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New Jersey’s Division of Gaming Enforcement (DGE) is preparing to release formal guidelines on sports betting and online gaming advertising, with the aim of raising industry standards before state legislators are forced to take action.
Speaking at this week’s International Association of Gaming Advisors (IAGA) International Gaming Summit in Boston, DGE deputy director Lou Rogacki said the agency would be releasing advertising best practices within the next few months, as the division extends an ongoing process to establish heightened standards to one of the hot-button issues in U.S. sports-betting policy.
The guidelines will be similar to enhanced know your customer (KYC) protocols, which were developed more than a year ago and are set to take full effect this week with a new requirement for multi-factor authentication upon login of wagering accounts.
The DGE also this month completed new guidelines for responsible gaming that are due to be fully implemented by the start of next year and will require operators to have specific teams to monitor player behaviors and intervene in the event of problematic play.
The new guidelines do not involve changes to formal regulations on internet gaming or sports wagering, but there is a clear expectation for operators to abide by them, as Rogacki warned that exposure of ads to underage players and responsible gaming failings were the industry’s two areas of highest risk in terms of potential legislative pushback.
“It’s something that needs to be looked at very seriously,” Rogacki told IAGA summit delegates, warning of an “over-saturation” of marketing in the state.
“If the industry doesn’t check itself and do things to get it under control, someone in the state house will.”
Regulatory responses to advertising were a clear theme of the IAGA summit focusing on legal trends in both U.S. states and international markets.
Richard Nathan, chair of the Colorado Limited Gaming Control Commission, noted his state’s recent legislation to cap the amount of bonuses and promotions sportsbooks can offer to players on a tax-free basis.
But it is not tax policy that members of the public raise in conversations over sports betting.
“All I hear about is advertising,” Nathan said. “We’ve got a public issue here to deal with.”
Along with Colorado, Rogacki also noted regulatory changes on advertising that were recently proposed by the Massachusetts Gaming Commission in anticipation of the state’s legalization of sports wagering.
A committee of Massachusetts House and Senate members is also currently meeting to reconcile two contrasting bills passed by each chamber, with the Senate backing a so-called “whistle-to-whistle” ban on broadcast advertising among other more European-style restrictions.
“You have to constantly show as an industry that you’re addressing something before it becomes a problem,” said Rogacki, who emphasized the importance of compliance teams being involved in advertising as one of New Jersey’s expectations.
“The regulators are starting to tell you, sending a clear signal, that this has to be addressed before it becomes a problem.”
Beating The Backlash
Louisiana has seen a similar explosion in advertising since mobile sports betting was launched earlier this year, but there is an expectation that it will start to taper off, said Chris Hebert, gaming division director for the Louisiana Attorney General’s Office.
Louisiana regulators want operators to be able to operate in an effective way, but they are also focused on ensuring that ads and bonus promotions do not target vulnerable people and that all marketing includes very visible responsible gaming messaging.
“What I’m hopeful for is that the operators can take care of this issue themselves,” Hebert said. “We know that the alternative is for state government, or even the federal government to step in … but that comes with unintended consequences.”
Cait DeBaun, vice president of communications and responsibility for the American Gaming Association (AGA), noted that recent progress has been made in responsible gambling messaging through a national problem gambling hotline number, avoiding the need for multiple disclosures that may confuse players.
The AGA also has developed its own set of industry best practices that include a mechanism to review public complaints of potential violations, while the association’s research shows that public awareness of responsible gambling tools and outreach has increased at a double-digit rate in recent years amid the rapid expansion of legal sports betting, DeBaun said.
Still, other IAGA panelists offered bleak warnings of how the regulatory tide had turned against the industry across the UK and Europe, which was described as suffering from a hangover from the kind of rapid growth now being seen in the U.S.
Several panelists expressed frustration at a lack of regulatory clarity and the ongoing series of multimillion-pound enforcement actions in the UK, as well as an apparent breakdown in dialog between the industry and the UK Gambling Commission over recent years.
Meanwhile, operators in the newly launched Netherlands market have not even been able to enjoy the benefits of liberalization for a period of time before confronting a policy backlash, said Justin Franssen, partner at law firm Kalff Katz & Franssen in Amsterdam.
The Netherlands Gambling Authority has not yet imposed the kinds of fines being seen in the UK, but “it’s crystal clear they have been inspired by the actions of the UK Gambling Commission,” Franssen said.
On the advertising front, Franssen noted that a ban on celebrity promotions for Dutch gambling sites will take effect this week, with lawmakers then expected to approve a much broader ban before the end of this year.
U.S. states may be unlikely to impose a full ban on gambling advertising, not least because of how extensively state governments promote their own lottery operations, noted Hebert of Louisiana.
Another regulatory complexity in the U.S. is who exactly would regulate gambling advertising from a volume perspective, said Jeremy Kleiman, partner at Saiber law firm in New Jersey.
State gaming authorities may lack the capacity to do that, Kleiman said, while at federal level, responsibility over broadcast and digital advertising is split between the Federal Communications Commission and Federal Trade Commission.
The regulators are starting to tell you, sending a clear signal, that this has to be addressed before it becomes a problem.
Mindful of future policy risks, Kleiman suggested that operators could proactively look to apply New Jersey’s forthcoming guidelines in markets across the United States.
Rogacki, in turn, said the industry appears to be moving in the right direction and has some time to control its advertising before lawmakers respond.
“I think most legislators are going to let the regulators regulate,” the New Jersey DGE deputy director said. “But I think if they are not satisfied at some future date with how regulators and the industry address this issue, then they’re going to step in.”
