Just two weeks following the release of the Oregon Lottery’s latest sports betting game, Scoreboard, $1.2 million in state funds has been transferred from the lottery to its betting game partner, the Bank of George.
The Las Vegas-based bank, a pivotal partner in the state’s sports betting operation, received the sum in five separate wire transfers. When asked about the transfers, Oregon Treasury spokeswoman Rachel Wray said, “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. Without further research, we cannot confirm whether additional amounts have been sent through other payment channels.”
The bank was hired as a pivotal partner in the Scoreboard betting operation based on its gaming ties and FDIC protection. The community-based organization is regarded as minor in the banking world, with $277 million in total assets.
When contacted for comment, the lottery responded that the funds were transferred as reserves to address player volatility. Volatility in this case meaning the unlikely event that withdrawals of winnings and account balances exceed deposits. The money will also go toward covering liability costs associated with returns and chargebacks. The move came as no surprise according to lottery officials. Spokesman Matt Shelby asserted that managers knew the Lottery would, “need some level of reserve, but I’m not sure how we arrived at the amount. Frankly, people should be worried if we didn’t have funds in reserve to cover wins.”
Reasons for Oregon controversy
The move has not gone over well with some Oregonians, who have reservations regarding how the state lottery is running the sports betting program in general. For example, the lottery reportedly deferred key decisions in policy to the company responsible for running the lottery’s games, SBTech. Those policy decisions included which bank to use. The lack of due diligence on the lottery’s part was conceded by officials. In fact, there was no competitive bidding process to speak of when evaluating partners and financial institutions. Moreover, the Bank of George is not among the 48 banks and credit unions approved to hold state funds.
One connection between the bank and external entities has raised a red flag. Bank board member Dr. Tony Alamo also serves as chair of the Nevada Gaming Commission. Another board member, Todd Nigro, is a noted Las Vegas developer of gaming-related real estate and commercial construction.
The Oregon Treasury and lottery board have been going back and forth on that status of funds generated from Scoreboard. If considered state funds, they are mandated to be held only in approved financial institutions. Among which, the Bank of George is not recognized.
Treasury, lottery, DOJ discussions
Wray stated in an email that the treasury had, “engaged in conversations with lottery and DOJ through much of 2019, including on the potential flow of funds and whether those funds were public funds. During these conversations, we asked questions and raised considerations as lottery was figuring out how to structure their program.”
The lottery has argued that the money belongs to the players, not the state. At least, that is the case until the betting process has been completed. This was affirmed by the attorney general’s office, which ruled the arrangement held merit.
The lottery’s contract with SBTech has also drawn scrutiny among both legislators and competitors. One competing bidder for the contract claimed SBTech conducts business in regions where gambling is illegal, which should have been a disqualifying factor at the time. The terms of the contract are kept secret. The lottery commission refuses to divulge contract details, and SBTech did not respond when questioned for comment.
As for the Scoreboard betting game’s initial reception, in just two weeks the game has had more than 18,000 registrations and taken more than 55,000 bets. The total amount wagered until now exceeds $1 million. In reference to earnings, total wagered versus total won, Shelby stated, “We are up a little over $100K since launch.”