Official magazine of the International Masters of Gaming Law
®
MALTA MARKET FOCUS
INTERNATIONAL MASTERS of GAMING LAW MAGAZINE
VOLUME 4 | NO. 3 | SEPTEMBER 2024
PLUS: 1-ON-1: IN CONVERSATION WITH BETSSON’S CORINNE VALLETTA EUROPE’S NEW DIGITAL SERVICES ACT AND ITS IMPACT ON GAMING UPDATE ON GAMING REGULATION IN INDIA & ROMANIA TIMOR LESTE: A NEW HOME FOR THE INDUSTRY? SIZING THE ILLEGAL MARKET IN THE USA ..& MUCH MORE! PROP BETTING IN U.S. COLLEGE SPORTS
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IMGL MAGAZINE | JULY 2023 IMGL MAGAZINE | JANUARY 2023
MALTA’S FATF GREY-LISTING IMGL OFFICERS 2024
Officers of IMGL for 2024
MATTHIAS SPITZ Assistant Secretary MELCHERS Law HEIDELBERG +49 62 2118 50141 M.SPITZ@MELCHERS-LAW.COM
QUIRINO MANCINI President TONUCCI & PARTNERS ROME, ITALY +39 06 322 1485 QMANCINI@TONUCCI.COM
ERNEST C. MATTHEWS IV Vice President, Affiliate Members INTERNET SPORTS INTERNATIONAL LAS VEGAS, NEVADA +1-702-866-9128 ERNEST@ISISPORTS.COM BIRGITTE SAND Vice President, Affiliate-Regulator Members BIRGITTE SAND AND ASSOCIATES COPENHAGEN, DENMARK +45 24 44 05 03 BS@BIRGITTESAND.COM
MARC DUNBAR Executive Vice President JONES WALKER TALLAHASSEE, FLORIDA +1 850 214 5080 MDUNBAR@JONESWALKER.COM
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SUSAN BREEN Secretary MISHCON DE REYA LONDON +44 20 3321 7434 SUSAN.BREEN@MISHCON.COM
IMGL MAGAZINE | JANUARY 2023 IMGL MAGAZINE | SEPTEMBER 2024
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PRESIDENT’S WELCOME
••••••••••••••• ••••••••••••••• ••••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••• ••••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••••
A world of opportunities
QUIRINO MANCINI President INTERNATIONAL MASTERS OF GAMING LAW
W
elcome to the September issue of the IMGL Magazine. It is always a pleasure to receive this welcome
Scanning the contents of this IMGL Magazine and talking to our members I am struck by the world of opportunities that continue to open up both for our industry and for the IMGL. Brazil has been the big one this year, but EM Group reported recently that it has helped potential operators apply for over 700 licenses in Curacao. We have reported on successive smaller governments champion the industry as a way to boost economic growth and employment. This issue we have an update from India, a market of over a billion people, where the twists and turns of regulation continue to generate interest. Then I hear there are developments in Finland which will no doubt feature in a future edition. It is an exciting time to be doing what we do. On the subject of emerging jurisdictions, I just returned from a very successful institutional trip to Tbilisi where I met with the local regulator and other industry representatives from across Eastern Europe and Eurasia. They are all keen to get closer to the IMGL, to work with us and also to draw from our vast experience, know-how and global network. As ever, I am interested to read the wide variety of articles in this edition and am grateful to all our contributors. I can only concur with Corinne Valletta’s comment that barely a day goes by without a development taking place somewhere that will have a material affect on us all. I am thankful to Simon and Phil for tracking some of these changes and for bringing them to us in our magazine.
injection of commentary and analysis of legal developments in the gaming industry. I hope you feel the same. I am particularly pleased to see the paper from Tamera Parson, student at the University of Mississippi School of Law. The article was her entry to the second IMGL Student Writing Competition where she was voted runner up by attendees to our Tampa Bay conference. Winner Charles Cahillane’s piece has already been published elsewhere, showing just how high the standard of entries is. I am hoping that we will expand this successful initiative to Europe this year and very much look forward to hearing from some future young gaming lawyers at our Rome conference. Talking of Rome, I have been overwhelmed by the enthusiasm with which this conference has been welcomed. Our partnership with IAGR, the venue in the Eternal City and, of course, a stellar lineup of highly relevant topics and a roster of exciting and experienced speakers have made this conference a very hot ticket. At this stage, it looks likely the event will sell out, and I encourage you to reserve your place whilst they are still available. Members of the organizing committee are putting the finishing touches to the conference both in terms of speakers and the social program and you can find out all the details by visiting www.imgl.org/events/imgl-iagr-2024-autumn- conference. As the IMLG Magzine went to press, we had over 350 people registered for the event from six continents. I hope you are able to join us.
See you in Rome! Quirino Mancini
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IMGL MAGAZINE | SEPTEMBER 2024
EDITORIAL
A question of size
SIMON PLANZER PHD, Editor in Chief IMGL MAGAZINE
T here are times when size matters. In this issue of the IMGL Magazine, size is the subject of three articles. Size is a talking point in our one-on-one interview. In the first one-on-one, I had the pleasure of sitting down with John McManus from MGA. For this issue, I talked with Corinne Valletta, General Counsel of Betsson. She noted that it takes scale to operate efficiently in the patchwork quilt of regulations that her company is subject to. It takes a legal department of over 60 legals to manage and run compliance in the 20+ jurisdictions in which Betsson operates. Her reflections on the challenges of recruiting and managing a team of that size and diversity make interesting reading. And it proves those wrong
who assume that being an in-house top lawyer is a quiet and cerebral role. Size is also a talking point in an article on start- ups. A combination of perceived risk and stifling regulation make it increasingly difficult for startups to access the funding they need to thrive. This matters all the more as the industry needs funding to push innovation. New technologies as well as new media and consumer habits will mean that innovation and the ability to be fit for the future is more vital than ever in the gaming space. Omer Sattar’s case study is refreshingly honest about what it took for his startup to reach the heights that it has achieved.
Our last article on size concerns a new way
Contents 6
Prop Betting in College Sports: Predict the Unpredictable People person: 1-on-1 with Corinne Valletta, Betsson
12 16 22 26 30 34 40 44
Indian Gaming Regulation: A Work in Progress
Impact of the Digital Services Act on Gambling and Lotteries
Regulatory update for Romania and the Role of Insurance in the Gambling Industry
Making Room for Start-ups in Online Gambling
Gambling Addiction & Parental Rights
Size matters: Quantifying the Illegal U.S. Online Gambling Market Conference report: Looking Ahead to Rome, Reflections on Florida
IMGL MAGAZINE | JANUARY 2023 IMGL MAGAZINE | SEPTEMBER 2024
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EDITORIAL
to value the US gaming marketplace. Since sports betting legalization started in May 2018 with a landmark Supreme Court ruling, the size of the legal market has been tracked and reported. Its growth has been impressive but has to be seen in the context of a large and persistent rump of offshore operations. Sizing this market is inevitably about extrapolation. Yet, a new approach seems to reveal a more complete picture. The results are startling with the licensed gaming and betting markets dwarfed by offshore operators. Size really does matter here: this is the size of the market that is going untaxed and at the same time the size of the opportunity for licensed operators to attack. Having put some numbers to the challenge, it is up to regulators and operators together to work out how to tackle it.
Yours sincerely, Simon planzer@planzer-law.com
Click on the links above to read back issues and our archive of gaming law articles visit www.IMGL.org/publications
IMGL Magazine is owned, published and distributed by: The International Masters of Gaming Law PO Box 27106, Las Vegas, NV 89126 USA The IMGL is a domestic non-profit corporation registered in Nevada, U.S. with registration number NV20121147120 Editor in Chief: Simon Planzer PhD, planzer@planzer-law.com Publication & Marketing Committee: Co-chairs , Stephanie Bell and Simon Planzer Members : Henrik Hoffmann, Kok-Keng Lau, Christine Masse, Peter Kulick, Anna Soilleux-Mills, Veronique dos Reis Head of Publications: Phil Savage phil@IMGL.org Design and production: SportBusiness Communications. Copyright: All rights reserved to IMGL. No part of this publication may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior permission from the publisher. The articles expressed in this publication do not necessarily reflect the views of IMGL but those of the authors. The publisher and editor do not accept any liability for the contents of the authors’ contributions.
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IMGL MAGAZINE | JANUARY 2023 IMGL MAGAZINE | SEPTEMBER 2024
COLLEGE SPORTS BETTING
Prop Betting in College Sports: Predict the Unpredictable MORAL HAZARD OR AN IRRELEVANT DISTRACTION? PROTAGONISTS TAKE UP ENTRENCHED POSITIONS IN THE DEBATE ON PROP BETTING IN COLLEGE SPORTS. MEGAN CARRASCO AND HEIDI MCNEIL-STAUDENMAIER OUTLINE THE ARGUMENTS
Abstract Gambling has, and likely will always be controversial, but when students are involved, the stakes—both figuratively and literally—are higher. This may be one reason why the National Collegiate Athletic Association (“NCAA”) has been in the vanguard of attempts by US sports codes to block betting on their events. In this, we know, they have been unsuccessful but that hasn’t meant they have completely thrown in the towel. Their latest maneuver has seen them target one element of the sports betting market which they consider poses real dangers. Proposition or “prop” betting is the concept of betting on components of an activity unrelated to the ultimate outcome. Common examples include how many home runs a baseball
player will hit, how many yards a running back will get, or how many take downs a fighter will secure. As expected, when a person can wager on more aspects of a game, more money pours in. The seemingly innocuous idea of prop betting has caused considerable controversy in college sports. In April 2024, as the NCAA March Madness tournament concluded, the NCAA denounced states for allowing prop bets on college athletes. Two primary rationales have emerged: athlete safety and player integrity. This article analyzes the positions of various states, the policy landscape, and the current legal status of prop betting on college athletes heading into the 2024-2025 college sports season.
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Introduction The striking down of the Professional and Amateur Sports Protection Act (“PASPA”) 1 in 2018 may feel like ancient history, but it is worth noting that the NCAA was one of the main protagonists in this landmark decision. When the United States Supreme Court ruled against them in Murphy v. NCAA , 2 it fired the starting gun on the explosion in sports betting that we have witnessed in the subsequent years. PASPA was a federal law, passed in 1991 that made it unlawful for a state to “sponsor, operate, advertise, promote, license, or authorize by law or compact” a “lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate.” The prohibition applied to all but four US states: Nevada, Oregon, Delaware, and Montana. New Jersey was also on the list of states permitted to legalize sports betting, but it failed to pass legislation in time. Several years later in 2010, New Jersey was successful in winning senate approval for a referendum and its electorate voted to legalize sports betting. The legislature enacted, and its Governor signed a law permitting sports gambling. PASPA allowed the U.S. Attorney General or a professional or amateur team to sue and enforce a sports betting ban 3 and, in the years from 2010 to the verdict of the Supreme Court in 2018, five sports leagues banded together and sued to enforce a ban under PASPA. By the time the case got to the Supreme Court, the question was one of federalism—who decides whether sports betting is legal, the federal government or the individual states? The Court held that PASPA violated the anti-commandeering principle established in the U.S. Constitution, meaning the federal government had co-opted state legislatures to carry 1 28 U.S.C. § 3702 2 584 U.S. 453, 458 (2018). 3 28 USC § 3703. 4 Murphy , 584 U.S. at 458. 5 https://www.americangaming.org/research/state-gaming-map/
out the federal government’s agenda. Therefore, the decision on whether to permit or prohibit sports betting post-2018 was left to the discretion of each individual state legislature. As the Court in Murphy observed, “Americans have never been of one mind about gambling, and attitudes have swung back and forth.” 4 In the subsequent years, legislatures have tried, succeeded, and failed to legalize sports betting subject to myriad requirements. Currently, 38 states and the District of Columbia, have opted to legalize sports betting including betting on college sports. Depending on the location, the precise contours of the sports betting enterprise are varied and particularized. 5 This article focuses on a niche application of sports betting regulations: the intersection of college sports and prop betting. College versus professional sports. College sports invoke a host of paternalistic considerations absent from professional sports. At bottom, college athletes are students under the care and supervision of their schools. In addition to sports, they attend classes, sometimes live in dorms, and answer to a student code of conduct. While schools do not always live up to these expectations of the student experience, 6 college sports remain a separate and distinct enterprise that is focused on educating students in addition to athletic performance. Up until June 2021, college athletes could not earn any financial compensation for their participation in school athletics. This is despite the fact that college sport garners US$ billions in TV rights, gate receipts and other commercial income. In NCAA v. Alston , the United States Supreme Court acknowledged “American colleges and universities have had a complicated relationship with sports and money.” 7 In Alston, current and former college level athletes sued the NCAA for violations of
6 See generally Jacob Abrahamian, The Forgotten “Student” in “Student–Athlete”: Why a New Cause of Action Is Needed To Remind Universities that Education Comes First, Ariz. State L.J. (2021), available at https://arizonastatelawjournal.org/wp-content/uploads/2021/02/05-Abrahamian. pdf 7 Nat’l Collegiate Athletic Ass’n v. Alston , 594 U.S. 69, 74 (2021).
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the Sherman Act by creating a monopsony under which the NCAA limited student-athlete compensation as an “unlawful restraint on trade.” Ultimately, the Supreme Court upheld the district court’s determination that the NCAA must abide by generally applicable anti-trust laws and therefore, could not enact rules limiting the cap on student-athlete compensation. The NCAA then developed working groups and initiatives to allow college athletes to be compensated for their name, image, and likeness (“NIL”). 8 These are often referred to as publicity rights. They do not allow the schools to directly compensate athletes, but instead open the doors to endorsement deals and advertising campaigns subject to the laws of each school’s state. 9 Professional athletes, by contrast, do not face the same hurdles to compensation. Lebron James, NBA superstar, will earn US$47.6 million in 2024. 10 For a more standard player, the NBA averages US$9.7 million in player salary. 11 This is aside from additional endorsement deals and advertising revenue. Wagering on college athletes, therefore, creates a further imbalance in the financial relationship between colleges and their athletes. Student-athletes, who have relatively little access to compensation, are now witnessing their school, their state, and the public making money off their performance through sports betting. Prop betting versus standard game propositions. Standard bets, often referred to as the “moneyline,” are simply wagers placed on who will win the quarter, half, game etc. Prop betting refers to the concept of betting on an occurrence, or non-occurrence of an event during a sports game that is unrelated to the game’s outcome. 12 In basketball, a bettor could wager on how many three-point shots Caitlin Clark will make
in a given game. Regardless of whether the Indiana Fever wins, if the bettor is right, they will be paid out. Prop bets dramatically expand the betting landscape because they can encompass nearly every aspect of a sporting event. For example, for a June 10, 2024 Major League Baseball Game (Rockies vs. Twins), prop bets include: Manuel Margot to get a hit (-210); Chris Paddack over 1.5 walks allowed (+155); Chris Paddack under 5.5 strikeouts (+115); and the list goes on. Because of the individual potential of each player, team, and game, prop bets can over-emphasize individual player performance. This offers the temptation among players to influence the outcome of events being bet on and is the reason that all sports ban players from betting on their sports. In the professional arena, sports betting tempts even the well- compensated. For example, Major League Baseball (“MLB”) banned San Diego Padres infielder Tucupita Marcano for life for placing over 350 bets and wagering US$150,000 on MLB- related sports betting. The National Basketball Association (“NBA”) issued a lifetime ban to Toronto Raptors player Jontay Porter for disclosing confidential information to bettors. 13 It has been reported that in at least one game, Porter left the game early, causing staggering wins on prop bets related to his performance. The debate on prop betting in college sports. The prop betting debate in college sports stands on two pillars: athlete safety and sporting integrity. In this spirit, NCAA’s president Charlie Baker called for the end of prop betting in college sports. 14 For athlete safety, Baker raised concerns
8 https://www.espn.com/college-sports/story/_/id/31740112/rule-changes-mean-athletes-schools-more 9 https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx
10 https://www.statista.com/statistics/202939/nba-players-with-the-highest-salaries/#:~:text=National%20Basketball%20Association%20high- est%2Dpaid%20players%20in%20salaries%20%26%20endorsements%202024&text=LeBron%20James%20was%20the%20top,dollars%20in%20 off%2Dcourt%20income. 11 https://fansided.com/posts/what-is-the-average-and-median-nba-salary-for-2023-24-by-position-01hbrqp8mv6f 12 See https://www.swlaw.com/publications/legal-alerts/louisiana-bans-prop-bets-for-betting-integrity-and-athlete-safety 13 https://www.espn.com/nba/story/_/id/39962406/nba-bans-raptors-jontay-porter-gambling-violations 14 https://www.espn.com/college-sports/story/_/id/39820326/ncaa-president-charlie-baker-calls-ban-college-prop-bets
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about player harassment, specifically related to prop bets on individual performance. The NCAA recently also reported that female athletes are subjected to approximately three times the harassment their male counterparts experience. 15 As to sporting integrity, Baker is concerned that players, who have achieved celebrity status on campus, could be subjected to liability when talking about everyday occurrences, such as who is sore from practice and how the players feel they will perform against upcoming rivals. Despite Baker’s plea, sports betting regulation remains a state- by-state endeavor. As such, Baker’s appeal is only effective if it persuades legislatures to act to ban prop betting on college sports.
“wagers on the overall outcome of a collegiate sports event or seasonal awards based on a player’s cumulative overall play.” 17 This framework takes the decision-making authority away from the regulatory body (i.e., the Arizona Department of Gaming). Other states, like, Ohio, enacted a constitutional amendment that creates the regulatory body charged with gambling integrity. 18 The legislature then further defined the regulatory body’s authority. 19 In Ohio, prior to the 2024 March Madness tournament, Ohio’s Casino Control Commission banned prop betting on college athletes. Its concern focused primarily on the first pillar of the campaign—athlete safety. Ohio’s governor explained that the decision was not made in haste and was in part prompted by an incident at the University of Dayton where athletes faced a social media backlash based on their individual performances. 20 Maryland Lottery and Gaming similarly banned prop betting effective March 1, 2024, with the purpose of “protecting college athletes from potential harassment related to their statistical performance.” 21 Vermont’s Department of Liquor and Lottery followed suit shortly after and removed prop betting from its catalog of approved wagering events. 22 Other states like Colorado, Massachusetts, New York, Pennsylvania, Tennessee, Virginia, West Virginia, and Oregon have also banned prop betting on college athletes. 23 In short, states banning prop betting on college athletes believe they are prioritizing athlete well-being by removing the temptation of harassment because it would be inconsequential. Since the NCAA’s support for banning prop bets, the discussion has transitioned to include the second pillar of prop betting
The Ayes
On the heels of Baker’s announcement, Louisiana’s Gaming Control Board, coincidentally announced that it would be banning prop betting on college sports beginning August 1, 2024. 16 Louisiana was not the first state to ban prop betting on college sports, nor will it be the last. The decision-makers as to whether or not to ban prop betting vary by state. First, a state’s legislature must authorize sports betting. Generally, the authorization comes with the creation of a regulatory body that promulgates regulations pursuant to the legislature’s authorization. The scope of that authorization again varies. For example, some states, like Arizona, banned prop betting on college athletes from the inception of the state’s legalization of gambling. A.R.S. § 5-1315(a)(2) specifically bans prop betting on individual athletes, but expressly permits
15 https://sportshandle.com/ncaa-pleased-player-prop-bet-bans/ 16 https://www.documentcloud.org/documents/24530082-20240401-suspensionpropbetsdocx 17 https://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/5/01315.htm 18 https://codes.ohio.gov/ohio-constitution/section-15.6 event or to prohibit or restrict sports gaming proprietors from accepting a particular type of wager.”). 20 https://highlandcountypress.com/news/college-prop-bets-no-longer-legal-ohio#gsc.tab=0 21 https://sportshandle.com/maryland-bans-college-player-prop-bets/ 22 https://www.gamingtoday.com/news/vermont-joins-movement-in-banning-college-player-prop-betting/ 23 https://www.nytimes.com/athletic/5389050/2024/04/03/louisiana-college-prop-bet-ban/; 19 See, e.g., https://codes.ohio.gov/ohio-revised-code/section-3775.02 (“(C)(1) The commission may, independently or at the request of any per- son, including a sports governing body, adopt rules to prohibit or restrict sports gaming proprietors from accepting wagers on a particular sporting
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policy—gaming integrity. While not as prevalent in the college arena, college players may be tempted by the lure of sports betting. 24 With the increased profile of professional betting scandals, state legislatures are beginning to consider whether prop betting is directly tied to a loss of integrity. 25 New Jersey, for example, already bans prop betting on college athletes located within New Jersey. However, in contemplating an expansion of the ban to all college sports, New Jersey State Senator Kristin Corrado explained that both harassment and integrity are driving the legislation. 26 The Nays Commentators have opined that the trend towards banning prop bets is less controversial than banning moneyline bets, particularly because college prop betting does not make up a substantial portion of the wagering market. 27 Others point to inconsistency in the NCAA’s position suggesting that bans will not work if there is an active prop betting market in college sports as illegal providers will fill the gap. Alternatively, if the market is not significant, then bans will not address a material harm. 28 While an increasing number of states are considering bans on prop betting pursuant to the NCAA’s push, Montana is bucking the trend. The Montana Lottery said neither harassment nor integrity concerns are present in Montana. 29 The state only has two large universities, a lower population, and a state-run lottery system. Accordingly, Montana does not feel the same pressure to protect its athletes as compared to more densely populated and high-profile states.
United States’ collection of states is that it permits states to adopt legislation that best protects and caters to the individual needs of their population. While some may criticize Montana’s assessment, arguably its actions accurately represent the American dual-sovereign system. In the individual analysis of its citizens, Montana arguably made the best decision for itself. There is no prohibition that would prevent Montana from enacting a subsequent ban on prop betting if conditions were to change. Other states, like North Carolina, have tried and failed to pass bans on prop betting legislation. 30 Representatives opposed to the legislation argue that removing college prop bets to prevent harassment rewards “bad behavior by limiting people who are behaving the right way to place bets the way they want to.” 31
Alternative Approaches
The policy aims of protecting student athletes and sporting integrity are not subject to a one-size-fits-all approach. Other states have created novel compromises to curb the negative effects of sports betting on college athletes. The West Virginia legislature granted the State Lottery Commission authority to permanently ban those individuals who harass athletes, coaches, or officials during sporting events. 32 The NCAA has endorsed similar legislation and encouraged states to adopt reporting mechanisms to identify those bettors that harass student athletes and ban them from participation. 33 Ohio, which already bans prop betting, has taken this step—the Casino Control Commission has the authority to
For the time being, Montana stands alone. The beauty of the
24 https://www.nytimes.com/athletic/5436872/2024/04/24/noah-shannon-iowa-gambling-case-ncaa-questions/ 25 See, e.g., https://igamingbusiness.com/sports-betting/ncaa-proposed-ban-not-black-and-white/
26 https://www.legalsportsreport.com/178026/nj-could-join-list-of-states-banning-betting-on-ncaa-player-props/#:~:text=Corra- do%3A%20NCAA%20prop%20betting%20ban%20helps%20integrity&text=New%20Jersey%20law%20currently%20prohibits,sporting%20 events%2C%E2%80%9D%20Corrado%20said. 27 https://sportshandle.com/north-carolina-bills-attempt-to-ban-college-player-prop-betting/ 28 https://igamingbusiness.com/sports-betting/ncaa-proposed-ban-not-black-and-white/ 29 https://www.gamblingnews.com/news/montana-refuses-to-ban-prop-bets-says-they-dont-hurt-local-sports/ 30 https://www.legalsportsreport.com/180833/college-props-nc-sports-betting-ban-bill-introduced/; https://webservices.ncleg.gov/ViewBillDoc- ument/2023/7854/0/DRS55066-BAf-11A 31 https://sportshandle.com/north-carolina-bills-attempt-to-ban-college-player-prop-betting/ 32 https://www.gamingtoday.com/news/west-virginia-bill-to-protect-athletes-from-sports-betting-harassment-moves-through-house/ 33 https://www.ncaa.org/news/2024/5/17/media-center-sports-betting-culture-negatively-impacts-mental-health-ncaa-works-to-support-stu- dent-athletes.aspx#:~:text=The%20NCAA%20is%20also%20urging,being%20able%20to%20place%20bets
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establish a lifetime ban on any individual who threatens violence against anyone involved in a sporting event. The Ohio legislature enacted § 3772.031, which provides “[t]he general assembly specifically finds that the exclusion from sports gaming of persons who threaten violence or harm against persons who are involved in sporting events, where the threat is related to sports gaming, is necessary to effectuate the intent of Chapter 3775. of the Revised Code and to protect the interests of this state.” The statute goes on to delegate authority to the Commission the ability to manage a list of those patrons who should be involuntarily removed from participation in sports betting or casino gambling. As noted earlier, states like New Jersey 34 have endeavored to protect athletes inside their borders with more narrow bans on prop betting by restricting prop bets to out-of-state teams, insulating domestic players from harassment. 35 Connecticut, which bans prop betting on in-state teams, has introduced legislation which could reverse its in-state ban given the success of the University of Connecticut’s women and men’s basketball teams. 36 The new language would expand “what is considered a ‘sporting event’ by eliminating exclusions under current law that generally limit legal wagers on Connecticut colleges to only when they are involved in a tournament of four or more teams.” 37 But, this
proposed legislation still bans prop betting on college athletes regardless of tournament status. For the several states which have yet to legalize any form of gambling the debate will continue to play out this year and likely beyond. With the backing of the NCAA, states seeking to legalize gambling will need to analyze the respective needs of their states. Conclusion “Americans have never been of one mind about gambling, and attitudes have swung back and forth.” Murphy, 584 U.S. at 458. Perhaps the NCAA got it wrong and there is no one size fits all for prop betting. While most states can agree that athlete harassment, especially of student athletes, is of paramount concern, banning prop betting is not necessarily the only way to rectify the harassment issue. 38 Arizona, as the 48th state, had the benefit of observing the effectiveness of other state constitutions. For the states that have not yet joined the fray, it may be beneficial to take a step back and observe. The 2024-2025 season will be an experiment to see whether those states who have deemed themselves most affected by player harassment or a lack of integrity to see whether prop betting, or something more, is needed to cure the ills. 39
MEGAN CARRASCO Associate, Snell & Wilmer For information contact: mcarrasco@swlaw.com 001 602.382.6092
HEIDI MCNEIL STAUDENMAIER Partner, Snell & Wilmer
34 https://njleg.gov/bill-search/2024/S3080 35 Other states like Illinois, Iowa, Maine, New Hampshire, and Rhode Island have instituted similar state-specific bans. https://www.oddsshopper.com/articles/betting-101/college-sports-betting-laws-by-state-where-can-i-bet-col- lege-player-props-y10
36 https://sbcamericas.com/2024/04/18/connecticut-bill-college-sports-betting/ 37 https://www.cga.ct.gov/2024/FC/PDF/2024HB-05284-R000271-FC.PDF
38 https://sportshandle.com/ncaa-pleased-player-prop-bet-bans/ (noting that even by removing prop bets on college athletes “[t]t’s also possible – and perhaps likely – athletes will receive harassment for how their performance impacts a team-wide bet, such as the spread, moneyline, or total”). 39 College prop bet legislation is constantly changing. Be sure to research the most recent legislation in your state. Comprehensive summaries of the landscape may be found here: https://www.actionnetwork.com/ncaab/college-bas- ketball-player-prop-rules-by-state; https://www.forbes.com/betting/basketball/college-basketball/where-can-you- bet-ncaa-tournament-props/; https://www.oddsshopper.com/articles/betting-101/college-sports-betting-laws-by- state-where-can-i-bet-college-player-props-y10
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IMGL MAGAZINE | SEPTEMBER 2024
ONE-ON-ONE
People person: Corinne Valletta, Betsson IN THE LATEST ONE-ON-ONE INTERVIEW WITH GAMING LAW LEADERS, EDITOR IN CHIEF, DR. SIMON PLANZER INTERVIEWED THE GENERAL COUNSEL OF BETSSON. THEY TALKED ABOUT THE CHALLENGES OF THE JOB AND THE PRESSURES ON IN-HOUSE TEAMS AS WELL AS THE ASPECTS OF HER ROLE THAT SHE FINDS EXCITING.
Simon Planzer: What has kept you busy this year?
CV: Malta is a gaming hub, at least in Europe, and as a result, you’ve got really quite a strong ecosystem supplying what is needed to make a gaming business successful. And that includes the sorts of employees you need. And not only Maltese. You have game marketing people, you have gaming law people, you have gaming tech people, and product people from all over the world. If they’re in gaming, they know that at some point they need to be in Malta. But each year, new companies set up here too, and that means there is a lot of competition for the right people. It has become a constant drive to have the best conditions, the best benefits, and the best packages, including competitive salaries. You’ve got a lot of startups and small companies aside from the larger ones like Betsson, and small companies can be very aggressive with very high salary budgets since they set up smaller teams. When you have a team of 50 or 60, you cannot pay them all high-tier salaries, it’s unsustainable. But we are competing with those companies,
Corinne Valletta: From a business perspective, there are lots of priorities, but growth is high on the agenda. If you look across the entire group, we’re expanding quite ambitiously, especially in South America, and we have around 20 licenses within Europe. So there’s quite a lot going on. How that affects me as Betsson General Counsel may not be what you are expecting because my biggest challenges are around people. A big part of my job is making sure that I have the right team in place to cope with that growth, and that has been very intense. The team has grown to around 60 people, which makes sense when you consider how many jurisdictions we have to cover, but in a place like Malta where we are based, that is quite large. Simon Planzer: Malta is known as a global gaming hub but are there currently enough qualified people locally to meet business needs?
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which makes it hard to attract the right people and keep them.
one needs to appreciate that we are not the regulator, we are only interpreting the law. So what we understand and explain may not necessarily be exactly what the regulator intended: we will only know with time. Things change so quickly, and always the question is ‘how does this affect our position,’ and you’re expected to give an answer. SP: Many IMGL members provide external counsel to people in your in-house position. Do you rely on third-party counsel and what can they do to support you better? CV : External counsel means different things in different markets. In markets where we don’t have a local license, they are the only way to get representation with the regulator. But in many cases, they are a sounding board. I talk through ideas and try to understand whether we are on the right track, especially with difficult decisions. I am happy with most of the support we get, although sometimes it feels like they take on too much and can’t be as quick as we need them to be. One week for a legal opinion is too slow: the business reality is much quicker than that. SP: You mentioned your expansion in LatAm. That feels quite a long way away from Betsson’s ownership roots in Scandinavia. How did that come about? CV: : South America is interesting for us because we have had good success in the early days and achieved some strong brand recognition. We acquired a company in Brazil in 2019 and another in Colombia in 2020. The recent law in Peru is very interesting for us, and we have been closely following the developments there. Argentina started to open up in 2018, and now we have three licenses there. From a legal and compliance perspective, the challenges in South America are numerous. Regulators are often younger and sometimes more prepared to listen, but sometimes they
SP: Once you have recruited the team, what are the challenges then? CV: Then it’s about setting them up with the right tools and strategies to get the work done properly. We have to have people from different countries owing to the language requirements of our various licensing jurisdictions, which means you have a melting pot of lots of different cultures and characters. Then I am managing people with very different career backgrounds to me. There are so many different skill sets required even just within the legal and compliance team. There are all areas of law, from regulatory to commercial, and corporate to M&A, as well as litigation and banking. Then there are people with a background in technical audits and data, security, business, or general compliance. It is really challenging when you’re the boss and you have no academic qualifications in some of the areas you are managing – it means you need to constantly test to make sure you have found the right people to help you arrive at the solutions the business needs. SP: You mentioned having to be across lots of different aspects of law. That’s a huge brief when you’re in so many countries, especially in Latin America. CV: It’s not even the law itself but the speed at which things change. Practically every day something changes somewhere that affects the plans or operations of the business. Management expectations are that we can give an immediate interpretation, which would be unheard of outside our industry. We are expected to be on top of regulatory developments in real time. So there’s a new framework being introduced in Brazil at the moment, and the team is working through it to understand and provide its interpretation on how we can implement it. The business is only interested in how long that is going to take, and
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have old school legal frameworks and lots of ex ante regulation, extremely prescriptive rules on financial reporting, AML reporting, and lots of demands on operators. Regulations are often so complex that it’s hard to achieve compliance efficiently, which can damage the relationship locally. Culturally, it’s challenging too, making sure that even though we are in Malta we are speaking the same language and things don’t get lost in translation. Peru has been a priority this year. We have tech and product teams working around the clock to make sure we’re ready to go live when we get the regulatory and compliance piece complete. Brazil is about to start in earnest as the window is open to apply for licenses there, and so it starts again. SP : You have followed quite different market entry strategies, with acquisitions, partnerships and your own standalone B2C operations. How do you assess that mixed approach? CV : We used to favour acquisitions, but forming partnerships is a strategy we have adopted for a few years now. We find it advantageous to retain the local knowledge, and it helps us gain a stronger foothold in a shorter time. In Brazil, that partnership is still active, and they are actively involved in the business. In Argentina, we need to have a land-based local partner under the regulations. We formed this partnership some years ago – they [the partner] run the land-based operation while we focus on the online part of the business. When regulation started in South America, we thought it would be effectively a copy paste of the regulations in Spain, but it turned out to be very different country by country, so there’s no possibility of cookie cutter. There are quite a few considerations for each country: which brand are we entering with, our flagship brand Betsson or a local brand that we’re acquiring? Which platform are we going to use – we have our own platform, will we use that? If we are using our platform, we may have to reshape it to accommodate a new brand. We do consider 3rd-party platforms where the brand we are acquiring is working well, but that brings lots of legal complexity. When you add another party to the mix, you have the responsibility for the license on a platform that may not be able to deliver what
you need. At the end of the day, you have to have the right mix of elements to be successful in whatever regime you are going into. SP : We have a regulatory patchwork even in Europe, in spite of its comparatively small size and the existence of a European Union. How do you manage licenses in over 20 countries? And is there a pathway towards greater regulatory harmonization? CV : I started in gaming about 15 years ago when harmonisation was already mentioned but was almost immediately shut down following the developments in European courts and then the other institutions. During those times, we thought – well, if harmonization can’t happen, then at least we should aim for some standardization. But even then, when we spoke about the idea of harmonisation and standardisation and the havoc it would wreak if it were not adopted, we couldn’t possibly imagine the situation we are in now. Today it’s so much worse than we thought it would be and so difficult and expensive to be compliant. Everyone is regulating differently, maybe not completely, but differently enough. And we don’t only have Europe - we have the US, Canada, Africa, LatAm. So you have to come up with a different way of complying each time, supported by a focused compliance team, and a different product. We have to spend hours convincing product teams that we cannot do in Brazil what we are doing in Argentina, for example, that the way they are supervising in this country is different from somewhere else, and being compliant will have different outcomes for the product. I have resigned myself to the fact that we just have to deal with it in the best way we can, which comes back to where we started. It is about getting the team, in place, but that means sustainability becomes a question as the team has to be large. The only way to justify it is if that market is profitable enough. If it’s too expensive to comply, considering everything, we have to exit those markets. To be sustainable you need to be very big and very aggressive or you have to go down a different route. As we know, there are operators out there who simply ignore the regulatory frameworks. We are compliant, but there are some who stay under the radar and are doing very well. The black market is huge, and this is who we are competing with in regulated markets.
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SP : How do you explain that the unlicensed offers are so successful if they are not allowed to communicate commercially? CV : This is the point. As Betsson, this is our mantra: to be a sustainable business, we must hold licences in the relevant jurisdictions where they are available; otherwise we cannot promote ourselves or operate there. But it is not the case for everyone – some operators thrive in the black market, continue to operate without getting caught by regulation. The enforcement mechanisms available and the network of regulators are perhaps not strong enough to tackle the black market. It is all very well to keep adding new rules and new restrictions, but when you are only covering operators who you license, not the illegal operators, you must question what you are doing wrong. SP : We have seen some companies fined over the behaviour of subsidiary companies pre acquisition. How do you as General Counsel limit or mitigate against those skeletons in the cupboard? CV : You have to know what you’re buying. You should be able to spot legacy risks when you see a regulator is investigating, and you may have to pay up, for example. There is usually very little you can do to minimize the risk, but you may be able to negotiate with the vendor around some limitation of liability. Sometimes you just have to accept it as a cost of doing business and we have done a mix of both, which factors into the price. I am not normally directly involved with acquisitions at the earlier stages. When they do land on my desk, the first thing I do is a thorough operations check on structures, reporting, etc. to see if we have to restructure or make other adjustments. There is always a focus on keeping up the ROI, so that can’t be thrown out. The only way I find to make it work is to put in place controls to make sure the reporting lines are right in the organisation. It’s not immediately possible, but you need to do it over time. We have been able to explain to regulators that we recognise a business needed to change, and this is what we’re doing to fix it. With the more reasonable ones you usually get somewhere, and they accept things have changed now you have taken full control. It doesn’t always go your way, however, and at the end
of the day the regulator wants somebody to answer for failures that happened under people who are no longer around. Usually, you are buying the company because you want the license, so it’s the acquirer that needs to answer for it. SP : We have talked a lot about the challenges of working in the industry in the position you have. What would you say to young lawyers to encourage them to get into gaming? CV : I think it’s definitely the place to be if you want variety. There’s always something new. I mean, I come to that to work every morning, I look at the news to see if there are some things I need to follow, and there’s always something new. The world is a very big place and gaming is a very new area. Gaming law is still new and constantly changing so there is a huge amount still to learn. And it’s an area where you have the opportunity actually to use your knowledge of the different areas of law. One day I’m discussing civil claims, another day I’m discussing an administrative decision by a regulator that I don’t agree with. Another day we are talking about rolling out a new product in a new market. No day is the same. You can be an M&A lawyer, you could be a tech lawyer and be interested in the products, you could be an IP lawyer. For me, the interesting part is that it changes every single day. That’s what I love most about it. There’s a social aspect where I’m with people who have very different areas of expertise to me. That’s a reward in itself because we are coming up with a solution together and I am actually able to dip into different pots of expertise to come up with solutions. Then there’s the fun of working in the enterprise space. I worked in a law firm when I started, then at the Malta Gaming Authority before joining Betsson. When you’re in-house counsel, your client is your employer. In a law firm, you can always put in a series of disclaimers, but in house you have find ways to do things that keep the business competitive. As a junior you can hide away in a law firm. I have the challenge of training young lawyers fresh out of private practice. They have to learn quickly that their role is to show what the business can do, not the opposite. No one needs to be told the reasons why they shouldn’t go ahead. It is all about being a facilitator, finding ways to make things happen in the real world rather than being too cautious or over-concerned with theoretical risks. And that’s exciting.
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IMGL MAGAZINE | SEPTEMBER 2024
MI AN LD TI A’SMA FR AK TE FT GU RP ED YA -T LE ISTING
Indian Gaming Regulation: A Work in Progress
THE VIBRANT INDIAN ONLINE GAMING MARKET INDUSTRY, POPULARISED BY REAL MONEY GAMES OF SKILL LIKE POKER, RUMMY, FANTASY SPORTS, AS WELL AS CASUAL GAMES, AND E-SPORTS, IS POISED FOR STRONG GROWTH ON THE HEELS OF THE GENERAL ELECTION IN 2024 AS TANISHA KHANNA, PALAK KAPOOR AND MORVI CHATURVEDI REPORT
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IMGL MAGAZINE | JULY 2023 IMGL MAGAZINE | SEPTEMBER 2024
INDIA MARKET UPDATE
Introduction Per some estimates, 1 the industry has already grown annually by 28 percent between 2020 – 2023, and is estimated to surge to INR33,243 crores by 2028 (approximately US$4 billion). In April, 2024, 2 Prime Minister Modi famously spent a day with top Indian gamers and sought to understand the regulatory and other challenges in the industry. It has been suggested that the growth of online gaming in India forms a crucial part of the Government’s ‘Digital India’ initiative which is set to transform India into a digitally empowered nation. However, despite the promising growth story of India’s online gaming industry, regulatory uncertainty remains. The Government backtracked on the much-anticipated federal co-regulatory framework between designated self-regulatory bodies and the Ministry of Electronics and Information Technology (“MeitY”), contemplating a Government regulator instead. 3 The absence of federal regulations has resulted in the State-wise uncertainties persisting, as well as confusion among other regulators and law enforcement agencies. Certain Indian states have challenged their respective High Court orders striking down bans on skill gaming as unconstitutional, before the Indian Supreme Court (“SC”). The outcome of these appeals may determine important questions on the permissibility of prohibition on skill games by states. In addition, several gaming operators have received show cause notices from goods and services tax (“GST”) authorities seeking retrospective payment of 28 percent GST on the entire bet value. The industry has hitherto been paying GST at the rate of 18 percent on the platform fee. These show cause notices have been challenged before High Courts, and the proceedings have now been transferred to the SC, for its consideration. 4 Meanwhile, since October, 2023, the industry has been grappling with amendments to the GST law imposing 28 percent GST on the
entire deposit amount. Some reports estimate that half of real money online gaming entities have experienced a dip in revenue pursuant to these amendments. 5 While the GST Council is reportedly proposing to introduce amendments to the GST law to enable a waiver of the retrospective imposition of taxes, the prospective GST rate will remain. Finally, concerted efforts by regulators and self-regulatory bodies to curb remote gambling operators’ operations in India continue and is likely to be a focus of Indian regulators in 2024. We recap some of these key developments in our update on India’s online gaming industry, and consider what the next few months may bring. Before we delve into these developments, certain aspects are worth noting: betting and gambling is governed by state-wise anti-gambling laws 6 (“Gaming Enactments”) in India. Skill games are excluded from the gambling bans in most states. Some High Courts have recognized that states may regulate games of skill. However, the treatment of games is not consistent across the states, leading to significant state-wise uncertainty. The regulatory treatment of games is constantly changing at a state level. For instance, after the ban on skill gaming in the state of Tamil Nadu was set aside by the Madras High Court, 7 the state government brought in a regulatory framework for online games. In addition, Gaming Enactments do not have extra-territorial applicability to apply to offshore operators. Abandoning the self-regulatory approach Amidst calls for federal regulation of online gaming, on April 6, 2023, an amendment was introduced to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”) to regulate online gaming at a
1 See https://www.financialexpress.com/business/brandwagon-online-gaming-segment-in-india-experienced-cagr-of-28-reveals-ey-re- port-3328710/ 2 See https://www.thehindu.com/opinion/op-ed/getting-to-a-new-level-in-indias-online-gaming-sector/article68146583.ece 3 https://www.livemint.com/industry/online-gaming-self-regulation-hits-roadblock-meity-weighs-direct-control-11704104343456.html 4 Directorate General of Goods and Services Tax Intelligence & Ors v Gameskraft Technologies Private Limited [SLP No. 19366 of 2023, SC] 5 See https://www.deccanherald.com/business/online-gaming-firms-see-revenue-fall-layoffs-since-gst-hike-report-3074689 6 Entry 34, List II, Seventh Schedule, Constitution of India. 7 Junglee Games India Pvt. Ltd. v The State of Tamil Nadu, 2021 SCC OnLine Mad 2762
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