Round Two For Daily Fantasy Sports In Nevada: Stakeholders Far Apart On Solution

Posted on August 23, 2016

[toc]The daily fantasy sports industry got another session in front of the the Nevada Gaming Policy Committee on Tuesday, with little sense that the state and DFS operators are any closer to finding a compromise.

DFS vs. Nevada, round two

This is the second time this year that the NGPC, chaired and convened by Gov. Brian Sandoval, tackled the topic of DFS.

The backdrop of the meeting: All DFS operators have been out of the state for the better part of the year. That mass exodus came after the revelation last fall that the state attorney general and regulators believed DFS sites were gambling operators that needed to apply for a gaming license in the state.

This time around, the meeting centered around the legislative proposal offered by DraftKings and FanDuel earlier this month.

That proposal, as written, did not seem to be terribly well received by the members of the committee. Casino interests in the state penned letters ahead of the meeting (here and here) expressing concerns with the proposal, sentiments that were echoed by many in attendance.

Casinos and regulators still at odds with DFS industry

The committee — which consists of casino interests, regulators and government officials — seemed to be in lockstep on their feelings on how to move forward:

  • The bill presented by DraftKings and FanDuel is far from being legislation that any of them would support. That proposal is far less rigorous than gaming regulations and creates little in the way of revenue for the state.
  • Most were dismayed that the industry had not come to members of the committee and the gaming regulators, before floating the draft legislation. They also expressed a willingness to work with the DFS industry moving forward on a more suitable proposal.
  • The overwhelming opinion of the committee members appeared to be that the current regulatory framework that Nevada already has for gaming is entirely suitable for overseeing the DFS industry.
  • That framework, most agreed, could be tweaked to be make it easier for DFS operators.
  • All wanted to find a way for DFS to be in the state, in some way.

The idea of working under current regulations appears to be a non-starter for the DFS industry as it currently exists. Operators don’t wish to be put under the auspices of a “gaming license” in a US jurisdiction.

In the past year, no current operator had applied for a Nevada gaming license; only a new company, USFantasy, has applied for and received a license for offering fantasy contests.

Another proposal on DFS for Nevada

Chris Grove, senior partner of Narus Advisors and the publisher of Legal Sports Report, was asked to testify in front of the committee. He floated a proposal that allows DFS to operate under current Nevada regulations.

Under that proposal, a new regulatory device class ­called “contest devices” ­would be designed to cover peer­-to-­peer skill-­based contests played for real money. DFS would be one such contest covered in such a construct.

The proposal appears, on the surface, one that could be amenable to both sides. However, it was a new solution to the issue of DFS in the state, and the various stakeholders generally withheld opinions on its suitability.

What’s next in Nevada?

Gov. Sandoval said he wanted the committee to meet again before a Sept. 30 deadline to provide a proposal regarding what the state should do regarding DFS. That obviously leaves a short timeframe for such a meeting to occur.

It’s not clear how much DraftKings and FanDuel might move from their initial proposed legislation, although DraftKings and FanDuel lobbyist Scott Ward, of  Orrick,  expressed willingness to work on it.

If there is wiggle room in the proposed legislation, that could be a path forward for DFS operators to return to Nevada. However, it still seems like the committee members would rather find a solution under the state’s current laws.

If the committee does suggest a legislative answer, that could not be acted upon until February, when the legislature reconvenes.

The only certainty from this meeting? The DFS industry and Nevada have a long way to go to come up with a tenable solution for both sides.

Dustin Gouker Avatar
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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

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