4 minute read | December.20.2024
The Senate Judiciary Committee met on Tuesday, December 17, for a hearing entitled "America's High-Stakes Bet on Legal Sports Gambling." Witnesses present at the hearing included NCAA President Charlie Baker, former NFLPA representative Johnson Bademosi, the Executive Director of the National Council on Problem Gambling Keith Whyte, former New Jersey Department of Gaming Enforcement Direct David Rebuck, and problem gambling clinician Harry Levant.
Committee members and witnesses engaged in spirited conversation about different elements of the sports betting market, including collegiate prop bets, responsible gaming practices, tribal gaming, and the prevalence of the illegal market. Of particular importance was the question of whether mobile sports betting requires additional scrutiny from the federal level, or whether individual state authorities are best positioned to serve as regulators. Multiple committee members, including Sen. Richard Blumenthal (D-CT), highlighted the proposed SAFE Bet Act, which would add additional federal oversight to the sports betting market. Witnesses and committee members also referenced the GRIT Act, which would set aside half of the federal excise tax on sports betting to fund programs dedicated to preventing and treating gambling addiction.
Of the witnesses on the panel, each except Rebuck expressed at least some level of desire for increased federal involvement in sports betting regulation. Levant and Bademosi, specifically, endorsed the SAFE Bet Act, while Whyte expressed his strong support for the GRIT Act. Baker expressed agreement with elements of the legislation with which he was familiar. Among the Senators present, Sen. Blumenthal, Sen. Peter Welch (D-VT), and Sen. Thom Tillis (R-NC) expressed a preference for increased federal involvement. Sen. Adam Schiff (D-CA) noted his agreement with Baker's proposal to ban prop bets on college athletes. Sen. Alex Padilla (D-CA) expressed his desire to see tribal voices included in future conversations about sports betting. No Senators expressed clear disagreement with the notion that the federal government should weigh in on sports betting regulations, though Sen. John Kennedy (R-LA) did characterize himself as a "libertarian" on the issue of gambling. In the end, the Senators present agreed to continue these discussions into the next Congress.
The Tennessee Sports Wagering Council will hold a hearing on January 15 to discuss the use of influencers in promoting betting products. The proposal would require licensed operators to disclose to the Council the identities of the influencers and brand ambassadors used in social media and advertising, the compensation details of the relationship and a description of the influencer or ambassador’s role in promoting the licensed sportsbook. These changes, which include a requirement for operators to disclose agreements with brand ambassadors or social media influencers, is part of a broader effort to increase transparency in sports betting promotions, similar to existing rules for athletes with wagering agreements. While other states have adopted regulations governing endorsements, Tennessee's proposal would substantially exceed other state requirements.
The proposed rules also address other aspects of sports betting, such as clarifying eligible collegiate proposition bets and requiring multi-factor authentication for user accounts. Following legalization of sports betting in Tennessee in 2019, the regulatory landscape has undergone significant change, including transferring oversight from the Tennessee Lottery to the Sports Wagering Council in 2021.
Robinhood may be interested in entering the sports betting industry, following the success of its event contracts during the recent presidential election. Robinhood's Derivatives product, which was available to a limited number of customers who met specific criteria, accepted over 100 million event contracts for the 2024 presidential election. At Robinhood's inaugural investor day event, CEO Vladimir Tenev expressed interest in exploring sports event contracts, noting that their customer base, primarily millennials and Gen Z, are interested in combining stock trading, cryptocurrency tracking, and sports betting in one platform. However, the company likely faces significant challenges were it to enter the space, including navigating complex state regulations, the interplay between federal and state regulatory schemes, reputational risks, the need for operational expertise in sports betting, customer acquisition costs, and erosion of brand loyalty once operational.
The World Health Organization (WHO) recently called for a curb on gambling advertising, citing the 1.2% of the global adult population that purportedly suffers from gambling disorders and warning that harms stemming from gambling threaten progress toward global health and development goals. The WHO called for effective prevention and regulation to mitigate these effects. As the global gambling industry is rapidly expanding, with projected revenues of $700 billion by 2028 driven by increased smartphone penetration, gambling is becoming more normalized. The WHO specifically noted the commercialization and digitization of previously analog forms of gambling and stated that increased online accessibility and high-risk products requires a stronger public-health response. Among the measures the WHO recommends are prohibitions on advertising and the promotion of counter-messaging that specifically warns of the harms associated with gambling.