The federal government wading into sports betting is anathema to some. Though if it can restrain itself, Congress could help positively shape the burgeoning industry.
Many will claim that the states have been doing fine regulating gambling without federal intervention and federal action will only muddle an already chaotic situation. That’s not always the case.
In fact, a majority of gaming states have laws that are woefully lacking when it comes to funding for problem gambling, and the state-by-state approach leaves gaping holes in responsible gaming policies.
Some of these holes could be filled via a federal sports betting bill.
Creating baseline requirements
First and foremost, a federal framework would provide some consistency in sports betting laws across the US.
Instead of a hodgepodge of laws, a federal bill would bring more uniform standards for states to adopt baseline regulations and policies.
Yes, there is a danger of overreach. The sports betting legislation introduced by Sens. Chuck Schumer and Orrin Hatch is a prime example of federal legislation taken too far.
That said, the Hatch/Schumer bill isn’t all bad, and a well-crafted, light touch federal sports betting bill could solve and prevent a lot of problems.
Responsible gaming policies
A federal bill could create a baseline responsible gaming policy that includes:
- standardized self-exclusion procedures;
- uniform policies to set limits on deposits, time played and losses; and,
- marketing and truth in advertising policies.
Virtually every state is already enacting these policies to different extents, but it would be beneficial to enact a nationwide baseline that could serve as a conversation starter.
Additionally, a federal bill could help close a longstanding loophole in self-exclusion by creating a national self-exclusion database.
As National Council on Problem Gambling (NCPG) Executive Director Keith Whyte previously told Play NJ, the current self-exclusion model is highly flawed.
“In Massachusetts, you can exclude yourself from DFS (daily fantasy sports) by going through the attorney general, from the casinos by going through the gaming commission, but you can’t exclude from the lottery or tracks,” Whyte said.
Problem gamblers could spend countless hours traveling the country and self-excluding from the near-1,000 gaming agencies in the US, and still have legal gambling outlets at their disposal.
It should come as no surprise that the NCPG would like to see national voluntary standards that would make self-exclusion easier and more effective. Federal legislation could accomplish the same thing.
In fact, the federal sports betting bill introduced in December would do just that: establish a nationwide self-exclusion service.
In need of consumer protections
A federal bill could also provide much-needed clarity for consumers.
One issue that has garnered a lot of headlines is what happens when a sportsbook has a pricing error, like the one that occurred at the FanDuel Sportsbook in New Jersey.
This is a tricky area. Even with the issuance of permanent regulations, New Jersey still hasn’t clarified what its policy is regarding pricing errors, or palps.
Now imagine dozens of states with varying laws on the palps. Then imagine if New Jersey has a zero-tolerance policy but New York and/or Pennsylvania sides with the sportsbooks when pricing errors occur.
That could significantly influence the pricing in each state and put New Jersey books at a disadvantage.
A federal bill could set a baseline national policy on palps, which would otherwise vary dramatically by jurisdiction.
Problem gambling funding
One area where states have fallen short is on the problem gambling front.
Funds for problem gambling treatment and research are sparse, with few states meeting the NCPG’s goal that 1 percent of gambling revenue be devoted to problem gambling funding.
Most fall abysmally shy of the 1 percent goal.
A 2016 survey by the NCPG found that states provided $73 million to problem gambling funding, while gambling revenues soared to $154 billion.
That works out to about 0.0004 percent of gambling revenue.
By comparison, the NCPG survey found that the US government invested $14.7 billion to substance-use-disorder treatment in 2016 and zero dollars to problem gambling.
The federal sports betting bill introduced in December also included federal funding for problem gambling as follows:
- Appropriates $5,000,000 toward the Department of Health and Human Services for gambling addiction research.
- Dedicates revenue from the federal sports wagering excise tax to programs for the prevention and treatment of gambling disorder as well as law enforcement.
Final thoughts on a federal sports betting bill
The heavy-handed Hatch/Schumer bill is highly problematic on several levels. But that doesn’t mean we should throw the baby out with the bathwater.
Despite its problems, it’s a good jumping off point for a more measured federal approach.
But how would a measured federal bill look?
In a nutshell, it would allow states to craft their legislation to fit their individual needs. But at the same time, it would install a regulatory floor that all states must meet. Most states will go beyond the minimum requirements.