Almost exactly one year ago, Nevada Governor Brian Sandoval signed Senate Bill 443 to legalize sports betting investment funds in the only state with fully legal sports betting.

The law, which I first detailed when Reno Senator Greg Brower introduced it in 2013, allows for the creation of business entities to pool funds from investors located anywhere in the world to place bets in Nevada sports books and share in the profits and losses of those wagers.

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Essentially, it allows people to invest on the point spread or over/under just as they would by placing money in a mutual fund.

At the time of their creation, many of the details about the operation of sporting betting mutual funds were still rather murky. However, within the past month, several funds have launched thanks to partnerships with CG Technology, formerly known as Cantor Gaming. CG Technology, which operates the sportsbook at the Venetian, is the only Nevada book to currently allow entity betting.

One of the first mutual funds to pioneer this new form of sports betting is Reno-based Bettor Investments, LLC. This fund, which has focused a lot of its action on hockey, requires a minimum investment of $500 and wagers about 2 percent of the total fund on any given bet. So far, in the month of April it boasts a 33-18 record.

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Another newcomer, Las Vegas-based Contrarian Investments, LLC, is already making waves for its initial success and lofty goals. Veteran sports bettor, Chris Connelly, is seeking minimum investments of $1,500 with the goal of raising $2 million. His strategy is to risk 5.5 percent per play, resulting in a 5 percent return on wins and 5.5 percent loss when he is wrong. Connelly has forecast a win percentage of 55-58 percent, which would overcome the casino’s vig.

To date, Connelly is 3-1 since placing his fund’s first wager on April 19. That is a return of 9.5 percent, which crushes many traditional mutual funds.

“I completely expect to outperform the majority of mutual funds and produce quality returns for my investors,” Connelly said.

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Yet outperforming mutual funds and overcoming the vig are only a few of the hurdles these new funds face.

One obvious problem for anyone who has ever tried to lay a large bet is that books can reject it. In theory, if a large bet leaves a book too heavily exposed on one side, it won’t take it. At times, books can also try to avoid action on softer halftime lines.

Additionally, if sports betting mutual funds grow as predicted, a given fund might try to place repeated six-figure bets and casinos will know which funds are frequent winners. This could cause them to shy away from accepting bets from the most successful funds.

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“This is true that books will cut off or limit bigger players who have proven they are successful,” Connelly admitted. “However, with this venture, CG Technology is encouraging bigger bets from funds with the hope that they generate a bigger handle with different entities on opposite sides. They’ve assured me they will not be limiting action, however there will be some sides that are limited, for example, the first half of Toledo vs Arkansas State college basketball. That won’t be an issue for my fund because my strategy involves only bigger conference games that draw bigger action.”

Even with cooperative sportsbook partners, the new Nevada mutual funds must also be weary of their own future success. As these funds grow, and hopefully provide significant returns to their investors, headline-hungry politicians could muddy the whole industry, just ask DraftKings and FanDuel.

One potential fear is that the federal government could try to enforce the Wire Act. 18. U.S. Code § 1084(a) provides:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

Wiring money to Nevada for the sole purpose of investing in a sports wager sure seems like a Wire Act violation to me. Although all of the action occurs within Nevada, the fund is most certainly engaged in interstate commerce with the goal of placing bets on sporting events. Whether the federal government would ever enforce it, however, is a completely different story. Technically marijuana possession violates federal law, but that has not stopped states like Colorado from legalizing it.

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Aside from circumventing the Wire Act, the Nevada sports betting mutual funds are also a way to back door the Professional and Amateur Sports Protection Act.

Yes, Nevada is exempt from the reaches of our idiotic federal ban on sports betting, but these mutual funds allow someone like myself in Pennsylvania to do what is otherwise considered illegal while I’m physically located in Pennsylvania — bet on sports.

“As a general principle of law you can’t accomplish indirectly what you can’t do directly,” explained gaming law expert Daniel Wallach. “The [Nevada] law is not likely to be tested, but if it were, it might not hold up. PASPA is a stupid law. I think it is unconstitutional. But the goal of PASPA is to curb the spread of state-sponsored sports betting. This mutual fund investment mechanism is designed to extend beyond the borders of Nevada. It really pushes up on the edges of PASPA and might potentially violate it. However, you need a willing plaintiff to challenge it and so far nobody is complaining. I think it is a done deal now that it won’t be challenged by the feds or the leagues.”

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Of course, DFS sites operated for years before drawing the ire of numerous Attorneys General after buying every TV commercial slot last football season.

Yet while it is unlikely that any of the pro leagues or the NCAA will challenge Nevada’s law as they have done in New Jersey, it could hamper their ability to raise PASPA objections in the future since they are sitting idly by right now.

Despite the potential obstacles, Nevada’s sports betting mutual funds provide an alternative investment option while also expanding legal access to sports wagering. Hopefully, as Nevada’s handle continues to grow and these funds generate significant returns for investors, more lawmakers will step up to the plate and pressure Congress to do what the vast majority of Americans want them to do — legalize sports betting.

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Steve Silver is a former sports reporter for the Las Vegas Sun and is now a lawyer in Philadelphia. You can reach him at steve@thelegalblitz.com or on Twitter @thelegalblitz.

Photo courtesy of Getty Images.