Seth Schorr, CEO of Fifth Street Gaming, has said regulation is the key to greater acceptance of esports betting and he sees the Las Vegas gaming market benefiting from several regulatory changes approved Thursday (October 19) that make it easier to accept wagers on video-game competitions.
“This is a topic that I feel is very important for our industry. I can give you a lot of reasons why esports betting has not gained traction or the handle that many in our industry have hoped for over the last eight years,” Schorr told the Nevada Gaming Commission (NGC) on Thursday.
“But I can summarize with this thesis, that sports betting is a very crowded, competitive and complicated space,” said Schorr, who has served on a Nevada committee advising regulators on potential updates to policies on esports.
“Even the biggest companies, much larger than mine, have limited resources, have lots to focus on, have very long priority lists.”
Schorr said if there is a lot of friction in terms of integrating esports wagering into the strategy of sportsbook operators, they simply will not do that.
Schorr thanked the commission and the Nevada Gaming Control Board (NGCB) for being open minded about esports betting since 2015, despite a cumbersome and clunky process that is now set to finally change.
On Thursday, the commission in a 4-1 vote approved proposed amendments to Regulation 22 making it easier to wager on esports, which was originally approved on January 11 by the NGCB, but with one significant change.
After a lengthy discussion, the commission removed language added by the control board requiring “effective integrity safeguards to be in place including, without limitation, a code of conduct which encompasses prohibitions on doping by participants and an effective program to deter doping.”
Alisa Nave, outside counsel for the Entertainment Software Association (ESA), said the group believed “the language as currently drafted associated with doping has substantive and procedural concerns.”
Nave expressed the ESA’s concern that the language approved by NGCB would have the unintended consequence of making most esports competitions functionally ineligible for wagering in Nevada.
“While there are many integrity safeguards currently in place at sanctioned esports event, esports competitions are growing and evolving at a phenomenal rate and there exists a series of complicated questions that have yet to be settled regarding esports,” Nave told the commission.
Nave stressed that even “reasonable experts in doping programs are likely to disagree what it means to implement an effective program to deter doping.”
“While the video-game industry has a vested interest in ensuring integrity in game play, the requirement that a sportsbook not accept esports events until it can be shown that an effective program to deter doping is in place will have the impact of making more esports tournaments ineligible for wagering in Nevada,” she cautioned.
Commissioners Rosa Solis-Rainey, George Markantonis and Brian Krolicki supported removing the doping language added to the amendments by the control board. Rainey said regulators can always add language to the regulation later if necessary.
Commission chairwoman Jennifer Togliatti also did not support the doping language, saying it was a very difficult thing to try and administer.
Commissioner Ogonna Brown, who voted against the amendments, asked Nave for specifics concerning doping in esports, including any popular drugs being used, and if there was any data on the percentage of esports participants doping.
Nave said there was no such data and that she would have to go to the ESA to get information on potential drug use. Nave said an example of a drug is Adderall that players may be taking with a prescription from their doctor, “but it is something we should be talking about.”
Language within a new Regulation 22.1202 regarding “prohibitions on wagering by, or on behalf of, a participant, official, owner, coach or staff or a participant or team and an effective program to deter circumvention of these prohibitions” was also removed due to similar language already within Regulation 22, which outlines the rules for traditional sports betting in the state.
The new regulations were developed by the eight-member Esports Technical Advisory Committee, which hosted its first meeting in March 2022 and delivered the proposed amendments to the control board in October of last year.
The regulations would make sportsbook managers responsible for monitoring and reporting betting irregularities to the control board. In addition, the regulations prohibit players, coaches, and agents of esports teams from placing bets, and sportsbooks will be required to monitor for potential match-fixing.
They will also be required to notify the control board on a quarterly basis of the operators for events on which they post odds and accept wagers.
The regulations take effect immediately.
Prior to Thursday’s approval of the amendments, Schorr and other operators had to seek control board approval for each specific esports event in advance. The regulatory change means sportsbooks in Nevada can now decide whether to post odds and accept bets on esports events, no different from any traditional sport.
Sportsbooks have been allowed to accept wagers on esports since 2016, but esports contests were so-called “other” events that required event-specific regulatory approval. Among the approvals given for esports betting to date have been for esports competitions such as CS:GO, ESL Pro League Season 11 and even eNASCAR events.
Schorr, who is chairman of the Downtown Grand in downtown Las Vegas, first received regulatory approval to take wagers for esports matches in November 2016, following months of unsuccessful attempts. William Hill partnered with Schorr in seeking approval to take bets on League of Legends matches during IEM Oakland.
“Without the regulation, esports betting is dead in the water,” Schorr told the commission.