Could Federal Bill Aimed at Protecting Kids Impact Gambling Industry? 

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Child safety can bring together unlikely collaborators – including members of Congress. Just last Thursday, a kids’ safety bill was reported out of a US Senate committee with some of the country’s most partisan figures among its 43 co-sponsors. The intent of the legislation? Protect minors from “online harms,” gambling among them.

US Sen. Richard Blumenthal (D-CT) and Sen. Marsha Blackburn (R-TN) are the lead sponsors of the Kids Online Safety Act of 2023 (S.1409). The senators said in a joint statement in May that the bill is designed to hold social media sites and other “covered” online platforms accountable for what kids experience online. Defined broadly in the bill as an “online platform that connects to the internet and that is used, or is reasonably likely to be used, by a minor,” a covered platform would be required to act in the best interest of the minor’s mental health and safety under the act.

Avoiding the promotion and marketing of gambling and age-restricted substances like alcohol to minors would fall under that requirement.

But in a regulatory structure where the gambling industry and regulators widely support age-restricted gambling ads and promotion, the potential impact of S.1409 is uncertain.

What’s Behind the Kids Online Safety Act of 2023?

A one-page official summary of S.1409 emphasizes its proposed requirements on social media plus algorithms that target kids. According to the summary, S.1409 would improve internet safety by doing the following, with enforcement by the states and the Federal Trade Commission:

  • Require social media platforms to provide minors with options to protect their information, disable addictive product features, and opt out of personalized algorithmic recommendations
  • Give parents new controls to help support their children and spot harmful behaviors
  • Require large social media platforms to perform an annual independent audit that assesses the risks to minors, their compliance with this Act, and whether the platform is taking meaningful steps to prevent those harms
  • Give academic and nonprofit organizations access to critical datasets from online platforms to foster research regarding harms to the safety and well-being of minors
  • Create a duty for online platforms to prevent and mitigate specific dangers to minors, including promotion of suicide, eating disorders, substance abuse, sexual exploitation, advertisements for certain illegal products, and other matters

Sen. Blumenthal: Underage Gambling a Concern

It’s definitely a responsible policy. But most states with legal online gambling, including sports betting, already restrict targeted gambling advertising and promotion to persons age 21 and older. The push for more regulation from Blumenthal and others stems from concern that existing restrictions don’t always protect those under the legal gambling age.

Gambling is among the concerns of Sen. Richard Blumenthal, D-Ct., and Sen. Marsha Blackburn, R-Tenn, co-sponsors of the Kids Online Safety Act.
Sen. Richard Blumenthal, D-Ct., and Sen. Marsha Blackburn, R-Tenn. (Anna Moneymaker/Pool via AP)

Blumenthal – known for his advocacy of strong consumer protections in the auto and tech industry – wrote to the American Gaming Association (AGA) and Caesars Sportsbook and Casino last November with specific concerns about sports betting marketing to college students – a growing segment of US sports bettors, research shows. The letters came on the heels of the AGA issuing a revised Responsible Gaming Statutes and Regulations Guide last September.

“Experts have said that it can be difficult for young people to recognize their inability to gamble responsibly, which could lead to serious mental and financial consequences,” Blumenthal wrote to the AGA last year. “While I am encouraged by AGA’s initiative to set industry standards meant to ensure the casino industry and other affiliated entities respect the legal age for sports wagering and support responsible gaming, including on online platforms, it is critical that you safeguard consumers from members that violate this commitment.”

“AGA has a responsibility for setting an example to everyone in the industry,” he wrote.

Tighter responsible gaming standards soon followed. The AGA – which stands by advertising as “essential” to building a regulated sports betting market – updated its Responsible Marketing Code for Sports Wagering in March to change all references to “legal age of wagering” in the code to 21-plus, add prohibitions on college sports betting partnership deals, and more.

The updated AGA standards went into effect immediately with a grace period to comply ending July 1. Three weeks later, S.1409 was amended and reported out of the Senate Commerce, Science, and Transportation Committee.

Also read: A Closer Look at the Minimum Age of 18 for Kentucky Sports Betting

‘Big Tech’

It appears S.1409 is largely a call for the top players in the information technology industry – not the gambling industry specifically – to tighten their controls. The joint statement by Blumenthal and Blackburn in May repeatedly singled out “Big Tech” in their call for action.

“Big Tech has proven to be incapable of appropriately protecting our children, and it’s time for Congress to step in,” Sen. Blackburn said in the statement. “The bipartisan Kids Online Safety Act not only requires social media companies to make their platforms safer by default, but it provides parents with the tools they need to protect their children online.”

According to Blumenthal, “Our bill provides specific tools to stop Big Tech companies from driving toxic content at kids and to hold them accountable for putting profits over safety.”

What Could Be Next?

The AGA has made it clear that it doesn’t want additional federal regulatory oversight over legal sports betting specifically. That sentiment is easily gleaned from an advocacy statement on the AGA website, which states:

“The AGA firmly believes additional federal regulatory oversight of legal sports betting is unwarranted. States and tribal nations have proven to be effective regulators of gaming – including sports betting – and the more than 4,000 regulators nationwide have decades of experience overseeing gaming operations within their jurisdictions. To the extent that there is an acute need for federal involvement, Congress and the administration should ensure attention and resources are spent addressing the illegal market, which lacks the transparency and safeguards found in the legal, regulated marketplace.”

It’s partly a matter of context. The sports betting industry recently marked five years post-PASPA – the federal law that limited legal sports betting to Nevada until it was struck down in 2018 by the US Supreme Court. The gambling industry – sports betting included – sees itself as new and evolving. According to the advocacy statement, the AGA “anticipates continued momentum behind state legalization efforts, and we will continue to advocate for policies that promote a safe and accessible marketplace.”

S.1409 is also evolving. Many more amendments are likely to be tacked onto the bill before it has a chance to pass both the Senate and House before the current congressional session ends in Jan. 2025. But for now, it’s definitely one to watch.

About the Author
Rebecca Hanchett

Rebecca Hanchett

Legislative Writer
Based in Kentucky's Bluegrass region, Rebecca Hanchett is a political writer who covers legislative developments at Gaming Today. She worked as a public affairs specialist for 23 years at the Kentucky State Capitol. A University of Kentucky grad, Hanchett has been known to watch UK. basketball from time to time.

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