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    CIT Entertainment, Media, Gaming & Sports Finance provides film, entertainment, gaming, sports, and media financing solutions for development, expansion, equipment and strategic acquisitions.

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    In early 2014, a small team of international programmers created Popcorn Time, an app that enables free online streaming of movies and television shows. Just over a year later, the app's popularity has already grown to Netflix-like levels, largely due to its slick interface and higher-quality streams than those on many piracy sites.

    The entertainment industry is studying the app and the growing number of piracy sites as a whole, which some say now makes up about 24 percent of global Internet traffic. Netflix sees Popcorn Time as a considerable threat and even mentioned it in a January note to shareholders.

    The app is difficult for U.S. copyright laws to shut down because it does not actually host pirated content. Although it provides free access to online streams and its developers show no intent for commercial gain, it could severely affect content creators' ability to get a return on investment.

    So with dull legal teeth, the U.S. film and television production industry takes a grassroots approach to fighting piracy.

    The Industry Fights Back

    The legislation conversation has been quiet since 2011, when SOPA (Stop Online Piracy Act) tried and failed to extend copyright infringement provisions to streaming.

    Meanwhile, the entertainment industry isn't backing down. At the forefront is Creative Future, an advocacy group comprised of about 400 television and film industry associations or production entities.

    According to Ruth Vitale, executive director of Creative Future, "We feel the creative community has been absent from the conversation and that needs to change." The group has mobilized film producers, directors and writers to speak on Capitol Hill and at film festivals about their craft and how copyright laws protect their ability to earn a living and deliver more of the content the public demands.

    The group has also taken its message to credit card companies and payment processing entities like PayPal. Since 2012, PayPal has been breaking ties with cyberlocker sites, obstructing the sites' abilities to collect payments.

    Some countries are taking more direct measures. A group of London police officers, for example, formed PIPCU (Police Intellectual Property Crime Unit), which blocks or shuts down piracy sites. In one year it has targeted 2,000 sites, Popcorn Time among them.

    British courts are now a greater part of the piracy conversation too. A late April ruling from a U.K. High Court issued blocking orders on several websites facilitating Popcorn Time.

    Content Delivery is the Key

    Plenty of people argue Hollywood is doing fine, and that 2014's domestic box office dip to $10.4 billion, just off record years in 2012 and 2013, is an aberration. Some also claim that piracy is a tastemaker, not taking away dollars as the industry claims but actually encouraging people to go to movie theaters.

    The film industry has also been called slow to move to better digital delivery methods as the movie industry will need to change for consumers who want product delivered quickly and inexpensively.

    According to Wade Layton, Group Head and Managing Director of CIT Corporate Finance, Entertainment, Gaming, Sports & Media, developments in digital, cloud-based and physical storage, mobile, smart-tv's and wireless broadband are among the major technological trends that have transformed the way consumers' access and interact with content.

    Theatrical release remains the best way for filmmakers to make money. However, in addition to the mainstream offerings such as Netflix, Hulu and Amazon, many new subscription-based video-on-demand (SVOD) over-the-top platforms are being launched, making content available through some 400 legal sites.

    According to Vitale, the industry is really doing battle with its own corporate image: "We're victims of our own red carpet celebrity. Those who don't believe in copyright continue to minimize our value. They reinforce the thinking that we're rich, fat sitting in the back of limos and we don't care."

    If you enjoyed this blog post please consider sharing it with your social media networks. If you have a comment on this post, or a suggestion for a future post, please let us know at  blog@cit.com.

    According to NBC Sports, the Super Bowl XLIX championship game between the defending champion Seattle Seahawks and the New England Patriots at Glendale, Ariz. was the most watched Super Bowl in history. Approximately 114.5 million viewers tuned in, topping last year's 112.2 million.

    It's no surprise that many watched the game all the way to the end, as the New England Patriots' 28-24 victory over the Seattle Seahawks came down to the last minute.

    The Arizona Super Bowl Host Committee estimates the event had an economic impact of more than $500 million in Glendale. Another town feeling a windfall from the matchup is Las Vegas. According to the Las Vegas Convention and Visitors Authority, more than 300,000 visitors flocked to Sin City, many of them to watch the game at the city's race and sports books. Nevada sports books are the only places in the country that legally can accept sports wagers.

    The Convention and Visitors Authority says the influx of tourists for the Super bowl produced a nongaming economic impact of $124.4 million, up 1.9 percent from 2014. Sports books say the Super Bowl betting handle exceeded $100 million, largely because of a huge variety of proposition wagers ranging from which team will win the coin toss to whether a safety will be scored - which has occurred in the last three Super Bowls.

    That seems like a lot of cash, but when you stack it up against illegal Super Bowl Bets, it's small potatoes. According to the American Gaming Association, approximately $3.8 billion was placed in illegal Super Bowl bets - that's 38 times more than the regulated market for Super Bowl wagering in the U.S.

    The chorus for something to be done to remedy the huge amount of money that's being bet illegally is rising. In a recent article in the Las Vegas Review Journal, Sen. John McCain says Congress should hold hearings whether to expand legalized sports betting that now largely is limited to sports books in Nevada. He said he favors allowing states that sponsor legalized gambling to accept sports bets as well, and would extend the invitation to Indian tribes that operate casinos.

    According to the American Gaming Association, there are commercial or tribal casinos in 41 states. Including lotteries, gambling takes place in 48 states and the District of Columbia.

    The Las Vegas Review also adds that sports gambling was a bright spot in Nevada last year. While casino totals dipped slightly, revenue from sports wagers hit a record $227 million, an increase of nearly 12 percent from 2013.

    Nevada is one of four states that were grandfathered into the 1992 Professional and Amateur Sports Protection Act, and allowed to sponsor sports betting. Montana, Oregon and Delaware are the others.

    Another advocate for the expansion of legalized sports gambling outside of Nevada is National Basketball Association Commissioner Adam Silver. In a recent New York Times editorial, Silver, as the first leader of a major sports league to call for change, feels sports betting should be regulated by the federal government. He says he's advocating federal regulation because there needs to be consistency from state to state.

    Whatever happens, you can be sure that with $3.8 billion on the line, calls for a solution to capture this lost revenue are soon to come.

    Steve Epperly is Senior Director of CIT Corporate Finance, Gaming. He has more than 20 years of experience in the financial services industry including credit risk management, corporate finance and international trade finance. Epperly has a bachelor's degree in marketing from the University of Nevada Las Vegas and an MBA from Kennesaw State University.

    If you enjoyed this blog post please consider sharing it with your social media networks. If you have a comment on this post, or a suggestion for a future post, please let us know at blog@cit.com.

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