The battle lines are being drawn. On one side are the sports-betting companies, on the other regulators, lawmakers, and disgruntled consumers.
The National Football League is set to begin play. Sports books are preparing for the return of bettors who have taken the summer off. Sports-betting handle dropped by over 50 percent from its high point in January to its low point in July and August. In some locations, it fell even more. Ohio registered $1 billion in wagers in January and $330 million in July. The trend will reverse beginning in September and continuing through the Super Bowl in Las Vegas on February 11. In January 2023, the national handle hit $12 billion. This year could easily exceed that by several billion dollars.
The return of bettors also means the return of the advertisers, meaning the bookies. The bookmakers will battle for bettors and market share. The battle is primary between FanDuel and DraftKings; between them, they have 60 percent to 80 percent of online sports betting. The two have been fighting since 2015; they outdo each other with advertisements and bonuses. It is a very expensive fight.
There will be fewer advertisers this year. Barstool and Wynn are out of the game. Caesars and MGM are cutting back. The costs far outweigh the rewards and most of the small bookmakers have abandoned the American market.
Still, anyone watching a football game can expect to see a seemingly unending stream of advertisements for sports wagering. It will catch the eyes of regulators and lawmakers as it has since September 2015 when sports fans were introduced to fantasy sports and FanDuel and DraftKings.
Another attention getter for public officials is illegal gambling by athletes. The recent investigation into players will affect the narratives of the games and gambling in the United States. The investigations have included both professional and college sports. So far, more than 20 players have been fined, suspended, or forced out of the sport. The combination of the noise from advertisers and outcries over illegal gambling by players is going to cause a collision of interests between the beneficiaries and the watchdogs.
The betting interests, which include the leagues, teams, and players and states collecting taxes, are eager for football and the cashflow to begin. New York is a prime example. The Empire State averaged over $70 million a month in tax revenue from September through January. It has the highest tax rate, 50 percent of the gross gaming win, but other states are also making money on sports betting.
The leagues, teams, and players have deals with betting companies. It is a high-stakes game. For example, Penn National just made a $1.5 billion deal with ESPN; in the process, Penn abandoned Barstool after investing $500 million in the company. The ESPN-Penn partnership will be taking FanDuel and DraftKings head-on. And with ESPN’s muscle, it promised to be an epic and noisy battle.
The watchdogs and beleaguered sports fans are not so enthusiastic. They did not enjoy the constant advertising noise of last year’s football season and are not looking forward to its return.
U.S. Rep. Paul Tonko of New York is among them. In February, Tonko introduced H.R. 967, Betting on Our Future. The bill seeks to limit or eliminate sports-betting advertising. H.R. 967 would place regulation of advertising under the jurisdiction of the Federal Communications Commission and the umbrella of interstate commerce, which would place sports-betting advertising within federal regulation.
That is a tricky issue; at the moment, regulation of sports betting is left to the individual states. In fact, the Supreme Court decision in May 2018 did exactly that, taking sports-betting regulation away from the federal government and placing it into the hands of the states. This bill seeks to put only the advertising under federal regulation as part of interstate commerce, not the betting itself. Tonko is adamant that he does not want harm or end sports betting, particularly mobile sports betting, as his state makes nearly a billion dollars a year from it.
Tonko does want to control the advertising. He is not alone. Lawmakers in other states are contemplating state regulation to do the same. They have some international models to follow. Ontario in Canada is set to eliminate the use of sports figures, influencers, and other celebrities from gambling advertising. Great Britian is following a comparable path.
Control of betting advertisements is a developing trend and it is impossible to predict the outcome. Except to say there will be more than one outcome, as each jurisdiction confronts the issue. For one thing, it is seasonal, a football thing. Football and other sports are not threatened by movement. The business model of FanDuel and DraftKings is, however, in the crosshairs.
It is a strange phenomenon. Not since the ban on tobacco advertising have we seen anything resembling it. It could be a replay of the Marlboro Man and Joe Camel. And now, let the season begin!
