When eight-term Rep. Paul Tonko (D-NY) introduced legislation to curb sports betting advertising during the week of Super Bowl 57, eyes opened.
The federal government had been pretty quiet since a 2018 effort to regulate sports betting federally fell apart in the years immediately following the Supreme Court‘s invalidation of the Professional and Amateur Sports Protection Act, but Tonko clearly was not playing around.
Tonko’s legislation called for an advertising ban across Federal Communications Commission (FCC) platforms. It would be a ban rivaled in scope in the United States essentially by only the advertising restrictions placed on much of the tobacco industry.
Sports betting advertising irks many
Sports betting advertising has become a target of ire for many. This was especially true as the daily fantasy sports advertising blitz of 2015 still remains fresh in many minds.
Despite the outcry and investigations that followed the DraftKings and FanDuel ad wars, memories appeared quite short in the sports betting industry. Most of the well-resourced companies spent on advertising like the money was about to expire. Nonetheless, the spending eventually became too much for some, with costs mounting and profitability remaining elusive.
Others, however, saw advertising as the path to profitability which has left us, America, with sports betting advertising becoming an inescapable part of our day-to-day lives, even in states where people cannot bet in the regulated market.
Rep. Tonko gets serious
Tonko’s legislation would give the FCC jurisdiction over enforcement of a prohibition on sportsbook advertising over television and radio stations, as well as the Internet. The legislation goes on to define a few key terms, but the meat of it is less than three lines long and gets directly to the point.
Despite the brevity of the actual legislation, Tonko released a fact sheet that provides a great understanding of why this has been introduced:
Sports betting advertisements are out of control. Congress needs to reel in an industry with the power to inflict real, widespread harm on the American people.
The fact sheet cites a rise in the number of calls being made to gambling helplines, as well as 7 million people as an estimate for those experiencing issues with gambling. The New York representative goes on to criticize the use of phrases like “risk free” or “no sweat” bets.
The fact sheet also cites alarming statistics about the number of high school students engaging in gambling, and further criticizes colleges and universities for partnering with gambling companies.
A path forward?
The fact sheet argues that the legislation is modeled after the Federal Cigarette Labeling and Advertising Act which made cigarette advertising a prohibited practice.
The legislation has undoubtedly sent chills across the industry, even if federal legislation remains a long shot.
Federal Cigarette Labeling and Advertising Act
While questions about whether the legislation could possibly pass will be answered with time, there have been many questions about the law that serves as the basis for this legislation. Following a Surgeon General report in 1964, which declared smoking to be a health hazard, federal agencies began to impose restrictions on cigarettes.
This would eventually lead Congress to examine the issue. The cigarette advertising legislation became law in 1965 and required that cigarettes contain warning labels.
Over the years, the legislation was supplemented and tobacco restrictions became broader in scope, as more and more evidence was produced about the relationship between smoking and health consequences. In 1969, the advertising of cigarettes on television and radio was banned.
Was an advertising ban constitutional?
Outright bans on speech are generally frowned upon by the First Amendment. However, the protections granted to commercial speech (think advertising) are significantly reduced from the amount of protection provided to other types of speech, like voicing your political views.
The 1969 ban on tobacco advertising caused something of a revenue concern for broadcasters, as tobacco advertisers were consistent purchasers of ad time. A lawsuit was filed in 1971 by Capital Broadcasting Company, which represented six companies that had broadcast licenses issued by the FCC, alleging violations of the First (and Fifth) Amendments.
In a decision that split the D.C. panel, the Court ruled 2-1 in favor of finding that Congress had ample latitude to ban tobacco advertising over media within the scope of the FCC. The Supreme Court declined to hear an appeal, and has not addressed the Act since denying the petition to hear the case back in 1972, according to the First Amendment Encyclopedia.
What to make of sports betting advertising ban talk?
The legislation introduced by Tonko is a shot across the bow of the sports betting industry, which, for years now, heard warnings about the broad scope of advertising and concerns about some of the language being used with little change.
We have seen some states respond to breaches of advertising regulations by imposing fines so low that they are laughable when handed out to billion-dollar companies. Ohio has taken a different approach, but other states do not appear to be doing anything.
What did the industry expect? This legislation was inevitable. Will this legislation pass? it seems to have long odds at the moment, but change nothing and it will.
Sports betting is now under the microscope. With more focus, there is going to be a lot more interest in studying the industry, and the connection between advertising and problem gambling is going to get a lot of attention. The industry would be wise to regulate itself before Congress does it for them.