Mark Cuban is making a big bet on gambling legalization in the United States. The Shark Tank star and Dallas Mavericks owner is putting his money where his mouth is by strategically investing in unicorns and startups that might profit from legalized sports betting in America.
Bettering or wagering across state lines in the United States is currently illegal under a federal law called the Wire Act. Most legal experts believe that the Wire Act, passed back in 1961, also bans online gambling. Despite that Cuban has been making a series of strategic investments in technology firms that might profit from legalized gambling.
These include Unikrn which is trying to develop a cryptocurrency for online gaming. Cuban has even signaled his intention to buy into the initial cryptocurrency offering (ICO) for Unikrn’s UnicoinGold. Cuban has also bought into the virtual reality company Virtuix Omini and the mixed reality company Magic Leap.
Cuban Sees Big Money in Gambling and eSports
Cuban told explained his rationale for investing in gambling-related tech in a June 2016 Fortune interview. It’s pretty simple and quite logical.
“Gambling is available in more than 100 countries,” Cuban said. “Combine that with the explosive growth of eSports and I saw it as a great investment.”
Some of the available data backs up Cuban’s argument. eSports, which many cynics label gambling is a fast-growing business.
There were around 148 million “eSports enthusiasts” in the world in February 2017, Sports Illustrated reported. Around 22% of male American millennials (men under 35) watch eSports almost as many as the number of people who watch hockey and baseball combined.
eSports companies generated $493 million in revenue in 2016, a 51.7% increase over 2015, Newzoo estimated. Newzoo expects such growth to continue and eSports to generate $1 billion a year in 2019.
Most of eSports’ current revenues come from sponsorship but if Cuban can add betting. He might create a venture capable of generating several billion dollars a year in revenue.
Cuban Thinks America will legalize eGambling
Like National Basketball League Commissioner Adam Silver, Cuban thinks legalization of sports in the United States is inevitable.
“It’s inevitable,” Cuban said. “It will take some time for the courts to overcome the grandstanding by a few district attorneys, but once that happens I think we will see a slow but sure availability of gambling across the country.”
Cuban believes the Wire Act will eventually be repealed or amended because states need the money.
“The bottom line is that it will create needed tax revenue that states will want,” Cuban added. Three states; New Jersey, Illinois and Connecticut, and the Commonwealth of Puerto Rico are already facing severe financial crises.
One obstacle that Cuban will have to overcome is the casino industry; which has close ties to President Trump. Sheldon Adelson; Trump’s largest campaign contributor is also one of the biggest casino operators. Casinos; which are already losing business, fear competition from digital gambling operations.
Something Cuban might be betting on is a Democratic takeover of the U.S. Congress in the 2018 midterm elections. Political observers are divided on that; but there are indications Democrats will pick up seats and possibly the U.S. House of Representatives. It is not clear whether the Democrats; who are heavily dependent on the soccer mom vote, would be willing to risk an expansion of gambling.
How Cuban Plans to Use Cryptocurrency to do an End Run around the Wire Act
Even if Congress does not cooperate, Cuban might have figured out a way to do an End Run around the Wire Act via Unikrn.
The company would sell gamblers in countries like the United States or Spain; where online betting is illegal, digital tokens for cryptocurrency. The bettors would then use Unikrn to make bets and convert it back into something like bitcoin to bring it back home.
That might be legal because all Unikrn is doing is selling cryptocurrency not taking bets. It might get into trouble with tax authorities in countries; like the United Kingdom, where online betting is legal as long as you pay the tax.
Even without the United States there might be a huge market for something like Unikrn in all the countries where online gaming is currently legal. The market is potentially vast, although logic interferes with it. Why would bettors spend money and effort to buy Unikrn when they can simply use bitcoin which they can use to get cash at an ATM or buy gift cards they can use at Amazon?
Cuban’s Sports Betting Failure
Cuban’s record on sports-betting investment is hardly inspiring. Back in 2004 he set up a sports-betting hedge fund called Centaur Galileo, Intelligent Betting Tips reported. By 2012 Centaur Galileo fund had collapsed with $2.5 million in losses.
For investors and cryptocurrency fans sake, I just hope that Unikrn will be more successful than Centaur Galileo. If not the legend of Mark Cuban might be destroyed for good and like another failed businessman; Donald J. Trump, the Shark will seek his fortune in politics instead.
Although Cuban’s investments in sports-betting tech make the motivations of his political career as questionable as Trump’s. Like Trump, Cuban seems to have serious conflicts of interest that cast doubt upon his sincerity. One has to wonder if his involvement in the Stop Trump movement was spurred by patriotism; or a desire to keep the casino industry from having too much influence in Washington.