Nevada Bill Could Make Tournament Staking Illegal
Unless a politician makes a grand announcement about a certain piece of legislation he is trying to push, proposed bills usually get introduced without the public’s knowledge. Hell, most that become law do so without anyone outside of the legislature knowing. One such bill could potentially have a significant effect on the poker economy. Nevada Senate Bill 40 was pre-filed and referred to the Senate Judiciary Committee on December 20, 2014, and should it one day pass, could destroy poker tournament staking in the state.
SB40 does not name a sponsor or list the names of anyone who has written it. It simply says under the bill number, “On behalf of the State Gaming Control Board.” Its goal, in a nutshell, is to amend current gaming law in Nevada to make it illegal for someone to place a bet on behalf of a third party, unless the bettor is properly licensed.
The language that would be added to the law would be as follows:
Except as otherwise provided by law, it is unlawful for a person to receive, directly or indirectly, any compensation or reward, or any percentage or share of the money or property played, for:
(a) Accepting or facilitating any bet or wager upon the result of any race, sporting event or future contingent event without having first procured, and thereafter maintaining in effect, all federal, state, county and municipal gaming licenses as required by statute, regulation or ordinance or by the governing body of any unincorporated town.
(b) Accepting or facilitating any bet or wager that is placed with or on behalf of a person described in paragraph (a).
(c) Transmitting or delivering anything of value resulting from a bet or wager to a person who has placed a bet or wager with or on behalf of a person described in paragraph (a).
Anyone who violates this law would be charged with a category B felony and would face from one to six years in prison, a fine of up to $5,000, or both.
As it is written, the bill would seemingly prohibit live tournament staking, a side effect that could do great damage to tournaments in Nevada, particularly the World Series of Poker. Staking is common in the poker world, as it allows people to play in tournaments without having to put up the entire buy-in. Instead, they recruit “investors” of sorts, people who are willing to pay part of their entry in return for a piece of their winnings. For instance, if I wanted to play in the WSOP Main Event but was reluctant to put up the $10,000 buy-in, my brother might be willing to give me $5,000 in exchange for half of my winnings (he would also be stupid to do that knowing my skill level, but that is an entirely different discussion).
Even players who won their seat into the Main Event via a cheap satellite often seek investors. Knowing the odds aren’t great that they will see a significant payday, the player may be happy just making a profit up front via stakes from friends or family. If he wins big, great! If he doesn’t, he still received a portion of the buy-in up front and walks away with a bit of cash.
As you might guess, staking is particularly important in the most expensive tournaments, as even the deepest pocketed, most skilled poker players like to sometimes minimize their risk. A wealthy poker player might be able to afford the $50,000 or $100,000 buy-in for a high roller event, but that doesn’t mean he wants to pay the whole thing if he can help. He will often be willing to lose out on some winnings in order to reduce his losses should he not cash. This law could really hurt the million dollar buy-in Big One for One Drop charity event that is held every other year at the WSOP. Not many people can easily put up a million bucks to play in a poker tournament, so staking is key to this event.
SB 40 is actually designed to combat problems with sports betting, but poker tournament staking would be caught in the crossfire. In a letter to Geoff Freeman, the President and CEO of the American Gaming Association, U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Associate Director Jamal El-Hindi wrote:
FinCEN understands that certain organizations and individuals have been circumventing various laws related to sports betting. More specifically, criminals are making bets with legally operating sports books, including by using intermediaries to place bets on behalf of unidentified third parties (third-party betting). In these cases, the intermediaries rarely voluntarily disclose to the casino that a transaction is being conducted on behalf of a third party, thereby disguising the third party’s role in the transaction and obscuring the source of funds used to place the bet. This poses distinct money laundering risks for casinos.
In addition to concealing the owner and the origin of funds, third-party betting poses distinct money laundering risks for casinos because it allows criminal organizations, illegal sports books, and others located in any state, where gambling may be illegal, to place bets within states where sports betting is legal.
The letter goes on to discuss some of the transaction reporting requirements for casinos (example: they must file a Casino Transaction Report for deposits or cash outs for more than $10,000), but the above gives you the jist. Sports betting is the target and poker could be collateral damage.