by Jeremy Martin
There may come a time in the near future when sports fans at almost any tavern in Nevada can get up from their hot wings and beer during half time of a game and saunter across the bar to place a half-time bet.
That is the vision for a new technology, Sports Bet Xpress (SBX), which entered a local beta test run of approximately two months on Feb. 3. The sports wagering terminal, which is a joint venture between three companies - VirtGame Corp., Multimedia Enterprises and United Coin - is now operational in 25 Las Vegas-area bars.
Initial feedback for the SBX terminals has been "phenomenal," according to John English, president and Chief Executive Officer for Las Vegas-based Multimedia Enterprises, the corporation that conceptualized the idea to VirtGame. The company put nearly 15 months into the planning and execution of the project. Since sports betting terminals are new to the Nevada landscape, the Nevada Gaming Control Board (NGCB) scrutinized the project very heavily. "As far as the gaming board is concerned, it is a first time product so they had to go through every little aspect of it," says English.
Once the idea was ready to move ahead, Multimedia Enterprises needed partners that could help with the technology, marketing and distribution. They decided to team with VirtGame, which is a provider of sports book software to Nevada casinos, and United Coin, a Las Vegas-based slot route company that owns and operates approximately 8,400 gaming machines in nearly 680 locations across the state.
Designed for ease of use, the terminals run on Windows-based software developed by San Diego-based VirtGame. The custom-designed terminals feature a 14-inch LCD touch screen that allows users to place a variety of sports wagers via Las Vegas casinos. The results of the test run will be evaluated and brought before the NGCB soon after March Madness. If gaming gives the go-ahead, these terminals could become a fixture across Nevada by football season.
VirtGame is responsible for both the technology and the contracts with participating sports books. All bets placed during the test run will go through Bally's Las Vegas. After the trial period, SBX would be available to any sportsbooks in Nevada that were interested in participating, according to Bruce Merati, CEO for VirtGame.
During the beta test, bettors who register through the SBX system must physically open a betting account at Bally's. Once the user makes a deposit and shows the proper identification, he or she is free to make a wager at any location where SBX is offered. Gaming laws state that no money can come in or out of the betting machines, so all tickets must be cashed at the sports book.
In order to get the machines out in the field, Multimedia Enterprises chose to team with United Coin, which already had wide distribution agreements for its gaming systems throughout the state. The union, according to United Coin President Bill Nader, was a win-win situation for all involved.
"It's a pretty nice fit for us, since [VirtGame] has the technology that goes into the books and we have the distribution network to put the terminals out in the field," he says. "It's a nice addition for our customers as well as their players, rather than having to leave [the establishment] at half time to go around and make wagers that they could be making at the location where they are watching the game. We have had a number of customers ask us when they can have [an SBX terminal]."
Any profits to be made from SBX for the companies involved will likely come in the future. VirtGame and United Coin split a $1 convenience fee that users are charged for each transaction. Multimedia makes their money from the licensing agreement.
"It is such a new system and if you develop something new you don't know whether it is going to be generating X dollars or Y dollars," says Merati. "You can't just go and arbitrarily decide what the revenue model is going to be. We need to have some kind of history established. [United Coin] needs to do the same thing and then we will come up with something that is reasonable and works for us and works for the books. If SBX is approved, this thing is going to be rolled out to hundreds of locations, maybe over a thousand."
SBX is offered to the bars free of charge, but they do not share in any revenue that is generated. However, the machines are a nice perk for the establishment to attract business and keep customers in their facility.
"Our big thing is that we want to give people a reason to come into our building and stay in our building," says Robert Snyder, Chief Financial Officer for Big Dog's Hospitality Group, which operates three of the bars participating in the beta test. "Obviously, the more often they come and the longer they stay, the [better] chance we have to make money. Our places are like most taverns; they tend to center around sporting events. It just seemed like a natural thing to have some kind of sports book angle."
The casinos will likely be the big winners if this technology is approved for mass distribution, as they will gain some new customers they might not otherwise have had. "When it comes time to cash the ticket, the [sports books] really want these people back in the casino," says English. "We are not out to try to take business away from the casino. We are more of a conduit to provide them with more business."
Merati believes that many books will want to participate once the trial run is completed. The three companies involved wanted to wait until after the Super Bowl to begin the beta test because that involves just one big day of betting. They say that March Madness will be the true test of the system's popularity and feasibility since the event is spread out over several weeks.
One factor that might hinder SBX in achieving widespread success is the fact that users must physically deposit money into an account at the sports book before they start using the system. Merati hopes that, in the future, account wagering laws will become more relaxed so that SBX will be more convenient for potential customers. But for the time being all users must head to the casino before sports betting convenience is available at their fingertips.
"The only reason I could think that it might not work is because it takes a long time for people to get registered and to get used to the idea that they have to go sign up somewhere else," adds Snyder. "And I do think that's a negative, that they have to go down to Bally's or wherever. I think that once you get people to sign up it's going to be great. It's a convenience to our customers."
If all goes well for the test run, expect to see these machines popping up all over Nevada. Long-term plans involve expanding the business to include convenience stores and pari-mutuel locations.
Related Stories VirtGame