Cantor’s Lutnick is out of luck in Vegas
They had some great ideas – for a while they had the best sportbooks in town. But as far as what they set out to do, they fell far short.
MARCH Madness, the ultimate in US college basketball, hits Las Vegas like a tomahawk jam.
Each year, hundreds of millions of dollars course through the Vegas sports betting parlours, far exceeding wagers placed on the one- day Super Bowl event.
Howard Lutnick, the man who rebuilt Cantor Fitzgerald, and then some, after the Sept 11 catastrophe, has spent the past decade looking for a piece of the action by building a sports gambling powerhouse. But Vegas can be a tough town – even a player like him has run into one obstacle after another.
Now, Lutnick may be folding his hand. He’s shopping the business around in what is described as an informal process to gauge interest, according to a person familiar with the sale. Cantor’s internal merger and acquisitions team is handling the possible transaction, circulating a short description of the business, said the person, who was not authorised to speak because the discussions are private. While the company is losing money, the person said, it may fetch US$ 50 million ( RM2.3 billion).
What went wrong? Plenty. Lutnick, 55, wanted to inject a bit of Wall Street into Vegas. But revenue at his young betting firm, CG Technology, has stalled. Long gone are plans to take the company public, filings show. Its chief executive officer, a longtime Lutnick confidante, left last
Jim Murphy, sportsbettingexperts.com’s odds consultant
year in a regulatory settlement. He hasn’t been replaced.
On top of all that, a former CG executive pleaded guilty to scheming with illegal bookies. In October, the firm agreed to pay US$ 16.5 million to avoid prosecution in the case.
“They had some great ideas – for a while they had the best sportbooks in town,’’ said Jim Murphy, an odds consultant with sportsbettingexperts.com. “But as far as what they set out to do, they fell far short.”
Lutnick declined to comment through a spokeswoman, Karen Laureano-Rikardsen.
It’s a far cry from the vision Lutnick was selling in 2008 when he bought odds-making firm Las Vegas Sports Consultants and put at least US$ 150 million into the business, according to a Bloomberg Markets Magazine story in 2012. It opened its first sports betting parlour – called a sports book in Vegas lingo – in 2009 and now has operations in eight Nevada locations, including some of the city’s highest- end places such as the Venetian and the Cosmopolitan, owned by the Blackstone Group.
The firm sought to distinguish itself with sophisticated software and devices that allowed gamblers to bet anywhere in the casino or hotel. Its computer servers were driven by the type of software that fuels derivatives trading, spewing out odds on events at the fastest rate ever in Las Vegas, it said. That allows gamblers to place bets during contests on dozens of situations.
The moves worked, and competitors followed with similar mobile technology.
But another strategy adopted by Cantor – offering higher betting limits than competitors – led to its most serious stumble, according to federal prosecutors. Michael Colbert, the company’s head of risk management and a direct report to then- CEO Lee Amaitis, oversaw an operation that took in millions of illegal bets, including wagers from an East Coast betting outfit that operated from 2009 to 2012, known as the “Jersey Boys,” according to Nevada regulators and the Justice Department.
Some of the outside bets were needed to offset large ones CG was taking, prosecutors said last year.
Nevada gaming regulators hit CG with their biggest fine ever – US$ 5.5 million – in 2014, and last October CG settled with US authorities for US$ 22.5 million more after being accused of illegal gambling and money laundering. The firm admitted wrong- doing on the federal charges and some of the state allegations.
Colbert, who is no longer with the company, pleaded guilty to a single charge of conspiracy in 2013. Murray Richman, an attorney for Colbert, declined to comment.
Cantor Gaming, as the firm used to be known, announced it was changing its name to CG Technology the same day Nevada regulators charged it with violations related to the “Jersey Boys” case. Lutnick and a family trust own almost all of the company, according to Nevada gaming records.
CG’s problems didn’t end there. Last May, the Nevada Gaming Control Board accused it of under-paying customers on more than 20,000 bets between 2011 and 2015. Regulators, who could have revoked CG’s gambling licence, agreed to a settlement in which Amaitis left the company and CG was fined US$ 1.5 million. — WPBloomberg