Betting Industry Unites Against Congressman's Proposed Ad Ban

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 .

“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 . “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 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.

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.

  
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