Nevada Could Be Epicenter For Daily Fantasy Sports Regulation in U.S.

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This fall could key for the future of daily fantasy sports and the possibility of regulation in the U.S. And that future might be shaped by the events in the state where gaming activities are scrutinized, despite their general legality: Nevada.

The ‘legal analysis’ is coming

Nevada announced its intentions to take a closer look at daily fantasy sports, via a “legal analysis” that was announced by Nevada Gaming Control Board Chairman AG Burnett.

While there was no timeframe associated with the analysis, Legal Sports Report understands that the findings aren’t that far from being released.

It’s at least possible to believe that the NGCB could have no impact on the legal status of DFS, which operates in Nevada as an unregulated industry, as a skill game apart from all of the gaming activities Nevada does allow and regulate, like sports betting.

But there’s far greater reason to believe the opposite, that the NGCB findings will have a negative impact on DFS.

Getting a read on the Nevada Gaming Control Board

For starters, would the NGCB have announced its intentions to take a look at DFS, with the idea that the industry was totally legal under state law? That seems unlikely. If that were true, Burnett probably says nothing about the NGCB’s plans, and then nothing would be announced publicly after the analysis is done.

It would be fairly strange to announce the analysis, then say everything in DFS is totally fine.

Far more likely is the idea that the NGCB already believes something about the industry — at least a sector of it — is not entirely legal under state statutes, or that it should fall under the state’s gaming regulations.

What might that be? That part is unclear. But a gamut of possibilities seems to be on the table. The NGCB could find that certain types of DFS are akin to sports betting and should be covered by state law. Or, it could come away thinking the “skill game” threshold is not being met in some or all forms of DFS.

We got a sense of where Burnett was from a Reuters story from Liana Baker earlier this month.

“When you start offering daily fantasy contests, then you start to blur the line between skill and chance. When chance begins to govern the outcome more than skill, you have a form of gaming, and that’s when the need for regulation kicks in.”

Of course, Burnett tempered that by telling Baker his mind wasn’t made up yet:

“I don’t have an opinion yet (on the legality)… The issue is not whether skill is present. It is whether the skill of the players determines the outcome of the game they are playing.”

Still, those don’t sound like the words of someone who is ready to come down on the side of the status quo for DFS.

What does the AGA have to say?

At the same time, we are also expecting a report from the American Gaming Association “on fantasy sports and sports betting.” That news came on the heels of Jim Murren, CEO of MGM Resorts International, saying DFS is a form of gambling.

Back in April, AGA President Geoff Freeman said that report would come in November. But could we get a hint of what that report might say at the Global Gaming Expo (G2E)? There Freeman will give the “State of Gaming” keynote address.

Casinos in Nevada aren’t in the DFS business (at least not yet). And they pay licensing fees and taxes to the state, something they see DFS companies not having to do.

At the same conference, there is the ominously titled “Business Threat or Opportunity: Sports Betting, Daily Fantasy and the Ongoing Debate.” Again, this does not sound like a discussion that is going to lead to casinos or Nevada interests saying that DFS should continue on under the status quo, in an unregulated environment.

Of course, all of the above — the NGCB analysis and the AGA report — are likely interconnected. Casinos in the state likely pushed for the analysis and the report, and it would seem unlikely that the two things would not act in concert.

What will the takeaway from the AGA be? Again, we can’t be sure. But the AGA represents the casino industry, which has on several occasions called DFS gambling. Putting two and two together would result in the AGA doing the same thing.

The upshot: This is bigger than Nevada

One view is that what is possibly coming in Nevada is just that — a Nevada matter. Each state’s laws that currently govern daily fantasy sports are different, and Nevada’s laws on gaming are certainly much different than everyone else’s.

At the same time, if the NGCB says DFS is a game of chance, and/or the AGA report says DFS is gambling and should be treated as such, that likely has an impact beyond Nevada.

After all, if Nevada calls DFS gambling, or says that it needs government oversight, wouldn’t that be a cue other states pick up on? That could come in analyzing DFS’ perceived status as a skill game, or simply trying to regulate it via state legislatures.

Either way, if the news for DFS out of Nevada isn’t good, it’s hard to believe it won’t reverberate throughout the industry, and the country.

Photo by Lasvegaslover used under license CC BY 3.0.