Svend Aage Kirk: “Protecting Customers Requires a More Diligent Effort From the Operators Themselves”

More than 30 individual US markets combined to generate nearly $100 billion in total wagers for the 2022 calendar year, yielding more than $7.5 billion in revenue for operators.

And a measurable increase in problem gambling. While legalization and regulation have provided a new layer of protection for bettors, they’ve also brought increased exposure to danger.

Data from these young markets almost universally demonstrate an unmissable rise in the number of people who seek help for their gambling behavior.

Operators Pushing Customers Too Hard?

Some of the blame falls directly on operators for what can be summed up as bad behavior.

Advertising has utterly boiled over, for starters, with the largest operators spending hundreds of millions of dollars a year on traditional and digital marketing. Alliances between sportsbooks and teams/leagues are further helping to stitch gambling into the fabric of American sports – even in the realm of college sports where the on-campus audience is largely underage. At least one major US operator has already faced fines for marketing directly to university students.

These same sportsbooks are meanwhile giving away hundreds of millions more dollars in free and boosted bets, perhaps the simplest tool to entice customers into playing more and playing more often.

It’s easy to see why this is a dangerous combination for customers, particularly for those who are already vulnerable to addiction or other forms of harm.

The US Isn’t Alone in Its Indulgence of Gambling

The US isn’t the first jurisdiction to reckon with the process of regulating this industry from scratch. And these circumstances have historically created conditions that are ripe for public outcry and the sort of fear that forces policymakers to intervene with a strong hand.

Once again, over-advertising seems to be the low-hanging fruit.

France has attacked this issue head-on, starting with a stern warning from the regulator ANJ in 2021. That notice eventually spawned a new set of rules that now govern the tone of advertisements and cap bonuses for customers. Similar reevaluations have recently taken place in Holland, Belgium, and Germany among others. The established gambling industry in the UK even appears to be on the verge of a sweeping reform pending recommendations from a long-awaited white paper.

Looking back, these forced corrections were inevitable.

Given an inch, operators have largely taken a mile in an effort to carve out a market share that’s big enough to keep their shareholders happy. The race to acquire customers has turned into a full-on sprint, and the corresponding increase in addiction has exposed inadequacies in the current support system. People are being harmed.

The US isn’t alone, but the fact that there’s so much history to learn from makes this overindulgence from operators especially troubling. It’s time to stop looking the other way.

US Regulators Wisening Up, Cracking Down

The conversation around a policy is heating up in the US too, and regulators are certainly starting to pay more attention.

Two states (Maryland and Colorado) have so far revised their original laws to disallow promotional deductions. It’s not a massive change for operators, but it does remove some of the tax incentives for those who overspend on promos.

And the efforts to change the landscape won’t stop there.

Read between the lines of this quote from Dan Hartman, the director of the Colorado Division of Gaming: “What we are seeing is a lot of ads, and we are starting to get a bit of feedback from legislators and other folks that there is too much.”

Coming from a regulator, that’s more than just a complaint. It’s an early warning. And it’s easy to foresee a stronger crackdown if the current trends continue unabated. Some states are already considering more drastic intervention, for that matter. And federal lawmakers have even floated the idea of an outright ban on all sports betting ads across television and radio.

Protecting Customers Requires a Better Effort from Operators

It is imperative for the industry to impose some self-corrections. For a few reasons:

• To provide real protections for customers
• To avoid a severe regulatory crackdown
• To build a more sustainable business

That first point serves as a foundation for the others.

Protecting customers requires a more diligent effort from the operators themselves, who represent the first line of defense against addiction and other forms of gambling-related harm. It requires more than compliance. It requires building real relationships with customers and making decisions that are in their best interest rather than the operators’ own. It requires taking steps to make the world a better, more sustainable place outside of gambling too. It requires a long-term, wide-lens view.

If operators don’t look out for their customers and the future of this industry, then regulators will.

Don’t take our word for it; listen to New Jersey’s top regulator David Rebuck: “If the industry does not control itself, the government will step in and certainly create standards that they may not want.”

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