- Spitfire List - https://spitfirelist.com -

The Sky’s the . . . er . . . Limit!

COMMENT: Some­times life presents us with events that are both sig­nif­i­cant in and of them­selves, and metaphor­i­cal­ly por­ten­tous. These qual­i­fi­ca­tions apply to a sto­ry about Can­tor Fitzger­ald oper­at­ing a sports bet­ting oper­a­tion with no lim­it on the size of wagers!

Major bond trad­er Can­tor Fitzger­ald recent­ly got into the sports gam­bling busi­ness.  But unlike oth­er book­ies, the Can­tor Fitzger­ald won’t have an upper cap in the bets it takes.  The arti­cle points out that it han­dled mul­ti­ple bets over $500k dur­ing this year’s Super Bowl.

Keep in mind that Can­tor Fizger­ald’s offices in the twin tow­ers took a direct hit on 9/11 and it was in those offices that a num­ber of high­ly ques­tion­able, high vol­ume finan­cial trans­ac­tions alleged­ly took place right before the planes impact­ed.  A Ger­man com­pa­ny, Con­var, was hired to to recon­struct those trans­ac­tions with the dam­aged com­put­er hard dri­ves, then Con­var was bought by Kroll, and we’ve nev­er seen a fol­low up on that news sto­ry.

The new  “unlim­it­ed bets” sports bet­ting sub­sidiary could be real­ly use­ful for mon­ey-laun­der­ing. Might that have been part of the busi­ness mod­el  from the begin­ning?

Can­tor start­ed devel­op­ing mobile gam­bling tech­nol­o­gy in the mid 2000’s, but it real­ly got into this busi­ness in a big way in 2008 when it bought Las Vegas Sports Con­sul­tants, the biggest odds-mak­er in Vegas.  Can­tor’s rev­enues from this sub­sidiary were $400 mil­lion last year and are pro­ject­ed to top $1 bil­lion.  The guy run­ning the unit start­ed off as a sta­ble boy work­ing at race tracks and then jumped into bond trad­ing in the 80’s.  He was bust­ed from run­ning a mul­ti-mil­lion dol­lar cocaine dis­tri­b­u­tion ring in Wall Street in 1986.

The author notes how the “take-all-com­ers” and “no upper lim­it” approach rais­es enor­mous risks for the firm, but the man­agers claim that the will mit­i­gate that risk through vol­ume.  This is essen­tial­ly  the same BS excuse Wall Street made before the deriv­a­tives melt­down.  It will be inter­est­ing to see how big a hit Can­tor might take from one bad Super Bowl out­come (like a star play­er get­ting injured in the mid­dle of the game).  Recall in this regard, the sig­nif­i­cant involve­ment of orga­nized crime in the NFL [1] and sports gam­bling.

Mr. Amaitis’ s background–horseracing and cocaine dealing–augurs poor­ly for the future of this enter­prise.

“Tak­ing Risks, Mak­ing Odds” by Susanne Craig; The New York Times [Deal­book]; 12/24/2010. [2]

Miles away from the glam­our of the Las Vegas Strip, past fore­closed homes and dusty tracts of desert, the Wall Street bond pow­er­house Can­tor Fitzger­ald has placed mil­lions of dol­lars of its own mon­ey on the table.

At the M Resort Spa Casi­no [3], Lee Amaitis, a for­mer bond trad­er who now runs Cantor’s oper­a­tions here, held court in a dim­ly light­ed plush orange V.I.P. booth lined with large Cham­pagne bot­tles. Lean­ing for­ward, he talked excit­ed­ly about the ambi­tious plans for the Can­tor Gam­ing sub­sidiary. . . .

. . . . Can­tor Fitzger­ald is one of the biggest bro­kers of Unit­ed States gov­ern­ment secu­ri­ties, con­sid­ered among the safest places to put one’s mon­ey. Can­tor Gam­ing han­dles some of the riski­est. It runs the sports book at the M Resort, a rel­a­tive­ly new casi­no pop­u­lar among Las Vegas locals. It has or will soon start han­dling the sports bet­ting oper­a­tions at the Vegas Hard Rock Hotel and Casi­no [4]and at the recent­ly opened Cos­mopoli­tan of Las Vegas [5]and the Trop­i­cana Las Vegas [6], all on or near the Strip.

And Can­tor is bank­ing on the next fron­tier in gam­bling: a license that would allow sports bet­ting on mobile devices any­where in Neva­da, as long as the bet­tor had an account at a casi­no.

Wall Street exec­u­tives usu­al­ly protest when their busi­ness is com­pared to a casi­no. But there is a log­ic to pri­vate­ly held Cantor’s Vegas sub­sidiary, casi­no indus­try experts say.

“Guys who trade Trea­suries are doing it for basis points, and sports bet­ting is not much dif­fer­ent,” said Jef­frey B. Logs­don, an enter­tain­ment and gam­ing ana­lyst for BMO Cap­i­tal Mar­kets. “Trad­ing a mil­lion dol­lars in Trea­suries is dif­fer­ent than trad­ing a bil­lion. Sports bet­ting is the same. You want the spread, vol­ume and you see your­self as a match mak­er.”

Still, for Can­tor it is a poten­tial­ly huge risky bet. Unlike most sports books, which typ­i­cal­ly cap wagers at any­where from $1,000 to $10,000, Can­tor Gaming’s book has a take-all-com­ers pol­i­cy, expos­ing it to loss­es if it can­not hedge its big­ger bets. Dur­ing Super Bowl XLIV this year, it han­dled a few bets in excess of $500,000.

Cantor’s push into Vegas is being led by the 61-year-old Mr. Amaitis, whose past includes a con­vic­tion in his 20s for deal­ing cocaine. Can­tor Gam­ing, Mr. Amaitis says, mit­i­gates its risk through vol­ume.

And Can­tor hopes to have anoth­er advan­tage through rich­er data. In 2008, Can­tor Gam­ing bought Las Vegas Sports Con­sul­tants, the world’s largest odds mak­er. It sets the odds for more than 40 per­cent of the casi­nos in Las Vegas, and Can­tor used that data to expand into what is known as in-run­ning bet­ting, which lets peo­ple wager on portable devices on sport­ing events in progress. . . .

. . . . In two years, Can­tor Gam­ing has grown into a force in Neva­da. So far this year, the sports book at the M Casi­no has tak­en in more than $400 mil­lion in wagers, almost 20 per­cent of all the mon­ey bet on sport­ing events in Neva­da, Mr. Amaitis says. He con­tends that the num­ber will grow to $1 bil­lion, or almost 40 per­cent of the mar­ket, in 2011.

The firm is not prof­itable; most of its rev­enue is rein­vest­ed in new tech­nol­o­gy. But Mr. Amaitis pre­dicts the com­pa­ny will be prof­itable on an oper­at­ing basis in 2011.

Mr. Amaitis has long had pas­sion for sport and bet­ting. As a boy he would head to the track after school. At the age of 16, Mr. Amaitis, a Brook­lyn native, land­ed at job as a sta­ble boy at New York’s Aque­duct race­course and worked his way up to rac­ing offi­cial.

In his late 20s, he switched careers, becom­ing a bond trad­er at Fun­da­men­tal Bro­kers. In 1986 he was arrest­ed at work, accused of being part of a mul­ti­mil­lion-dol­lar drug ring that was ped­dling cocaine at Wall Street firms. He plead­ed guilty to pos­ses­sion as part of a plea bar­gain. The indict­ment was dis­missed, and he was sen­tenced to a year’s pro­ba­tion and a $5,000 fine. . . .

. . . . In 1995, Mr. Amaitis accept­ed a job at Can­tor from a friend, Howard Lut­nick, the firm’s chief exec­u­tive and chair­man. A year lat­er he was dis­patched to Lon­don to over­see Cantor’s Euro­pean oper­a­tions. It was there that Mr. Amaitis got the idea for Can­tor Gam­ing. . . .

. . . . Mr. Magliardi­ti joined the Vegas Hard Rock Hotel and Casi­no in June, lead­ing to the Hard Rock’s recent deci­sion to hire Can­tor to run its sports book. Can­tor Gam­ing pays rent to oper­ate in the casi­nos, and the casi­nos get an undis­closed cut of the prof­it.

Can­tor Gaming’s deci­sion to take huge wagers is what sets it apart from oth­ers. A Can­tor Gam­ing exec­u­tive, Andrew Garood, said while this strat­e­gy had helped Can­tor Gam­ing expand and attract pro­fes­sion­al bet­tors and high rollers, there had been some dicey moments.

For instance, in Novem­ber 2009, the Indi­anapo­lis Colts were two-point favorites going into a game with the New Eng­land Patri­ots. The Colts won the game by just one point. Can­tor lost mon­ey on both the game and the spread.

“I don’t see any dif­fer­ence between Las Vegas Boule­vard and Wall Street,” said Mr. Garood, a for­mer deriv­a­tives trad­er who joined in Can­tor in 2000. “Over time we can’t lose, but there will be games where we take a hit.”