White Paper on Parimutuel Gaming
United States Patent:
#US 8,277,311 B2
Date of Patent: October 2, 2012
Platis, et al.
Wagering Web Service System and Method
Inventor: Harry Platis, Lynnwood, WA (US)
Application Number: 12/472,344
Filed: May 26th, 2009
Wagering Web Service Summary
A wagering web service operates on a wagering web virtual server and coordinates, wagering on events such as tournaments, wagering on entrants in such events, wagering event-location applications and databases (such as casino applications and their related databases), financial institutions (such as bank applications and databases), and the individual wagering events themselves (such as various types of wagering scenarios, for example a win bet, a choose “n” to win, (wagering on a large entrant groups, etc …)).
The wagering web service acts to synthesize and coordinate the disparate applications to create a Virtual Totalisator System. This Virtual Totalisator System utilizes a scalable technology platform and encrypted communication channels to provide a secure Web service. The service utilizes in one embodiment a Web Service Definition Language or WSDL. The Web Service method interfaces and interacts with the various databases discussed above utilizing a Simple Object Access Protocol or SOAP to exchange the structured information regarding the transactions. The protocol utilizes XML as its message format.
The bandwidth limitations are only limited to the local portals within which the end transactions are taking place. With regard to security protocols, the primary control of security exists at the Wagering Web Service administration application location, and shares security with each of the locations, for example, at the event locations, financial locations, and at the wagering locations. Therefore, security is shared disparately between each location and provides a separation of information. With regard to regulatory control, the parimutuel wagering takes place at the local level, and the Wagering Web Service administration can take place off-site because no wagering is taking place there.
With regard to verification of tickets and IDs, the system uses a GUID regime which provides for near unique ticket ID generation. While each generated GUID is not guaranteed to be unique, the total number of unique keys 2 to the 128th or 3.4 X 10 to the power 30 is so large that the probability of the same number being generated twice is extremely small.
The purpose of this White Paper is to elaborate on:
A. The people behind the Parimutuel Wagering concept.
B. The potential for Government revenue creation from Parimutuel Poker.
C. The gambling industry’s shift to one of fairness for all participants.
This white paper will show how the gaming industry can potentially become more transparent, as compared to it’s current state. Among other things, this white paper will demonstrate the potential long-term benefits of Parimutuel Event Wagering and the revolutionary impact it can have on gaming as a whole.
1 – Executive Summary Parimutuel Group
Parimutuel LLC has been in existence for ten plus years. Parimutuel wagering has been around since the late 1800’s. Our system provides risk free options to the operator, and the best odds payouts to the bettor. Our system addresses concerns raised by gamers, who believe they are being manipulated and defrauded by unregulated foreign corporations, illegal bookies, and unethical offshore corporations.
Parimutuel LLC provides parimutuel style wagering on a wide range of competitive tournaments, events, contests, games, and activities, all of which have a long history of play, a large number of entrants and are regulated.
Parimutuel LLC’s innovative wagering system can easily be adapted by existing state lotteries, thereby providing additional revenues to local, state and federal governments. The system’s ground-breaking entertainment value will attract both foreign and domestic players.
Parimutuel LLC’s technology allows players to place bets on top-ranked individuals entered worldwide in an event, tournament, activity or contest, such as: a poker tournament (e.g., The World Series of Poker), pocket billiard tournament, automotive race, golf tournament, tennis tournament, soccer tournament (e.g., The World Cup), motorcycle race, and many other competitive events.
Parimutuel LLC’s offering hinges on the adoption of our technology for legal online social gaming. Our long term objective is to create revenue for all levels of government. We will provide a competitive best odds alternative to all participants, players, and bettors. Parimutuel LLC’s technology reduces the current profit margin on all online gaming. We bridge the technology gap by offering Android, Iphone, and tablet based games, events, activities, and tournaments for all small and medium sized bettors. Our offering is not geared toward “whales”. The patented system moves away from the current format where the house takes side against the bettor.
We provide active pools where bettors wager against each other within a system that is 100% riskless to the operator. The technology provides a fixed rate of return over time close to 5% while the current model for event wagering margin depends on a risk reward mathematical formula. There may be cases where the current format performs slightly better than our parimutuel system and other cases where we have a small margin advantage compared to current wagering systems. Again, we offer a risk-less venture. The more bettors using the parimutuel betting system the greater the value to our business. We supply a pure betting system where the bettors receive optimum entertainment value across multiple electronic platforms. Our business model is a technology play rather than a pure gambling play. The future of gaming is all about mobile and tablet technology.
We are moving forward with state regulatory applications, licensing and software certification.
Contact us for further information.
Harry B. Platis
Attorney at Law
Founder, Parimutuel LLC
16300 Mill Creek Road #105
Mill Creek, WA 98012
Director of Operations
16300 Mill Creek Road #105
Mill Creek, WA 98012
2 – Introduction (Overview of Internet Gaming)
According to the statutes of the U. S. Federal Government and many states, gambling is defined as risking something of value upon the outcome of a contest of chance.
The latest U.S. Federal legislation on September 30, 2006 — H.R.4411 the Internet Gambling Enforcement Act of 2006 Sec. 5362 defines illegal betting or wagering as the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance).
This Federal legislation includes a specific allowance for online competitions–betting on games of skill, such as the competitions offered by The Parimutuel Group, to continue in the states where they have always been legal.
In 2005, millions of U.S. residents went online to bet more than $4 billion on casino games, sporting contests and poker. Despite the official hostility of the federal and most state governments, Internet gambling among U.S. residents continues to grow at a rate of more than 20 percent a year. Most online gambling businesses now operate from obscure jurisdictions such as Antigua, the Kahnawake Mohawk Nation of Canada, Alderney (an island in the English Channel), and in the United Kingdom.
We are targeting all gaming, both land and internet based, where an event, competitive tournament, contest, game, or activity, is wagered upon. Our customers are all participants, players, and bettors who are legally allowed to bet on such a competitive event, tournament, contest, game, or activity. This market exceeds $1.44 Trillion Dollars per year worldwide.
3 – What is Parimutuel Wagering?
The parimutuel technology is a method to provide betting pools on events, competitive tournaments, contests, games, and activities over any and all electronic platforms. In gaming terms the parimutuel technology presents the lowest cost action to bettors giving the player “the best of it” on every wager.
Our technology coordinates a wagering event using a virtual Web Server with an administration application and server database. The administration application is an executable code which can generate a first event page from an event category page. The administration application also has a player management page, pool page and ticket management set of pages. The administration application inter-operates with banking and casino applications on the floor of a sports book or through any land based kiosk located in any authorized gaming establishment. The administration application will send the event information to the casino application, coordinate wager amounts with the banking application, close the wagering, monitor the event, update the pool, close the pool, and allocate individual account winnings and losses.
In simple terms Parimutuel Wagering is the formation of pools of bets made similar to the win, place and show pools used at horse races. The winners of each individual event are paid out of the pool, after first deducting administrative costs and taxes.
Parimutuel betting (from the French: Pari Mutuel or mutual betting) is a betting system in which all bets of a particular type are placed together in a pool; taxes and the “house-take” or “vig” are removed, and payoff odds are calculated by sharing the pool among all winning bets. In some countries it is known as the Tote after the totalisator which calculates and displays bets already made. The parimutuel system is used in gambling on horse racing, greyhound racing, Jai Alai, and all sporting events of relatively short duration in which participants finish in a ranked order.
Parimutuel betting differs from fixed-odds betting in that the final payout is not determined until the pool is closed. In fixed odds betting, the payout is agreed at the time the bet is sold. Parimutuel gambling is frequently state-regulated. It is offered in many places where gambling is otherwise illegal. Parimutuel gambling is also available at “off track” facilities, where players may bet on events without actually being present to observe them.
Our patented parimutuel wagering technique uses a pure parimutuel pool to cover bets made on events, activities, contests, games, and competitive tournaments. Straight odds systems, presently offered in licensed sports books in the State of Nevada, offer lines on any event, activity, contest, and tournament. There is a specific difference in implied odds between a line created by a sports book and a line created within a parimutuel pool. Sports books hope to profit from each event, activity, contest or competitive tournament by setting a line resulting in an equal distribution of money on all participants. In the parimutuel wagering system, the house is paid a small commission to manage the pool. There is no incentive for the house to favor one outcome over another. Our patented parimutuel system avoids a conflict of interest, unlike the present system in use by the licensed sports books. The risk to the house is ZERO.
Our parimutuel wagering approach favors the bettor, not the operator (sports book), via reduced commissions (vig) and therefore provides more favorable odds to the betting public. When less is reduced from a pool due to risk more can then be paid to bettors in winnings (better odds).
4 – Parimutuel Poker is Legal
To determine whether a particular contest falls under state anti-gambling prohibitions, most states employ a common law test called the “Dominant Factor Test,” or, alternatively, the “Predominance Test.”
In applying the Dominant Factor Test, a court asks whether “player skill” or “uncontrollable chance” is the most likely factor that will influence the outcome of a contest. For example, in applying the Dominant Factor Test, the Nevada Supreme Court found that because player skill was the dominant factor in influencing the outcome of a hole-in-one golf contest, such contest was a game of skill and players could pay an entrance fee and compete for a prize in that contest.
While the Dominant Factor Test is fairly easily applied to roulette (clearly a game of chance) and chess (clearly a game of skill), there lies a large “grey middle ground,” populated by hundreds of games that contain both an element of chance and an element of skill. Not surprisingly, in evaluating games with hybrid characteristics, two different courts in different states applying the Dominant Factor Test to identical games reached opposite conclusions. For example, poker has been described both as a game of chance and a game of skill. Differences, however, can be attributed to the determination of skill and [*1205] chance as being a question of fact as opposed to a question of law. Therefore, the skill or chance decision can be influenced by the quality of evidence presented; the experience and qualifications of counsel; and the experience, qualifications, and biases of the triers of fact. As the Plissner case and the Kansas Attorney General Opinion set forth in the footnotes illustrates, juries can be difficult to predict and their decisions may be even more difficult to overturn on appeal.
A second test used by some courts is the “Material Element” test. Under this test, courts find a particular activity to be a game of chance if chance plays a material element in the outcome. This test is more subjective than the Dominant Factor test.
Lastly, some states prohibit betting on skill games altogether either by statute or effectively by using a conservative common law test. For example, a small number of states use tests called the “Any Chance Test” or the “Gambling Instinct Test.” Under the Any Chance Test, if the contest contains any element of chance, however small, wagering on such contest is always prohibited as gambling. Similarly, courts employing the Any Chance Test prohibit an activity that “appeals” to the player’s “gambling instinct.”
The question of gambling on an event comes down to whether or not the event is a game of skill or a game of chance. If betting on an event that is at least 50.1% skill based then the event is a skill based event.
Therefore wagering on such an event is not gambling. Kindly review the ruling made by Senior United States District Judge Jack B Weinstein regarding poker as a game of skill:
Please also take the time to review Professional Poker Player Annie Duke’s view on poker as a game of skill listed in the additional information section.
Wagering on poker tournaments within our parimutuel poker wagering system is by definition not gambling — it’s entertainment. Poker is not a game of chance. Parimutuel wagering is exempt under all U.S. laws that refer to Internet Gambling.
Betting on parimutuel horse racing events is legal in the United States. In some states they go so far as to show races on television so that you can watch the race you just bet on over the Internet. Betting on horse races over the Internet is 100% legal.
Our patented technology is in line with other parimutuel wagering, from horses to greyhound dogs, and everything in between. The patented parimutuel wagering method was developed to be utilized in parimutuel events such as horse races, greyhound dogs, Jai Alai, and lottery draws. Our parimutuel wagering system can be used for other contests, activities, events, and competitive tournaments at absolutely no risk to the operator.
4.a – Parimutuel Revenue Projections
In order to build a critical mass of users we will use targeted television ads, mobile/tablet ads, and hundreds of keyword based search engine ads (both paid and organic) to drive traffic to our offering. Our 24 hour a day marketing strategy will focus on the best odds offerings to participants, players, and bettors. We will emphasize the legal status of our offering vs. illegal online poker or event wagering websites. We will be the operator who provides the best payment system at the best odds, for the lowest cost. We will offer a transparent affiliate program to all online marketing agents where we will share information with affiliates. The days of blind affiliate gaming programs are over. The parimutuel auto racing and golf offering will be affordable to the masses, not simply to big time players. The product development will be geared to updating our mobile, tablet, and electronic platforms. As new technologies emerge, we will always be on the cutting edge. As it relates to gaming we will accept the top crypto currencies like Bitcoin, Ethereum, and Bitcoin Cash.
In 2009 MSNBC produced a documentary on illegal event wagering in the U.S. The numbers were so high, they were beyond belief.
Estimated Annual Wagering across Multiple Events
NFL Wagering: $80 Billion Dollars annually
Super Bowl: $6 Billion Dollars annually
College Football: $60 Billion Dollars annually
College Basketball: $50 Billion Dollars annually
NCAA Basketball: $6 Billion Dollars annually
NBA: $35 Billion Dollars annually
MLB: $30 Billion Dollars annually
Hockey / NASCAR: $1 Billion Dollars annually
Total event wagering USA: $268 Billion Dollars annually
Currently in Canada, the Ontario Lottery and Gaming Corporation allows straight wagers on all professional and amateur sporting events under a non-parimutuel-based betting line (similar to the Nevada sport betting systems). The Ontario Lottery and Gaming Corporation charges a minimum 15% commission or vig for these wagers.
Our worldwide estimates for event wagering are based on the proven willingness for people to wager in the State of Nevada. The Nevada estimate data for the entire U.S. and the rest of the world is $1.44 Trillion Dollars a year, combining both legal and illegal event wagering. This is a conservative estimate at a ratio to global GDP of $65 Trillion Dollars. Our figures reflect 2.2153 percent of the total global GDP.
We have calculated the following annual revenue estimates (2012) from specific parimutuel events, as follows:
1. Parimutuel Events $850 Billion Dollars annually
2. Parimutuel Poker $184 Billion Dollars annually
3. Parimutuel Billiards $60 Billion Dollars annually
4. Parimutuel Games $284 Billion Dollars annually
5. Parimutuel Contests $62 Billion Dollars annually
Total: $1.440 Trillion Dollars per year
Total Revenues based upon a 5% commission rate, except for Games which uses a 45% rate
1. Parimutuel Events $42.50 Billion Dollars annually
2. Parimutuel Poker $9.2 Billion Dollars annually
3. Parimutuel Billiards $3.0 Billion Dollars annually
4. Parimutuel Games $127.80 Billion Dollars annually
5. Parimutuel Contests $3.1 Billion Dollars annually
Total: $185.60 Billion Dollars annually
The offshore commission rate of 10 to 15 percent is 2 or 3 times our estimated commission rate for all non-game commissions. Therefore, with the current system, it is estimated the annual non-parimutuel game related commissions (vig) to offshore, unregulated, event betting entities, is believed to be at least $115.60 to $166.40 Billion Dollars. This amount is growing by over 15 percent a year while Internet Gaming is mostly illegal and offshore dealings are not exactly fair and balanced. There is a lot of money involved in parimutuel event wagering. As we mentioned above, the total estimated parimutuel poker wagering is at least $184 Billion dollars a year. This figure will increase dramatically as wagering on poker tournaments is regulated and legalized. The State of Nevada took the first step by legalizing online poker. New Jersey and Delaware were quick to follow suit. Other States will soon jump on the bandwagon.
The Parimutuel Group’s technology is superior to any current offering in the gaming market. We offer bets on parimutuel events, competitive tournaments, contests, games, and activities. We take on any size entry pool where legal bettors want to wager on the results. Our focus is on micro gaming and the creation/management of bettor pools. We do not profit from the results of the pool, rather we earn a small commission for arranging the pool, and supplying the technology across all electronic platforms. This is the biggest difference between the current wagering system and our patented parimutuel web wagering system.
The current base of massively profitable Internet wagering offerings will no doubt adapt and react to our system. The Parimutuel Group’s technology can legally go up against the biggest players in the gaming market, due to superior technology, protective software, web betting patents, social network marketing and search engine advertising techniques. We have an unstoppable desire to provide the best odds to bettors for all events, competitive tournaments, games, contests, and activities. The key to success in a market dominated by big players is the ability to give a great yield to bettors. The Parimutuel Group technology is way ahead of the curve on this front.
The Parimutuel Group’s focus will rest on the entertainment value to small and medium sized bettors. Our method encourages micro-betting. We deliver where other systems cannot afford to handle the action.
We are competing directly against brick and mortar casinos, and all other existing licensed (and some unregulated) sports books, both land based and online. We will survive because of our low overhead, and we will focus on smartphone marketing, and advertising. We will go straight to the end user and deliver technology that allows for action at a miniscule fee compared to the current system. Our concept is similar to a multi-state lottery, where the prize is significantly large while costs are small. We need to cover our cost of applications, compliance, licensing, insurance, servers, processing, marketing, advertising, social media, web hosting, server administration, Internet security, and customer service. Our system is a technology play and not simply a gaming offering at a lower fee.
Federal Gambling Laws and Limitations
On Oct. 13, 2006, President George Bush signed the Unlawful Internet Gambling Enforcement Act into law. This law banned internet gambling and created a task force to stop and punish violators of the law.
The excitement to get back in the game has been halted, however, as federal as well as state legislation pending approval prohibits former sites from operating for five years minimum. This leaves new faces like The Parimutuel Group to point their future efforts toward Internet gambling.
The U.K. is currently the largest online gambling market in the world. In 2012, online gambling in the U.K. raked in $2.5 billion and gambling in Europe overall is predicted to reach $42 billion in 2015. This, however, is not even the most staggering statistic. In 2010, there was a 30% growth in online users from the 2009 numbers (which was already 5.6% of the adult population). If this growth trend continues across Europe, the market could size could double in the next five years.
When poker was legal in the U.S. from 2001-05, revenue grew from $82.7 million to $2.4 billion. Internationally, online gambling generated $117.6 billion in 2011 and is predicted to grow annually at 9% to reach $182 billion in 2015. According to MSN Money, online poker alone could generate $6 billion to $8 billion a year.
State Gambling Legislation
Legal gambling in New Jersey and Pennsylvania was $3.05 and $3.16 billion, respectively, and they are just No. 2 and No. 3 on the U.S. gambling list. No. 1 last year was Nevada, making a whopping $10.8 billion. Nevada believed gambling was moving to an online venue in the future and wanted to ensure its place in the emerging market. Below are states considering legislation concerning online gambling and a timetable for completion of the legislation:
- California — Still waiting.
- Delaware — Fully passed Online Gambling Bill and are currently putting infrastructure into place to get it up and running by September.
- Florida — Considering a bill, but could be next year before approval. They estimate online gambling will produce $10 million in tax revenue starting out.
- Hawaii — Proposed a bill, but are still waiting for support and have no real timetable, but would like to move quickly as they see possible revenue from Asian markets as well.
- Illinois — State Rep. Bobby Moak, D-Bogue Chitto, is rolling the dice again in the 2013 legislative session on online gaming legislation that could have a profound impact on the future of legal gaming in the state. The bill would have a 5% tax and limit licenses to companies already with land licenses in the state.
- Iowa — Are looking to move quickly on a gambling bill as they estimate 150,000 people in their state already illegally online gamble on offshore sites.
- Maine — Having been discussed for over a year now and not gone anywhere, it does not seem important on the agenda even though the idea is frequently thrown around in committee.
- Massachusetts — Proposed by State Treasurer, would allow online Social card games, fantasy sports, and the lottery.
- Mississippi — Failed to get bill out of committee so far.
- Native American Tribes — Have proposed and discussed bills, but need federal legislation to allow population to gamble on a Native American land-based gaming server.
- Nevada — Signed into law a bill that legalizes online gambling and sets up framework for interstate online gambling.
- Pennsylvania — Will not introduce an online gaming bill this year.
- Texas — Proposed Poker Gambling Act of 2013 but does not have a timetable and has considerable resistance.
- Washington — Proposed bill legalizing in home online gambling, has yet to be voted on. Should be resolved in the next few weeks.
According to The New York Times, online gambling from mobile devices will be $100 billion by 2017.
What sets The Parimutuel Group apart is its connection to the growth of social media sites such as Facebook, LinkedIn (LNKD), and Twitter. The legalization of online poker in the U.S. according to a Goldman Sachs could create $12 billion in revenue alone, an estimate nearly twice as much as previously thought possible.
According to a research report by KPMP titled “Online Gaming: A Gamble Or A Sure Bet?,” one of the four key drivers that will shape the industry over the coming years is:
Combining online gaming and social networking: social networking will be a key driver of activity and growth in the online gaming world, as it represents a natural extension to users of digital and mobile technology. Social networking’s role in driving online gaming is especially significant because of its high levels and ease of remote access.
5 – Legal Resources and Support
U.S. Patent No. 8,277,311 entitled “Wagering Web Service System and Method”
- Patent granted on October 2, 2012
- All rights assigned to Harry Platis
- Additional patent application has been filed to ensure someone doesn’t try to design around the granted patent
At its core, the patent is directed to:
- A computer program which is used to coordinate wagering events, including pari-mutuel wagering events.
- As part of the process of coordinating wagering events, the computer program communicates with a casino’s software program, so that the event can be displayed and so that individuals can place wagers.
- The computer program also communicates with a financial institution’s banking software program, which ensures that wagers being placed are properly funded.
- After properly-funded wagers have been place, odds are calculated and displayed via the computer program.
Among other things, the computer program also:
- Controls the opening and closing of wagering time periods associated with an event.
- Records the event players in a database.
- Records the results of each wagering event in a database.
- Communicates with the casino’s software program to display the results of each wagering event.
6 – Summary and Conclusion
The patented Parimutuel System allows regulated legal betting on a wide variety of events, activities, contests, and competitive tournaments. The technology permits a bettor to wager on numerous contestants in events, contests, games, activities, or competitive tournaments. The parimutuel concept is applicable to poker, pocket billiards, golf, tennis, car races, World Cup Soccer, and many other events, activities, contests, games, and competitive tournaments.
As parimutuel poker wagering is adopted within the event wagering industry the benefits to bettors, operators, and governments, will become apparent. The parimutuel wagering industry will benefit from a transparent open wagering system that operators can use without risk of loss.
Affiliate marketing agents will have full information concerning users and revenue sharing data. Bettors will suddenly have the best odds for a given result, and therefore, a greater entertainment value.
Finally governments can regulate and tax a user friendly parimutuel wagering system to generate additional income.
The offshore operators will have to reduce their margins in order to compete with the parimutuel event wagering system. Bettors will be paid from all parimutuel wagers. This will place additional pressure on offshore operators who do not pay their patrons and who must absorb huge processing charges in order to operate outside of U.S. laws. Offshore entities will not be able to compete with the parimutuel wagering system as handicappers experience the value in all that is parimutuel wagering.
We have explained who is behind this revolutionary industry changing patented technology. We have also shown how governments can create billions of dollars of additional tax revenues at no cost, without risk. Finally, we have demonstrated how the betting public will achieve the best odds running in a parimutuel wagering system with costs minimized and winnings maximized. The big winner will be the skill-based game of poker.
Harry B. Platis
Attorney at Law
16300 Mill Creek Road #105
Mill Creek, WA 98012
Director of Operations
16300 Mill Creek Road #105
Mill Creek, WA 98012