DFS sites and Nevada not on same page

March 15, 2016 3:09 AM


DFS sites and Nevada not on same pageThe two giants in the daily fantasy sports business are not interested in the tough questions and invasive procedures that go with applying for a Nevada casino license.

Wading through the seemingly endless paperwork required by most jurisdictions with commercial casinos has never been a process recommended for the squeamish or the young. It’s exhausting, is what it is.

But strategists with the best interests of Nevada at heart have long been reluctant to take unnecessary chances. They fear the consequences of letting the wrong licensee set up shop along the Las Vegas Strip, or anywhere else in the state for that matter.

Nevada has always had more at stake than most other jurisdictions where gambling is much more limited. Gaming-related tax revenue accounts for a significant chunk of Nevada’s state budget. So the state has been inclined to take long, hard looks at applicants for a license. Which explains the tough, invasive, yes, even “onerous” approach to deciding suitability.

It may also explain why the top executives with DraftKings and FanDuel, who showed up last week for the first meeting in several years of the governor’s Gaming Policy Committee, described the Nevada procedure as “onerous,” onerous as in threatening or distasteful.

But what do you mean by onerous, people such as Gov. Brian Sandoval and Gaming Commission Chairman Tony Alamo Jr. inquired?

“What they want,” a local gaming attorney in the crowd snickered, “is to be self-regulated,” or better yet, forget the regulations. No wonder they want to think of this daily fantasy stuff as a game of skill and not gambling.”

Call us anything, the DFS guys seemed to say. Just don’t call us gambling.

Last week was not the first time Nevada regulators have been exposed to this sort of grumbling about the state’s rules and red tape.

A former CEO with one of the big companies wondered why a suitability check like the one Nevada subjects applicants to should be necessary at a time when the biggest companies looking for access to Nevada are subject to SEC rules.

Any number of wannabe investors have, in the past, said thanks but no thanks to opportunities to put their money into a Nevada project of some kind. They did not want to subject themselves to a licensing process that might make them feel like they’d visited a proctologist.

Has the time come to relax a bit, maybe in partial recognition of the fact gaming has become a widely accepted business sector? Times have changed and they continue to change. The requirements that apply to passive investors have been relaxed some over the years.

Perhaps the time has come to reassess what is required of license applicants as Nevada officials decide how to respond to the changing landscape.

This is one of the issues that will be massaged during the months ahead as the Policy Committee continues meeting, working on the best approach to licensing requirements that will protect Nevada’s principal industry while welcoming new ideas, and the imaginative people behind them, to the center of the gaming universe.

American Gaming Association President Geoff Freeman had some thoughts on all this as he spoke to the Committee and Gov. Sandoval who chaired the meeting.

“Nevada officials considering daily fantasy sports and other products that don’t fit within traditional gaming silos should embrace innovation and establish a flexible framework that allows gaming companies to stay ahead of ever-changing consumer demand,” Freeman said.

“As innovative, disruptive new platforms become established in the marketplace, regulations should aim to integrate them into our industry without instead pushing the customer down the path of least resistance to the unregulated, illegal market,” said Freeman. “As gaming operates in 80 percent of the country, we’re competing against every other entertainment option. Flexibility will allow operators to adapt to rapidly changing markets and consumer trends and help to ensure a thriving gaming industry.”

Freeman conveyed that the casino gaming industry believes legal clarity and appropriate consumer protections of DFS are needed. With clear rules of the road, gaming companies could enter into marketing partnerships, host major DFS events at gaming properties or even develop a DFS platform of their own.

“We want regulators across the U.S. to take DFS out of that legal gray zone and make it either black or white,” said Freeman. “The challenge for regulators and policymakers is to build an effective framework for bringing these new platforms into the world of regulation without losing the customer to the black market and harming the very qualities that make these products innovative in the first place.”

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: PhilHevener@GamingToday.com.

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