Investing in a Legal Sports Betting Mutual Fund Entity
The passage of Nevada Senate Bill 443 in 2015 has made it legal for individual investors to deposit money in a sports betting mutual fund investment entity group for the purpose of betting on sporting events.
What are the requirements of sports betting mutual funds and what legal business is needed?
This sports betting mutual fund entity group is usually a Nevada corporation or LLC formed by a group of gaming executives and sports bettors that manage the fund as an in-state Nevada fiduciary agent. They can solicit funds from investors anywhere in the world. However, major restrictions do apply but is open to anyone that can go through the difficult approval process.
The entity or fund manager can take investors from anywhere in the United States and can charge fees or commissions for managing the fund. This includes placing the bets and where to allocate the funds for future investments. No investor can make a bet through the fund. It’s a private hedge fund for sports betting with a different format than the current sports advisory business of selling picks to subscribers.
Sports betting mutual funds are looking for clients to promote this new concept in sports betting but …
The application process is far from just providing standard information. Many applications have been rejected with about 10% being approved. The application process is an attempt to secure very personal and private information about the applicant and any investor willing to endure such scrutiny and invasion of privacy. This would include a background check, source of funds invested and other customer data which is given to a sports book willing to accept the entity betting. In other words, a lot of red tape.
If any prospective investors are not dismayed by the application process, there are other alarming issues to confront.
CG Technologies is the only option for entity group formation and execution. They are at the center of the application process to get things moving through the state and for their managed sports books to accept and review investment groups detailed information. Other sports books could eventually join in the experiment but most are weary of the red tape and short-sighted regulations that make things difficult.
The biggest issue for the actual betting decision selection is the absence of shopping for a better line. There are over a dozen different sets of lines in Nevada. Entity groups and their investors get access to only one line from CG Technology managed sports books. This restriction is the main problem of trying to find an edge when placing a bet. Just ask any sports bettor who bets for a living or just fun about finding the best number.
The entity group is incapable of finding a better line to fit their investment strategy. Basically at this point, their hands are tied behind their backs and the investor is just an innocent bystander. Good luck with that approach.
Some other negative facets of investing in this format are the fees and commissions. Yes, there are non-refundable fees of 1 or 2 percent of your investment like a standard stock exchange mutual fund. The commissions are usually 30 percent of the winning profits, if any at all. Can you imagine collecting 70 percent of your winning bets on your own. Who needs this layer of management appropriations when you are at their mercy or lack of expertise. This is not Wall Street. Why gamble on something with no track record for success and a hyped-up sports betting bill with too much exposure for the investor. Most experienced veterans in the sports betting industry have joked about the bill and even dismissed it as a “bad beat” bill without a redeeming quality or a simple format like mobile betting from your smart phone.
