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A Nevada special committee has taken another step forward in establishing a regulatory framework that would make it easier for sportsbooks to take wagers on rapidly growing esports competitions.
The Nevada Esports Technical Advisory Committee discussed several proposed regulations during its hour-long meeting on Wednesday (September 21) and requested that the attorney general’s office make several changes to them before considering reworked draft rules for approval.
“I think the document is close to where it needs to be,” chairman Paul Hamilton said. “We can hopefully pick this back up and have a document where we would all like to see it.”
The eight-person committee, formed last year, has been considering how the state might regulate wagering on video game competitions. Hamilton was confident that, at its October 24 meeting, the panel will approve regulations that can then be considered by the Nevada Gaming Control Board (NGCB).
On Wednesday, John Michela, senior deputy attorney general, reminded the committee that the “overarching intent of the potential changes is to allow licensed [sports] books to accept wagers on esports in the manner of traditional sporting events.”
Currently, esports are treated as so-called “other events” under Nevada’s sports wagering law. That means they are subject to event-specific regulatory approval, rather than the traditional sporting contests that are generally automatically eligible for wagering in Nevada.
Michela said the committee’s draft regulatory proposal dated September 16 reiterates that esports are regulated as other events but also allows sportsbooks to take wagers outside the current other events requirements.
“This is allowed if the book satisfies the due diligence requirements of the [regulation],” he said.
The proposed regulations would also require that sportsbooks maintain and update their records concerning their due diligence of esports events and notify the NGCB on a quarterly basis of any “esports league” which they accept wagers on.
The NGCB chair would also be authorized to prohibit sportsbooks from accepting wagers on events conducted or events by certain esports leagues. This would allow the chair to shut down wagering on an esports league if an integrity issue develops, Michela said.
Finally, the proposed regulations would allow the chair to place an esports league on Nevada’s list of sanctioning organizations for sports wagering.
Michela said if the chair decides to place an esports league on the list, then specific due diligence by the sportsbook would not be required. However, as with wagers on traditional sporting events, sportsbooks would still be required to monitor the integrity of the events on which they take wagers and follow other requirements, he said.
“For our effort here, I think this represents a real strong path to progress as far as our mission here,” Jud Hannigan, a committee member and CEO of Allied Esports, said following Michela’s presentation.
Hannigan did express concern about using the term “esports leagues” and how the regulations define esports leagues. He noted that a lot of the esports wagering comes from events that are run as individual events, not necessarily part of the common definition for a league structure.
“Do we broaden it to include tournament or organization as well?” he asked.
In the draft regulations, Michela said, an esports league is not defined, just like the NFL is not defined in traditional sports contests, but “we could define esports league if that gives the committee greater comfort.”
Hamilton said it is a “slippery slope if we jump into the definition of esports.”
“I think the easier route is … adding just a couple of words … tournament provider, game developer, game itself,” he said. “I think there are a few ways to do it. They get us to where we want to go and still give the operators the flexibility they need but give us the comfort that we are looking for to make sure that it’s all done right.”
Hamilton also brought up the issue of cheating and match-fixing in online esports competitions versus land-based events.
“The ability to cheat at a land-based event is harder, if not impossible, than it is online. Should we be talking about land versus online?” he said.
Hannigan said there is a significant amount of online competition that has been driven over the last few years by the coronavirus pandemic.
“There are ways to monitor integrity,” Hannigan said. “I think putting handcuffs around online would potentially limit the potential of what could occur here. So I’m not sure I would advocate for handcuffing online. We do need to consider the integrity around it.”
