Sunday May 27, 2012 : CANTOR AMBITIONS IN U.S. SPORTS BETTING
If P.A.S.P.A. is overturned, Cantor could be a tough US market competitor
The Wall Street financial trading empire of Cantor Fitzgerald, through the activities of its Cantor Entertainment Technology division, could become a tough nationwide competitor if the sports betting market in the US is ever opened up through changes in the Professional Amateur Sports Protection Act, which currently restricts sports betting to just four US states.
Several tax revenue-hungry states are presently considering challenges to the Act, which is widely seen as discriminatory.
In its June issue, Bloomberg Magazine looks at the impact that Cantor might have on a broadened market under the colourful and competitive leadershp of CET's chief exec Lee Amaitis (62).
Amaitis is quoted as saying that he plans to turn Cantor into a sports-gambling powerhouse, expanding its operations beyond Las Vegas when this is legally possible.
“We came here to change the face of the industry,’’ he says, talking about the sports betting business in Las Vegas, where CET has invested $150 million operate and revitalise seven sports books, owned by the Venetian and the Palazzo – part of Sheldon Adelson’s Las Vegas Sands group – and other casinos.
Cantor Entertainment Technology was also a pioneer in introducing ‘on-premises' wagering in Las Vegas casino resorts using wireless technology on hand held devices, and hopes to start a Nevada-licensed online poker operation too, when licensing in available.
Amaitis is clearly in tune with the industry trend toward mobile apps; to promote its new Android app that allows betting from smartphones and tablets in Nevada, Cantor advertised in Las Vegas taxis in February, featuring a curvaceous woman’s derriere with the tag line “Sports Betting on Your Android? You Bet Your App!’’
Amaitis's boss, Cantor Fitzgerald chief Howard Lutnick (50) is supportive of the company's gambling ventures, saying: “The idea that we can bring so much technological innovation to that market is a great opportunity. I think it will dramatically add to the size of the market.’’
Cantor’s bookmaking software is a modified version of that used by Wall Street traders, the Bloomberg article reveals. It has changed the way sports gamblers at the Venetian bet, providing a 10,000-square-foot room furnished with 118 bright-red betting stations. Cantor installed a 100-foot-wide TV screen that can show 34 sporting events at once.
Cantor gets a fee of about 2 percent of some wagers, plus its winnings, which are shared with the casino, and it has expanded revenues significantly. Amaitis claims Cantor’s technology has single-handedly boosted sports betting in Nevada, where wagers increased $311 million from 2009 to 2011, according to the state gaming board.
But Amaitis's biggest bet is that the US Congress will mute P.A.S.P.A., allowing sports wagering to spread across the country.
His vision is shared by rival Joseph Asher of the recently acquired William Hill plc sports betting subsidiary Brandywine Bookmaking, who told Bloomberg:
“I don’t think there’s any doubt that one day sports betting will be legal and widespread in the U.S. It’s widespread already. But it’s illegal.’’
The Bloomberg piece reveals that in Nevada, sports gamblers bet $2.9 billion in 2011 – a tiny fraction of the $380 billion that Americans wager illegally each year, according to a 1999 report by the National Gambling Impact Study Commission.
Asher was a senior exec at Cantor Entertainment until he left in 2007 to set up Brandywine Bookmaking, which also manages risk for Delaware’s sports lottery. Along with two other Nevada acquisitions , buying Brandywine gave William Hill over 10 percent of the state's sports betting market, competing against Cantor's 14 percent.
Amaitis and Asher appear to have an acrimonious relationship which has resulted in court actions between the two companies.
The idea of Cantor entering the gambling industry originated with Amaitis back in 1996, when he worked in the London offices in charge of international business development. After watching a client in Tokyo playing internet poker whilst trading bonds, he could appreciate the potential.
Four years later the company engaged with the industry through a UK-based online financial spread betting business branded Cantor Index. The experience gained led Amaitis to start thinking about Las Vegas extensions of the basic concept of mobile gambling in 2005, and the company began lobbying for the ‘on premises' legalization of mobile activity in Nevada hotel casino resorts.
With legislative approval, Cantor had manufacturers produce 500 eDeck hand-held devices for loan to visitors to gamble on whilst on casino premises.
Cantor, which is phasing out the hardware as it deploys its own apps made possible by mobile technological advances, collects the winnings and fees.
Nevertheless, CET has reportedly been struggling to make a significant profit, and filed for an IPO to raise capital in December 2011, admitting in its prospectus that although gamblers bet $362 million with the company in the first nine months of 2011, the company had incurred losses of $22.2 million in the same period.
The Bloomberg piece notes that Amaitis is not lacking in confidence, predicting that Cantor will dominate sports betting in Nevada despite competing against giants like Caesars Entertainment and MGM Resorts, which control over half the market.
“I can tell you, Cantor will dominate sports in Nevada,’’ Amaitis boasts.