Regulators compromising with sports books

Nevada gaming regulators moved closer Wednesday to imposing stringent new standards on the state's race and sports books, but announced some compromises with the industry.

At a special meeting of the Nevada Gaming Commission, state Gaming Control Board officials explained the proposed new regulations, first introduced last month, and highlighted changes to the initial proposals.

In what appears to be its most significant concession, the Board agreed to allow books to continue accepting wagers in chip or voucher form as long as the books agree to follow the same reporting procedures required for large cash transactions.

Federal law requires reporting of cash transaction of $10,000 or more to the Internal Revenue Service. Those reports can be accessed by the Gaming Control Board to track player activity and determine whether people are acting as messenger betters for out-of-state gamblers.

But many people use chips or paper vouchers from previous book wins to circumvent the federal reporting requirements, officials said.

"Many of our books in the state use chips," said Greg Gail, chief of the gaming board's audit division. "The board never gets information on who is making these bets."

The board had wanted to require all book bets be made in cash.

"We felt the only way we could get this information is if the books require their customers to use cash when they make their bets," Gail said.

But book representatives said the all-cash requirement would require onerous changes in their procedures.

That led to a compromise allowing chip or voucher bets, but only at books agreeing to report non-cash transactions of $10,000 or more to the Gaming Control Board.

Final compromise language is still being worked out with the Nevada Resort Association, and will likely be ready by next week's commission meeting, officials said.

The compromise may have satisfied the NRA's concerns, but it rankled Victor Salerno, president and chief executive of American Wagering Inc., operator of Leroy's sport and race books at casinos statewide.

"I don't understand why what we have now is not sufficient," Salerno said.

Control Board officials said the lack of reporting requirements for non-cash transactions foster abuse.

"There are runners in the state of Nevada that are being used to lay off [illegal bookmaker's] action and balance their lines," said Gail.

"Chips have become a form of currency ... that are not subject to any reporting requirements," said Board Chairman Bill Bible.

The board made another significant concession to the books by allowing certain designated "premium" players to be exempted from the non-cash reporting requirements. Under this concession, a book may apply to the board to allow certain high-wager players to be exempted from reporting chip and voucher wagers over $10,000.

"Premium player activity would not have to be reported to the board," said Gail.

The change alleviates book concerns that a form would have to be completed every time a regular high-wager customer places a bet, but gives the Board a chance to investigate those customers to ensure they are not acting as messengers.

The board also reiterated a number of other proposed changes:

--State laws prohibiting the offering of rebates to certain high-wager race betters would be strengthened by the prohibition of any promotion or special wager that has the effect of giving a customer a rebate.

The Control Board charges that many books offer high-wager customers special favorable odds bets that have the effect of allowing them to win back 10 percent of their total bets. Last year, the Nevada Legislature outlawed rebates under pressure from California racehorse interests concerned the rebates were diverting their best customers to Nevada.

Special bets and turf club promotions that give away big-ticket items to good customers have the effect of circumventing this law, board officials charge. Under the proposed changes, books would be limited to giving patrons free rooms, food, beverages or entertainment.

Barry Lieberman, general counsel for Coast Resorts, argued the change would hurt locals casinos like the Orleans and the Gold Coast, which do not have amenities like chalets and gourmet restaurants to use to attract high-wager customers.

"This is very discriminatory to the locals' properties," said Lieberman.

Technically, the special wagers and turf club prizes are promotions -- not rebates, he said. And as promotions, they increase the overall race book handle, benefitting the books and race tracks, Lieberman said.

"I believe that the Board is trying to micro-manage [book marketing practices]," said Lieberman.

--Books would only be allowed to change betting limits if they complete a form justifying how the change benefits the book.

Control Board officials charge that books regularly offer their high-wager customers special limits not offered others. The new regulation would allow the practice, but would require books to document and justify the change.

Preston Howard, an attorney for the Fiesta hotel-casino, argued that the requirement, together with the prohibition against rebates, puts books in a Catch-22. If a book increases its limit for a regular customer, and that customer wins, in hindsight the board will declare the event a planned rebate, Howard said.

"It's the same players you're going to make those concessions for on the book side which are your large pari-mutuel wagerers," said Howard.

--Books would be required to hold enough money in reserve accounts to cover all wagers in the event the book goes bankrupt, or suffers a disaster.

Salerno objected to the requirement, which he said would force books to dramatically increase their reserves at certain times simply to cover, say, all the football bets made on a Sunday.

"It is a very onerous thing for us," said Salerno.

But commission members seemed unswayed.

"For me this is a pretty big point," said Bill Curran, chairman of the Gaming Commission. "Not having an iron-clad guarantee to the patrons that they're going to get paid for their wagers is a very big problem."

--Communication devices like cell phones and pagers would be prohibited from books -- another means of making messenger betting more difficult.

--Wagering via the Internet would be prohibited, while using a computer to dial directly into a book computer server to place bets would be allowed.

--All lines, odds or changes would have to be posted or otherwise available to the public.

--Book employees would be prohibited from placing bets in their books or at the books of affiliated companies. Also, book employees who are supervisors or have control over odds or lines would have to be licensed as key casino employees.

The proposed regulations are far from final. The commission will hold another hearing on the changes next week at its regular Carson City meeting, and again at a September meeting.

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