In brief, entity wagering can be described as a sports betting mutual fund. Investors buy into the fund and the entity manager will invest that money in sports wagers instead of traditional businesses like a mutual fund would.
Last summer Nevada state legislature passed Senate Bill 443, which legalized entity wagering. The bill allows Nevada sportsbooks to accept wagers from a pool of investors called “entities”. The pools are open to US residents, regardless of where they live, but the entity itself must be operated by someone located in the state of Nevada.
Similar to mutual funds there can be entities that specialize in certain areas of sports. Experts in college basketball, NFL, tennis, etc. could start a fund that focuses on their special area of handicapping. All wagers that are available to the public by the sportsbook operator may be wagered on by the entity. For example, a specific entity focused on the NFL could take a position on futures, wager on sides, totals or props for games each week and wager during the game with in-play wagering.
The entity will operate like a legal Nevada business and will maintain an account with a bank or other financial institution in the state. The entity operator, and each investor, will undergo a comprehensive background check. The entity will keep original copies of records of the wagers and any records that are required by Nevada’s general business laws. All profits and losses will be done electronically by the entity and the sportsbook operator.
Even though each entity is operated as a business you will still have to do your own research on the entity/fund to see if it’s right for you – you’ll have to research the entity like you would any mutual fund. While companies like Fidelity have multiple funds managed my different individuals the same can’t be said for entity wagering yet. This form of investing is so new that you should be researching each entity manager with the due diligence your money deserves.
Entity wagering hasn’t set standards and best practices so you’ll want to make sure when profits will be shared, how you’ll be accounted to, what the entity will be wagering on and so forth. Some of the information should be easy to find but you’ll have to do some work like you would any other investment but there isn’t a hub set up to make this easy for you right now.
Even though the entity is open to people outside of Nevada, the individual investors have no say in individual wagers. The investments will all be made by a company or, more likely, a person in Nevada and not have input from outside of the state.
While it’s pitched as an investment style fund this is still considered gambling by the state of Nevada so you’ll have to be 21 years old to participate and earn profits.
The bill states that for each participant the entity must submit “the name, residential address, copy of a valid photo identification which evidences that the person is at least 21 years of age, and social security number or individual taxpayer identification number, of each of the business entity’s equity owners, holders of indebtedness, directors, officers, managers and partners, anyone entitled to payments based on the profits or revenues and any designated individuals.”
Entity wagering will be slow to start as each individual sportsbook operator will decide if they want to participate. Right now there are only a few entities in action but that should pick up when football season begins.
This bill was pitched to the state of Nevada by CG Technology and they are the first and only sportsbook operator to have entity wagering accounts. According to CG Technology COO, Parikshat “PK” Khanna they welcome competition. The more sportsbooks that are involved with entity wagering the more liquid the market will be – and that benefits all sportsbook operators.