Rebate ban still plan for Nevada race books

Dec 3, 2013 3:08 AM

Rebates are not in the best interest of Nevada’s struggling race books, which are continuing to see statewide reductions in the volume of betting.

That’s the way the Nevada Gaming Commission sees things after several public hearings that resulted in a decision to leave the rebate ban in place.

It’s a conclusion that means bettors will have to look to non-Nevada venues if rebates are what they want, which is exactly what they have been doing in recent years if the numbers used to define the health of the race book business are accurate.

So the Commission will not be writing regulations to define a plan that was advanced in Senate Bill 425 this past spring.

The proposal was seen then as a useful tool for enticing more bettors who might be spending more money. At least this was the argument of Cantor Gaming, whose top executives and lobbyists argued successfully for SB 425’s passage.

Three months of hearings by the Commission resulted in a decision to let Nevada lawmakers know rebates “were determined not to be in the best interest of the state.”

The Nevada Pari-Mutuel Association argued that the group’s mostly small books could not afford the expected consequences of such a promotion. Nevada race book revenues grew to over $600 million by the mid-1990s when the state was at the “forefront” of the rebate business.

Nevada officials eventually suspended rebates because of pressure from California tracks and the race betting business began its long, steady slide toward what may be oblivion. The 12-month Nevada handle in 2012 was $337 million and year to date comparisons this past August showed a further 7 percent decrease.

Rebate opponents have long argued, in so many words, that rebates would result in dramatic increases in charges by the tracks holding the races provided to more than 80 books by Las Vegas Dissemination Company, which services all the books.

LVDC was one of the very few parties arguing for rebates since its operating costs continue to climb even as the NPMA and its rate committee have been holding the line on what they pay anyone.

“Rebates will greatly reduce, if not entirely eliminate, the profits the average Nevada book can hope to achieve,” attorney Anthony Cabot told members of the Commission at its November meeting. “Despite a decline in the national handle our existing business model allows books to remain profitable.”

Cabot made it clear book operators see difficult times ahead because rebates would be quickly followed by “increased expenses attributable to higher track fees.”

Station Casinos VP of Race and Sports Operations Art Manteris says it is difficult to compete with the “stripped down off-shore rebate houses” that have none of the expenses associated with a major Las Vegas property.

“So what are they gonna do, watch their business fade away to nothing?” This was the frustrated reaction of a rebate proponent.

It’s likely this subject will be revisited at some point in the future because the coming and going of personalities and companies will probably bring a different combination of ingredients to the argument. For instance, William Hill and Cantor were not in Nevada less than a decade ago.

NJ approach to I-gaming: Well, it is off to a satisfying start what with better than 40,000 accounts being opened since the Nov. 26 start-up.

Yes, there are glitches or inconveniences but the operators and generally supportive state governments in both Nevada and New Jersey can be expected to bring more user friendliness to the system as time goes by.

The plusses and minuses are all pretty well known at this point. Some banks and credit card users have been slow to react to the fact that online gaming is legal in New Jersey, Nevada and Delaware, which means the federal prohibitions in 2006 legislation that banned banks from processing gaming-related online transactions no longer apply in those states.

The banks and card companies – some of them – have decided for the time being to err on the side of caution. That will change as time goes by.

“It takes an education process,” said former Nevada Gaming Control Board Chairman Mark Lipparelli, who noted alternative means of getting a gambler’s money to the casino are in the works on several fronts, but that’s a long story for another day.

Then there is the technology that determines if a gambler is within the boundaries of the state where he is playing. There were lots of eligible players being rejected during the first few days of play in New Jersey but the fine-tuning there is making a difference.

It will be interesting to see what happens to gaming stocks this week as Wall Street reacts to the spreading enthusiasm for online activity in New Jersey. And that brings us to a question Nevadans have been asking.

Why is online play in Nevada limited to poker while players in New Jersey can risk their bankroll on a full menu of casino games? That’s because influential Nevada companies with their many bricks and mortar locations across southern Nevada do not want to make it too easy for gamblers to do their playing from home.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. He can be reached at [email protected].

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