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With the fall of the federal ban on sports betting four years ago, the proliferation of sports wagering in multiple U.S. states is forcing Nevada gaming regulators to further tweak the state’s own rules.
Proposed regulatory changes were authored by Nevada Gaming Control Board (NGCB) staff in April and include suggested amendments to establish minimum criteria for suppliers of sports-betting data to be licensed as an “information service”, as well as a sports wagering licensee’s responsibility for services provided by its data providers.
“With the advances in sports wagering technology, it is has become necessary to create a regulatory framework that codifies the expectations and boundaries of an information service,” said Jim Barbee, chief of the NCGB’s technology division.
Among the other proposed amendments are removing the requirement that account wagering systems and call centers be physically located in Nevada and removing the word “management” from the definition of an information technology service provider.
Barbee said the proposed changes to the account wagering system and call center definitions are necessary to bring them into line with recent regulations that now accommodate the use of cloud computing service providers and hosting centers for gaming in Nevada.
Additionally, he said, the amended language is intended to specify that the definition applies to the technology that comprises an account wagering system and not the personnel.
“As sports wagering has grown to include more diverse offerings and advanced technologies, so too have the various types of services being offered and service agreements between the books and their suppliers,” Barbee said.
Barbee said the proposed regulations and amendments are designed to be a catalyst for discussion on several important contemporary gaming topics to establish clear regulatory requirements.
Should the control board approve the updated policies, the proposed regulatory changes would then go before the Nevada Gaming Commission (NGC) for final approval.
During a May 4 workshop on the proposals, NGCB chairman Brin Gibson asked the state’s gaming industry to submit additional comments before the board considers any final recommendations. The NGCB has not scheduled another workshop on the proposals.
Scott Scherer, an attorney with Brownstein, Hyatt, Farber, Schreck who represents BetMGM, said it was the company’s belief that the issues were important and needed to be addressed.
“We hope we can strike the necessary balance between the board having the regulatory authority they need and at the same time allowing the industry to take advantage of the expertise that is out there to stay competitive,” Scherer told the control board.
“It’s important that we modernize to some extent our approach to sports betting here,” said Scherer, a former control board member from 2001 to 2005.
Among the proposed changes are amendments to Regulation 5.240 related to the limits of services that can be provided by an information technology provider to a race and sportsbook, including deleting the term "management" from the regulation.
The control board also discussed changes to Regulation 22.025 that clarify the minimum requirement necessary for an information service to obtain and maintain a license to supply odds and other types of data and information to a sportsbook.
According to the updated language, no person may operate an information service in Nevada unless that person holds an information service license that would be processed in the same manner as an unrestricted gaming licensed as required of casinos and sportsbook operators themselves.
A data provider would also be required to “generate its sports related facts, opinions, and analysis internally or obtain them from multiple unaffiliated sources,” and ensure its data and information is “unique to the licensed information service.”
In comments submitted to the board, Scherer said BetMGM was concerned some data providers would no longer service the Nevada market if subject to a full and extensive licensing investigation and recommended they should instead only have to register with the board.
He also expressed concern at the requirement for data providers to provide unique information, given most receive initial information from similar sources.
Elsewhere, the NGCB is also considering updates to regulations overseeing a licensed race or sportsbook’s responsibility for services provided by a licensed information service, including written procedures to ensure the sportsbook has authority to override or reject any information.
“Fundamentally, this regulation requires the licensed book to actively exercise oversight and control of the services provided by a licensed information service to the book,” Barbee said.
In proposed amendments to Regulation 5.240 that governs the operation of gaming establishments, regulators are proposing to delete the word “management” from the definition of an information technology service provider.
Michael Somps, an attorney with the Nevada attorney general’s office, said the change was meant to prevent the information technology service provider from being involved in management activities.
Scherer asked the control board to consider licensing service providers as key employees, giving regulators the ability to call them forward should there be an issue. Scherer added that the key employee designation allows licensees to “have more access to the expertise they need in a more fast-paced world.”
Gibson, chairman of the NGCB, said he appreciated Scherer’s comments but asked the industry to consider where Nevada should draw the line when it comes to licensing.
NGCB member Philip Katsaros agreed with Gibson’s comments, adding that Nevada has regulations written for a pre-Professional and Amateur Sports Protection Act (PASPA) world, the Wire Act included.
“As minimal as the changes are, the results are big,” Katsaros said.
