Sports Betting Ads Under Fire by Lawmakers

Sports Betting Ads Under Fire by Lawmakers article feature image

Suzanne Kreiter/The Boston Globe via Getty Images. Pictured: Massachusetts State House.

Too much J.B. Smoove and Jamie Foxx?

Some lawmakers are beginning to think so.

Four years into legal sports betting in the U.S., the industry's voyage through 35 states and counting has brought countless gambling ads to television sets, subway stops and major league ballparks.

The price of TV ads for online gambling jumped to $725 million in 2021, a 148% increase from 2020, according to Nielsen Holdings.

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It's part of their business model: flood newly legal states with incentives to bet in hopes of acquiring as much of the market as possible. Most companies are years away from turning a profit and are still jousting to snatch up as many bettors as possible.

But the advertising bonanza is way more than New Jersey Assemblyman Ralph Caputo says he and his colleagues anticipated in 2018 when they became the first state outside of Nevada to legalize online sports betting.

“I never imagined it would get to this point. I wanted them to be successful, but not at the cost of negative effects on our public and youth," Caputo said. "These ads have gotten really insane. You can’t turn the TV on without seeing them."

States Begin the Conversation

In May, Caputo held a legislative hearing on steps New Jersey could take to curb betting ads, which he's concerned have stoked addiction.

That could come in the form of a new law or through action by the Division of Gaming Enforcement, he said.

“The marketing and advertising piece is one of the next challenges ahead," said Brandt Iden, Sportradar’s head of government affairs and a former Michigan State Representative. "The industry needs to start to do more to take a harder look at it, or politicians and regulators will.”

In Massachusetts, headquarters of sports betting giant DraftKings, lawmakers are considering baking in restrictions on sports betting ads into their law, including:

  • A ban on any marketing that could "disrupt" the viewer’s experience during live sports broadcasts.
  • A limit on promotional betting incentives, which could mean no free credits or signup bonuses.
  • A ban on all forms of advertising unless 85% of viewership is over the age of 21.

It'd be the first U.S. state to ban sports betting ads to such an extent.

Betting Ads Limited Outside of U.S.

Even stricter limits are in place in Ontario, the first Canadian province to legalize sports betting. Within the first month of launch, regulators finedPointsBet and BetMGM tens of thousands of dollars for violating them.

Similar restrictions are in place across Europe, where, unlike the U.S., sports betting has been legal for decades.

Just last month, the U.K., which has historically been free rein on betting ads, issued rules banning athletes, celebrities and social media influencers from advertising sportsbooks, according to a BBC News report.

There aren't many ad restrictions in the U.S. in part because the industry is so new, especially in most states. The American Gaming Association, which lobbies on behalf of the gaming industry, has a code of guidelines on its website, which underscores the need for responsible gaming and respecting the legal betting age.

Legal Complexities with States

In America, freedom of speech and interstate commerce protections present several legal complexities.

Without a federal law, it'd be difficult for one state, like Massachusetts, to impose advertising restrictions on region-wide broadcasts such as Monday Night NFL Football.

"If you get to the point where you’re regulating stuff in one state in a way that infringes on what's going on in, say New York, or for Congress to act, it could become an issue," said Rad Wood, a gaming attorney and partner with Vela Wood in Austin, Texas.

Companies that operate in legal jurisdictions are allowed to promote their product in nonlegal states, thanks to an exemption in the law that prohibits passing gambling information across state lines.

"Right now, companies are relying on that exemption," Wood said. "With the advances of the Internet—false IP addresses and people hiding their location—it could turn into something where courts say these exemptions no longer apply, and we start seeing restrictions based on the Wire Act."

That could eventually come through a new Department of Justice interpretation, though that's likely years away, as the federal government has so far taken a laissez-faire approach to state sports betting.

Wood likened the potential for federal restrictions on sports betting ads to the limits placed on tobacco retailers.

Social Media's Role

Social media is one of betting companies' favorite and cheapest forms of advertising. Unlike states, they can ban whatever and whoever they want, as they're private companies.

Since the U.S. Supreme Court overturned the law that prevented states from legalizing sports betting, Facebook, Instagram and others have updated their rules on gambling marketing.

The Facebook & Instagram Real Money Gambling Policy states:

Adverts that promote or facilitate online real money gambling, real money games of skill or real money lotteries, including online real money casinos, sport books, bingo or poker, are only allowed with prior written permission. Authorised gambling, games of skill or lottery adverts must target people over the age of 18 who are in jurisdictions for which permission has been granted.

Twitter's policy varies depending on country restrictions. Depending on what states like New Jersey and Massachusetts end up doing social media companies could do the same thing between states.

"Social media has the right to limit ads only to states where you’re legal. As betting increases and concern over ads rise you may see more companies adopting that style," Wood said.

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