Although the State of Nevada has long been famous for its legalized gaming industry, gambling has not always been legal in the state.  In 1909, the Nevada legislature made games of chance illegal with the law taking effect in 1910.  After the collapse of the mining industry and the advent of the Great Depression, Nevada again legalized gaming in 1931.  Not all activities related to gambling, however, are legal in Nevada.  

Earlier this week, the Securities Division of the Nevada Secretary of State's office issued a Summary Order to Cease and Desist to an individual named Michael Clough, who allegedly was soliciting sports entity wagering investments under various business names, including Sports Bet Brokers, Sport Brokers, Sportivo, and Circles Network, LLC.  According to the Summary Order, the securities were in the form of notes issued in connection with an entity wagering program.  In 2015, Nevada enacted legislation allowing entity betting (somewhat akin to a gambling mutual fund).  According to the Secretary of State's Summary Order, only one sportsbook has ever been approved by the Nevada Gaming Commission to accept entity wagering.  Allegedly, that sportsbook never accepted an entity wager from the respondents.

The Summary Order includes this following allegation:

"Based upon a review of the Edgar database maintained by the Securities and Exchange 25 Commission, no Form D or other notice filing or registration was completed by any Respondent."

That allegation is misleading, at best.  However, the Securities and Exchange Commission has made clear its position that failure to file a Form D does not vitiate the availability of the exemptions under either Rule 504 or Rule 506:

"Question 257.07

Question: Is the filing of a Form D in connection with an offer or sale a condition to the availability of a Regulation D exemption for that offer or sale?

Answer: No. The filing of a Form D is a requirement of Rule 503(a), but it is not a condition to the availability of the exemption pursuant to Rule 504 or 506 of Regulation D. Rule 507 states some of the potential consequences of the failure to comply with Rule 503. [Jan. 26, 2009*]

Further, Regulation D is a non-exclusive safe harbor.

This isn't the first time that the Secretary of State's office has alleged violations of Nevada's securities laws.  See this post from last November. 

https://www.jdsupra.com/legalnews/nevada-secretary-of-state-orders-halt-45777/