On November 21, the New York Times published several articles analyzing and critiquing the newly expanding gambling industry. The summary article noted several shortcomings of the sports betting industry including:
- Low tax revenue compared to projections
- Oversight issues of welcome bonuses and their language
- University partnerships with sportsbooks and hard questions about college students and gambling
Writers within the gambling industry have routinely unpacked these questions, often pointing to a greater need for oversight on these issues. So, it was surprising to see the American Gaming Association’s (AGA) response defending the gambling industry as a whole instead of addressing the state of sports betting regulation.
The AGA released a statement on social media defending the gambling industry shortly after the New York Times articles went live.
The AGA’s Defence of the Gambling Industry
The core AGA critiques of the New York Times reporting are characterizations of the gambling industry’s:
- Level of regulation
- Commitment to responsible gambling
- Responsible gambling awareness
Some of the AGA’s pushback is legitimate. However, the AGA made a few points that also need additional context.
Gambling and Sports Betting Regulation
“The U.S. gaming industry is one of the most heavily regulated in the country,” the AGA wrote in a statement. “The federal government regulations the gaming industry like financial institutions while thousands of dedicated professionals across legal jurisdictions set & enforce gaming regulations.
“There’s an appropriately high bar to clear to receive and retain a gaming license and any assertion to the contrary is false.”
This section of the AGA’s response is true but misleading.
The gambling industry is indeed one of the most heavily regulated. To apply for licenses, gambling operators must show that they’re financially sound. Gambling regulators perform background checks on companies and their executives to keep money launderers out of the regulated industry. Finally, casinos and sportsbooks are subject to the same anti-money laundering regulations as banks. Regulated gambling companies must implement anti-money laundering protocols and are liable for any money laundering that occurs.
These regulations do not address the New York Times’ critiques.
New York Times Reporting
One NYT article correctly stated that “the federal government doesn’t regulate sports betting.” The federal government imposes anti-money laundering requirements on gambling companies, but states are responsible for licensing and policing their sportsbooks.
States have also enforced license requirements inconsistently. The Times reported that “in 12 out of 13 states in which Penn runs Barstool-branded sports betting regulators didn’t require Mr. Portnoy to undergo a licensing review.” That is a serious oversight in an industry where gambling executives and some managers are expected to be scrutinized.
Colorado is another state whose sports betting oversight has been poor. The Colorado Office of the State Auditor conducted a report in April 2022 that revealed the Division of Gaming’s oversight suffered from pandemic stresses and mismanagement. Some sportsbooks disclosed lawsuits that the Division of Gaming failed to register or look into on their end. All but four of the state’s 39 retail and internet sportsbooks held temporary licenses, which have lower standards to clear for licensing than permanent licenses.
The New York Times should’ve explicitly drawn distinctions between federal anti-money laundering regulations and state sports betting regulations before unpacking the details of poor enforcement. The AGA had a point when it added that context in its response.
However, the AGA’s response failed to address the specific criticisms of enforcement that the New York Times and many gambling news sites have pointed out. Together, the AGA and New York Times form a more complete picture than they do separately.
Responsible Gambling Commitment
“The industry’s commitment to responsible gaming is a core and clear differentiator for the U.S. gaming industry against our peers globally,” the AGA wrote in its statement.
This statement’s truth depends on which countries the United States is compared to.
In July 2021, Australia faced a decision about whether to suspend the Crown Melbourne Casino’s license. Victoria’s Royal Commission found that the Crown Resorts was “unsuitable to operate Crown Melbourne.” It cited anti-money laundering, responsible gaming, and tax payment issues as reasons the casino’s license should be suspended or revoked. The Royal Commission ultimately decided to appoint an official to run the casino for two years before making a final licensing decision.
Australia’s episode with the Crown Resorts license illustrates the country’s larger struggle with problem gambling. On Nov. 18, 2022, the Victorian Gambling and Casino Control Commission announced that Australia’s largest poker machine operator would face 62 charges for “allegedly operating gaming machines that didn’t have mandatory pre-commitment technology (YourPlay) installed.” This technology allows users to set time and wager limits, crucial responsible gaming features.
US sportsbooks offer time limits, wager limits, and self-exclusion in each state they operate in. However, there are still flaws in US responsible gambling policy.
Uneven Responsible Gambling Quality
First, responsible gaming policies vary by state. The Massachusetts Gaming Commission created a budget program that automatically alerted casino gamblers when they’d spent certain amounts of their budgets. Something as simple as sending a push notification to users that they’d gone through 50%, 75%, or 100% of their gambling budgets reduced the number of users who chased losses. In contrast, Arkansas, Montana, and Mississippi spend no public money on responsible gambling, leaving non-profits to fund basic services like the problem gambling helpline.
US bettors would benefit from federally standardized responsible gambling measures. If the federal government regulates states’ responsible gambling programs, then it shouldn’t stop at standard responsible gambling programs. It should adopt advanced responsible gambling measures from mature gambling markets.
Advanced Responsible Gambling Measures
When UK bettors start betting more money than usual, online sportsbooks require bettors to submit proof of income. Bettors must prove that they can afford to gamble greater amounts of money. This is a safeguard against chasing losses, one of the risky behaviors associated with problem gambling.
It’s also a feature that US sportsbooks lack.
The United Kingdom is one of the most mature gambling markets in the world. It’s among the oldest and it has focused on regulating online sports betting rather than banning it. Around the same time that the United States passed the Unlawful Internet Gambling Act, the UK created regulations governing the emerging online gambling industry. Consequently, it has responsible gambling features that online sportsbooks in the United States could learn from and adopt.
The United States is a global leader in parts of responsible gambling programs, like anti-money laundering policy. However, US online gambling regulations lag behind countries like the United Kingdom.
Awareness of Responsible Gambling Programs
“AGA research shows past-year sports bettors are familiar with responsible gaming tools (92%) and more than half saw more responsible gaming information in the past 12 months than in previous year[s],” the AGA’s statement said. “Our collective efforts have brought responsible gaming tools directly to consumers and increased awareness of these resources exponentially.”
That 92% figure comes from the AGA’s most recent annual survey on casino gaming conducted in early 2022. The survey found that 92% of past-year sports bettors were “familiar with at least one responsible gaming tool.” 51% of past-year sports bettors also saw or “heard more responsible gaming information in the past year.”
Initiatives like the Have A Game Plan ad campaign and standard responsible gaming disclosures across states have likely contributed to this increase.
However, these awareness statistics mask the uneven distribution of problem gambling resources across the United States. New Jersey is home to the Center for Gambling Studies, which its website proclaims is “the only gambling studies center in a school of social work in the United States.” The Arkansas Racing Commission is being sued for the $200,000 the state had appropriated for problem gambling in its casino and sports betting amendment but never transferred.
The implication that awareness is the United State’s key gambling issue rather than state policy and enforcement failures is absurd. Consumer awareness does not absolve state governments from their responsibilities to provide problem gambling services. It’s not an answer to unflattering news coverage of regulatory failures in state regulators who shirked their responsibilities and attracted negative press attention in the first place.
Sports Betting Industry Response to Enforcement Problems
New York Times coverage of enforcement failures may be new to the mainstream media audience. However, gambling industry sites have reported similar failures for months. Colorado’s audit made the rounds across gambling news organizations in June 2022, and in local mainstream news sites like Colorado Public Radio.
The New York Times reporting is consistent with the sports betting industry’s regulatory issues. Sports betting regulation isn’t a universal failure, but its inconsistency from state to state invites scrutiny from outside the industry. Today, it’s one of the country’s oldest papers of record. Tomorrow, it could be federal regulators.
Gambling lobbyists should switch from defending the industry’s successes to guiding regulatory improvements that would protect the industry from regulatory backlash and protect gamblers, many of whom are being exposed to legal online sports betting for the first time.