Nevada gambling regulators approve closed-loop sports betting
October 25, 2002
The Nevada Gaming Commission agreed Thursday to grant a limited license to a company that has developed a closed-loop computer system for betting on horse races.
The 18-month license was granted to Virtgame Corp. after Bruce Merati, who heads the San Diego-based company, said he hopes to have signed deals for the system with several Nevada casinos by early next year.
Under the system, bettors can use personal computers or PCs in casinos to place bets on races at tracks all over the country. Gamblers can do that now at Nevada’s legal race and sports books — but with the PC setup they wouldn’t have to stand in line at a counter to place a bet.
Bettors also would have a preapproved credit line for what Merati termed a “cashless” system that uses modern technology but isn’t linked in any way to the Internet.
Commission members had asked about possible Internet links, but Merati said the company only wanted a closed-loop system because it can be better protected and controlled.
Commissioners also expressed concern about Virtgame’s finances after Merati said about $15 million has been invested in Virtgame but its current stock share value represents a market cap of about $8 million.
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He also said the company hopes to raise about $5 million from investors in the next two months and, because of a “very lean and mean” operation plus the expected contracts, should be profitable by January.
Commission Chairman Pete Bernhard warned Merati to be “absolutely, precisely accurate” in public statements about Virtgame. If there’s any evidence of misleading information, “we’d be extremely upset,” he added.
Bernhard said earlier news reports and Virtgame’s own Website incorrectly stated that the company had won licensing approval from Nevada regulators.
Commission member Augie Gurrola asked about electronic blackjack or other games that could be added to the Virtgame system, so gamblers would have something to do between races. Merati said that’s a consideration for the future, but not now.