West Virginia moving way too fast on legalizing sports betting

West Virginia moving way too fast on legalizing sports betting

March 27, 2018 3:00 AM


I see the state of West Virginia is getting ahead of the game and has legislation ready for the launching of sports betting in anticipation of the Supremes giving the OK.

Look back over my columns and web site and see why I have doubts as to the success of sports betting when politicians and rookie bookmakers are in on it. West Virginia is a classic example. They propose a 10% tax on the gross. What a great idea.

Nevada sportsbooks hold 4% and that’s with seasoned management. The leagues will demand at least 1% each so we’re up to at least 8% before the nut is even considered. If the WV books hold less than 4%, just plain lose or if the leagues want a bigger piece, which the NFL surely will, there won’t be enough beans to count.

Decades ago a 10% federal tax was levied on Nevada’s storefront race and sportsbooks long before hotel-casinos were granted licenses. It was to be paid up front by the players when making a bet. The books were expected to be tax collectors. Neither player nor bookie could overcome a 10% tax on race and sports bets.

The sportsbooks operated on maybe a 4% win. The sharpest player on the planet couldn’t survive paying a 10% tax, penalty, extortion, or whatever you call it. You couldn’t book or bet in a book that went along with this onerous tax.

So the books figured out a way to get around the 10% federal tax. For the bettors who were known and trusted, we would write an “R” on the bottom of their ticket. The “R,” just in case anybody would question, stood for “tax refund,” but it had a different meaning for us. LV books had their own system but essentially served the same end.

If a bettor was an “R” customer (known and trusted), we would write his ticket for 10% of the actual value, i.e., a $100 bet was written as $10 but with an R written on the bottom of the ticket. This way when we checked out and graded the ticket, the customer cashed for the full $100 wager if he won.

Writers, cashiers and in-house accountants all knew the ticket’s true value. To the outside bean counters and regulators, it was worth only $10 and when we were audited it would count as a $10 ticket. It had to be done to stay open.

Us writers and cashiers had to keep double tabs. At the end of the day, it was an adventure to tally up. Balancing your cash on the first pass was an upset. After all, you would take $500 from some bettors, write the ticket for $50, and put the “R” on the ticket. Sometimes, you might forget the “R” and checking out a balanced cash drawer would be impossible. When the bettor came up to cash the ticket, he’d be expecting a payout on a $500 bet not $50, so you had to be ready to pay off that real amount. It was very involved, and you really had to know what you were doing.

One enterprising customer, call him Harry, came up with an idea. Only problem was he had half of it figured correctly. It’s football 1977 when Harry comes to my window and bets $550 to win $500 and tells me he wants to pay the tax. Knowing he was an “R” customer, I try to write him an “R” ticket, but he insists on paying the tax. I reminded him he can get an “R” ticket, but he insists on paying the tax. He leaves with a $550 ticket, on the Broncos as I remember.

In a couple weeks, these guys come in from Denver and cash the ticket. Benny the cashier gives them $1,050, and they say the ticket was a $5,500 bet, and they have $10,500 coming.

Harry told them of the 10% deal he had, and they gave him $5,500 to bet. But he bet $550, gave them the ticket, told them it was actually worth $5,500 and pocketed the rest thinking it would lose.

It would have been the perfect scam if the ticket had lost, but it was a winner. Picking losers is just as difficult as picking winners. It was eventually straightened out.

Note: Nevada Senator Howard Cannon got the tax reduced from 10% to 2% in October 1974. The press hailed him, but the books didn’t. Actually, we were better off with the 10% figure because it was compatible to writing “R” tickets while 2% was nearly impossible to work with on the fly. It stands at 0.25% today. Take care.