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Two US legislators recently took aim at the state-regulated sports betting industry by introducing a bill to ban sports betting nationwide and force the 38 states that have legalized the activity to apply to the federal government to restart their offerings under far more restrictive regulations.
The SAFE (Supporting Affordability and Fairness with Every) Bet Act attempts to roll back the thousands of collective hours state legislators and regulators have spent thoughtfully crafting sports betting frameworks.
Sen. Richard Blumenthal of Connecticut and Rep. Paul Tonko of New York cited problem gambling issues exploding across America since the US Supreme Court struck down a federal ban on sports betting in 2018 as the reason for their legislation.
The bill, which creates minimum federal standards in advertising, affordability and artificial intelligence, has little-to-no chance of passing for three reasons:
- Federal legislation is difficult to pass.
- It’s late in a presidential election year.
- Many legislators favor states’ rights and wouldn’t support federal overreach in the traditionally state-regulated area of gaming.
Even if the SAFE Bet Act did pass, iDEA Growth founder and general counsel Jeff Ifrah told PlayUSA it would never be implemented.
“It would be struck down as unconstitutional by any court that reviewed it,” Ifrah said. “In short, this whole thing is a gimmick.”
However, the federal proposal could influence how state legislators and regulators consider online gaming submissions in the future.
Recently retired New Jersey Division of Gaming Enforcement Director David Rebuck discussed the SAFE Bet Act along with Massachusetts Rep. David Muradian and FanDuel VP of Government Affairs Cory Fox in an iDEA Growth webinar Thursday.
Federal proposal a knee-jerk reaction
Rebuck called the bill a knee-jerk reaction by people who did not like seeing the Supreme Court overturn the Professional and Amateur Sports Protection Act (PASPA).
Based on the details in the proposal, Rebuck said he believes it was put together by staffers who might not be as informed about what the industry and state regulators are already doing to address these issues.
“It’s mind-boggling to me the arrogance of saying we know more than you do without working on things together that we have already reached out to them to work on to make things better for our citizens in all the states that have legal sports wagering,” said Rebuck, referring to state regulator efforts to get federal help in combatting illegal offshore gambling sites.
Nevada has regulated sports betting for 50 years but would have to apply for a federal license under the SAFE Bet Act. Rep. Dina Titus of Nevada responded to the proposal.
“While the SAFE Bet Act is perhaps well-intentioned, pre-empting state gaming regulators by outlawing most forms of advertising and restricting the types and methods by which customers can place bets is a misguided approach,” Titus said.
If the federal government wants to help address mental health issues around problem gambling, Rebuck suggested making use of the federal excise tax it collects on each legal sports wager made in the US.
“The federal government collects tax on sports wagering. Where is that money going? Is it going to fight illegal gambling? Is it going to responsible gaming issues? To public health initiatives to support people who are addicted to gambling? I don’t know. We’re talking about tens and tens of millions of dollars that are contributed by the operators.”
An insult to state legislators and regulators
Rebuck and Muradian took particular offense to a quote from Blumenthal saying:
“State regulation is faint-hearted and half-baked. That’s why we need a national standard. Not to ban gambling but simply to take back control over an industry that is out of bounds.”
Massachusetts legislators spent years working on the sports betting bill. The Massachusetts Gaming Commission has spent as much time as any regulator setting and updating standards to keep the industry in check.
“When you hear that it’s half-baked, that kind of flies in the face of all of us who put so much time into crafting legislation that we thought was meaningful,” Muradian said. “As the ranking member on the Economic Development Committee and one of the six members on the conference committee that ultimately negotiated the final bill, we spent a ton of time trying to get legislation that was fair to everyone. … So to hear the half-baked thing, it’s brutal when we sat through 50, 60, 70 meetings just to craft the House version of the bill.”
The American Gaming Association defended the work done by the states on sports betting and rebuked the federal overreach. VP of Government Relations Chris Cylke highlighted how federal oversight wouldn’t allow state regulators to adjust as gaming changes.
“Six years into legal sports betting, introducing heavy-handed federal prohibitions is a slap in the face to state legislatures and gaming regulators who have dedicated countless time and resources to developing thoughtful frameworks unique to their jurisdictions, and have continued to iterate as their marketplaces evolve.”
Hearings could have an effect on state level
While Ifrah doesn’t fear the SAFE Bet Act passing, he is concerned about the impact federal hearings could have.
“I think the concern here is about having federal hearings regarding this bill and what the media and the public take from those hearings, which given the supporters of this bill could very well turn into a circus,” Ifrah said. “I think it’s very important for the industry to come together and testify if there is such a hearing.”
Increased media attention could pressure state regulators or legislators to enact the act’s damaging restrictions.
Some of the most intrusive elements include:
- Prohibiting sports betting advertisements between 8 a.m. and 10 p.m. or during sporting events.
- Restricting deposits to five in 24 hours.
- Requiring affordability checks to wager more than $1,000 in 24 hours and $10,000 in 30 days.
- Banning all in-play sports wagering on sporting events that have commenced.
Fox said such advertising restrictions would hinder efforts to bring bettors into the regulated market, where they can get better consumer protections.
“When I think about our ability to advertise, that is one of the rights we get along with being a regulated operator in our country. So it really would cut down on our ability to acquire users into the regulated and taxed market, away from the illegal market.”
The act might spark discussions with state regulators and legislators, but Ifrah doubts they will lead to the adoption of the restrictions in the bill.
“I think it will raise issues about marketing and responsible gaming and advertising,” Ifrah said. “It will remind operators that these continue to be issues at the forefront of legislators’ minds on the state and federal level. But this would be the most restrictive regime in the world. I would say that state regulators should not adopt most of these archaic provisions.”
Negative attention doesn’t help online casino efforts
While sports betting legalization already has proliferated across states over the past six years, online casinos are legal in just seven states.
The SAFE Bet Act doesn’t apply to online casinos. However, it brings up many of the concerns state legislators already have about legalizing another form of online gambling while regulators are still figuring out how best to address the issues that arose from online sports betting’s ascension.
When industry representatives go to statehouses next year to pitch iGaming legislation, Ifrah expects the SAFE Bet Act to come up, particularly if a federal hearing brings it more attention.
“For state lawmakers, they will notice that the federal government wants to raise these issues for us to think about as well. In future online gaming legislation, I expect we’ll hear about this. When the industry goes to state capitals, state legislators will ask us about the SAFE Bet Act. But it’s nothing we can’t address.”
Ifrah said he doesn’t think the SAFE Bet Act will make passing online casino legislation in states more difficult. State legislators and regulators are confident they can handle problem gambling without federal oversight.
Stalled efforts to pass online casino legislation face more economic-based factors.
“I think the barriers to passing online gaming legislation are not uniquely tied to these issues covered in the SAFE Bet Act,” Ifrah said. “It’s really constituency issues. We’ve got to bring more people into the tent, not just the land-based casinos and tribal casinos, but now the unions.
“Legislators need to feel comfortable that this is only going to contribute to helping their economy, protecting their consumers, and that’s not going to come at the expense of any sectors losing their jobs.”
