Nevada Touts in a Bout

The United States Supreme Court (the Supreme Court) recently ended a nearly six-year legal battle regarding the constitutionality of the Professional and Amateur Sports Protection Act (PASPA). In Murphy v. National Collegiate Athletic Association, 138 S. Ct. 1461 (2018), the Supreme Court, with Justice Alito authoring the majority opinion, joined by Chief Justice Roberts, and Justices Kennedy, Thomas, Kagan and Gorsuch, held that PASPA violated the 10th Amendment’s “anti-commandeering” principle, which provides that if the Constitution does not give power to the federal government or take power away from the states, that power is reserved for the states or the people themselves.

This decision ushered in the next gold rush for the U.S. gaming industry. Delaware, Mississippi, New Jersey, Pennsylvania, Rhode Island and West Virginia have legalized sports betting and are taking bets. Arkansas and New York[1] have legalized sports betting but have not yet started taking bets. Also, one tribe in New Mexico launched sports betting in its casino in October. With this period of unprecedented sports wagering expansion, many states will look to Nevada for its expertise in the sports betting industry.

Perhaps in light of the recent developments, Senate Bill 46 (SB 46) was pre-filed on November 19, 2018, on behalf of the Nevada Gaming Control Board (the Board).[2] SB 46 would require tout service providers and persons significantly involved with the operations to be registered with the Nevada Gaming Commission (the Commission). The bill defines a “tout service” as a person who, for any form of compensation, fee or remuneration, provides advice or opinions relating to wagering on racing or sporting events. The Board and the Commission regulate the gaming industry in Nevada and the public policy of the State is to ensure gaming is conducted with integrity to maintain public trust.

For many years touts, companies that simply provide sports betting picks to persons willing to pay for such advice, operated in Nevada unregulated by the Board and the Commission. SB 46 would authorize the Commission, with the advice and assistance of the Board, to create regulations regarding the operation and registration of such providers and persons associated therewith. For instance, the bill would allow the Commission to require such companies or associated persons to be found suitable to be associated with licensed gaming. The Commission will also have to determine registration and renewal fees, the period in which such registration will be valid, and the manner in which such companies may operate (e.g., the location of services and minimum internal control standards). The Commission would be able to enact other regulations related to tout services as it deems necessary and appropriate to satisfy the bill’s purpose.

The notions of oversight and consumer protection are commendable. For instance, some touts have manipulated data to create the perception of high success rates. Also, there is no current recourse for touts who provide bad picks to bettors. That said, it presents a slippery slope. Are the Board and the Commission exceeding their authority by regulating persons who are tenuously linked to the industry? Would the Better Business Bureau be more suitable to monitor such businesses? Is the next step to begin regulating individuals who write books providing advice on blackjack and poker? This bill will be intriguing as it goes through the legislative process.

If you have questions regarding this legislation, sports betting or land-based gaming, please contact the authors Glenn Light at glight@lrrc.com, Karl Rutledge at krutledge@lrrc.com or Mary Tran at mtran@lrrc.com.

[1] Legislation to permit full-scale sports betting in New York failed in June 2018, but New York passed a law in 2013 to allow sports betting at four on-site locations. This law could be revived and the New York State Gaming Commission is aiming to complete regulations “in the short term” for the four locations specified in the 2013 law. http://www.espn.com/chalk/story/_/id/19740480/gambling-sports-betting-bill-tracker-all-50-states.

[2] https://www.leg.state.nv.us/App/NELIS/REL/80th2019/Bill/5965/Text.