The Rapid Rollout Of Legal Sports Betting Is A Double-Edged Sword
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More markets. Fewer restrictions. Faster launches. These have been the gambling industry’s sometimes vocal and often whispered asks ever since the Supreme Court repealed PASPA in May 2018. And for the most part, the industry got its wish.
In many ways, the gambling industry hit the lottery with sports betting.
It wove its way through the legal system over several years, narrowly averting death on multiple occasions. When it ultimately won at the Supreme Court (its only victory throughout the entire process), sports betting also found friendly ears in state legislatures, unlike online poker and best online casino games. And right in the middle of it all, COVID hit, and more states suddenly became interested in online sports betting.
Yes indeed, sports betting hit the lottery.
And isn’t it interesting that the gambling world’s most used cautionary tale is the lottery winner? There are many examples of people becoming instant millionaires (sometimes many times over) and being right back where they started in a few years.
Legal sports betting isn’t going anywhere, but years from now, we will likely look back at these first five years of legal sports betting as a gold rush, a Wild West scenario, where a few are getting rich during an outlier period before everything settles and order is restored.
All I Do Is Win
One of the big questions is what is causing this period-of-plenty to be so abbreviated.
The short answer is the industry committed several unforced errors that have shortened the honeymoon period. You reap what you sow.
The industry ignored many subtle and not-so-subtle warnings from regulators like David Rebuck, pundits, and problem gambling advocates. It largely ignored the warnings to tone down marketing, and why wouldn’t it? It was winning left and right and likely felt untouchable as 2022 was shaping up to be the year U.S. sports betting turned the corner.
Ohio had just legalized sports betting in December 202. New York was readying for its mobile launch. Many states were on the shortlist to legalize in 2022, including almighty California and Kansas, Missouri, Kentucky, Georgia, Massachusetts, and mobile betting in North Carolina.
And then it stopped. Instead of turning the corner, the industry found itself at a turning point.
Winds of Change
Only three states legalized sports betting in 2022 (Kansas, Maine, and Massachusetts), and one of those states has turned into the proverbial thorn in the industry’s side.
Further, the overwhelming loss in California proved the industry wasn’t invincible. And the launch in New York put advertisement, an already controversial topic, center stage.
But Massachusetts sports betting was the real tipping point.
I Fought the Law
When Massachusetts legalized sports betting via a conference committee in 2022, the industry thought it had secured an overwhelming victory. The winning kept coming when it convinced the Massachusetts Gaming Commission to accelerate its launch timeline to get retail betting up and running before the Super Bowl and mobile betting ready for March Madness.
The industry didn’t know that it was winning battles but losing the war.
The industry learned how the MGC worked, in terms of its no-nonsense approach to the complexities of the open meeting laws, during its first sports betting meeting in August 2022. Since then, the MGC has proven to be the toughest nut the industry has tried to crack.
From the outset, the MGC made it clear that it would be tougher on sports betting operators than any other state. And the timing couldn’t be worse.
Advertising was becoming a lightning rod issue, and the Ohio Casino Control Commission started handing out six-figure fines in January 2023. That combination gave the MGC a very bouncy springboard. Had Massachusetts legalized sports betting in 2021, the jumping-off point would have been much lower.
Massachusetts also highlights what happens when you prematurely force an industry into existence, as there was pressure to launch before the NCAA Tournament. So instead of clear marketing standards and time to double and triple-check the back end, we have sloppy mistakes and operators not knowing if their marketing is out of bounds. The rush, along with the MGC’s uncompromising approach, made violations and fines inevitable.
The End
So where does this end?
That depends on the industry. The toothpaste isn’t going back into the tube, but that doesn’t mean the industry can’t put the cap back on now or in the very near future.
Virtually every state is going to want to be seen as the toughest on the industry, and that means the fines are only going to increase, as will the restrictions on advertising, bonusing, and even affiliate marketing.
The industry needs to come together and make across-the-board strategic changes. The current bigger, faster, stronger strategy needs a serious rethink.
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