Massachusetts Regulators Expected To Be Tough on Sports Betting Operators

Massachusetts is renowned for its investment in problem gambling programs and responsible gambling research. Overall, Massachusetts regulators are expected to be similarly strong enforcers of a sustainable sports betting industry.

“I suspect they’re going to take the same approach to sports betting that they’ve taken to other forms of expanding gambling in Massachusetts,” Keith Whyte, Executive Director of the National Council on Problem Gambling, told Gaming Today. “[That is], to incorporate a comprehensive public health framework and to either assemble or develop the evidence base we need to make more informed decisions about regulation and impacts.”

Regulating isn’t without challenges, though. Regulatory agencies are often vulnerable to regulatory capture, where they end up working to benefit the industries they’re meant to regulate. There’s also an inescapable need to learn on the job and make decisions about how to balance industry and consumer needs.

“I have generally been impressed with the [Massachusetts Gaming Commission] and would rank them as one of the best regulatory entities in the US,” Richard Schuetz, a gambling industry stalwart and former gaming regulator, said in an email.

But Schuetz is also clear-eyed about the challenges of regulating a new type of gambling with a new infrastructure.

“They [the MGC] are dealing with a whole new vertical, and they are also dealing with a new delivery system,” Schuetz said. “That is a lot to swallow. I oversaw the largest book in Las Vegas, and it takes a lot of learning, and there is much that can go wrong.”

Regulation Challenges in Massachusetts

As legalization has expanded, sports betting has moved from neighborhood bookies and offshore operators to sportsbooks that rank in the App Store’s top five sports apps. Regulating any industry is a challenge. But the sports betting industry combines complications for regulators.

MGC members have some advantages in this area. While none of them have come from the gambling industry itself, each commission member has a relevant background.

“The Commissioners have all spent years as gaming regulators, state policymakers, and members of the MGC staff,” Thomas Mills, a spokesperson for the Massachusetts Gaming Commission, wrote in an emailed statement to Gaming Today. “Each Commissioner has prepared for this new regulatory responsibility by attending educational conferences and industry trainings, working with staff and consultants, and doing their own due diligence.”

This commitment to educating themselves has been verified by critical voices in responsible gambling.

“They continue to look for best practices and where there aren’t best practices, I think they continue to be willing to do the research themselves either in advance of sports betting or to get data from sports betting operators to try to help increase everybody’s knowledge base,” Whyte said.

Marlene Warner, CEO of the Massachusetts Council on Gaming and Health, echoes Whyte’s optimism in her observations of the state gaming commissioners.

“It’s been fascinating to watch the public meetings, because if operators are in process in a number of jurisdictions, but they haven’t actually launched a single app yet, that’s a little concerning,” Warner said, “and you hear that in the questions the Gaming Commissioners are asking.”

The MGC seems to be tackling the greatest structural challenges of regulating. So rather than questioning its ability to regulate sports betting, it’s worth asking which issues most urgently deserve its attention.

Emerging Issues in Sports Betting Regulation

Ever since Ohio’s crackdown on “risk-free” language in bonus offers, news headlines, regulatory agendas, and organizational press statements have focused on prohibiting misleading “risk-free” language. (The free-standing “free” bet has the same problems, but still floats around some of Google’s meta descriptions.)

But even within marketing, there are other pressing issues. One is the hole in the net that’s supposed to catch direct marketing materials before they’re sent to self-excluded or underage bettors.

DraftKings has already faced a fine in Ohio for direct marketing ads that were addressed to underage residents. There were about 2,500 offending ads in a set of about 150,000. This raises further questions about how well the self-exclusion list can shield bettors from direct marketing. If age verification can fail, then similar flaws may let direct marketing materials through to self-excluded bettors over time, too.

This is a family of issues ripe for innovation from regulators and industry professionals. Massachusetts is among the states best positioned to protect self-excluded gamblers and underage residents.

The Brewing Youth Gambling Crisis

Outside of marketing, youth gambling is a critical issue that’s waiting for its own series of headlines. However, this issue is thornier than it may appear at first glance. Youth gambling is less likely to be due to flaws in licensed sportsbooks’ age verification measures. It’s more likely to be in the overlap between university partnerships and offshore signups.

A handful of universities has signed marketing agreements with sportsbooks. For example, the University of Colorado at Boulder signed an agreement with PointsBet that allows PointsBet to advertise at Folsom Field and gives CU Boulder $30 for each customer referred to PointsBet.

Ever-improving age verification measures at licensed sportsbooks intend to prevent underage bettors from betting legally. But people under 21 can make gambling accounts at offshore sportsbooks unbound by American advertising law.

“If your marketing is effective, it can get people to want to bet, which includes getting [underage] college students to want to bet,” Whyte said. “But if they can’t bet on your platform, then… one of the things you may have done is send the next generation of gamblers offshore.”

While this issue may crystallize around college campuses, it’s not limited to colleges. High school and middle school students may see sportsbook ads that make them want to bet, too. Any particularly anxious kid that finds momentary relief from the thrill of gambling may be at a higher risk for a problem gambling disorder. Even if sportsbooks market responsibly, youth gambling is still an issue for gambling regulators.

The issue of keeping underage American gamblers from offshore websites is a messy entanglement of issues. Legal sportsbooks should be allowed to advertise. It’s unreasonable to expect gambling companies to shield every underage person from their ads. They’re not responsible for all the gamblers who choose to go offshore, either.

But this is the kind of impossible problem that demands a partnership between the sports betting industry and state regulators, not just an adversarial one.

Industry and Regulators

The relationship between any industry and its regulators is complicated. Industries often court regulators to ensure they maintain favorable regulations. (See Colorado’s sports betting regulations, which define “free bets” as bets placed with site credits but make no mention of initial deposit requirements.) Regulators must also balance reasonable consumer protections without unreasonably infringing on businesses’ rights to operate.

But a less-explored tension is the line between accepting legitimate insight from an industry and policing that same industry. It requires self-education from regulators, transparency from the industry, and the insight to tell when one of the two is falling short.

It’s a difficult balance to strike, and many state regulators haven’t risen to the new challenge of sports betting. It took over 30 states to legalize sports betting before one of them cracked down on so-called “risk-free” bets, that in fact are not risk-free.

Unlike most new sports betting states, Massachusetts doesn’t have a reputation for passivity. No state gambling regulator is perfect, but like we’ve seen in Ohio, it’s reasonable to expect progress in consumer protections from Massachusetts.

About the Author
Christopher Gerlacher

Christopher Gerlacher

Senior Writer
Christopher Gerlacher is a senior writer and contributor for Gaming Today. He is a versatile and experienced industry expert with an impressive portfolio who has range from political and legislative pieces to sports and sports betting. He's a devout Broncos fan, for better or for worse, living in the foothills of Arvada, Colorado.

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