As sports betting ads push the limits, regulators need to push back
In August, Massachusetts became the 36th state to legalize sports betting. What was once spurned for its potential to corrupt the sports world is now embraced as a natural part of it. But that cultural shift shouldn’t mean anything goes when it comes to ads and promotions designed to entice bettors. The First Amendment does not grant the right to swamp every possible media outlet — from trash cans and subway tunnels to television ads and social media feeds — with unfair or deceptive pitches and promotions.
Since the March launch of mobile sports betting, there’s good reason to question whether the Massachusetts Gaming Commission is doing all it can and should to protect consumers. Current regulations ban advertising that contains “images, symbols, celebrity or entertainer endorsements or language designed to appeal primarily to individuals younger than 21 years of age.” Yet the television airwaves are brimming with ads that reach an audience of all ages, including young children, featuring local sports heroes who are hawking gaming apps. Promotions offering what sounds like free money, but isn’t, overwhelm social media feeds. In the face of this advertising blitz, Attorney General Andrea Campbell is rightly urging the commission to get tougher when it comes to calling out what’s unfair or deceptive.
As lawyers for the AG’s office put it in a March 21 letter to the commission, “At minimum, safe and responsible gaming means that the betting experience must be fairly and accurately described, marketed and promoted.” To that end, the AG’s office is proposing draft regulatory language that would put more limits on what it describes as “targeted marketing, harmful promotions and platform design choices that could deepen addiction or encourage risky behavior.”
The language proposed by the AG would impose stronger ID-authentication requirements to make sure bettors are 21 or older. It would restrict advertising to young people on social media and connected television, like YouTube TV and Hulu. It would bar the use of app or platform design elements that prolong use or encourage “risky behavior.” It would prohibit sports betting operators from using the extensive personal information they collect to target users via more advertising and push alerts.
The AG is also proposing to ban certain promotional offers and to require others to be submitted to the gaming commission for review and approval. To win approval, the sports betting operator would have to show the promotion accurately represents the gambling experience and mitigates negative consequences. The AG’s office is blunt about the likely outcome of such review, predicting that “Many of the promotions incessantly offered on Massachusetts airwaves and social media feeds will not be permitted under this language when it is adopted.”
For example, Campbell wants regulators to ban referral bonuses, which allow one customer to receive credits for referring others. The concern is that these types of promotions encourage consumers to leverage their social networks for referral bonuses. Such bonuses are not permitted in some other regulated industries, such as the sale of alcohol and recreational marijuana. Campbell also wants to restrict promotions that encourage bets with falsely positive odds — for example, bet $5 to win $200 if the Celtics score a single point. Such promotions often require bettors to keep their winnings on the platform for anywhere from 30 days to 90 days before they can be withdrawn. The hope, of course, is that those happy winners will continue gambling.
The AG also wants to stop operators from paying perceived insiders like sportscasters, announcers, or players to be “experts” providing gambling advice and to make it easier to opt out of information sharing, targeted advertising, and push alerts.
Others on Beacon Hill are also asking whether Massachusetts Gaming Commission members are doing their jobs as regulators — and deciding they are not. “Based on the amount of advertising, the tone and tenor, I don’t think so,” state Senator John F. Keenan of Quincy told the editorial board. “We have some catching up to do.” Keenan has filed a bill that would add bonus promotions, same-game parlays, odds boosts, or promotions that are billed as risk-free, no sweat, or free to what’s prohibited under Chapter 93A of the state’s consumer protection law. Added Keenan, who voted to legalize sports betting, “We’re not saying ‘don’t bet’. We’re trying to rein in an industry that has taken advantage of the situation.”
The federal government does not regulate sports betting. It’s all on the states. And, when it comes to the ability of state regulators to stand up to the industry, an investigation by The New York Times found good reason for concern. A Times survey of states where sports betting is already underway found “the enforcement of rules has been haphazard, that punishments have tended to be light or nonexistent and that regulators are counting on the industry to police itself.” Meanwhile, as the Times points out, the more people bet, the more states collect in taxes, creating an inherent conflict of interest and a desire to get sports betting underway as quickly as possible. That’s what happened in Massachusetts. Then-Governor Charlie Baker signed the sports betting law on Aug. 10. Casinos got the green light for in-person sports betting on Jan. 31, and mobile sports betting launched on March 10, just in time for March Madness.
As this state adjusts to the new reality of sports betting, it’s important to remember that the industry behind it cares about one thing: maximizing profits by encouraging people to bet their money, whether or not they can afford to lose it. But, for the state, there are competing interests: the desire to maximize tax revenue versus the responsibility to protect its citizens from harm that could arise from reckless gambling. While it’s too early for data that point to an increase in problem gambling, it’s not too early to guard against it. One way is to take the regulation of advertising and promotions as seriously as possible — by the commission heeding Campbell’s advice and the Legislature enacting
Keenan’s proposal.
The First Amendment does not grant the right to swamp every possible media outlet — from trash cans and subway tunnels to television ads and social media feeds — with unfair or deceptive pitches and promotions.