The rapid and widespread adoption of sports betting legislation across the U.S. has met with little high-profile public resistance since 2018, but as the prevalence of the industry begins to peak, some cracks are beginning to show.
The recent failure of two powerful lobbies in California to get legislation over the line may indicate that the toughest battles are yet to be fought. But while the final states to fall to European-style betting legislation hold firm, those that have succumbed are considering changes.
Last week, New York senator Pete Harckham introduced Senate Bill 9605 in a bid to convince the New York State Gaming Commission to “promulgate rules and regulations regarding predatory sportsbook bonuses in mobile sports betting”.
The bill does not offer details about what the regulator should do to curb such inducements to bet but did point to “deposit, matching, risk-free betting, free money, free bets, site credits and profit boosts” as examples of undesirable incentives.
The justification for the bill was backed up by recent New York Times reporting, which claimed to have analysed the impact of mobile sports betting. As CDC Gaming Reports’ Jake Pollard highlighted in November, the industry was less than impressed by some of the claims made in the NYT articles.
Nonetheless, the reporting clearly rang alarm bells in Mr. Harckham’s office. It is true that the fight to win customers over the past year or so has led to some eye-watering marketing campaigns. Few sportsbooks have been able to turn a profit in New York as a result of the massive cost of customer acquisition, of which bonusing is a large part.
When New York went live in January, operators could expect to spend $25m to obtain a license and then pay an average cost per customer acquisition of $100-$150, before taking into account that gross sports betting revenue is taxed as 51%.
In fact, that cost of acquisition figure is low by some estimates. DraftKings has suggested it spends around $371 to acquire each user, in a bid to achieve an estimated lifetime value from players of $2,500 each.
Harckham’s bill repeatedly refers to the ‘luring’ of customers to bet, via targeted marketing campaigns, ‘free’ bets and ‘free money’. These are all practices that have come under scrutiny in Europe, and it’s no surprise that the same should be true in the U.S.
What is perhaps a little surprising is that such issues were overlooked when legislation was originally drawn up – a cursory google of the debates happening in Europe in recent years would have flagged the relevant issues.
In fact, Harckham’s bill outlines some of them, saying: “Other countries such as the United Kingdom have limitations upon when advertisements for ‘free betting’ or other predatory sports betting tactics can be aired, and Canada has prohibited them all together.”
While it is true that overly generous and relentless bonusing and offers have been curbed in many European jurisdictions, Harckham may be well advised to take the New York Times’ figures with a pinch of salt and seek more academic sources.
The figures quoted by the press on gambling harm are rarely based on fact. The truth is accurate data is hard to come by and more gathering of such data, particularly by newly regulated jurisdictions, would be an enormous benefit to legislators, gambling operators and punters alike.
Where Mr. Harckham probably has a point is in his bill’s observation that: “Across the country, the enforcement of mobile sports betting rules and regulations has been haphazard”. The fact that player protection has come as somewhat of an afterthought in New York only mirrors the common trajectory of legislation elsewhere.
“Industry officials have cited their voluntary support for anti-addiction resources as proof that they can be trusted to operate without stricter government rules, but more safeguards must be put in place as this reporting has illustrated these predatory practices are triggering a spike in gambling addiction”, was the bill’s doom-laden conclusion.
It will now pass to the Senate Rules Committee for consideration. Arguably, New York’s operators will be grateful such consideration was not given to bonusing and player acquisition prior to their drive earlier this year to claim players in the state. They won’t be pleased to see their marketing practices curtailed, but they’ll be glad they got that initial bite of the big apple.
