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Oregon's choice of a sports betting provider, SB Tech, was a questionable one. Where that contractor has chosen to hold at least $2 million in deposits has folks scratching their heads even more.
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The Oregon Lottery oversees all sports wagering in the state, including the new Scoreboard app. But SBTech determined where all banking would be conducted. Despite there being plenty of banks in Oregon that can benefit from the burgeoning new industry, SBTech has opted for a small, privately owned community bank headquartered in Las Vegas, Bank of George, named after the first US President, George Washington.
"SBTech was tasked with producing a turn-key platform, based on our needs," Oregon Lottery spokesman Matt Shelby tells WW. "They chose to go with Bank of George to support the player accounts. Our contract is with SBTech and they contracted with BoG. Gaming accounts are a core area of the bank's business."
“We can confirm that lottery has wired just under $1.2 million to the Bank of George or to Bankcard Services LLC account at the Bank of George,” treasury spokesperson Rachel Wray confirmed to Oregon Live. “Without further research, we cannot confirm whether additional amounts have been sent through other payment channels.”
Kelsey Harnisch and Rachel Monahan of the Willamette Week believe there is reason to be concerned.
In financial terms, Bank of George is a gnat. It has just one branch in addition to its headquarters and only 63 employees. In terms of deposits and assets, it is smaller than local Oregon banks such as Bank of Eastern Oregon, located in Heppner, or Citizens Bank, headquartered in Corvallis. Umpqua Bank is more than 50 times the size of Bank of George, as are the large regional and national banks with which the state normally conducts business. Gambling is a risky and complicated enterprise, yet the state is placing its reputation in the hands of a tiny, unknown player.
According to Shelby, Bank of George also works with another company in the sector, Sightline Payments, "to support" a provider of sports-gambling accounts for various casinos and sports betting apps across the U.S.
Jeff Manning of Oregon Live notes that the bank may be FDIC insured but the “$277 million in total assets is minuscule in the banking world”.
Lottery officials confirmed they performed little due diligence on the bank, Manning added.
What’s more, the bank is not among the “qualified depositories” approved by Oregon to hold state funds. State law requires that its funds be held in one of these 46 banks and credit unions. Nevertheless, lottery officials approved the arrangement with the bank.
Dr. Tony Alamo, a director of the bank, is chair of the Nevada Gaming Commission while Todd Nigro, a long-time builder and developer in Las Vegas, also sits on the bank’s board.
Sports bettors in Oregon will need to trust the out-of-state Bank of George with their social security numbers before successfully opening a wagering account with Scoreboard. They also have to post up funds (prepay).
This requirement gives offshore operators and local bookmakers a competitive edge. Bookies offer betting on credit. While most offshore books require post up, few ask for social security numbers. A number of offshore sportsbooks have now opted to allow betting anonymously via Bitcoin.
By far the biggest competitive edge for the offshores and local bookies is their willingness to take bets on college sports. The Oregon Lottery does not allow betting on college football or basketball through its Scoreboard app.
Through the first weekend since its launch on Oct. 16, the Scoreboard app saw 18,116 registrations and 55,880 bets with over $1 million wagered.
- Aaron Goldstein, Gambling911.com
