Nevada policy committee hearing on DFS advocates closer operator - regulator relationship

Nevada governor Brian Sandoval’s Nevada Gaming Policy Committee hearing on DFS and other matters Monday produced a consensus that there is a need for regulators and operators to develop a closer working relationship, with further hearings planned later in the year.

Reports in the Las Vegas Review Journal and Vegas Inc. note that all parties appeared eager to bring (properly regulated) daily fantasy sports back to Nevada after the exodus which followed the opinion of the state Gaming Commission that the genre constitutes gambling and requires licensing and regulating (see previous reports).

However, there appeared to be some dissonance between regulators, who feel that the state’s laws are sufficiently comprehensive to cover the proper regulation and licensing of DFS, and the CEOs of the two DFS market leaders (DraftKings and FanDuel) who opined that the Nevada regulations are too “onerous” and “heavy handed” for DFS companies, although when pressed were not able to say specifically which regulations troubled them.

Tony Alamo, who heads up the Nevada Gaming Commission was in no doubt that the current state laws and regulations are adequate to the task, observing:

“I think we have the infrastructure right now to regulate it with the laws we have on the books.”

However, other committee members pointed out that if DFS companies were to licence as sportsbooks in Nevada it could put them in an invidious position in other US states, explaining that under US federal law only Nevada and three other states are allowed to legally engage in sports betting.

Blake Sartini, chief executive of Golden Gaming, said the issue is something of a Catch 22. “We would love to see your industry prosper and grow, but our attorney general has already stated it’s a sportsbook, and anything in conflict with that in another state is going to pose a problem for us,” he said.

The DFS chief executives at the hearing, Jason Robins from DraftKings and Nigel Eccles of FanDuel suggested that the stringent Nevada regulations may stifle innovation in their dynamic industry, but were unable to be specific. However, both expressed a willingness to seek a compromise and accepted that regulation was necessary.

Governor Sandoval said that he hoped the committee would deliver a solution that suited all parties, perhaps in the form of a recommendation or investigation into another category of licensure that addresses the DFS business model, but he added that he expected the DFS executives to prepare “meaningful proposals” on how to move forward.

The committee heard testimony from a range of interested parties in order to assemble sufficient views to frame future discussions. Among those presentations was one by gaming analyst Chris Groves, who pointed out that phenomena like DFS are dynamic, innovative and fast-rising, necessitating a faster, more nimble regulatory system.

“A regulatory approach should appreciate that these products can rise very quickly and can become cultural phenomenons in a brief period of time,” Grove observed. “There’s something about that reality that does call for the regulatory approach to anticipate that these products might enter the picture, but also that their entrance is inevitable and will be far more rapid than craps or faro.”

William Hill US CEO Joe Asher did not mince his words in asserting that daily fantasy sports was gambling and simply a different form of sports betting. He also attacked the characterisation of DFS as an extension of traditional season-long fantasy sports, claiming that there are some similarities but no comparison in terms of size and scope.

Asher noted that companies like his are required to post bonds for the financial security of players, and adhere to strict regulatory requirements…and he opined that DFS companies should be made to do the same under similar licensing conditions.

Geoff Freeman, CEO of the American Gaming Association opined that traditional gambling operators will be reluctant to become involved in DFS until the legal situation offers more clarity. “They don’t fit into the traditional regulatory and statutory silos,” Freeman said. “They’re new platforms that present unique sets of questions.”

In closing proceedings, Governor Sandoval said three more meetings of the committee are planned this year, probably in May, August and October, when DFS along with skill games and interactive gambling will be discussed.

These meetings will lead to a set of recommendations for the consideration of Nevada lawmakers in the state’s 2017 legislative season, he said.