Billy Walters: Done gambling, still dealing

Entrepreneurs such as car dealers are inherently gamblers, taking risks that others don't. The National Automobile Dealers Association's annual convention henceforth will be held in Las Vegas every other year for a reason that goes beyond lots of hotel rooms: Dealers are at home in that environment.

None, perhaps, more so than Billy Walters. Walters, who with his partners owns 18 dealerships, has been a gambler and entrepreneur since before he was 10. In 2010, he won $3.5 million betting on the Super Bowl, according to a report on CBS' "60 Minutes."

Today, the man some consider the greatest sports bettor ever faces indictment by the Securities and Exchange Commission for insider trading.

The Wall Street Journal reported that Walters offered insider tips to professional golfer Phil Mickelson, who used the profits from those trades to pay off his gambling debts to Walters.

Since the 1980s, Walters has been indicted four times -- but never convicted -- on charges related to gambling.

In a lengthy interview with Automotive News, Walters declined to discuss the latest indictment and spoke only fleetingly about his gambling past. But in his slow, Southern drawl, showing the occasional flash of subtle humor, the Kentucky native spoke extensively about his history in and plans for auto retailing.

"Whatever success I've had in life I owe to the automobile business," Walters, 69, chairman of the Walters Group in Henderson, Nev., said. "It was my MBA. It was my college."

His dealerships sell about 28,800 new and used vehicles a year. To grow that number, he says he hopes to expand by buying more stores, especially in the Southeast.

Walters grew up poor in a home without running water in Munfordville, Ky., about 70 miles south of Louisville. Its current population is about 1,600.

Rarely the "smartest guy in the room," Walters said he was always willing to "outwork everyone."

That work ethic came from his maternal grandmother. She worked two jobs to raise seven children, including Walters, after his father died when he was 1 year old and his mother walked out, he said.

"My grandmother was my entire life," Walters said. "She not only gave me the confidence to be a businessman, she was my role model."

His entrepreneurial streak showed when he was young. At age 7, Walters secured a $40 bank loan to buy a Huffy power lawn mower to start a grass-cutting business. Two years later, a second loan for $90 funded a newspaper route. His grandmother co-signed for both loans.

His early years also introduced Walters to gambling. When his grandmother went to work, she left him with his uncle, who owned a pool hall. By age 5, Walters had learned to shoot pool. He made his first bet at age 6.

In 1965, one year after his high school graduation, Walters got a sales job at McMackin Auto Sales, a used-car store in the Louisville area. He hustled to build clientele. Each time he sold a car, he mailed a self-promotion letter to 10 people living on each side of that customer's home. He would peruse the daily newspaper for car ads, inviting the ads' sellers to do trades with him. He went through the phone book and cold-called people.

"Everybody I sold a car to, I recruited as a bird dog and paid them a $50 referral fee, which was unheard of then," Walters said. "I got a ton of referrals."

Walters sold about 32 cars a month and earned $56,000 a year in 1966, equal to about $400,000 today.

Steven's Brothers Auto Sales, which was across the street from McMackin, recruited Walters in 1967 to be a sales manager. "When I gave my resignation to Mr. McMackin, we cried together. But this was an opportunity for advancement," Walters said. "We remained friends until he died."

Walters worked for Steven's Brothers until 1972, then started his own business wholesaling cars. He did that until 1982, when Las Vegas beckoned.

"The whole time I was in the automobile business, I had been working on a program to handicap sports," Walters said. "I wanted to gamble where it was legal and lawful and you could be a respected member of the community."

Walters told Automotive News that he has stopped much of his gambling in recent years, adding: "That passion I had with gambling has faded. I got burned out on it."

In 2011, Walters was interviewed on CBS' "60 Minutes." An avid golfer -- his handicap today is 10 -- Walters told "60 Minutes" he would bet tens of thousands while golfing with friends. The most he won for a hole of golf was about $400,000. The most he won in a game of golf, he said, was $1 million -- which he lost at a blackjack table later that evening.

In 2010, Walters had won $3.5 million on the Super Bowl, "60 Minutes" reported. Walters told "60 Minutes" that on any Sunday he could have at least $2 million "at risk" on professional football games. A Las Vegas oddsmaker characterized Walters as a "great white," a legendary sports bettor who was respected and feared.

This May, The Wall Street Journal reported that Walters met pro golfer Mickelson in the early 1990s in Las Vegas. The SEC alleges that in July 2012, Walters pushed Mickelson to buy Dean Foods Co. stock based on inside information Walters allegedly had about the spinoff of one of its divisions. Mickelson earned nearly $1 million in profits selling the stock after it surged on the spinoff news, which he used to repay a gambling debt to Walters.

Mickelson has agreed to turn over to the SEC slightly more than $1 million based on his profits plus interest, while Walters faces indictment for allegedly profiting and avoiding losses of $40 million based on "numerous illegal tips he got about the company."

Walters set up Walters Group, a holding company, in April 1988. It owns two golf courses in Las Vegas and other businesses, including his car dealerships.

Walters returned to the car business in 2004 as a passive investor in Glenn Ford-Lincoln in Nicholasville, Ky., about 15 miles south of Lexington.

"The entire time I was out of the car business, I wanted to get back in it," Walters said.

In 2009, he started the Walters Bayer Auto Group with Robert Bayer as his partner. The group's seven dealerships in California represent nine brands: Chevrolet, Chrysler, Dodge, Ford, Hyundai, Jeep, Kia, Ram and Volkswagen.

In 2012, Walters' other partner, Jared Gaiennie, bought some dealerships in the Southeast from Bayer. Gaiennie and Walters then formed the WG Auto Group. That group owns seven dealerships in Kentucky and four in Georgia representing 13 brands: Buick, Chrysler, Dodge, Ford, GMC, Hyundai, Jeep, Kia, Lincoln, Mitsubishi, Nissan, Ram and Toyota.

Walters said he is hands-on in his dealership and business operations "365 days a year." He rotates frequently among homes in Las Vegas; Carlsbad, Calif.; and Lexington, Ky.

"There isn't anything that goes on in our company, that I'm not aware of," Walters said. "I interact with the stores' general managers and with my partners multiple times on a daily basis."

A self-confessed "car guy" who worked as a mechanic in his teens, Walters drives a 2016 Hyundai Equus sedan and a 2015 Bentley Continental GT Speed convertible.

Walters, who has been married for 40 years, has three adult children. None is interested in the car business, so his succession plan includes his partners and some general managers.

The fact that he can help his employees achieve success is partly why he loves the car business, he said: It's "an equal opportunity" field.

"You strictly reap what you sow," Walters said. "You take a guy who comes from where I came from -- if it wasn't for the automobile business, I don't know where I'd be today."