California Restarts Rulemaking On Restrictive Gambling Advertising

May 3, 2024
Cardrooms in California could be held responsible for any advertising done on their behalf by a third-party provider or advertising agency, according to revised advertising regulations approved by state gaming regulators.

Cardrooms in California could be held responsible for any advertising done on their behalf by a third-party provider or advertising agency, according to revised advertising regulations approved by state gaming regulators.

“The draft regulations establish industry standards, definitions and criteria concerning the content, dissemination, and control of gambling related advertisements,” said Alex Hunter, legislative and regulatory specialist at the California Gambling Control Commission (CGCC).

Under the Gambling Control Act, the commission is required to adopt regulations that provide for the disapproval of advertising by licensees where it is determined by the Bureau of Gambling Control (BGC) to be deceptive to the public.

For the BGC to consider an advertisement deceptive, it must depict gambling as a means to become wealthy or resolve a financial burden, target or appeal to children or adolescents or encourage persons under 21 years of age to gamble.

Examples of deceptive advertising include using images or voiceovers of anyone under 21 years of age, using cartoon characters or movie characters that appeal to those under 21, or using “Nevada” or “Vegas” when describing what games a cardroom licensee offers.

In two previous versions of the proposed regulations being considered in California, cardrooms would be prohibited from using “Nevada-style” or “Vegas-style” in their advertisements because they are not permitted to offer house-banked casino games that would be found on the gaming floor of a typical Las Vegas casino.

But Eugene Volokh, a First Amendment lawyer at the University of California, Los Angeles (UCLA) law school, argued that those revised advertising regulations would be unconstitutional.

“There is some opportunity for the government to restrict misleading speech but there has to be real evidence the speech is likely to be misleading and that the proposed restrictions will keep it from being misleading rather that making it more misleading, more confusing or just not changing it at all,” said Volokh.

Volokh said commercial speech and other speech, such as opinions, are free from being restricted. He added that style comparisons are opinions.

“What’s Nevada-style or Vegas-style? Well that’s a matter of opinion,” said Volokh, who was commissioned to write a letter to the commission by the California Gaming Association.

If the BGC determines an advertisement is deceptive then the agency will issue a notice of the violation that offers a description of each part of the advertisement that is not compliant, and an operator would have a 30-day deadline to correct the advertisement.

The cardroom owner also has 14 days to respond to the notice. That would be followed by a 30-day deadline for the BGC to respond to the licensee.

Any disapproval or failure to correct an advertisement could be included in the BGC’s report for a licensee’s renewal or could be considered in determining suitability for licensure.

The BGC is a division within the California Department of Justice that enforces state regulations on gambling, whereas the California Gambling Control Commission has the power to establish new rules and make licensing determinations.

Hunter noted that the commission’s decision last month to begin formal rulemaking anew came after the previous effective period for proposed action on the regulations expired on December 29, 2023.

The CGCC released the eight pages of revised proposed regulations on Monday (April 29), starting the clock on a new 45-day comment period.

Included within the proposed regulations is a definition of “advertisement” to mean “any written or verbal statement, illustrate, or depiction that is disseminated to the public which is calculated to induce participation in a controlled gaming or gaming activity at one or more gambling establishments.”

Ads subject to the regulations would include any written, printed, graphic or other material, billboard, sign, or other outdoor display, political literature, publication or in a radio or television broadcast, social media business page or in any other media.

If approved, the regulations would require all advertisements to include the name of the cardroom and a statement that participants be 21 or older to gamble. Any reference to a game needs to include the BGC’s approved name, or the bureau’s approved alternative name for the offering.

“If the game or group of games is identified by a name other than [what is approved], the advertisement must state” whether it is a “California game,” “California games,” or “This cardroom does not offer banked games.”

The five-member commission decided to tackle the issue in December 2022 after finding examples of advertisements for cardrooms and third-party providers of proposition services (TPPPS) that failed to include responsible gambling information.

Among the requirements listed within the third set of draft regulations dated April 29, 2024 is that TPPPS will not create or place any advertisement for a cardroom unless the third-party provider has a contract to provide advertising for the cardroom.

Hunter said the specific TPPPS business requirements were needed for clarity. The third-party providers also must provide a cardroom with copies or transcripts of all advertisements used to promote their business.

The revised regulations also require cardrooms to post information on responsible and problem gambling resources.

Any website or social media landing page operated by or under control of any cardroom or third-party provider licensee must include a responsible gambling message, as well as a link to the California Office of Problem Gambling that provides information and referral services for problem gamblers.

The responsible gambling message also must include one of the following 1-800-GAMBLER;; or text “SUPPORT” to 53342.

Previously, the requirement for posting a responsible gambling message would have applied “to any advertisement on television, radio, outdoor display, flyer, mail or digitally.” The provision did not apply to promotional items in which size or space limitations would not allow for messages to be legibly displayed.

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