Nevada gaming regulators are mulling whether to license sports-data services, which have grown with the nationwide expansion of sports wagering.

The Nevada Gaming Control Board held a workshop on the subject Thursday and the three members are likely to decide in 2025 whether there should be a new category of service provider.

“Do we have enough visibility and knowledge of everyone involved in the sports wagering business?” wondered Board Chairman Kirk Hendrick. “Are we making sure that those who are involved in setting the lines and providing the data are captured within our regulatory process?”

The genesis for the conversation is that the current regulatory and statutory environment was created when there were fewer players than there are today.

Jim Barbee, chief of the Board’s technology division, said workshops on the subject held in 2022 discussed changes to the service-provider regulation.

“When our statutory and regulatory structure was created, you had the events and the information service that monitored them and created lines and odds ultimately consumed by the operator. As sports wagering evolved, the number and type of events also evolved to offer an increasing number of events, as well as other types of betting, such as pre-game and in-game wagers.”

A new entity has emerged between the information service and the event itself, which Barbee referred to by the placeholder name “sports-data service provider.” It’s closer to the event than the information service, which is getting the information from third parties instead of monitoring events themselves.

“Information, because of the volume, is being consumed systematically and passed from these third parties through the information service and oftentimes directly to the operator without a lot of interaction between the information service,” Barbee said.

“There’s a little risk of having these third parties establish event information, including lines and odds that ultimately end up in front of patrons where they can place wagers.”

Barbee said any consideration of regulations wouldn’t be for entities that provide statistics, which are subsequently used to create lines and odds.

“It’s who takes that information and turns it into a line,” Hendrick said. “If that’s a licensed information service, we know who they are. If it’s somebody outside of that, that’s the group we’re trying to figure out who they are and have a connection with.”

While the Board licenses the operator and the information service, the proposal under consideration is to license the third party as a service provider. It would require only a registration to bring these third parties under the regulatory structure. That would allow the Board to evaluate their suitability to operate in Nevada, review if “something unfortunate occurred,” and work with them entities to resolve issues. It would also match how third-party companies are registered in other states.

Barbee pointed out that in New Jersey, for one, these ancillary casino service providers go through a registration process. Thus, these companies aren’t dissuaded from going through the process in Nevada and even then, they would come in at the lowest level of registration.

“What we’re trying to do is have transparency and accountability,” Hendrick said. “I know our licensees wouldn’t not be in business with anybody doing anything nefarious. The responsibility is on the licensees to be involved with those who do things completely above board.”

Barbee is confident operators are doing their due diligence with companies they work with, but bringing them into the regulatory process gives the Board the ability to do their own background checks.

“It also gives us the authority and tools on the back end should something go wrong, so that we can work directly with those third parties,” Barbee said. “As it stands now, our visibility stops at the information service.”

There’s also a benefit to the state in having this oversight from a reputational standpoint, Barbee said.

While it wasn’t brought up at the workshop, sportsbooks have dealt with the occasional international sporting event starting earlier than the posted line indicated, and some bettors were able to cash in before the error was discovered.

“We’d be talking about something that’s not necessarily nefarious, but more of a systemic issue,” Barbee said. “Let’s say a line is set too high or low or an event didn’t close when it should have. Right now, we handle that by starting with our licensee, then moving along to the information service. At that point, if the information service claims their feed provider had a hitch with their product, we don’t have the authority to encourage that third party to give us access to that information. We’re limited in conducting a full investigation.”

Examples of third parties that could face regulatory oversight include Sportradar, Genius Sports, and Lsports.

Board member George Assad questioned whether more regulation is needed and said the responsibility should fall on those currently licensed by the state. “We have a lot of regulations already. Do we really need another regulation when we can go after, for example, MGM or Station Casinos or Wynn? Why do we need to be redundant?”

Barbee pointed out examples in the past where third-party entities have had an impact on gaming operations.

“We don’t have the ability to look under their hood to see what’s going on,” Barbee said. “This is an area of growth where we’ve seen these third parties providing opening-line information. But we simply don’t have any oversight or insight into what they’re doing and how they do it.”

Assad also wondered if everyone would point the finger at everyone else if something goes wrong. “I don’t see the point. You have enough people to go after. You can go after the licensee, the casino, the hotel, the sportsbook, or a Stadium Technology. They’re the deep pockets anyway that we would want to go after if there was some misinformation or something nefarious that took place.”

Hendrick responded that someone could point the finger at the unlicensed entity and the Board knows nothing about them now. He added they don’t even have their phone number.

“I will say regarding regulations that I am 100% behind you,” Hendrick told Assad. “I’ve said on the record many times I’m all about reducing regulations. One of the Board’s bills going in front of the legislature this session is seeking to reduce the number of service providers. If we decide to draft this up, it’s a chance to capture entities that don’t have a nexus to the Gaming Control Board.”

In response to a question from Board member Brittnie Watkins on the fiscal impact of adding such a regulation, Barbee said less than 20 entities and possibly less than 15 would likely fall under it.

“I don’t think we’d see an exceptional drain on our resources to process these registrations.”

https://cdcgaming.com/nevada-regulators-weigh-licensing-of-sports-data-providers/

Hendrick described how the Board has limited number of agents and that its registration unit is stretched thin. That should be taken under consideration if they decide to move forward in the future.