Most people in the United States know that Nevada is home to the country’s sports betting industry. Those outside Nevada may not know how sports betting convenience has expanded in Las Vegas in recent years.
Sports bettors are no longer forced to venture to their local casino’s sports book to place a bet. They may make a wager over the internet or on their mobile phone. The newest sports betting devices are kiosks that are located in taverns such as Buffalo Wild Wings and PT’s Pubs. These kiosks are now under attack by the Nevada Resort Association.
Sports betting kiosks were approved in 2011 by the Nevada Gaming Control Board. They were approved without any serious opposition. The devices started appearing in taverns in 2012.
Nevada taverns with slot machines or video poker hold restricted gaming licenses. This means that they are limited to 15 video poker machines. The machines must be incidental to the main business of operating a bar and must also provide food services to their guests. The difference between a restricted and nonrestricted gaming license in Nevada is that nonrestricted gaming license holders must offer at least one 24-hour restaurant and a hotel with at least 200 rooms.
The Nevada Resort Association argues that it is unfair that their sports books must compete with restricted gaming licensees when it comes to sports betting. They contend that taverns do not have to make the type of investment needed to operate a sports book. Restricted gaming licenses can install a kiosk that is provided by William Hill as part of an affiliate agreement and that is all that is needed to offer sports betting.
The Nevada Resort Association’s argument is clearly protectionist. It seems that the group is not even trying to hide that. What makes this position worse is that they have not demonstrated the harm that sports betting kiosks have created for their industry.
British bookmaker William Hill acquired the sports betting kiosk business in Nevada by purchasing American Wagering. This group did business under the name Leroy’s. They now own and operate 83 kiosks in taverns and some non-restricted establishments too small to justify a live sports book. They also operate nearly as many brick and mortar sports books. Most of these books are offstrip, downtown or outside of Las Vegas. Riviera is the only William Hill sports book located on the Las Vegas Strip.
William Hill contends that the Nevada Resort Association’s argument is absurd. According to William Hill, their kiosks only generated $600,000 in winnings in 2012. All of Nevada’s sports books combined had a total win of $170 million. This means that kiosks accounted for a win of about one-third of one percent. The entire 2012 sports book win in Nevada accounted for about 1% of all gaming revenue. Sports books are a draw that fills hotel rooms on busy weekends, not a revenue generating portion of the casino floor.
Kiosks Cannot Replace Sports Books
Sports kiosks are not meant to replace large brick and mortar sports books. There are several limitations on these machines. For example, a wager of more than $300 requires approval. If a bettor wanted to wager $2,200 on a game to win $2,000 they must sit through seven different approvals. Each of these approvals takes 2-5 minutes. The line may even change while the bettor waits. The delay seems to occur just for this reason. It gives the bookmaker a chance to reset their line if needed before taking more bets.
The machines also have limitations when it comes to accepting deposits. While it may not be intentional, large deposits tend to lock up the machine. The kiosk then goes out of service until William Hill can reset it.
There is also the issue of collecting winnings. The largest onsite payout allowed on these machines in a 24-hour period is $500. If a player makes a straight wager of $275 or more they will be unable to receive their entire win immediately because the limit includes their original wager. The player will be forced to wait 24 hours to receive the rest of their money or they must go to a William Hill brick and mortar establishment. A Las Vegas player would be forced to head towards the Strip or to Fremont Street to get paid. This is not convenient for residents living in Summerlin or other outlying areas.
Mobile Devices and Online Betting Not Targeted
While the mostly small kiosk wagers have been targeted by the Nevada Resort Association, their attack on the mobile and internet betting business is noticeably absent. This is probably not a coincidence. Cantor Gaming is the sports book provider for seven Las Vegas casinos. Their properties include Venetian, Tropicana and Cosmopolitan. In addition to some of the best sports books in Las Vegas, Cantor Gaming offers a mobile betting product. Wagers may be made by phone or tablets as long as the bettor is located within Nevada at the time of the wager. Station Casinos, the largest locals’ casino company, offers both online and mobile wagering as long as the bettor is within state lines at the time that the bet is made.
The lack of opposition to these products makes it clear that the Nevada Resort Association is not opposed to off-site sports betting. They are only opposed to wagering that does not directly benefit their members’ operations. Apparently it is acceptable to place a wager in a restricted tavern over a mobile device, but it is wrong to make the same wager on a kiosk that benefits the local establishment where the player is located.
Sporting News made a similar argument. They included that resorts should place off-site sports betting in grocery stores and convenience stores. The problem is that Golden Gaming, the owner of over 40 taverns hosting sports betting kiosks, owns the slot machines located in most of these locations. Other companies that are the target of this bill hold the vending routes in similar establishments. It would seem doubtful that Golden Gaming and competing companies would be willing to do business with resorts that created a situation where their approved rights were removed. It would also seem that resorts do not have immediate access to the technology needed to provide this service.
Dotty’s Business Model Also Targeted
Dotty’s operates over 60 restricted establishments in Nevada. Most of these locations are in Las Vegas but there are a number of Dotty’s in northern Nevada. Many Dotty’s are located in grocery stores and Kmarts. Most Dotty’s locations do not serve food through kitchens. They would appear to be mini casinos to most visitors. This business model became popular when Nevada voters approved a smoking ban in restaurants, grocery stores and gas stations in 2006. Taverns that did not serve food and other businesses that cater to guests 21 and older were exempted. The smoking ban was partially repealed in 2011. Bars that serve food may now allow smoking as long as they do not allow minors to enter the business.
The Nevada Resort Association feels the repeal of the smoking ban in restaurants opens the door for forcing establishments such as Dotty’s to operate kitchens and other amenities and move away from their business model that is essentially a 15-machine slot arcade. There is one major problem with this philosophy.
Dotty’s and similar businesses were approved to operate in their current state. Local governments and the Nevada Gaming Control Board licensed these companies to operate in ways comparable to small casinos. The lobbying group for Nevada’s largest casinos now wants to change the rules midgame.
Casinos Should Have Spoken Out Sooner
There was a time and a place to oppose sports betting kiosks and business models like Dotty’s. These businesses had to go before local government bodies and the Nevada Gaming Control Board to gain approval. Their business models were approved and licensed. It is far too late to fight them now. It is unreasonable to expect the Nevada Legislature to force these companies out of business or drastically change their business model.
Resorts that hold nonrestricted gaming licenses deserve some lobbying power. They are the largest employers in Nevada and pay the most taxes. I feel that it is an abuse of that power to try to force their competitors out of business after it was discovered that a certain business model was successful and has the potential to compete against the nonrestricted licensees. While taverns and other restricted gaming licenses did not make the capital investments that resorts did, there was still money spent to open these locations. It would be completely unfair to change the rules after the money was spent on a model that was approved to operate in Nevada. If these companies are forced to close or drastically change their business model then it may affect future investment in the state. If that happens, everybody loses.
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