Manager’s sports betting fund ignites scrutiny in Nevada

A man who ran one of the first sports betting mutual funds in Nevada had filed for personal bankuptcy twice before receiving permission to manage other people’s money.

Sports books are not required to check a manager’s ability to competently oversee money, according to Nevada law.

The Nevada secretary of state and attorney general have received at least eight complaints about Reno-based Matt Stuart, 46, founder of Bettor Investments.

Stuart is accused of going “radio silent” and not responding to about 10 clients’ requests to return their money.

Stuart had about 45 clients, several of whom invested between $5,000 and $10,000 over the course of 2016 and 2017, according to investors. He accepted a minimum of $500 and might have raised at least $60,000.

Investors say they were not aware of Stuart’s history of bankruptcy, which can only be found by searching a court database. They wonder why he was given the right to manage other people’s money. The incident, they say, will hurt the already struggling sports betting mutual fund industry.

Regulations

The Colorado native received permission in March 2016 from CG Technology, the Las Vegas arm of Wall Street company Cantor Fitzgerald, to place bets on behalf of Bettor Investments after a background check by the sports book.

According to Senate Bill 443, which became law in 2015, sports books are required to perform due diligence on fund managers, know the identities of the people investing in the fund and check the funds’ records on a regular basis.

The depth of the due diligence is up to the sports book, and there is no requirement to check a manager’s ability to competently oversee money.

Most sports books decided not to accept wagers from the new mutual funds because they didn’t want the due diligence burden, said Dennis Gutwald, an attorney at Las Vegas-based McDonald Carano.

CG Technology, which helped craft the law, has been the only one to do so.

“If CG Technology had no responsibility to investigate this guy’s competence as a manager, there’s no reason for them to care. Better for them if he’s not a winner, which they were probably banking on,” said Anthony Curtis, who runs Las Vegas Advisor and publishes books about all aspects of gambling and Las Vegas.

CG Technology doesn’t comment on clients, spokeswoman Karen Laureano-Rikardsen said.

Karl Bennison, chief of enforcement at the Nevada Gaming Control Board, said the matter is under review.

Bankruptcy

According to court documents, Stuart first filed for bankruptcy in 1994. Details surrounding the bankruptcy are not available.

Stuart grew up in Littleton, Colorado, and ran Stuart Computers LLC, a consultancy firm, from 2001 until 2005. His earnings fluctuated from $19,000 to $43,000 between 2004 and 2006, according to court documents. He moved to Las Vegas in 2007, where he filed for personal bankruptcy a second time.

Stuart then found work in a poker room in Nevada, according to a 2016 Sports Illustrated article.

In 2015, he registered Bettor Investments.The sports betting mutual fund combined Stuart’s strengths in computers and gambling. Stuart stated on his Bettor Investments site that he developed an algorithm to generate “conservative growth, profit and stability for investors.”

Several investors said they communicated with Stuart frequently by phone and email, yet none had met him. The investors said Stuart was knowledgeable, outgoing and responsive to any inquiries until the end of last year.

He even invited his clients on several occasions to join him at casinos in Las Vegas and Atlantis Casino in Reno. Stuart’s last-known address is a 12-minute walk from the Atlantis. The casino declined to say when Stuart last visited their sports book, citing guest confidentiality rules.

Personal loan

Stuart told his investors in December 2016 that he would not be placing wages through CG Technology anymore. The sports book was demanding more and more information about investors and was processing new applications at a “snail’s pace” for all of the mutual funds, he told them.

Stuart told investors he responded to CG Technology’s demand with questions of his own about what the sports book was doing to set guidelines for the funds and to promote the industry it had created. The sports book told him it was none of his business, according to emails obtained by the Review-Journal. It would soon close Stuart’s account for not complying with their request, said a company employee on the condition of anonymity.

“Our fund is going to change legal structure so that we are in accordance with ALL State and Federal laws, yet we will NOT be forced to play the game with only ONE sports book,” he told his investors in the email dated Dec. 2. “I also am NOT going to continue to make wagers with CG Technology. Why should we help them price betting lines so they can squeeze an additional 3-4 percent in order to make back some of those fines levied on them? NO! This ‘customer’ is NOT coming back!”

He persuaded many to convert their investments in Bettor Investments to a one-year personal loan to him paying anywhere from 12 percent to 14 percent. Stuart would continue betting and return the interest from his winnings.

As the one-year loans started to come due at the end of 2017 and investors reached out to Stuart, he went “radio silent,” client Todd Thomas said in his complaint dated Feb. 21 to the secretary of state.

Stuart no longer takes their calls or answers their emails, several investors said. He has shut down his website Bettor Investments and launched another one called No Free Picks, which sells a daily sports betting subscription service for $30 a month or $150 a year.

“I thought the idea of sports mutual funds was cool, but it seems there is little to no regulation,” Thomas said. “I wouldn’t touch such a fund again with a 10-foot pole.”

No reputation

The 2016 Sports Illustrated article on Nevada’s new law permitting sports betting mutual funds featured Stuart prominently, helping him reach a broader audience.

Several of Stuart’s clients said they contacted him after reading the story, which touted Stuart as “part of an entrepreneurial group of quants.”

Curtis, whose mailing list includes about 15,000 gamblers, said many of the top sports bettors are known by someone in his group. But he couldn’t find anyone at the time who knew Stuart, raising doubts in his mind about his prowess.

“If no one in our contact circles knows ’em, it’s hard to imagine that they’ve really been winning,” Curtis said of the sports betting mutual fund managers.

Contact Todd Prince at tprince@reviewjournal.com or 702-383-0386. Follow @toddprincetv on Twitter.