. This particular owner sounded quite depressed on the phone. I said, “You sound down, from what I understand it was a pretty even weekend for everyone. Did you get creamed?” He replied in a montone voice – “10 team parlay” . . . But, Delaware does have a bit of a buffer. On the rules of the card it states that there is a maximum aggregate payout of $100,000 plus two times that handle for that week. By only offering parlays, I doubt that there will ever have to be some type of pari-mutuel payoff to players.

The teaser payouts in Delaware are also giving offshore books a run for the money. At 13 to 5 or +260 for a three-team 6-point teaser, those odds are really high. Offshore books generally pay anywhere from 3-2 to +180 for this same wager. And, they offer up to 12 team teasers in Delaware! And they pay out at 65-1! Again, as with parlays, the 4-8 team teaser can be gotten for a better price offshore. But, players who buy computer generated tickets looking to hit the big one, because that what this is all about, being a ‘lottery’, will have a shot at a pretty big payday on a similar type of longshot low money wager. And, I think the odds of hitting a 12-team teaser are better than hitting the daily number.

On Sunday, Delaware is giving it a go and so will we. I will be in front of the tote board in less than 48 hours. I will also be stepping outside the racino/sportsbook to provide live updates via our Facebook site. Feel free to check it out and get involved in the first legal sports betting east of the desert since the 70’s.…..perhaps a Facebooker will have a 10 teamer up their sleeve….

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It’s September 1 at Delaware Park, just 45 miles from Philadelphia. Everything is ready to go. The granite table tops are polished and ready to go. The huge wall of television (there is an 82 individual 50-inch television wall) is blaring the NFL Pre-game show and the odds board is lit up.

But where are the sports bettors?

Probably at home on their phone or computer, because today the 3rd Circuit Court of Appeals ruled that Delaware’s plan to allow single game, Vegas style sports betting is in violation of the Professional and Amateur Sports Protection Act (PASPA). Thus, no single-game sports wagering will occur this football season in Delaware. And, wagering on sports other than the NFL are also in question.

Sad for Delawareans, certainly. But, the fact remains that this is a sad for sports betting in the U.S.. By this ruling, the court has basically come out and said that there will be no new sports betting anywhere, any time soon.

The NFL and the rest of the major sports leagues and NCAA had managed to get the 3rd Circuit Court of Appeals to expedite their request for an injunction against sports betting in Delaware. They brought their suit against Governor Markell, stating that ‘irreparable harm’ would occur to the leagues and their brands if this type of sports betting was allowed. Had Delaware been able to confine the arguments to just the harm that their proliferated betting was going to cause, they may have had a shot at packing their shiny, new sports betting parlors on September 1.

Attorney Kenneth Nachbar, who presented a solid case for the leagues and was very resilient to the sometimes hostile line of questions from the three-judge panel, stated early on that PASPA clearly prohibits single game wagering in Delaware. He quoted from the law, “to the extent that the (betting) scheme does not change form what existed before”. What the leagues’ contention was basically saying is that they know that Delaware had parlay betting before and that is (begrudgingly) ok, and is covered by PASPA. But, Delaware cannot add in single game wagering, because they did not offer single game wagers before PAPSA was enacted (1992).

The lawyers for Delaware, David Margules and Joel Friedlander, were dragged into a discussion on the legality ‘merits’ of the case. They tried in vain to keep on focus that single game betting was not going to cause irreparable harm to the leagues. Having to fight a potantial PASPA violation was unltimmately the downfall for the defense.

Judge McKee came out firing at Delaware’s first lawyer, Margules, saying that this situation was a “complete mess”. He went on to claim that Delaware could be selling illegal tickets, causing the state to become an illegal bookie. He appeared quite worried that the December case involving the merits of Delaware’s sports betting law and subsequent implementation would be found to be illegal. Judge Hardiman chimed in that it was up to Delaware to prove that their betting plan was not illegal. He said, “you have no problem with this court ruling the case on merits?” Later, he added to Friedlander, who was there to argue the case based on merits, that he was “fighting an uphill battle . . . at least with me.”

Friendlander did manage to make some headway with the judges. He stated the if you want to take what is said in the law literally, “we can only operate the three parlay games that we had before” and (Delaware) “could only operate them for four months, because that is what we did before.” Judge Hardiman did seem to like this line of reasoning and added in that you couldn’t “bet on the Texans, because they were not in existence before.” He added that schedules back then were only 14 games when Jude McKee, apparently an avid Cleveland Browns fan, noted that there were only 12 games in his team’s heyday. Hardiman said “it depends how thinly you want to slice the onion.”

The judges asked for a 35 minute recess after hearing again from the NFL’s Nachbar. The courtroom buzz was brisk and centered on the illegal betting that could be going on in Delaware. It appeared as if the NFL had done an outstanding job in presenting their case and had the upper hand early but Delaware’s Friedlander hit a three at the buzzer. It was anybody’s guess what the judges were discussing.

The three judges came back into the room more than 45 minutes later and Judge McKee read the courts’ decision. He said that Delaware’s single-game betting was in “violation of PASPA,” adding that “Delaware sports betting is not covered under the exemptions in the law.” Apparently, they did decide to rule this case on the merits, not mentioning the original reason that we were all there, the irreparable harm to the leagues. After all, with this decision, that is now a moot point.

Nachbar told a group of reporters after the trial that the NFL was “delighted” at the outcome.

They should be. The NFL, NCAA and other major sports leagues went to court looking for an injunction to temporarily halt Delaware’s sports betting. Instead, they got the decision that they were to seek in December. As of right now, they may have gotten the ultimate victory. Because, even through the Delaware racinos have already built their sports betting facilities, it is not without cause that they may opt out of this entirely. State studies have given an estimate that 90% of their wagers would be on single games. Parlay-only wagering could end up being a losing gambling proposition for the house (state). And that just wouldn’t be gambling.

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In our office complex apparently somebody complained yesterday morning. Why? We were doing the happy dance and yelling like teenagers who just scored their first six-pack from a take-out package store. Why? Legal single-game betting is now a reality in Delaware.

To confirm that sportsbetting will exist East of the Mississippi, on I-95, just outside of Lincoln Financial Field, where the Eagles play their home NFL games, there is a giant billboard proclaiming, “SportsBetting in Delaware”! That’s all it says. And all it needs to say.

According to several media sources, the entire sports betting operation hinged on single-game betting. As the OSGA has reported before, the foray into sports gambling in Delaware in the 70s went down in flames with parlay cards. This week’s court decision to allow this type of betting was a welcome relief. I was very worried about 8-5 two-teamers or getting 4-1 on a three game parlay.

Though the sports leagues were defeated, I do not feel too bad for the ‘integrity of the game will be tarnished” NFL and other sports leagues. They will still get their day in court – December 7, almost playoff time. By then, no doubt, the NFL’s image will look like the bottom of an old copper frying pan. But, maybe the image is more affected by the actions of some players and the league itself. Michael Vick appears to be ready to play and maybe some team will give PacMan another shot when their secondary gets depleted by injuries. Most likely these players and others who forget that it should be a privilege to get paid millions and be adored by fans are allowed to compete because they simply sell tickets and merchandise.

Merchandise, like lottery tickets. As of right now there are more than a dozen pro football teams that will have lottery tickets with extra special prizes like tickets to a game or team merchandise. And the NFL isn’t the only one who thinks that gambling is OK, as long as it is not actually on their games. In 2007, the Texas Rangers and Houston Astros had Texas scratch-off tickets as part of a Major League Baseball deal with state lotteries. Last year, the National Basketball Association’s Dallas Mavericks, San Antonio Spurs and Houston Rockets had scratch-off games. Several news outlets have quoted the judge in the NFL suit, Chief District Judge Gregory M. Sleet , “the professional sports leagues’ position was ‘ironic’ given that a number of sports teams now have sponsorship deals with casinos and several owners or part owners of sports teams also own gambling establishments.”

What it comes down to it the NFL or any of the major sports leagues do not want anyone but the NFL, MLB or the NBA to make a nickel off of their ‘product’. Or maybe it’s the owners don’t want anybody but themselves to make money off of their teams. After all, it’s all about the money. Do you think the NFL would be putting up such a fight if they were getting 25% of the net win? Or if they could find a way to have the state pay a licensing fee to use their team names and brands on their tote boards?

Even the NCAA has gotten into the act. They came out with an edict, “No predetermined or non-predetermined session of an NCAA championship may be conducted in a state with legal wagering that is based upon single-game betting (high school, college or professional) in a sport in which the NCAA conducts a championship.” In this case it looks like they are cutting off their nose to spite their face. The new Delaware law prohibits any type of sports betting on any Delaware college game. So, this new policy only punishes the students at Delaware universities. In addition, Delaware, has often been a preferred football playoff host because the Uinveristy of Delaware’s stadium holds 22,000 and because their program is always among the national leaders in Division I-AA average attendance.

So unless there is a force mejure at work here, Las-Vegas style betting parlors will open in three racinos in Delaware on September 1. One of them is less then 30 minutes from Philadelphia. We are planning a road trip and expect to be there by 10AM.

But, this does not mean that East Coast players’ accounts will sit idle. I doubt that there will be road trips to Delaware on Monday to check lines and that there will ever be a traffic jam at the racino after a key injury is announced. And certainly there will be no teaser or prop wagering.

So how do the offshore operators feel? One told us that, “We support any decision that sheds light on the fact that the vast majority of Americans consider the concept of gambling on sports to be a right they should be able to exercise legally . . . regardless of their jurisdiction.”

I couldn’t agree more.

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This week the tiny state of Delaware beat the odds and enacted a bill to allow sports betting. This one move forced the hand of the NFL who needed to come up with some kind of legal opposition to this new law. Since Delaware was grand-fathered in to allow sports betting, they could not use the Amateur Sports Gaming Protection Act . . . since Delaware has decided that initially the betting will be done via parlay cards, creating a sports betting ‘lottery’, the NFL could not argue that this violated the state constitution. So, the NFL, with its infinite wisdom and apparent willingness to look for a short-sighted victory, played the skill game card.

Hooray for the NFL!! Sports betting is now a game of skill (as if we all didn’t know that by now).

The NFL has argued before that betting on their games was pure chance. They have used this argument previously before the House of Representatives and during other court cases. According to the NFL no skills are required to win at sports gambling, until now. When no less an authority than the National Football League recognizes that sports betting is a game of skill, no further debate is really necessary, is it?

According to a brief filed in the Delaware Supreme Court, the NFL is prepared to argue that betting on their games requires skill, and that “Setting a point spread might make it more difficult for a bettor to decide which outcome to select, but does not render the game one of chance.” Yet the best quote “If a game is predominantly one of chance,” attorney Kenneth J. Nachbar wrote, “it will not matter who is doing the picking — a skilled expert, or a monkey choosing at random.”

I don’t know about you, but there are weeks every season where I think the monkey could do better than me at picking games!

Joe Brennan, the head man at the Interactive Media Entertainment & Gaming Association (iMEGA), told us via email that, “We thank the NFL for conceding the obvious, and hope that this point of view will be reflected across the board in their dealings with the gaming industry, both online and off.”

Why does this latest revelation from the NFL matter?

Gambling is loosely defined as wagering in which the outcome depends more on chance than skill. However, many states have statutes that specifically make betting on sports events illegal. Still, not every state specifically prohibits sports wagering or other ‘games of skill’.

Many state laws refer to “Lotteries” instead of “gambling.” Some state courts have held a lottery is defined the same way as gambling: “a wager where the person gets a reward in a manner predominantly determined by chance.” Other courts and laws specifically define “lottery” as you would think: a numbers style game of pure chance.

The NFL wants the Delaware Court to hold that sports betting is not a lottery but is gambling – it involves skill. By using a skill games argument in court, the NFL seems to have failed to see the risk that in many places not being a lottery is exactly the same thing as not being gambling.

Many people have mentioned to us that that a better argument would be that this violates the Federal Wire act of 1961. The Federal Wire Act criminalizes accepting a sports bet made across state lines (or more recently across country boundaries) via a communication device. In reality, it is the Amateur Sports Gaming Protection Act (ASGPA ) that makes the betting of games illegal. This 1992 law is what is basically keeping states from becoming bookies right now and is the law that gives four states, including Delaware, a carve out.

So, though the NFL may have opened the door in one way, the ASGPA might trump any movement from states that are not grand-fathered to allow sports betting. In the meantime, I have to work on my skills.

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After 2 weeks of public hearings, the Delaware State House Gaming and Pari-mutuels Committee today, approved House Substitute 1, a stripped down version of HB100, and paved the way for legal sports betting in Delaware.

Recent public hearings, packed with employees of the states 3 racinos, spurred the bill sponsor, House Majority Leader Rep. Peter C. Schwartzkopf (D-14), to make significant changes to his initial bill. Major changes included no new casinos or gambling parlors and the creation of the Video and Sports Lottery Study Commission. Schwartzkopf ‘s new bill was released only last night, drawing ire from many present at the hearing. Still, the major components of sports betting and an annual license fee for existing racinos were left unchanged.

A representative from Governor Jack Markell’s (D) office urged lawmakers to act swiftly in the passage of this legislation. These politicians fully understand that the NFL season is the ‘mecca’ of sports betting. The Committee provided a time line to begin as soon as two weeks, so that the state would have ample time to build, implement and train, prior to the start of the 2009 NFL season.

Unilaterally, legislators feel the pressure of the NFL season looming, yet many are seeking additional time to review and work on the current legislation. A two-week time period was discussed, but it was pointed out that any delays in legislation may cause the start of Delaware sports betting to miss the first several weeks of the NFL season. When pressed for actual numbers by Rep. Bradford Bennett, (D-32) the Governors’ committee (after seeking out a calculator) revealed that any delays would cost the state over 2 million dollars per week (per NFL Betting weekend) in lost revenues.

In all, Delaware projects up to 35 million dollars (adjusted figures due to the economy were said to be between 22 and 30 million) in additional funds to the state coffers. However, opponents of the bill state insinuated that this is all “fuzzy math”. Acting both befuddled by the figures and argumentative as to their accuracy, members from both the Committee and the floor acted as if the figures were pie-in-the-sky. Apparently, the State is counting on ‘crossover’ players from sports to slot machines. They also added that their latest figures were arrived at using a formula that included the same 19% drop in revenue that Atlantic City, NJ is currently experiencing.

Opposition to this bill was wide-spread. Horsemen, racino executives and, of course, the NFL, all voiced opposition throughout the two weeks of hearings. However, only the NFL, opposed the sports betting portion of the bill consistently. The representatives from the casino and racing industries, vehemently opposed the greater tax burden being placed upon them, even going so far as to say these additional fees would bankrupt their industry.

The three current racinos, were asked “point blank”, if they plan to participate in sports betting in Delaware. All three racinos were in agreement that due to startup costs and a 50% revenue share, they could not commit to a definitive “yes” on the subject.

Who are they kidding? To have a monopoly on the only legal sports betting east of the Mississippi, no matter what the take-out, appears to be a no-brainer! Simply put, the only reason these racinos are hedging their bets is because of the additional taxes contained in the bill.

Over the next several weeks, vendors will be submitting proposals to provide sports betting services to the racinos. Oddly enough, offshore giant Pinnacle Sports, has thrown their hat into the ring. a Wilmington based lobbyist spoke with the OSGA and told our representative at the meeting that Pinnacle is anxious to begin the RFI (Request for Information) process. Pinnacle Sports has long been an industry leader with their “reduced juice” model. The lobbyist also told the OSGA that Pinnacle, with ten-plus years of experience, certainly can work within Delaware’s constitutional model, to provide an excellent betting product for the public and a profitable one for the state.

It is now up to current gambling industry representatives and state lawmakers to hash out final percentages and revenue shares. With the initial hurdle now cleared, this bill is headed into the Delaware House and Senate, ultimately landing on the Governor’s desk. Hopefully, an agreement will be reached shortly, as it is clear Governor Markell wants to exploit the Professional and Amateur Sports Protection Act of 1992, which gave Delaware the legal means to offer sports betting. In fact, it was the Governor’s representatives that were providing facts and figures supporting every aspect of Substitute Bill 1 at today’s Committee hearing!

If Delaware can come up with a sports betting product that players want, that gives the casinos a chance to reap some additional revenue AND can plug a hole in the state budget . . . Markell will sign it as fast as you can say Super Bowl. That’s a solid bet!

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