Ohio has immediately become perhaps the most aggressive U.S. state to date in enforcing responsible gambling protections through sanctions, and the regulator’s executive director said Tuesday (January 10) that much of that conversation revolves around affiliate marketers.
Despite only launching sports betting last week, the Ohio Casino Control Commission (OCCC) has already proposed some of the largest fines in the U.S. sports-betting market for various advertising-related issues.
Before the state’s January 1, 2023 launch, the commission proposed a $250,000 fine for Penn Entertainment for promoting sportsbooks on a college campus, as well as a $350,000 fine for DraftKings for sending mailers to underage children.
Last week, the commission followed up with three $150,000 proposed fines for BetMGM, Caesars and DraftKings for failing to prominently include responsible gambling information in ads and promoting bets as being “risk-free” despite players having to incur a loss to take advantage of the promotion.
“As the advertising ramped up, we were noticing a number of issues with no problem gambling helpline, unseeable problem gambling helpline, and continuing to call things free that actually require the patron to incur some cost,” Matt Schuler, the commission’s executive director, said in an interview with VIXIO GamblingCompliance on Tuesday.
Schuler said the commission initially reached out to operators when regulators saw issues to alert violations.
Then the commission sent out an advisory to stakeholders on December 23 before a second and final warning on December 30 that included specific examples of wrongdoing for operators to avoid.
“Really where this tended to be most prevalent wasn't the direct advertisements from the operators themselves, but from their affiliate marketers, who often take liberties with cutting parts of the ad out to fit in space or trying to put too many things in, resulting in a non-compliant advertisement,” Schuler said.
“Usually, once we get to the point of a sanction, that does bring about compliance and so what we're looking for is lasting, long-term compliance, and in this case, it's really with the operators getting these affiliate marketers under control,” Schuler said.
“That's the weakest link in this chain are the affiliate marketers, and if the operators aren't able to bring them into compliance since they're acting on their behalf, those affiliate marketers could end up costing the operators a lot of money through the sanctions.”
Unlike in most other states, marketing affiliates are not currently required to register with Ohio regulators.
But Schuler said if affiliate marketers continue to be non-compliant with the state's regulatory requirements, one potential option is requiring affiliates to obtain licensure, although he emphasized that the commission would prefer not to implement such a system.
“Because they're not actually engaged in sports gaming, requirement for a license was not necessary, but they do play an important role in fulfilling important aspects of the problem gambling section of the statute,” he said.
“And so, if the operators continue to use third-party or affiliate marketers, and they continue to be non-compliant, the commission may then have to move toward licensure,” Schuler continued. “We prefer not to, but that's always an option.”
Schuler said regulators have seen some improvement in advertising compliance following the December 30 guidance.
“I remain hopeful that the operators will move to make more improvements and we have seen already some improvement here, but we'd like to see across the board, consistent, long-term compliance,” he said, adding that some operators have taken proactive steps “above and beyond” what the commission asked for in sanctions in dealing with the affiliate-based issues.
The financial size of the sanctions, Schuler said, reflects operators doing business at a state-wide level through mobile sports betting and the larger impact that has compared with more regional casino advertising.
“It seems to me that when there is an error, it becomes a much more significant state-wide error that needs to be addressed,” he said. “And so, the amount of the fines are meant to get their attention for sure, and to reflect, I think, the negative impact that the violation has had on the people of Ohio.”
“I do think that tending to put a spotlight on the problem sometimes is as much of a motivator to the operators as any dollar figure,” Schuler continued. “No one likes bad press, and so I hope that both of those things serve as a deterrent. We’d like to do no more.”
The commission received the backing of Republican Governor Mike DeWine last week, who said that statements in sports-betting advertising were being closely watched by both his office and the Casino Control Commission, and that several had “already crossed the line,” which would not be tolerated in Ohio.
“We were delighted that the governor made some very strong statements regarding visibility of the helpline number, and about being very truthful in the advertising,” Schuler said, adding that DeWine's comments brought new attention from media outlets that do not typically cover the gaming industry.
“His use of the bully pulpit probably did more with one set of comments that has taken the commission many months to achieve.”
Ohio has also been at the forefront among states in policing use of the term “risk-free” in advertising, with many operators now shifting their advertising away from the phrase in national campaigns when Ohio included restrictions against the phrase in its regulation.
Some have moved to different terms that convey a similar offer, such as FanDuel and DraftKings using the term “no sweat” instead, and others using terms like “second chance” or “bonus bet,” which Schuler said is in line with the Ohio rules.
“The way those ads are framed … complies with the letter of the law. They’re not implying that anything is free or risk-free, they call it a bonus, and typically I think the way they phrase it may lead someone to look more at the fine details than just accepting the word 'free',” he said.
“Following the letter of the law is a good thing. What we would like to grow into is following the spirit of the law; that’s the next hurdle,” Schuler added.
“It’s a culture change for a lot of operators, and we understand that, than what they’re used to doing in the other states, but this is going to be a long-term thing here in Ohio and there’s always room for improvement.”
The Ohio Casino Control Commission is scheduled to hold its first regular meeting following the sports-betting launch on January 18.