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William Hill Grilled by Nevada Gaming Regulators

Company Looks to Operate Sports Books, Anticipates Online Gaming

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A London-based bookmaker with a large online component took an assault of questions Thursday as it looks to gain entry into the U.S. via the Silver State.

Nevertheless, William Hill PLC (LSE: WMH) received the first round of approval to set up shop in Nevada. The company is seeking to operate the three Nevada sports books it acquired last year. Leroy’s, Lucky’s and Club Cal Neva will be consolidated and be re-branded as part of the more than $60 million project.

William Hill told the Gaming Control Board that its online business is an “engine of growth.” The company gave regulators an extensive presentation of its web services, which also include poker and other casino games.

William Hill has a joint venture with software provider Playtech Ltd. to run casino games across the world. Playtech (LSE: PTEC) has submitted an online poker application in Nevada.

Control Board members grilled William Hill on Playtech founder Teddy Sagi, who served jail time in 1996 for fraud and bribery. The companies have recently endured a rocky relationship.

The Board also expressed concern with William Hill serving Americans in the past. While the 2006 Unlawful Internet Gambling Enforcement Act wasn’t enacted yet, the 1961 Interstate Wire Act created illegality.

Mark LipparelliControl Board Chairman Mark Lipparelli asked if the company’s game plan was to throw open its business worldwide, and then wait to see if it was illegal in a jurisdiction. William Hill recently left the murky legal waters of Australia.

Nevada officials also asked about player fund protection and safeguards for problem gambling and sporting event integrity.

“The first guy is taking all the bullets,” said Gaming Commissioner Randolph Townsend, who was observing the hearing from a live stream in Las Vegas. He said the Commission will fire some more.

Townsend said the application was very complex and sets precedence as Nevada embarks into online gaming. Regulators have shown that operating in conflict of the antiquated Wire Act is unattractive, but it isn’t an application killer. Board member A.G. Burnett called the law “hazy.”

“There was a failure on the part of the company in doing its due diligence,” Lipparelli said. He admitted that regulators won’t find “perfection” with any online gaming applicant.

During the marathon three-hour long public vetting process, William Hill ended up satisfying the three-member Board. Concerns about Playtech will be addressed during its application for online poker. If regulators don’t find Playtech suitable, William Hill could sever its partnership.

Lipparelli considered approving William Hill with conditions, so that regulators could formally re-examine the company after a certain period of time.

However, an attorney for the company argued strongly against it, calling a condition “counterproductive” because it would create unanswered questions going forward.

“I find all the individuals [at William Hill] to be extremely suitable,” Burnett said as the meeting was winding down. “We would be welcoming into Nevada a very well respected company and brand. This will make the state’s gaming more competitive.”

Follow Brian Pempus on Twitter — @brianpempus