First Steps Towards Sports Betting Regulations Offer Few Surprises

Two weeks ago, while most of the United States was focused on the Brett Kavanaugh hearing, the House Judiciary Committee conducted a hearing on the future of sports betting in America.

The Committee asked witnesses from several interested organizations questions about what they would like to see as far as legislation and regulation. The NFL, American Gaming Association, Nevada Gaming Control Board, Coalition to Stop Internet Gambling, and Stop Predatory Gambling all presented short statements and had an opportunity to answer questions from the Committee. The statements and responses provided insight as to what the consumers may see in the near future. Some of the key insights from the panel…

The NFL wants federal legislation that would: (1) ensure a framework with substantial safeguards for consumers; (2) provide tools for law enforcement to protect fans and penalize bad actors; and (3) protect League consent and intellectual property. The NFL’s representative, Jocelyn Moore, also presented recommendations for achieving each of those goals. With respect to protecting consumers and League integrity, the NFL wants federal legislation to establish criteria for state regulatory entities, enforce age limits, require the use of official League data, prohibit insider and high-risk betting, and include responsible gambling resources.

Strong enforcement provisions (significant civil and criminal penalties) with active monitoring and enforcement would ensure compliance and the League’s consent to any use of its marks, logos, or IP. The framework in the federal legislation should require operator licensure and auditing, facilitate information sharing between the leagues and enforcement agencies, and combat money laundering, tax evasion, and corruption.  The NFL would require data to come from the League or official licensees for the purpose of ensuring accuracy.

The American Gambling Association (the only panelist to mention the tribes), represented by Sara Slane, put forward five public policy goals for the states and tribes: (1) consumers choice to operate in a legal market; (2) transparency; (3) consumer protections (fairness, safety, transparency, accountability); (4) integrity protections; and (5) generate jobs and tax revenue. Ms. Slane pointed out that there is already a regulatory infrastructure in place: 40 states have casinos and every state but Utah and Hawaii have legal gaming, three states have initiated the legislative process with respect to sports betting, and three teams already have contracts in place with casinos. The AGA suggests that there is no need to mandate financial terms or official data purchasing when it can be done privately via contract.

The AGA noted that gambling is a low margin business, so an increase in overhead (inevitable with federal oversight) would significantly hinder operations. It was also noted that the AGA already works with the Treasury Department, specifically the Financial Crimes Enforcement Network. Additionally, the AGA already supports responsible gaming programs, research and public awareness, trains employees in and is active against underage gambling. Ms. Slane finished her statement noting that Congress does not regulate other gaming products and that the AGA supports state regulation.

The Nevada Gaming Control Board, represented by Becky Harris, highlighted a few points in her opening statement. The Board supports some form of government regulation to ensure integrity in games and betting practices. Pointing to their own success, the Board believes states are in a better position to regulate since federal oversight would add costs, time, and taxes. The remaining points concerned taxes, combating illegal operators, ensuring technology remains current, protecting addicts, and creating a forum for discussion.

The Coalition to Stop Internet Gambling represented by Jon Bruning, and Stop Predatory Gambling represented by Les Bernal, were both concerned over the ubiquity of sports gambling, and more specifically how easy it is to lose your life savings with a few clicks on a website. The concerns over how to protect the public and children should be the top priority. Mr. Bruning noted the difficulties a state attorney general would have getting jurisdiction over a foreign entity operating illegally in their state. Mr. Bruning’s opinion was that restoring and using the Unlawful Internet Gambling Act of 2006 could provide the protections that are required for the industry to be implemented safely. Mr. Bernal was more focused on the con that is gambling.  According to Mr. Bernal, more than one trillion dollars will be lost by the public over the next eight years to government-sanctioned gambling, and this does not include sports betting.

At these early stages, the questions put forward by the Committee were most concerned with whether or not legal gambling would significantly decrease illegal gambling, how children would be protected from advertising and easy access to internet gambling, how to enforce age limits online, how would an operator know the state in which a bet was placed online, how to protect consumers from going into credit card debt, whether the safety of student-athletes, players, coaches, staff, and officials been considered, privacy, and integrity and match-fixing. One area surprisingly left out was the possibility of antitrust violations. It is safe to assume that the topic will be broached in future hearings.

The representatives on the panel and the Committee did not offer many surprises, but they did enlighten the public as to what we can expect to see included in any legislation.

To Be Continued…

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