It’s not very often that sports betting stakeholders universally find themselves all-in on the same issue, but that’s the case a week after U.S. Rep. Paul Tonko of New York filed a bill he calls the Betting on Our Future Act.
The legislation would prohibit any sports betting advertising and marketing on television, radio, and the internet, and it has galvanized stakeholders focused on one thing: keeping the federal government out of their business.
It’s been nearly five years since the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA), thus giving control of legalization of sports wagering to the states. Federal lawmakers have made other efforts to “stick their nose under the tent,” as one stakeholder opposed put it, but now that more than 30 states have legalized wagering in some form, many connected to the industry find it late to stuff the genie back in the bottle with any congressional action.
“With the federal legislation, I think that there’s enough things going on in the country that they don’t have to worry about [sports betting],” Colorado Division of Gaming Director Dan Hartman told Sports Handle.
“I can’t think of too many businesses where when you put a federal umbrella over it, that they have done very well,” he said. “When PASPA was overturned, it really put it back into state’s hands, where you want it.”
Stakeholders contend that a federal advertising ban could have unintended consequences, harming those in need of responsible and problem gambling services, laying the groundwork for the black market to flourish, giving a leg up to bigger players that also offer iCasino, and effectively decreasing tax revenue to states.
“Just like any other ban, I fear that it would be counterproductive and it may encourage patrons to start betting with black markets,” Martin Lycka, senior vice president of American regulatory affairs and responsible gaming for Entain, told Sports Handle. “Licensees would lose a critical channel to reach the consumers, and that goes hand in hand with RG messaging.”
One size doesn’t fit all
Since May 2018, states have legalized in myriad ways. Some allow only in-person wagering, while others authorize only digital or approve of both. Some allow betting on tribal lands only. Some give professional sports venues a chance to have sportsbooks. Some have banned wagering on college sports. And some have 51% tax rates while other have 6.75%.
Whatever it looks like, each state has its own culture and set of priorities, all of which make a one-size-fits-all solution for even just one piece of the pie tough to swallow in the form of Tonko’s bill.
“This is just another example of overreach by the federal government on an issue that SCOTUS said is a states’ rights issue,” said B Global managing partner Brendan Bussmann. “This is a government that can’t pass a budget, can’t figure out a border, let alone can’t figure out what’s flying over its airspace, and they think they can regulate sports betting advertising? Give me a break.”
Across the U.S., states with legal gambling require that operators include a problem gambling hotline number in advertising and provide clear, concise language about responsible gaming tools. Some companies have found ways to leverage responsible gaming advertising beyond the standard — theScore Bet partnered last year with a group of comedians to get its message out, while the Manning football family is the responsible gaming voice of Caesars Sportsbook.
A ban on all advertising would eliminate that opportunity to reach consumers, which industry spokesmen argue would push consumers to the black market that a legal framework is designed to protect them from.
“Any such effort only serves to reduce awareness for legal options to the benefit of illegal, offshore operators and the detriment of consumers and communities,” the American Gaming Association said in a statement last week. “The proposed legislation would violate well-established free speech protections and undermine the expertise of more than 5,000 state and tribal gaming regulators across the country.
“Responsibility is a foundation of the legal gaming industry and that includes with advertising. In fact, there’s never been more attention paid or resources invested in responsible gaming and problem gambling resources.”
During a hearing in Connecticut last week on a bill that would ban promotional advertising, Michael Ventre, FanDuel’s senior manager/Northeast state government relations, testified that banning promotional ads could “incentivize more Connecticut residents to use illegal sports betting apps,” according to The Day newspaper.
Ventre said, “Advertising promotions is an effective tool to incentivize consumers to break up with their bookie and transition onto regulated platforms ― a goal that is in the best interest of the people of Connecticut.”
Ventre also emphasized that all FanDuel promo advertising points consumers to responsible gaming resources.
Ad betting bans around the world
As the federal government contemplates this ban, it won’t be the first time a legal betting jurisdiction has sought to limit or prohibit advertising. The U.S. sports betting and iGaming market is its infancy compared to other parts of the world, and while operators can draw on their experiences in more mature markets, lawmakers often can’t — or don’t.
“This is the most recent potential regulatory headwind over the interactive gaming industry, mirroring gambling regulations seen in Europe (some level of ad bans in Italy, Belgium, Germany & Belgium),” analyst Barry Jonas of Truist Securities wrote in a recent financial note.
“That said, it’s uncertain to us if the act can succeed. Additionally, we believe some larger players like DKNG and FanDuel (FLTR-LON, NR) could benefit amidst any potential advertising limitations/bans given smaller, lesser-known operators could struggle to raise public awareness around their product. We also believe that omni-channel operators (BetMGM, CZR) could see benefit given iCasino ads could remain fair game.”
The Italian government in 2018 banned wagering advertising and sponsorships. It is now revisiting at least one of those bans, as professional soccer teams have complained of financial hardship that analysts predicted would occur shortly after the law went into effect. In addition, some research has suggested an increase has taken place in black-market gambling in Europe in recent years amidst tough restrictions.
As Italy considers softening its prohibitions, the Dutch government is pushing for a total gambling advertising ban while U.K. lawmakers have weighed legislation aimed at preventing “front of the jersey” gambling advertisements, along with other restrictions.
“There has been an influx of business into the black market,” Lycka said of the Italian ban. “They’ve struggled with that. It is difficult [for consumers] to differentiate between legal and illegal operators. I am of the view that the advertising needs to be addressed via self-regulations — and some soul searching — by operators.”
A regulator’s perspective
At least one U.S. regulator would agree. Colorado’s Hartman, whose state has more than 25 legal digital platforms, has long been a believer in what he calls “self regulation.”
“I hope talk of federal legislation gets people thinking about getting a good message out, because I don’t think anybody wants federal intervention,” he said. “It’s really important to listen to what people are saying and try to gear up to that. It detracts from the job that we need to do when all we’re doing is worrying about ads. It’s diverting regulatory resources which are usually scarce.”
On May 1, Colorado will mark three years since the launch of legal wagering. In that time, regulators and lawmakers have tweaked or considered tweaking the framework, most recently by stepping down promotional write-offs for operators. There’s also been talk of revamping how the state’s self-exclusion list is handled and new legislation that would funnel more dollars to responsible gambling initiatives.
Colorado is by far the "best" state for legalized sports betting. Market competition for accounts is fierce.
Massive bonus offers and significant line variation across so many books = even a moderately motivated person would have trouble losing, at least in the short term. https://t.co/ql7I8eiUsW
— I 💔polls (@Michael_Cobb68) January 22, 2022
In those nearly three years, Hartman has seen the ebb and flow of wagering ads. He preaches patience to newly legalized states while allowing room for operators to pursue customers aggressively, particularly in states with many competitors.
“In Colorado, we’re asking 25-26 operators to come in and compete for market share, and if you don’t let them do that, how are you going to build a market that does the things you want it to do?” Hartman said. “People can bet in any state right now, whether legal or not, so we’re trying to create a safe, legal market for everyone in the state and trying to eliminate the black market.
Said Suzi Karrer, the Colorado Department of Revenue’s communications coordinator: “Ad buys are targeted to sporting events, but they’re not on prime TV. In Colorado … the ad dollars are being backed down. Now that they have data for years in, they’re saying, ‘This worked, that didn’t,’ and they’re [adjusting accordingly].”
This isn’t the first time
Since PASPA was overturned nearly five years ago, there has been at least one prominent congressional effort to take some control of sports betting back from the states.
In 2018, then-Sen. Orrin Hatch of Utah and Sen. Chuck Schumer of New York co-authored a bill that would have set a federal regulatory framework for states in which wagering was legal. That bill would have forced operators to buy official league data and would have set national standards for how operators and states would handle self-exclusion lists, for betting on college sports events, and more.
Hatch was one of the co-authors of PASPA, and the bill was introduced near the end of his 47-year Senate career. It would have also laid down standards for advertising, including provisions that many states across the U.S. have adopted, such as bans on advertising to minors or problem gamblers and requiring that helpline information be prominently displayed. The Senate bill didn’t gain traction.
The NFL has sent a letter to Senators Orrin Hatch and Chuck Schumer supporting the Sports Wagering Market Integrity Act of 2018, a federal sports betting bill to be introduced today. pic.twitter.com/dRtFWShJW4
— David Payne Purdum (@DavidPurdum) December 19, 2018
The Hatch-Schumer bill was the first of a handful surrounding wagering that have popped up — and then died — in Congress since 2018. In 2021, U.S. Rep. Lou Correa of California filed a bill that would have expanded the Indian Gaming Regulatory Act to allow for digital wagering off reservation, and Rep. Dina Titus of Nevada has repeatedly offered proposals to do away with the federal excise tax on sports betting.
Stakeholders already tackling ad issues
Since sports betting began to proliferate in 2018, advertising has been at the heart of the conversation. In recent months, the words “risk” and “free” have been front and center as responsible gaming advocates and regulators expressed concern about inappropriate marketing.
Terminology such as “risk-free” isn’t original to the U.S. — it was used in European betting markets in the early 2000s and has since been discarded as misleading.
Some U.S. operators eliminated or changed the language on their own starting last year. FanDuel took the lead in changing its terminology to “no-sweat bets” in July 2022. Sports Handle has reported that other operators, including Barstool Sportsbook, BetMGM, BetRivers, DraftKings, and PointsBet, have been massaging their advertising and marketing.
The NBA this month became the first professional league to ban the use of the phrase “risk-free” by its partners in relation to promotional bets, while Massachusetts and Ohio have been among states cracking down on that language.
The NFL last year announced that it would limit the amount of wagering ads allowed during its broadcasts. Though it did not specify what the ads could or could not include, the league permits no more than six wagering advertisements per broadcast.
States cracking down
The Massachusetts Gaming Commission discussed the possibility of banning betting ads during live sporting events and how to control when ads on public transit would be visible. While it found keeping wagering ads off of national sports broadcasts of sporting events appeared impractical, the commission has developed some of the most stringent advertising guidelines in the U.S. as it moves toward a March 10 launch of digital operators.
In Ohio, where digital and retail operators went live Jan. 1, commenters on Twitter have found their advertising to be overwhelming on television, social media, and anywhere else you can think of. The state’s regulator has already rebuked four operators for marketing violations, meanwhile, including advertising to minors.
OK, @Twitter ,
I see this ad,
I click "not interested,"
You tell me to refresh the page…
and then I see it again.
Let me make this very clear.
I don't care about sports betting apps. Or UFC.
And yet you keep trying to shove them down my throat.
Enough already. pic.twitter.com/RAMY2P3ZsP
— J.V. (@JVfromOhio) February 12, 2023
In Connecticut, which has both iCasino and digital sports betting, SB 971 proposes banning operators from using “advertisements offering or advertising financial enticements” to consumers for any kind of online gaming. It would also require that those funding accounts with credit or debit cards only use cards in their name, rather than joint accounts.
The legislation is opposed by DraftKings, FanDuel, and Rush Street Interactive, the only three commercial operators in the state. They say the credit/debit card requirement would be the first of its kind in the U.S. and difficult to adopt and have warned of “unintended consequences” from banning promotional advertising.
And in Hawaii, where no form of gambling is legal, one lawmaker is seeking to ban gambling advertising while imposing a tax on “gambling excursions” as a way to begin to fund a responsible and problem gambling programs in the state, according to the Las Vegas Review-Journal.
Since PASPA fell, the federal government’s appetite for gambling legislation seems small. And given other pressing issues, legislating something that already belongs to the states seems to be a longshot.
The EKGLine newsletter also points out that Congress is “hyperpolarized” following the mid-term elections, which will likely make it difficult for a “potential legal challenge around states’ rights and freedom of speech” to gain traction.
There are few industries subject to the kind ban Tonko is proposing. The only one that comes immediately to mind is tobacco, and Tonko said when he introduced the bill that he is taking a page out of the 1970 legislation that bans tobacco advertising on television and radio.
Some stakeholders have wondered, however, just how a regulated industry is supposed to attract customers without advertising.
“I remember when I saw Joe Camel or the Marlboro Man on the back of Time magazine,” said Bussmann, the gaming consultant,. “I can’t think of any other business where they are told they can’t do X because of the kind of business they are, unless it’s illegal.
“What other industry has come in and been told that it can’t advertise, but it still pays all of its taxes (employment, real estate, excise), and then says tax me another 10% on revenue? Name me another business — I can’t think of one.”