Former GCB chairman at the forefront of sports betting

Nov 10, 2015 3:09 AM

The sports betting business continues to fuel talk that is getting the attention of lawmakers across the country.

Former Gaming Control Board Chairman Mark Lipparelli, who now serves as a state senator from Las Vegas, is at the junction of this exchange of views and notes it has been difficult for regulators to keep pace with the new and improved thinking that comes to them from multiple directions.

Things are out of synch, he says, which is not surprising, considering legislators and regulators are usually in the position of having to react after the fact. They get a new idea, a product of some kind and have to decide whether it fits within existing regulations. It often doesn’t, a determination that puts regulators to work fashioning new rules.

The big question these days is what to do about fantasy sports betting? Is it gambling or is it a game of skill?

The answer depends on who you ask. Nevada officials have decided daily fantasy sports wagering qualifies as gambling and companies offering it in Nevada must acquire a sportsbook license.

The question remains unanswered in other states where there are millions, maybe billions of dollars at stake – money put up by people anxious to play, money invested by companies that have their corporate eyes on huge profits. Discussions of this issue have already opened doors leading to possibilities for expanding Nevada-style sports betting to other states.

It fuels discussions that would have been difficult to imagine just a few years ago when Lipparelli was at the Control Board and the major sports leagues were ready to go to war against gaming companies trying to make use of their brands.

But that was before the creative thinkers who thrive on marketing challenges decided fantasy sports could be packaged and marketed as a game of skill, putting it outsides gambling laws.

There’s a lot of activity centered in Florida, which has a population of about twenty million in round numbers and a number of professional sports teams that have already agreed to sponsorship deals with either DraftKings or FanDuel, the companies controlling around 90 percent of the market.

Congress has declared Nevada-style sports betting to be illegal (for the moment), which seems to help qualify daily fantasy activity as an entertaining substitute.

All this has helped increase the audiences for TV sports, a fact that has not been lost on anyone in the business.

How will all this play out in Nevada?

Lipparelli will not be surprised if the 2017 Legislature comes up with proposals aimed at benefitting Nevada companies in one way or another, but he says it is much too early to speculate about such things, what with a major national election cycle taking shape.

It’s possible other states will take action that nudges the big thinkers in Nevada one way or another. Companies such as MGM, Caesars, Penn and Pinnacle own or operate casinos in states where daily fantasy sports wagering may find a nice fit, depending on how laws evolve.

A challenge then might involve the need to assemble a business plan for another jurisdiction that does not offend Nevada officials.

On second thought, Nevada’s assessment of daily fantasy sports might get a second look from officials who decide, on second thought, maybe it is a game of skill.

Florida sports attorney Daniel Wallach, who has been following the separate threads that comprise the fabric of this issue, says, “What separates gambling from non-gambling activity in many states is an incredibly subjective determination of whether an activity is one of chance or one of skill.”

One of the most interesting lawmakers hard at work on this issue is 78-year-old Phyllis Kahn, a 22-term member of the Minnesota House of Representatives who months ago took off down a path that others would eventually follow.

Kahn, who has a B.A. in physics from Cornell, a Ph.D. in biophysics from Yale and a M.P.A. from the JFK School of Government at Harvard, months ago sponsored a bill to legalize sports betting in her state.

She does not appear to have any problem with fantasy sports as far as I can tell. About the issue of sports betting in her state she told an interviewer, “To think we have laws opposing it or stopping it is terminally stupid. Anyone with an Internet connection can make a bet.”

And in California, Assemblyman Adam Gray sensed back in September as he was signing up for a season-long fantasy league that the issue would benefit from legislative attention.

He has introduced a bill to legalize and regulate daily fantasy action in the largest state in the union, but is in no hurry to get anything passed. He figures passage might be a year away but hopes to get the ball rolling with an information hearing in December.

California action would probably get special attention in Nevada.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: [email protected].