Betting on e-sports in Nevada could happen in weeks

By Thomas Moore

Wednesday, Nov. 16, 2016 | 4:45 p.m.

Betting on e-sports in Nevada could begin in a couple of weeks now that the Nevada Gaming Policy Committee has advised the state’s regulatory bodies to allow businesses to take bets on the growing sport.

“I believe, at least in my discussions and from the testimony we have heard today, that we have the regulatory infrastructure in place and we won’t need a legislative change to get this done,” said Gov. Brian Sandoval, the chairman of the committee said Wednesday.

Specifically, the committee passed a motion telling the Gaming Control Board and Nevada Gaming Commission they could move forward with developing the regulations regarding e-sports because “e-sports is something the committee has vetted and found non-problematic and suitable from a betting standpoint.”

A.G. Burnett, chairman of the Nevada Gaming Control Board, said that if a licensed business wanted to take bets on e-sports now, it could apply under Regulation 21.120, which allows operators to offer wagers on events other than athletic events. The example he offered was sports books taking bets on who would win the Heisman Trophy.

If the operator wanted to offer bets on e-sports in some other way, it would take longer, he said, but not much.

“I think the governor is 100 percent correct,” Burnett said, agreeing that new laws were not needed. “If there is a need for written rules or regulations, we can do that at the Gaming Control Board level much quicker. We could have regulations out and before the Gaming Commission in a month or two and the commission could approve them in a month or two.”

Before the decision, the committee heard testimony from representatives of the e-sports industry, including Seth Schorr, CEO of Fifth Street Gaming and chairman of Downtown Grand; Sam McMullen Jr., CEO and founding partner of e-sports company FiveGen; Ian Smith, Integrity Commissioner for the Esports Integrity Commission; and Rahul Sood, CEO and cofounder of e-sports startup Unikrn.

The testimony and questions from the committee today centered less on the nature of e-sports or the games, and more about how Nevada could use its gaming regulatory experience and infrastructure to become the center for e-sports gambling.

However, there are challenges to overcome, the experts said, before that can happen.

Sood, who in addition to running an e-sports startup was the founder of luxury computer creator VoodooPC, said one of the barriers is acceptance.

“Right now, Nevada is competing against itself,” he said. “I didn't think this committee was going to be a friendly audience.” He said he anticipated a negative reception but was wrong.

“However, when I go to speak to casino operators, and I’ve been speaking to them in the last two years, the reaction has gone from 5 percent interested to 95 percent interested to ‘Whoa, whoa, let’s hold on.’

“We need more forward-thinking people in the industry willing to say, ‘Let’s take a risk. Let’s take a bet on this.’ There’s no doubt in my mind Nevada will be a mecca for e-sports going forward. It’s just a matter of if the committee says we’re going to do this. Then that is going to get people excited.”

Smith, who studies e-sports cheating for ESIC, said part of the problem will be getting game publishers to understand the need to work with gaming regulators.

He said there are typically two kinds of cheating — cheating to win and cheating to lose, or match fixing. Game publishers are good, he said, at addressing cheating to win schemes but not as good at dealing with match fixing.

“Casual players are the bread and butter of every publisher I have mentioned today,” he said. “And e-sports are just the cherry on top. E-sports are seen by many of the publishers as a marketing tool. Cheating (to win) undermines the game and can cause you to hemorrhage (casual) players, and you don’t want to do that. Those are the people paying you every month.”

However, he said, game publishers don’t like talking about cheating to lose, or match fixing.

“I wouldn’t say they don’t care,” Smith said. “It’s a matter of priorities. “They believe rightly that they don’t exist for gambling. So we’re forcing them to look at something they don’t want to look at.

“I’ve had senior executives at a top publisher say to me, ‘We don’t allow gambling. Well, I can say I don’t allow the sun to come up in the morning, but that won’t stop the sun from coming up. For them, it’s a reluctant engagement because it doesn’t add to their bottom line.”

McMullen said he believes that if Nevada truly wants to be a center for e-sports gambling, it must reach out to the game publishers.

“We need to invite the publishers to Nevada formally,” he said.

“The community needs to be formally invited into something,” he said. “That might be some advisory committee or it could be a resource for e-sports so we start to collect the best people we can. The benefit for Nevada is because we invited them to talk to us it will start bringing them here.”

And the fact that they are here, McMullen said, positions Nevada as the center of the discussion about gaming and gambling.

“By sharing solutions with publishers, and sharing our concerns with them, I think that we’ll find that we solve some of their problems. And that will establish Nevada as a thought leader and center of thought around e-sports.”

The committee also decided to take no action on daily fantasy sports and let the current situation stand.

In 2015, the two main fantasy sports companies, DraftKings and FanDuel stopped operating in Nevada when the Control Board decided the activity was gambling and directed operators to obtain sports book licenses.

Nobody from the either daily fantasy sports industry attended today’s meeting, although members from both companies had discussed the issue with the governor and board members in the past.

“We have spent several hours discussing this,” Sandoval said. “We were presented with an opinion authored by the Attorney General’s office and I suppose at the end of the day, based on the testimony I’ve received, I’ve come to the conclusion there’s no need to have any changes in Nevada law.”

The committee agreed and voted unanimously to let the current situation stand. Unless the daily fantasy sports companies decide to be licensed to offer bets in Nevada, they won’t be allowed to operate in the state.