U.S. Operators Face Escalating Enforcement Environment

January 24, 2023
Ohio has wasted little time in raising the bar in terms of enforcement activity against sports-betting operators, although U.S. states still have a long way to go before they start to resemble the more hostile enforcement environments of European markets.


Ohio has wasted little time in raising the bar in terms of enforcement activity against sports-betting operators, although U.S. states still have a long way to go before they start to resemble the more hostile enforcement environments of European markets.

Since mid-December, the Ohio Casino Control Commission (OCCC) has announced a series of five proposed penalties totalling $1.05m for violations that have included marketing to minors and on college campuses, failing to include appropriate responsible gambling messaging in advertising, and misleadingly describing bonus offers as involving free or risk-free bets.

According to VIXIO GamblingCompliance research, the $1m-plus in pending fines in Ohio is already more than the approximately $835,000 in settlement agreements assessed by the Indiana Gaming Commission — previously the most prominent regulatory authority in terms of enforcement actions against sportsbook operators — since legal sports wagering began in Indiana in late 2019.

Proposed fines of $350,000 against DraftKings and $250,000 against Penn Entertainment would also be the largest ever against a sports-betting operator outside Nevada, while Ohio’s three further fines of $150,000 also match the previous highest penalties amounts issued in 2021 and 2022 by regulators in Virginia and New Jersey.

Ohio’s relatively high penalties are appropriate because advertisements for sports betting are so visible across the state, OCCC executive director Matt Schuler told VIXIO in an exclusive interview.

“The amount of the fines are meant to get [operators’] attention for sure, and to reflect, I think, the negative impact that the violation has had on the people of Ohio,” he said.

In total, regulators in at least 13 states have levied almost $3.9m in total penalties against sports-betting or online casino operators since the start of 2019, according to VIXIO analysis.

But Ohio’s early moves are perhaps the clearest sign that enforcement activity is ramping up, in part due to growing sensitivity related to advertising and responsible gaming issues.

The Buckeye State’s first fine was announced the day before regulators in another newcomer to mobile sports betting — Maryland — agreed a record $146,000 settlement against BetMGM after the operator inadvertently accepted a limited number of wagers before it was approved to launch.

In late November, the New York Times published a high-profile series of articles criticizing oversight of the U.S. sports-betting industry and labeling enforcement of state regulations as “often light or non-existent,” especially compared with international markets such as the UK.

It noted that regulators in states including Louisiana and Tennessee had declined to take formal actions to punish regulatory violations related to advertising or payments, while the Iowa Racing and Gaming Commission was now considering whether to increase the amounts it fines companies after a series of recent penalties against operators for accepting credit-card deposits in contravention of state law.

In New Jersey, an independent annual academic report on internet gambling and responsible gaming published late last year by the state’s Division of Gaming Enforcement recommended the introduction of “strict and significant penalties for any form of predatory advertising/marketing.”

The report by researchers at Rutgers University’s Center for Gambling Studies also recommended a “standardized enforcement protocol” in the area of responsible gambling, to include random checks to ensure self-excluded patrons remain unable to play, as well as “significant fines and return of gambling losses when operators fail in their duty of care.”

Still, the heightened focus on enforcement activities related to sports betting and internet gaming in the U.S. remains a far cry from the more adverse climates of the UK, Sweden or other European jurisdictions.

In Ohio’s case, the actions appear to be a deliberate effort to ensure compliance in a specific area of heightened concern, whereas regulators in other sports-betting states have generally levied smaller initial fines as operators have stumbled when configuring their systems to accommodate state-specific restrictions on wagering events, among other requirements.

The OCCC has no intention to be heavy-handed in its enforcement approach once operators’ advertising and responsible gambling programs are brought into compliance with both the letter and the spirit of state law, according to Schuler.

“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 told VIXIO this month. “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.”

Most U.S. regulators already have an established track record of enforcement for their land-based casino industries and it still remains to be seen how different their approaches might be when it comes to the digital operations of mobile sports betting and online gaming.

The Ohio actions and the tone of recent licensing hearings in Massachusetts do indicate concerns of responsible gaming and advertising, specifically around collegiate events, said Frank DiGiacomo, partner and head of the gaming practice of Duane Morris law firm.

“As is often the case, when a new state legalizes gaming, or expands on the types of gaming it offers, the regulators in that state oftentimes make it clear to the industry where they stand on certain issues,” DiGiacomo said.

“That message is sometimes delivered though relatively stiff fines.”

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