Jack Bryant
Background:
On March 11, 2024, the Governor of North Carolina, Roy Cooper (“Cooper”), placed a wager on the Carolina Hurricanes to win the Stanley Cup.[1] Cooper made the bet on Raleigh’s beloved hockey team[2] to commemorate sports betting companies, also known as “sportsbooks,”[3] accepting wagers in North Carolina for the first time in the state’s history.[4] The event marked nine months after the North Carolina General Assembly’s enactment of House Bill 347, authorizing sports gambling within the state.[5] It also came six years after the Supreme Court’s decision to lift the federal ban on sports gambling, allowing states to decide the issue for themselves.[6] As the Supreme Court noted in its decision, “Americans have never been of one mind about gambling.”[7] Supporters of its legalization argue that the tax revenue it produces outweighs the potential it has to corrupt individuals with addiction and poor financial decision-making.[8]
Unfortunately for Cooper, the Carolina Hurricanes did not win the Stanley Cup,[9] and he felt the pain of what most gamblers experience: a losing bet.[10] In fact, in only the first full month of legalized sports betting, North Carolinians lost more than $100 million in sports wagers.[11] This large sum may be indicative of the country’s gambling addiction statistics. According to the National Council on Problem Gambling (NCPG), about 85% of American adults have gambled at least once in their lives, and approximately 2.5 million American adults have a severe gambling problem.[12] The consequences are evident, as citizens in states where online gambling is legalized are about 28% more likely to file for bankruptcy.[13]
With these figures in mind, it’s no surprise that sportsbooks collected over $11 billion in revenue in 2023.[14] Critics attribute sportsbooks’ success to deceptive and predatory promotions like sign-up bonuses, free bets, and targeted advertisements to get players hooked.[15] Concerns have also been raised about sportsbooks’ use of artificial intelligence (“AI”) technology to tailor players’ experiences based on their betting tendencies.[16] These developments within the industry have left some wondering whether the Supreme Court’s decision to lift the federal ban was misguided.[17] Recently, lawmakers persuaded by these views introduced a bill, the SAFE Bet Act, aimed at regulating the sports gambling industry.[18]
The SAFE Bet Act:
On Thursday, September 12, Congressmen Paul Tonko (“Tonko”) and Richard Blumenthal (“Blumenthal”) proposed the Supporting Affordability and Fairness with Every Bet, or the SAFE Bet Act (the “Act”).[19] The Act is designed to “address the public health implications inherent in the widespread legalization of sports betting.”[20] Section 101 of the Act would establish a “general nationwide prohibition on sports betting,” while section 102 would provide a revamped application process for states that desire to legalize the practice.[21]
Section 103 of the Act would do most of the heavy lifting by imposing a duty on states with sports betting programs to meet minimum standards regarding affordability, advertising, and AI.[22] First, the Act would require sportsbooks to “conduct ‘affordability checks’ on customers before accepting wagers in excess of a certain amount,” and prohibit them from “accepting more than five deposits from a customer in a 24-hour period” or “accepting deposits via credit card.”[23] Second, the Act would proscribe broadcast advertising of sportsbooks between 8 a.m. and 10 p.m. and during live sporting events, as well as banning the advertisement of promotions like “no sweat” bets.[24] Third, the Act would outlaw the use of AI to track players’ habits and create “individualized offers and promotions.”[25]
In addition to these standards, the Act would impose a federal ban on amateur sports betting, with some exceptions for college sports, the Olympics, and the Paralympics.[26] Furthermore, the Act would require that the Surgeon General produce a report on the sports gambling industry’s effects on public health, “with a particular focus on young adults.”[27]
Although the Act would not ban sports gambling entirely, it would impose a “national standard” amid “faint-hearted and half-baked” state regulation, Blumenthal said.[28] He also criticized sportsbooks’ use of “the most advanced technology to make the most money.”[29] Tonko added that “it’s well past time for Congress . . . to step up and make a difference,” as sports betting advertisements have become an “endless cascade of flashy promotions.”[30] In addition, law professor and public health advocate Richard Daynard stated that the gambling industry has become a “direct threat to public health,” and likened it to the tobacco industry.[31]
Predictably, the Act has already accumulated its fair share of opposition.[32] Chris Cylke, an executive at the American Gaming Association, denounced the act and characterized it as a “slap in the face” to industry regulators and state legislatures who have worked tirelessly to police the gaming sector.[33] He also called attention to the benefits of legalized sports betting, including its contributions to state tax revenues and the protection it provides consumers from the dangers of illegal gambling operations.[34] Even the NCPG remained neutral on the Act, stating that it “lacks the necessary investment in public health infrastructure to adequately address gambling addiction.”[35] With heads butting on both sides, legalized sports betting has proven to be a contentious issue with an ambiguous future.
The Future of Sports Betting:
If passed, the Act would go into effect one year after its enactment, and states which have already legalized sports betting would have one year to come into compliance with its provisions.[36] Although it is unlikely to be passed, the Act represents the Federal Government’s first attempt to regulate the sports betting industry since the Federal Ban was lifted.[37] For now, it is a safe bet that sportsbooks will continue to promote their services to fans who are willing to roll the dice with sports gambling.
[1]As Sports Betting Goes Live in NC, Governor Cooper Places Futures Bet on Carolina Hurricanes to win NHL Stanley Cup, N.C. Governor Roy Cooper (Mar. 11, 2024), https://governor.nc.gov/.
[2] See Walt Ruff, Canes Begin New Season with Record-Setting Fan Base, Carolina Hurricanes (Oct. 12, 2023), https://www.nhl.com/hurricanes/news/canes-begin-new-season-with-record-setting-fan-base.
[3] Matt Ryan Webber, Sportsbook: What It Is, History, and Legality, Investopedia, https://www.investopedia.com/sportsbook-5217715 (Feb. 5, 2024).
[4] N.C. Governor Roy Cooper, supra note3.
[5] Rules, N.C. State Lottery Comm’n, https://ncgaming.gov/rules-and-compliance (last visited Sept. 19, 2024).
[6] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1484–85 (2018).
[7] Id. at 1468.
[8] See Id. at 1484.
[9] ESPN Staff, Stanley Cup Playoffs 2024: Bracket, Schedule, Scores, News, ESPN (Jun. 24, 2024, 10:55 PM), https://www.espn.com/nhl/story/_/id/39964783/nhl-playoffs-2024-stanley-cup-bracket-schedule-teams-players-preview.
[10] Study Shows That Most Gamblers are Throwing Away Money, Business Insider (Oct. 30, 2013, 6:42 PM), https://www.businessinsider.com/gambling-is-even-dumber-than-we-realized-2013-10.
[11] Brian Murphy, North Carolina Bettors Lost More than $100M on Sports Wagering in April, WRAL News, https://www.wral.com/story/north-carolina-bettors-lost-more-than-100m-on-sports-wagering-in-april/21436613/ (May 17, 2024, 1:42 PM).
[12] FAQs: What is Problem Gambling?, National Council on Problem Gambling, https://www.ncpgambling.org/help-treatment/faqs-what-is-problem-gambling/ (last visited Sept. 19, 2024).
[13] Brett Hollenbeck et al., The Financial Consequences of Legalized Sports Gambling 4 (2024), https://ssrn.com/abstract=4903302.
[14] Total Sports Betting Revenue in the United States from 2018 to 2023, Statista, https://www.statista.com/statistics/1126480/sports-betting-revenue-us/ (last visited Sept. 19, 2024).
[15] See Andy Sheehan, With Popularity of Online Sports Betting, Gambling Counselors See More Young Men Battling Addiction, CBS News (Feb. 6, 2024, 5:44 PM), https://www.cbsnews.com/pittsburgh/news/sports-betting-young-men-gambling-addictions/.
[16] Nicola K. Smith, Concern as the Gambling Industry Embraces AI, BBC (Mar. 4, 2024), https://www.bbc.com/news/business-68304137.
[17] See Bennett Gross, A Safe Bet: Advocating for a Uniform Federal Approach to Sports Betting, Geo. L. Tech. Rev. (May 2024), https://georgetownlawtechreview.org/a-safe-bet-advocating-for-a-uniform-federal-approach-to-sports-betting/GLTR-05-2024/.
[18] Jessica Golden, U.S. Lawmakers Introduce Bill to Put Regulations on Sports Betting Operators, CNBC (Sept. 13, 2024, 12:57 PM), https://www.cnbc.com/2024/09/13/federal-bill-regulations-sports-betting-operators-safe-bet-act.html.
[19] Id.
[20] Legislative Outline of The SAFE Bet Act, Paul D. Tonko, https://tonko.house.gov/uploadedfiles/safe_bet_legislative_outline_3.24.pdf (last visited Sept. 19, 2024).
[21] Id.
[22] Id.
[23] Id.
[24] A “no sweat” bet is a promotion offered by sportsbooks whereby players are granted credits equal to the dollar amount lost on a wager. See How Do I Place a ‘No Sweat’ Bet, Draftkings, https://help.draftkings.com/hc/en-us/articles/18020647261587-How-do-I-place-a-No-Sweat-bet-US (last visited Sept. 19, 2024); Id.
[25] Id.
[26] Id.
[27] Id.
[28] Golden, supra note 18.
[29] Id.
[30] Id.
[31] Id.
[32] See Ken Adams, The SAFE Bet Act, a Clear and Present Danger, CDC Gaming Reports (Sept. 15, 2024, 6:04 PM), https://cdcgaming.com/commentary/the-safe-bet-act-a-clear-and-present-danger/.
[33] AGA Statement on Introduction of SAFE Bet Act, American Gaming Association (Sept. 12, 2024), https://www.americangaming.org/new/aga-statment-on-proposed-safe-bet-act/.
[34] Id.
[35] NCPG Statement on the SAFE Bet Act, National Council on Problem Gambling (Sept. 16, 2024), https://www.ncpgambling.org/news/ncpg-statement-on-the-safe-bet-act/.
[36] Paul D. Tonko, supra note 20.
[37] See Adams, supra note 32.
