Q+A: Enforcement leaders outline their approach on e-sports, skill-based games

By Thomas Moore

Thursday, Oct. 13, 2016 | 2 a.m.

Ask an industry insider about the future of gaming and no doubt you’ll get an answer that includes some combination of e-sports, daily fantasy sports and skill-based gaming.

Numerous workshops dedicated to these topics at the Global Gaming Expo last month indicate that the push is on to attract younger visitors to Las Vegas and to get them to gamble once they’re here.

The Sun recently spoke to Karl Bennison, chief of the Gaming Control Board Enforcement Division, and James Taylor, deputy chief of the special investigations and support services section of the Enforcement Division, about how the enforcement division is dealing with the industry’s latest trends. Here are edited excerpts from the conversation:

How closely are you tracking the development of e-sports and skill-based gaming? Is there anything that stands out?

Bennison: We had to make a determination when daily fantasy sports got really big, and we were getting a lot of questions on the legality of it. … We have to determine what our position is, and so with that example we … looked at it and, at the direction of our chairman, made the determination that it was required to have a license to do it here.

The e-sports thing is new: You have the skins wagering (when players bet using items inside the game instead of cash) and then just e-sports wagering on it in general. That's been looked at also, and part of that is going to be answered or we'll get some direction from the Gaming Policy Committee.

They're meeting (about that), for, I think, the fourth time in this round, where they're considering e-sports, skill gaming and daily fantasy sports issues or policies and recommendations. So probably next month we'll get some kind of feedback on e-sports from them.

What do you think some of the issues will be with e-sports?

Bennison: There are two major concerns. One is the legality of it — where there's wagering going on that's not licensed.

We have to look at that and figure it out, and skins wagering is the prime example. We have to make a determination, like with daily fantasy sports, whether, at least as far as Nevada law is concerned, is it legal? Is it illegal? How do we want to address that?

The other side is how (and) what our licensees can do as far as offering wagers. In Nevada, there are several ways to look at it.

If something is deemed a professional athletic event, then it doesn't require any special approvals. So if e-sports is deemed a professional athletic event, theoretically it could just go forth and be posted and the licensees could take wagers on it.

The other option is called the 22.120 approvals, for events other than professional athletic events. With that process, a request comes in and we screen it for many elements and criteria that we'd like to see get answered or feel comfortable with.

If it comes under that kind of request, then it would be an approval either based on one event or the whole genre, depending on how we want to capture it.

What do you look at to make that determination to separate those two kinds of events?

Bennison: If you take something like the Heisman Trophy winner, you look at what kind of organization is controlling the order and how they're balancing things. When do the ballots go out? When are the wagers going to be cut off?

Then our audit division chimes in. They'll look at any vulnerabilities and are always looking at (whether) they think it could be manipulated. If they have any concerns like that, those would have to be addressed. ...

A professional e-sports player could sit down at a skill-based game and, like a poker player at a table, have an ability way beyond what the average person has sitting down at the same game.

Bennison: Certainly there are different ways to structure and incorporate the skill element in gaming devices in general. It can be (just a) little component like a bonus round on a slot machine (that) can have a skill component.

Or it can be heavier on the skill weighting and be primarily skilled ... As far as the e-sports, you can have competitors competing against each other like you're saying, more like a poker tournament.

Or you can have people betting on the people who are playing, which is what I was talking about originally, which would be what the folks would post as far as taking wagers and setting lines for the different competitors.

Would you ever have both situations?

Taylor: Poker … (An example is) the World Series of Poker. They can wager on the actual players. It's not exactly the same, but I don't think we've approved anything other ...

Bennison: We approved WSOP wagering in the same manner as I mentioned earlier as a special request as another event. So we evaluate it, and we've allowed that. So you can bet on the poker outcome.

On our website, under the enforcement tab, you can see the 22.120 approvals. They include the Reno Air Races, the Heisman Trophy, the Cy Young Award, the Super Bowl MVP and Horse of the Year.

Are you hiring people who understand the mechanics of e-sports coding to ensure it's not being manipulated?

Bennison: We have a technology division. On the heavy programming side and how everything is networked and data flows ... our technology division is pretty savvy and has engineers and folks who deal with that.

On our side, we're fortunate we have investigators who play games and are familiar with e-sports. Not only do they have the law-enforcement background, they have the knowledge of what's going on and what's current in the gaming world.

Taylor: And last year the Legislature gave us three new agents who are basically technology agents who work cyber crimes and that kind of thing. So we train a couple of our agents up on that.

Bennison: This might not be a good analogy: We allow wagering on NASCAR, but we don't inspect the race cars, you know what I mean?

When you're approving NASCAR, you know the governing body and you either have a comfort level or you don't with the way the events are run. E-sports is different because e-sports isn't one thing. They consist of many games, many leagues, many competitions.

(There are) new governing bodies that are just emerging that are trying to provide some oversight and comfort to various concerned parties that there is control and testing.

E-sports is unique in that respect in that it's not just one thing so you can't just say yes to e-sports because you don't know what it is as far as a narrowly defined (thing).

It sounds like over time those issues might work themselves out like boxing where there are several different organizations that govern the sport. So it seems like there's precedent for that in other sports.

Bennison: You'll see some recommendations from the Gaming Policy Committee about how to approach e-sports because it’s heard testimony from the leagues, the players, all different stakeholders in the e-sports realm.

What about skill-based gaming like Gamblit Gaming’s new games? Do they present any special challenges?

Taylor: It's been approved but I don't think any of it's on the floor yet. I don't think any of them have done a field trial. Some of them are about to.

Bennison: And that's always what we see in the field-trial process. You know, we have agents out there observing, and we get feedback from the licensees and we even talk to players on occasion.

We monitor that. As it gets out there and gets played, hopefully before something bad happens, we will look at potential issues and then work with Gamblit and others to either have controls in place or technology fixes or whatever for any vulnerabilities.