What Goes Into A North Carolina Sportsbook’s Internal Controls?

Several North Carolina sportsbooks are busy readying for the launch of legal sports betting. The market will open next year, possibly as early as January. Many sports betting operators are lined up to become licensed and do business in the Tar Heel State, home to some of the most passionate sports fans in the country.

One of the many steps in preparing a legal sports betting industry is implementing internal controls for an online sportsbook. For mobile betting apps and sports wagering websites looking to launch in North Carolina, internal controls provide one crucial way to demonstrate their qualifications as reliable sportsbooks to regulators.

Before a sportsbook can decide which North Carolina sports betting promos to offer, it must have an internal controls framework to provide a foundation for compliance with gaming regulations. That’s the only way to ensure a safe sports betting market for the NC consumer.

NC Sportsbooks: What are internal controls?

Most simply, internal controls are how the regulatory body, in this case, the North Carolina Lottery Commission, defines the basic operations and function of the market.

For example, what are the terms and associated definitions for North Carolina sports betting, and how will sportsbooks perform the various tasks of complying with state requirements? The goal is consistency, efficiency and, most importantly, compliance.

What is the purpose of internal controls for a sports betting operator?

Internal control requirements from the North Carolina State Lottery Commission are intended to define explicitly how sportsbook operators must report on their activities, handle their financial transactions, structure their workflow and separate tasks to limit potential fraud or conflicts of interest.

For example, the published Internal Controls Guidelines from the Ohio Lottery Commission explain which financial data the sportsbook must report to the regulatory body in that state and how frequently. It also outlines a sportsbook’s organizational hierarchy, including required jobs and what tasks each performs. Internal controls explain how the sports betting operator will pay out winnings, how to resolve disputes over wagers, and so on.

When in the application process must NC sportsbooks submit internal controls?

In most cases, the sports betting applicant (a prospective sportsbook in North Carolina) must include a draft of its proposed internal controls with its application for a license.

For example, in Louisiana, the statute reads:

An applicant shall submit its internal controls with its application for licensing as a sports wagering licensee or for permitting as a sports wagering platform provider. Whenever internal controls are updated, they shall be immediately submitted to the division for approval to ensure the division is in possession of the current internal controls at all times.

The regulatory body receives a proactive plan for internal controls from the sportsbook well before a decision on licensure has been made. Or, in the case of North Carolina, before the NCLC issues a final internal controls document.

Luckily for states like North Carolina, most sportsbooks have experience formulating internal controls in other jurisdictions. Therefore, FanDuel, Caesars, DraftKings and other sports betting operators applying in North Carolina have already implemented compliant internal controls policies in other states where they do business.

What goes into drafting internal controls for an online sportsbook?

More than five years after the United States Supreme Court issued its ruling that cleared the way for states to legalize sports wagering, more than 30 states had chosen to do so. This means the regulatory landscape has had plenty of foot traffic already. Much of sports betting internal controls requirements exist in other states’ documents. A new state like North Carolina will undoubtedly rely heavily on that library of regulatory language.

Also, leveraging the expertise of many gaming regulators when a new state prepares to launch a sports betting market helps. For example, North Carolina hired Sterl Carpenter as its Sports Betting Director following his years of experience in the gaming industry. He assisted in the launch of sports betting in Massachusetts.

The NC Lottery Commission is debating language for internal controls as part of its rule-making process for NC sports betting. The public and sports betting industry professionals can weigh in on the internal controls process.

Eventually, North Carolina gaming regulators will publish an approved internal controls document. Those regulations will be requirements for sports betting operators in the state. Typically, such a document adjusts to the needs of an evolving industry with regular amendments.

About the Author

Dan Holmes

Dan Holmes writes about sports betting, sports media, and sports betting legislative matters. He's the author of three books, and previously reported for Major League Baseball, as well as the National Baseball Hall of Fame and Museum.