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Reintroduced legislation to impose sweeping federal restrictions on U.S. sports betting has little chance of being approved in Congress but may continue to influence state lawmakers, with loyalty programs now seemingly in the crosshairs of industry critics.
The so-called SAFE Bet Act was reintroduced in the U.S. House and Senate last week by Senator Richard Blumenthal of Connecticut and Representative Paul Tonko of New York, the same two lawmakers who sponsored an initial version of the bill last year.
The new legislation is largely the same as the first iteration of the SAFE Bet Act that was filed last September, prohibiting sports betting in any states whose regulatory regimes are not aligned with new federal minimum standards on responsible gambling and advertising.
Consistent with last year’s bill, states would have to establish regulations for affordability checks, prohibit deposits by credit cards, and ban any advertising broadcast between 8am and 10pm. All in-play betting and any prop bets on college sports also must be banned.
However, the new version SAFE Bet Act now proposes additional federal restrictions focused on loyalty programs and retention bonuses offered by online sports-betting operators.
The new bill specifically would prohibit any states from allowing any “VIP programs” that offer any form of compensation, credits, prizes, or hospitality “that is directly or indirectly connected to a customer’s deposits, gambling activity, gambling wins, gambling losses, or level, amount, frequency, scope, pace, duration, or rate of gambling activity”.
Retention bonuses based on the player’s wagering activity would be capped at a maximum amount of $5, while any form of reload bonuses offered to players whose accounts reach a zero balance would be prohibited entirely.
The updated bill follows media reporting on several civil lawsuits filed against leading U.S. operators, alleging that plaintiffs lost many thousands of dollars after being encouraged to bet beyond their means by VIP hosts.
Introducing the bill on Capitol Hill last week, Blumenthal insisted the legislation was not intended to prohibit all sports wagering “but make it safer, and stop the sports betting industry from abhorrently exploiting addiction and purposefully and relentlessly driving people deeper into gambling abuse disorder”.
“Sports betting has become a science … of exploitation and targeting and tracking individuals who are prone to addiction,” Blumenthal added. “Targeting and tracking losers and inducing and enticing them to bet more until they are driven into ruin. That’s the abuse that we are trying to stop ... and it happens literally every day.”
State-Level Influence
Although the introduction of last year’s SAFE Bet Act did prompt a congressional hearing on sports betting before an influential U.S. Senate committee, few observers would be willing to bet on the federal legislation being able to make much progress in either the House or Senate in the current political climate in Washington.
One prominent gambling industry lobbyist told conference delegates last week that the bill had “not a snowball’s chance in Hell” of becoming law, not least because the measure is being sponsored by two Democrats in what is now a Republican-led Congress.
“The reason this bill doesn’t stand a snowball’s chance in Hell is despite the fact [Blumenthal, Tonko and other supporters] said it was a bipartisan bill, it is not a bipartisan bill. There’s no Republican co-sponsors,” Bill Pascrell III of Princeton Public Affairs Group in New Jersey told delegates at the NEXT Summit in New York.
Still, the latest version of the SAFE Bet Act may continue to be an influential document if not at the federal level, then for state lawmakers who share similar concerns to Blumenthal and Tonko.
So far this year, lawmakers in at least three states have already filed bills that copy and paste directly from the initial version of the SAFE Bet Act to impose stricter regulatory constraints on their sports-betting markets.
That includes two bills introduced in the Illinois Senate to require affordability checks and ban the use of AI by sports-betting operators in the state, directly in line with language included in the initial federal bill.
Separate bills have also been filed in other U.S. states such as Connecticut and New York to prohibit or restrict advertising, ban bonuses and inducements in advertising, or ban push notifications — not all of which are part of the SAFE Bet Act but they are on a similar theme.
Pending federal legislation remains a natural place for state lawmakers to look for inspiration as they consider proposing their bills, meaning more state-level versions of the SAFE Bet Act appear likely to follow in the coming months and years.
Why Only Sports Betting?
It is fair to assume that the new SAFE Bet Act will not be warmly welcomed by the industry, with even independent regulatory experts highly critical of the legislation for reasons that stretch far beyond its impact on states’ rights to regulate gaming.
Speaking at last week’s NEXT New York Summit, the former director of the New Jersey Division of Gaming Enforcement (DGE) criticized another new provision added to the SAFE Bet Act this year that would require states to promptly issue cease-and-desist orders to any unlicensed sports-betting operators as identified by the U.S. Attorney General.
Ironically, state regulators have recently become active in sending such orders of their own accord, after a joint 2023 letter sent by the DGE and regulators in a half-dozen other states seeking greater cooperation from the federal Department of Justice in tackling illegal gambling yielded little response.
David Rebuck, the former DGE director, also questioned why the SAFE Bet Act would apply only to sports betting, and not online casino games or iLottery, or newer variants such as fantasy sports or sports prediction markets that are not even being regulated as a form of gaming.
“There is a need to definitely do things better than what we’re doing now,” Rebuck said. “But everybody will tell you in this room that with the advent of sports wagering, and particularly online gambling, we're doing things to protect individuals who are vulnerable … way more by this industry … than any other form of gambling, legal or illegal, that operates in the United States today.”
Additional reporting by Matt Carey.
