| QUESTION 0 | 20 Points |
| Instructions: | Read the following e-mail string.TO ANSWER: Read the e-mail string and write an appropriate response to the request from your partner. Remember this question is worth 20 points, use your time accordingly |
From: Michael Grey
Sent: Monday October 31, 2022
To: Associate
Subject: Fwd: Block Chain Sports Wagering System
Associate:
I have a long time client, Ben Crobbery, that was the inventor of the carbonless copy paper in the 1970s and is now a venture capitalist. Anyway, Ben often asks us for advisory memos regarding his potential investment. As you know, my practice is primarily in general commercial finance, and I am not familiar with gaming, but I think Ben’s email (which I am forwarding) may have gaming implications.
Please review Ben’s e-mail and provide me with a summary that I can use to discuss any potential gaming law issues with Ben.
Thanks
Michael
——–Begin Forwarded E-Mail
From: ben@carbonless.com
Sent: Monday, October 31, 2022
To: Michael Grey
Subject: Investment Opportunity
Michael,
I hope all is well. I am writing to ask you to give me advice regarding a potential investment that has been presented to me. Newco, the creators of a new venture have offered to let me buy founders stock at a substantial discount if I invest at least $5 million. They have created a new sports betting platform using the Ethereum block chain system.
The way it works is that players can post a bet on the site, and other players can accept the bet. For example, lets say I am an LA Rams fan and they are playing the Raiders this weekend. I can post and fund a $10,000 bet that the Rams will win by 10.5 points or more. Someone else that thinks the Raiders will win or at least not lose by 10 or more points can take all or part of that wager. The block chain system is used to show bets, match bets, hold stakes, determine winning outcomes and distribute winnings. The company will make a small transaction fee in cryptocurrency from each bet. The system uses no odds makers and has almost no overhead. It is essentially an automated money-making machine.
It sounds too good to be true, but if it is risk free, then I want to invest and invest heavily in Newco. Please analyze this peer-to-peer betting concept and let me know the following:
- Is it legal for taking and accepting wagers in the U.S.? If so, why? If not, why and which laws present a risk?
- If it isn’t legal, are there any risks to me as a passive investor? If not, why and which laws present a risk?
- Would legal risks be mitigated if NewCo is based in Curacao and has a Curacao gaming license allowing it to provide gambling services globally?
I will be traveling on my yacht in the Caribbean for three weeks for an extended Thanksgiving break, I’ll call the second week of December to go over the analysis you send to me.
Thanks
Ben.