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In the offseason before the 2015–16 NHL season, the league opened a window for ownership groups to bid for expansion teams for the first time since 2000. Two ownership groups submitted bids to the league, one each from Las Vegas and Quebec City. If chosen, this would be the first "Big Four" major professional sports league to place a franchise in Las Vegas (not counting the city's short-lived and ill-fated football teams in the Canadian Football League and XFL, who played in 1994 and 2001 respectively), but the NHL has had a limited presence in the city with annual preseason games, beginning with an outdoor game in 1991 and the Frozen Fury series held each year since 1997. Quebec City was previously home of the Quebec Nordiques, a team that had moved in 1995 and became the Colorado Avalanche; it has hosted occasional preseason games since that time, and has constructed a new ice hockey arena to receive a potential NHL team. Due to political delays, a bid was not submitted from Seattle despite the presence of three different ownership groups publicly campaigning to start an NHL team; a number of other potential expansion sites, such as Kansas City and Saskatchewan, declined to place bids because of cost concerns.
Las Vegas was approved for the 2017–18 NHL season on June 22, 2016; at the same time the Quebec City bid was deferred.
The initial proposal of the rules for the draft were decided upon by the NHL in March 2016. They allowed each team to either protect seven forwards, three defencemen, and one goaltender or, one goaltender and eight skaters regardless of position. Because the NHL wanted to ensure the competitive viability of any new teams, the number of protected players allowed was lower than in the 2000 NHL Expansion Draft which populated the Minnesota Wild and Columbus Blue Jackets, when each team could protect nine forwards, five defencemen, and one goalie, or two goalies, three defencemen, and seven forwards. Under these rules, each of the 30 teams would lose one top-four defencemen or third-line forward per number of new teams. Only players with more than two years of professional experience — NHL or AHL as defined in the collective bargaining agreement — were included in the draft.
Teams had to submit their list of protected players by June 17, 2017, and they had to expose at least two forwards and one defenceman that had played at least 40 games in the 2016–17 season or more than 70 games in the 2015–16 and 2016–17 seasons combined and had to still be contracted for the 2017–18 season. The exposed goaltender had to either be under contract for the 2017–18 season or became a Restricted free agent in 2017. At least twenty of the thirty players selected by Vegas had to be under contract for the 2017–18 season, and they were required to select a minimum of fourteen forwards, nine defencemen and three goaltenders. Vegas was granted a 48-hour window prior to the draft to sign any pending free agent (RFA or UFA, one per team) that was left unprotected. If a team lost a player to Vegas during this signing window they did not have a player selected from their roster during this draft.
Teams were required to protect any contracted players with no move clauses (NMCs) with one of the team's slots for protected players, unless the contract expired on July 1, 2017, in which case the NMC was considered void for the draft. Players whose NMCs had limited no trade clauses had to still be protected, and any players with NMCs were able to waive the clause and become eligible for the expansion draft.
Any player picked in the expansion draft cannot have their contract bought out until after the completion of the 2017–18 season. The expansion team was guaranteed the same odds in the draft lottery as third lowest finishing team from the 2016–17 NHL season for the 2017 NHL Entry Draft; after their first season the team will be subject to same draft lottery rules as the other teams in the league. The NHL's deputy commissioner, Bill Daly, said that teams that do not follow the expansion draft rules would face penalties, including possibly the "loss of draft picks and/or players."