Inside Asian Gaming

INSIDE ASIAN GAMING FEBRUARY 2018 32 GAMBLING AND THE LAW be US$163,480. The operator gets to keep US$252,530 (US$416,000 minus US$163,480). So operators would be paying the equivalent of 39.3% of gross gaming revenue (24.04% integrity fee plus 6.01% federal excise tax plus 9.25% state taxes). Another way to get to the same result: US$163,470 divided by US$416,000. In other words, the bookie takes in US$10 million in bets, pays the leagues US$100,000, the feds US$25,000 and the state about US$38,000. This leaves the operator with about US$250,000 to pay all of its expenses. Whatever is left, if any, is profit. It is hard to know how many bets a sportsbook in Indiana, or anywhere else for that matter, would actually have in a year. And expenses would vary over time and among sportsbooks. There would also and you get US$25 million in bets a year, revenue of US$1,040,000 (US$25 million times a hold of 4.16%). Out of that win of about US$1 million a year, the Indiana sports book would have to pay US$250,000 to the leagues, US$62,500 in federal taxes and US$96,200 in taxes to the state. This leaves the sportsbook again with revenue of about 2.5% of wagers or US$631,300. Out of that US$631,300, the operator has to pay all other expenses, including other taxes, such as property and income taxes. This is not EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization. That is how investors measure cash flow. The US$631,000 is only revenue, after the gambling privilege taxes and fees have been paid. It does not yet take into account all expenses and all other taxes. I personally would never invest a cent into a business like this. “Sportsbooks not only became large and numerous in Nevada, they were viewed as profit centers and entertainment enticements for commercial casinos. By 1985 all of the small independent sportsbooks were closed, replaced by multi-million dollar casino sportsbooks with dozens of giant video screens.” be fixed costs, such as building the facility, and variable costs, which would increase or decrease depending upon the number of bettors. But we can get some guidance from the numbers from Nevada. The most recent official figures show that for the 12 months ending in November 2017 there were 195 sports books in Nevada. They won a total of US$233,299,000. Dividing the total win of approximately US$233 million by the number of sportsbooks, 195, means the average Nevada book wins about US$1.2 million a year. The reported win percentage was 4.82%. This includes parlay cards and parimutuel bets, where the house keeps a much larger share. Still, using the reported hold of 4.82% means the average sportsbook in Nevada accepts almost US$25 million a year in bets (US$1.2 million divided by 4.82%). Put that average sportsbook in Indiana