The sports betting business in Nevada has changed

May 17, 2011 6:07 AM

 

When William Hill bought out the Leroy’s, Cal-Neva and Lucky’s chains of sports book operations, it changed the entire landscape of the sports betting business throughout Nevada.

Not only did they acquire a large chunk of the bet taking market, but they also essentially will control how the other sports books in Nevada take bets.

There are currently 183 sports books in Nevada and once William Hill becomes licensed here – sometime in early 2012 – they will control 115. Because of the large takeover, there is some cause for concern from the other 68 books from a competitive angle, but the pressing issue right now is what system to use.

Most of the Nevada sports books use the CBS system to take wagers, which is a subsidiary of American Wagering (AWI), the parent company of Leroy’s that was included in the William Hill purchase.

There are only two other licensed systems in Nevada. One is offered by Stadium Technology Group (STG), which currently supports 54 Nevada books and the other is the in-house WIN system used by Station Casinos’ 15 locations.

Many of the sports books that currently use CBS, who aren’t affiliated with AWI, are somewhat skeptical about remaining with CBS because of the uncertainty of what William Hill’s intentions are here. If they control the market of betting systems, monthly service fees could be dictated as AWI wishes, putting the books in a position with no leverage.

In the past, CBS has always had that leverage and used the power to mandate changes in software and hardware at high mark ups, but there was always a sense of ease upon agreement just because of AWI CEO Vic Salerno’s relationship with everyone. If Salerno said the upgrade had to happen, then it had to happen and the years of friendship with all the casino operators made it easier to swallow.

One of the biggest expenses for the race and sports books each year is the monthly service fees for each betting window in operation. For some of the larger books, that number can be an expense of over $30,000 per year. For major corporations like MGM Resorts, Coast Resorts or Caesars Entertainment, that’s a sizeable bill when considering all the multiple properties linked under their umbrella. That very reason is why Station Casinos developed their own system and slowly phased out CBS to become self supporting.

The only other option Nevada sports books have right now is STG, unless Station jumps into the market with their system. The benefit of STG is start-up fees are considerably less than CBS, most notably the hardware that is far cheaper than CBS.

From an administrative and bookmaking stand point, the STG system shaves off hours from a normal routine of setting up games, sub-categories and parlay cards.

The only thing STG doesn’t have that CBS currently has right now is account wagering, but that’s to be included in their next system release. The beauty of STG is each of their system upgrades aren’t mandated. If a book is happy with what they have, they don’t have to change. They currently have three different versions up and running right now at places like the Treasure Island, Cantor Gaming, Golden Nugget, Cal-Neva and Lucky’s.

All the reviews I have gotten from the books that currently have the STG system say it far exceeds what they were used to from the CBS system and they rave about the time saved. But the real issue now becomes which way the other major players in this game go. If the big corporations don’t switch, STG could find themselves being somewhat bullied.

Chances are once William Hill becomes licensed, all 47 of the Cal-Neva and Lucky’s sports books will operate under one system. And since they now own CBS, it would be a logical assumption that CBS would get the nod. This would leave STG with only seven clients and would be a major blow to their operation without those monthly service fees. That could possibly make STG more susceptible to being sold if more clients aren’t found.

Rumors about William Hill buying STG are unfounded according to former bookmaker Richie Baccellieri, who has been the driving force behind STG’s user friendly approach.

The rumors could have been strategically placed out there just to put a shadow of doubt in the major corporations’ minds just to give them a sense of uneasiness about making such a major move from CBS to STG with a thought process being, "We don’t want to be under the William Hill umbrella, but if there is a possibility of STG being bought out by William Hill, then why make the change."

One of the major pieces in the game could fall STG’s way if rumors that Caesars Entertainment sports books will soon be operated by Cantor Gaming are true. That would be eight properties on the monopoly board going on STG avenue because those sports books would have to change systems to match Cantor’s.

The apparent Cantor-Caesars deal (see Phil Hevener’s column, p1), could be the best thing to happen to Caesars since Chuck Esposito departed, giving guests throughout the Strip, and locals, a reason to play sports at those properties again.

Along with the big corporations, the other existing operations are just as important for both CBS and STG in this game. The South Point has nine properties using their sports book’s lines that would all have to change. The Wynn has the Echelon, the Venetian has the Palazzo, the Stratosphere has Arizona Charlie’s and the Las Vegas Hilton Super Book has more betting terminals than any book in town.

The long shot winner in this game could turn out to be Station Casinos with their WIN System. After five years of development and a slow implementation process to all their sports books that had its share of growing pains, the system has been refined into being very reliable in its 10th year since inception.

Station doesn’t have any known intentions of marketing it as of yet, but they could just be sitting back waiting to see what happens and what side the players in the game take. They are one of only three authorized systems in the state so why sit back on it?

Station is making money off it in the sense that they’re no longer paying monthly service fees, but now have a chance to make positive cash flow generated from it by sharing the system. They could find themselves a few clients just by being able to undercut the monthly prices of the other two.

Having spent quite a bit of time in front of each of them myself from an administrative and bookmaking standpoint, STG would be my first choice. Even if there was some truth to the rumor they could be bought out, I would still want the system that was the best from a bookmaker’s perspective, that was the least labor intensive.

Most hub operations have a large administrative staff where all they do is set up games, parlay cards and daily sheets. The STG system condenses all of that work into something one person can handle each day and allow for the remaining part of the staff to get out on the line and help the understaffed writers.

Whatever side these places decide to take will have a major role in deciding the overall winner in the game. Currently, CBS is winning with the most hotels stacked, but STG is gaining momentum as they get ready to pass Go.

More William Hill

It will be interesting to see how the William Hill organizational chart for Nevada comes into play once licensed because there are so many talented individuals with the three operations combining forces. CEO Ralph Topping has already expressed intentions that he wants Americans to run the U.S. operation, which eliminates the notion someone from England would be coming over to run it.

So who is going to be on top, and who is going to be the lead bookmaker? They’ve got Joe Asher from Lucky’s, a lawyer with a horse racing background, who knows how to handle lobbyists and is someone who can take charge of the future in broad terms regarding on-line gaming and technology.

Vic Salerno of Leroy’s has relationships throughout the state that also make him an invaluable part of the team. From the bookmaking standpoint, they have the legendary Nick Bogdonovich from Cal-Neva whose reputation alone makes bettors with large money visit his books regularly.

Leroy’s has Bob Smith, one of the sharpest numbers guys in the state and Lucky’s has propositions whiz kid Adam Pullen, who can set a solid line in an instant – off the top of his head – on just about anything in the sporting world. Then, when you throw in one of the most famous bookmakers of all time, Jimmy Vaccaro, it rivals the 1992 USA national basketball team in regards to talent.

William Hill has a bookmaking dream team with every facet needed in place to make them a major force. When you combine the strength of their unlimited budget with the type of talent supporting all three book operations that will unite, there is a foundation there that rivals, or tops, any in the world.

My best guess: Asher eventually becomes the main guy. He’s tackled every obstacle in front of him from Nevada’s Gaming Control Board to leading the charge for sports betting in his home state of Delaware.