iGB Op-Ed: Massachusetts has been stricter than most other US states in its licensing hearings for online sports betting, Daniel O’Boyle writes, but the industry should get used to that approach, before it becomes the nationwide norm.
Massachusetts has always had a bit more of an eye towards Europe politically than much of the rest of the US. Higher taxes, higher spending, you’ve even got a dynastic family passing on power from generation to generation.
Maybe it’s that it looks right across the Atlantic Ocean to Europe, maybe it’s because the state is one of the few parts of the US where an “old building” isn’t one that dates back to the ‘60s. Whatever it is, the state seems to resemble some European markets much more than the rest of the US when it’s come to regulating sports betting.
Massachusetts doing things differently
And from the start, Massachusetts seemed to want to do things differently from the rest of the US when it came to sports betting.
The Senate’s draft of the bill that ultimately legalised sports betting in the Bay State included a ban on all promos, though thankfully the House’s less restrictive approach to marketing won out.
Now, early licensing hearings suggest that the Massachusetts Gaming Commission intends to be much stricter than other US regulators so far.
The online operators approved so far in the state have typically had specific conditions attached to their initial licence, areas where the Commission would still like to see improvement.
For Penn Entertainment’s Barstool Sportsbook, there were long discussions around the Barstool brand in general and controversial founder Dave Portnoy, as well as the sportsbook arm’s marketing activities. Ultimately, Penn agreed to allow an investigation of the Barstool brand – as well as to stop using the term “risk-free” – as part of the conditions for its licence.
BetMGM was told, as a condition of its licence, to provide the regulatory with “timely updates” on confidential investigations in other jurisdictions, after the Commission raised questions about a record regulatory settlement for BetMGM co-owner Entain in Great Britain.
Fanatics, meanwhile, agreed to improve an internal responsible gambling plan in order to receive its own licence.
Generally, the message is clear: Massachusetts is putting operators under the microscope in a way other US states have not yet done.
In some ways, its approach to the gambling sector looks a bit more like what we’ve seen in Europe in recent years.
Good thing or bad thing?
There is, of course, both a positive and a negative way of viewing that.
On the one hand, many European countries’ approaches to online gambling in recent years have been stifling to the industry.
If Massachusetts was to introduce the sudden post-launch tightening of a market like the Netherlands, the licensed market would be unlikely to ever make it off the ground. If rules are too strict, offshore players might never make the switch to legal brands.
However, the consensus for quite some time has been that a Europe-like backlash to aspects of the US sector was inevitable. If so, Massachusetts is more of a necessary evil.
The constant ads have already turned many against the sector, and it seems like only a matter of time before some sportsbook gets tied up in a responsible gambling scandal that gets national attention.
Soon, stricter rules could be common across the US. Legislatures will bring in laws restriction how operators can do business, regulators will be expanded into much more professional organisations and media scrutiny will be higher than ever.
Operators will likely have to get used to approaches that look more like Massachusetts.
Beyond the US
There’s also room for Massachusetts to make a push for changes that might have an impact beyond the US.
If the regulator asked BetMGM about Entain’s regulatory settlement in Great Britain, it seems reasonable to think that it could probe operators’ association with unlicensed gambling in other markets.
Maybe alone, Massachusetts wouldn’t be a big enough market to change operators’ approach to these markets, but if it can help make that a more common approach in the US, eventually operators may have to choose between access to “dark grey” markets and access to the multi-billion-dollar US opportunity.
Not just sports betting
Of course, strict scrutiny from the Massachusetts Gaming Commission wasn’t something that began with sports betting. The regulator has already taken on a big name through its investigation into Steve Wynn and Wynn Resorts, which ultimately let to a $35m fine. Its final report into Wynn was highly publicised, as were appearances of key executives before the Commission.
That attitude of scrutiny towards the industry seems to be in place in the Bay State.
It is, obviously, also true that regulatory scrutiny is not unique to Massachusetts. The Ohio Casino Control Commission announced in December that it plans to deny PlayUp’s licence application, after it discovered “potential illegal gambling activity”, New York has considered multiple bills to limit advertising and early igaming adopters Nevada and New Jersey both raised questions of operators’ unlicensed activities when considering which brands to approve.
But in Massachusetts it’s less a state going out alone, completely against the tide of what others are doing, and instead a state that looks set to go much further, much faster with something that was already trickling into the US market. That is exactly why the state could be so important.
Massachusetts: an inconvenient market?
As of right now, the state could look like an inconvenient market where a wrong step could have serious consequences.
But at every step so far, it’s avoided crossing the line. Its final sports betting bill looked much more like the reasonable House version than the Senate’s; it hasn’t denied licences over the concerns raised in its meetings; and its rules about ads targeting children avoided banning marketing at major sporting events.
Unlike markets that simply set sky-high tax rates, the potential inconvenience of Massachusetts’ approach might actually help the industry as the US market evolves.
Because it’ll be a lot more inconvenient for the industry when other states eventually apply the same scrutiny.
Source: Read Full Article