There are a couple of things the sports betting industry can agree on when it comes to advertising. One is that there is a growing number of people who believe the extent of sports betting ads is problematic. The other is that there is no clear-cut answer regarding the best approach to addressing those concerns.
At last week’s UNLV Conference on Gambling and Risk Taking, UNLV Distinguished Fellow in Responsible Gaming Alan Feldman moderated a panel that tackled all facets of the advertising discussion. Joined by KPMG’s Adam Rivers, UNLV’s Becky Harris, and JCT Holdings’s Jane Tsai, the group tackled big questions, including whether or not the glut of advertising is even something to worry about.
There isn’t research supporting that advertising is a problem
“None of this has been studied. None of this has been evaluated. No one has any idea whether or not putting the name on the side of the shirt in front of the shirt does a damn thing,” noted Feldman.
We haven’t really tackled why is it that you want to clamp down,” added Rivers. “Because it’s annoying the American public? Because of the sheer volume of effort?”
The volume is substantial, and still growing, which is something Harris pointed out in her presentation.
“Online gaming and sportsbook operators spent $292 million on TV advertising in 2020. In 2021 that was up to $725 million. And that excludes jurisdictions like New York, that weren’t online. That’s the GDP of some small countries. It’s insane,” she said.
Problem gambling calls on the rise post-PASPA
What is also on the rise is the number of calls to problem gambling numbers throughout the country. That can’t directly be tied to advertising, but the general rollout of sports betting across the country has come with a spike in issues that Harris believes is worsened by the tight interplay between sports betting and sports broadcasting.
“It is documented that since the repeal of PASPA and the rollout of the US legalized regulated market that there has been a significant increase in the number of calls for health and gambling hotlines, particularly from young males. We’ll call it 23-40,” Harris said. “Many of them, because sports are so ingrained in our culture, are really struggling to separate out that gambling piece of our now very engaged sports betting, sports competition interchange.”
Harris credited Ohio and Massachusetts as the current hallmark of regulators trying to do something to keep advertising under control. Ohio regulators focused on “conspicuous” responsible and problem gambling messaging and ensuring that operators are not marketing products to those under 21, particularly on college campuses.
Ohio has liberally fined operators more than a million dollars to hammer the point home that their regulations about advertising need to be taken seriously. Massachusetts regulators have also been very involved in the launch process and some operators have gotten in hot water, but there have been no fines actually handed down yet.
Gaming industry taking multi-pronged approach to advertising
Regulators aren’t the only one taking up the charge and acting on the criticisms about advertising. Lawmakers are introducing new bills, the leagues and media have formed their own Coalition for Responsible Gambling, and the industry has put its own measures in place such as the American Gaming Association’s Marketing Code of Conduct.
“What I find really, really interesting is this multifaceted, multi-stakeholder approach. In order to appropriately address the topic you’ve got your legislators who have to signal their priorities. You’ve got your gambling regulators who have to enact those priorities and do so in a meaningful way and enforce them on your sports betting licensees. Then you’ve got your trade associations or sports teams, I’ll put them in there. They’re having conversations because they saw this coming from a mile away and they’re like, ‘Okay, what protections can we put in place? What can we say that we adhere to? What can we require our members to adhere to in order to protect those who struggle and just frankly, not to overwhelm the public with sports betting advertising,” Tsai observed.
Tsai applauded the industry for taking a multi-pronged approach, but also cautioned that too many cooks in the kitchen and too many complex regulations across the markets could have adverse effects.
“It’s really important that every level of this come together and start to try and put together a framework that makes sense because if you make it so convoluted, that makes it impossible for somebody to sell the product,” she added. “If you make it impossible for them to do business, then it begs the question of what is legislation really accomplishing?”
Gambling is already one of the most regulated industries in the world, so to add more rules does make the barrier to entry even higher. As we see a consolidation in the market, it is already difficult for some of the smaller players to keep their heads above water. Tsai also noted that is something stakeholders need to keep in mind.
“There’s something like that, that makes it untenable for new market entrants. And then you create a different scenario where you’re actually almost favoring the existing operators. You’re favoring the bigger companies that have the bigger bucks and you’re giving them a competitive advantage because there’s not gonna be any competition coming into the market.”
Is a natural slowdown of ads on the horizon?
Rivers also mentioned the natural consolidation of the industry and suggested that ads will inevitably slow down once the gold rush period of sports betting draws to a close.
“I think you’re just going to naturally clamp down to actually be profitable,” he explained. “As it stands, the business model simply doesn’t work and investors will end up sort of seeing behind the curtain realizing they don’t like what’s there. So I think there’ll be a natural sorting out of some of this stuff.”
If there isn’t a natural sorting though, TV advertising is just the tip of the iceberg. Social media has gotten by relatively unscathed but it is a place where operators are going full bore on advertising and content with operators often posting dozens of times a day.
Harris said social media is still just the Wild Wild West in general in the US, so other than some age-gating, regulators aren’t currently concerned with it. That doesn’t mean they won’t have the avenue to address it in the future though.
“I imagine if advertising for sports betting gets out of control in the United States, potentially that’s going to come, that I think [social media] is going to be a last priority, not a first priority, and innovative regulators who have a problem of jurisdiction probably are going to turn to those tenants and start thinking about those ideas in ways that they can apply to social media,” Harris said.
We may not know the full harms of sports betting advertising but the panel did agree that this is an issue that is not going away. People are riled up and, even if there isn’t problem gambling research to support their concerns, the optics around the issue remain.
Whether that is answered by research, regulations, self-policing, or a mix of all of these things, the industry is already taking steps to do something, but there is still room to do more.