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As sportsbooks in Nevada desperately searched for alternatives to traditional sports that were shut down during the initial months of the coronavirus pandemic, some operators have turned to video game competitions as one substitute.
Still, the process of getting approval to offer esports betting during the pandemic was not easy as wagering on each video game competition had to be approved by state gaming regulators.
Esports are treated as so-called “other events” under Nevada's sports wagering law, noted Brett Abarbanel, director of research at the University of Nevada Las Vegas’ International Gaming Institute.
That means they are subject to specific regulatory approval, rather than traditional sporting contests that are generally automatically eligible for wagering in Nevada.
The Nevada Gaming Control Board (NGCB) approved several competitions for wagering in 2020 but did not receive a request for any esports competitions in 2021.
“Approval for these events can be done via three different channels: approval of individual events; as part of a list of pre-approved events; and as an event approved by an approved sanctioning organization,” Abarbanel told VIXIO GamblingCompliance.
“Most events so far have been individual events,” she said. “The only pre-approved event at the moment is the Golden Tee World Championship, and there are no approved sanctioning organizations.”
Before any changes can be made to state gaming regulations to allow for easier betting on video game competitions in Nevada, the newly-formed Esports Technical Advisory Committee is tasked with recommending regulations of esports competitions.
Although wagering on esports is already legal albeit restricted in Nevada, several states are still in the process of clarifying the legality of wagering on esports.
New Jersey last year enacted legislation to facilitate esports betting, with regulators having been hamstrung by the terms of the state's original 2018 sports-betting law.
A new bill in West Virginia to legalize esports betting was approved by the House last week and only needs approval by the Senate, while lawmakers in Iowa also last week passed House File 2497 that amends the state’s sports-betting law to add “electronic sports events” to the definition of sporting event eligible for wagering.
Iowa and West Virginia are part of a small cluster of states, including Indiana and Pennsylvania, where sports-betting operators cannot offer wagering on esports due to statutory restrictions. Esports betting is already allowed in most other states with legal sports wagering, according to VIXIO GamblingCompliance research.
In Nevada, the NGCB was directed by state lawmakers who passed Senate Bill 165 last year to create the eight-member committee to provide recommendations on “any guidelines and parameters that are necessary to safeguard the integrity of esports when wagers are placed.”
The committee, which will meet quarterly, met for the first time last week in Las Vegas to discuss how the state might regulate the competitions, while monitoring for match-fixing and cheating.
“Where there is a market there are always people trying to manipulate it. The only questions are whether they are succeeding or not,” Ian Smith, commissioner with the Esports Integrity Commission (ESIC), told the committee.
Smith urged the committee to recommend to regulators a “one and done” policy, where any esports competitor found to have thrown a match are expelled forever from competing in Nevada. He said 92 percent of match-fixing is driven by fraud.
Smith also assured the committee that most professional esports competitors are committed to the integrity of their sport.
Abarbanel, a committee member, told VIXIO GamblingCompliance that match-fixing is a key issue for the state panel.
“Based on the presentations at the meeting, especially that of ESIC’s Ian Smith, there appear to be a number of options here,” Abarbanel said.
“Many elements parallel the efforts that are commonly seen in sport, such as doping testing; educational programs for competitors, teams, and other relevant organizations; and key to this audience, corruption and match-fixing reporting networks that center on betting companies reporting of unusual betting patterns.”
Abarbanel said other elements are unique to esports, “such as those related to digital competition platforms, hardware/software checks, and the role of the community itself, which views cheating differently based on the cheaters' goals … [as in] cheating to win versus cheating to lose.”
“All of this is something that can be taken into account for the review/approval process,” she said.
Esports has increased its efforts in recent years to detect and prosecute match-fixing. Smith explained that historically match-fixing was exposed by law enforcement, media reports or whistleblowers but with more than 300 bookmakers offering esports there is now unusual and suspicious betting monitoring.
The committee will continue collecting information, but at some point, will have to start making recommendations to the control board and the Nevada Gaming Commission.
Abarbanel said the committee did not even mention the topic of regulations at its meeting last week.
“It likely will be considered in the future, though that doesn't necessarily mean the committee will make a recommendation for that kind of oversight,” she said. “Rather, we advise the NGCB, who can choose to incorporate, or not, those recommendations.”
Abarbanel also cautioned that it is entirely possible that the committee could recommend that nothing be changed.
“But it seems clear from the first meeting’s presentations that there is some streamlining necessary to ensure there isn't an unnecessarily burdensome process for operators, especially in esports, where there are many new start-ups, while also maintaining a suitable level of consumer protection.”
