For years and years, the State of Nevada has successfully regulated sports betting. Why? One word: Experience.
Decades of experience have led to the regulatory body of law in Nevada. Today, Nevada licensees are investigated before being licensed, and are then monitored and held accountable after that. The sports betting business requires cooperation between the book and the regulator, in the form of communication, assuring accountability among the book’s employees who take bets and set lines and pay out customers is the first line of defense. Then, operators can recognize an issue and reporting it up the chain since the risks in sports betting are not so obvious.
On Monday, The Supreme Court came to a decision regarding the Murphy v. NCAA sports betting case to strike down a federal law that sought to prohibit states from authorizing sports gambling within their borders could open the door for other states. So, it will be more important than ever before that they do it right. This means setting up a regulatory agency that has the power to investigate, enforce, audit, and tax the industry, along with giving the industry the tools it needs for success. Additionally, steps should be taken to continue to stop illegal operators, so that the newly-regulated and legalized industry can thrive and patrons can be kept safe.
With yesterday’s decision in the closely watched case, I sat down with AG Burnett, partner in the Gaming & Administrative Law Group with McDonald Carano, to discuss the implications of the decision and what states would need to do to prepare should the court open the door for sports betting. He has extensive experience working in and with regulatory agencies in Nevada and throughout the world, most recently as Chairman of the Nevada Gaming Control Board (NGCB) from 2012 through 2017 and as a member of the Governor’s Gaming Policy Committee.
“The ruling is groundbreaking and significant for sports bettors and sports books all around the country,” he said. “Instead of perhaps going to illegal, offshore betting companies, Americans in all states may soon be able to do what millions have legally and safely been doing in Nevada— betting in a regulated environment with reputable and licensed companies.”
Sports betting is a business that is regulated in Nevada, but elsewhere, it is essentially illegal. If PASPA falls, states will immediately begin the process of allowing regulated sports betting in their jurisdictions. The trick will be ensuring it is cohesive and fair for the legal operators while at the same time getting rid of the illegal, offshore operators, per Burnett.
So, state regulators have multiple tasks ahead of them in addition to sports betting regulation. Another new industry phenomenon is skill-based gaming.
“Skill-based gaming is just beginning as many game developers are trying to figure out the math behind the games and how exactly to appeal to the customer. It is the beginning stage in what is hopefully a ground-breaking revolution in gaming,” he explained. “If not, the gaming industry must continue to evolve traditional gaming to appeal to an ever-growing younger demographic. Skill and hybrid games were meant to open that door for the industry and allow for a new niche of gaming entertainment to be created. I feel that it has a very bright future, but it will take time to get it right.”
The impact of many states legalizing and regulating sports betting has many paying close attention as stakeholders are actively engaged in the potential new business. Technology in gaming offerings will continue to challenge operators and regulators, changing demographics in casinos will challenge R&D departments in gaming companies, and public safety at resorts will continue to be a crucial topic for operators. If PASPA is changed in a way that allows states to legalize sports betting, significant discussion will be held in legislatures as to regulation, according to Burnett. State regulators are gearing up for this prospect and so are operators and the sports leagues as the complexities of gaming regulation are important to consider when legalizing sports betting.
He said, “The business of sports betting must really be understood to do this right. Everyone is watching, and it’s almost like the start of a race, right before the gun goes off. When the gun does go off, let’s hope it does not create chaos, but instead a structured, cohesive set of laws around the country for a later, mature, nation-wide sports betting market to succeed in.” One key implication is a Supreme Court ruling that calls for Congressional action, a mandate to clarify the existing law. Burnett would be concerned that Congress would not act, and then it is back to square one. Meanwhile, another implication is a partial ruling that sets aside some portions of PASPA but not others. Continued litigation might be the course after that, along with partial state actions that don’t go all the way in true legalization and/or regulation of sports betting. “The best hope is a clear ruling one way or the other: Either PASPA stands or it falls,” he said. Today, it is important to set up a regulatory agency that has the power to investigate, enforce, audit, and tax the industry, along with giving the industry the tools it needs for success, per Burnett. The regulatory agency must have the legislative mandate to do those activities, and then enforce failure to comply. In addition, the industry must be given the tools it needs to succeed by both the legislature and the regulators.
“Empowering the industry to ‘go forth and conquer’ within a fair and balance regulatory scheme is thus imperative. Many models seek to accomplish this around the world,” he explained. “It takes collegiality, communication, and objectivity. Regulators cannot play favorites, and licensees must play within the rules. All parties have to be looking at what’s next for the industry, and then try to fit what’s on the horizon in within the rules.”
So, what are the steps that should be taken to continue to root out and stop illegal operators, so that the newly-regulated and legalized industry can thrive and patrons can be kept safe?
Burnett said, “Thorough investigations are paramount, with investigators always on the lookout for illegal operators. Whether it is an electronic-based, document-based, or human-based investigation, regulators needs the proper tools to fairly and thoroughly investigate. Dialogue between investigative agencies, whether state or federal, is crucial. Dialogue with the licensees in the industry is helpful because they often know who is essentially competing against them illegally.”