Startups differentiate themselves in different ways. Some have particularly visionary founders or subversive business models. However, one of the most sought-after differentiators is disruptive technology. For startups that have it, it can transform their companies and their industries. It fulfills a requirement for startups to differentiate themselves in the marketplace.
However, for startups in the sports-betting space that differentiate themselves with new technology, their differentiating asset poses potential legal risks.
Emerging technologies are ripe targets for state Attorneys General. At a panel during the SBC North America Summit, Washington D.C., Chief Deputy Attorney General, Jason Downs, offered the reasoning:
“This will garner state AG attention in the future and that’s because it impacts consumers in different states. Anytime an issue touches on a consumer and a state, that is going to get a state AG’s attention. Anytime we’re talking about an emerging technology, that will get a state AG’s attention.”
Uncertain impacts on consumers are subjects that state AGs are interested in. Startups whose advantages come from new technology should take note.
Mitigating Legal Risk For Startups
If consumer protections are a consistent concern for State Attorneys General, then young gambling companies must avoid attracting their ire. If new companies raise questions about their respect for consumer rights, then they may attract unwanted attention. For a young gambling company, responsible gaming is the most important issue to get right.
“I think when you add in money and you add in minors and you add in marketing and responsible gaming…I just had to say those are all issues where state AGs are not going to be quiet,” co-chair of State Attorneys General Group for Cozen O’Connor, Lori Kalani, said in an SBC Summit panel.
Responsible gaming is the gambling industry’s most important consumer protection issue. That extends to avoiding marketing to minors and reactivating problem gamblers for sportsbook sites.
Startups who are particularly disruptive must be aware of the impact they have on consumers. Disruptive startups must use their new technologies to respect consumer rights as well as innovate. If startups with disruptive technology fail to honor their ethical commitments, reckless companies could have a deleterious effect not only on themselves. They could also cast the whole gambling industry in a negative light.