US sports betting operators could eventually face increased regulations on content creation.
The issue has once again come to the forefront following the controversial NBA intel reported by FanDuel media partner Shams Charania, which swayed a draft betting market.
Maryland has already passed US sports betting legislation requiring disclosure and independent evaluation of influencers and media partners by its regulated sportsbooks.
Lawmaker: US sports betting regulations needed
West Virginia attempted a similar measure to Maryland’s, but it died last session. However, West Virginia House minority whip Shawn Fluharty foresees the sports betting content creator oversight bill passing in the next session.
Fluharty, who is set to become the next president of the National Council of Legislators from Gaming States (NCLGS), believes the issue is larger than just the most recent incident with Charania. It could impact any sort of market, from the NFL Draft to the Super Bowl.
“I’m not saying FanDuel had any unclean hands here. But if they wanted to, they certainly could. That’s because there is no regulatory boundary in place,” Fluharty told LSR on Monday. “… This is kind of the forecast of what’s next in the regulatory and legislative realm. And it shines a light on something we’ve been talking about for months. You just needed a clear example, and this is a clear example.”
What West Virginia legislation did
Fluharty explained what was in the failed West Virginia bill, which passed through the House and one committee in the Senate before falling short:
- Sportsbooks disclosing third-party affiliates, i.e. influencers and media partners to the regulatory body (West Virginia Lottery.)
- An independent evaluation or audit of the content through an agency like SharpRank, the company that ushered through the Maryland legislation.
NBA Draft intel snafu
Charania’s tweet Thursday morning that Scoot Henderson was “gaining serious momentum” for the No. 2 pick in the 2023 NBA Draft resulted in betting odds shifting significantly.
For example, theScore Bet moved Henderson from a +275 underdog to a -450 favorite. One college student told the Wall Street Journal he placed a $500 wager on Henderson as a result of the Charania tweet.
However, the Charlotte Hornets ultimately made Brandon Miller their selection that evening.
FanDuel defends Shams partnership
The operator defended its relationship with Charania after the incident.
“FanDuel is not privy to any news that Shams breaks on his platforms,” a FanDuel spokesperson told LSR at the time.
Furthermore, a source told LSR that the operator was not considering ending its relationship with Charania.
Questions arise for US sports betting future
Questions emerged after the incident, including whether insiders should be allowed to report on the same betting markets a sportsbook that pays them is offering.
In the event that insiders like Charania do have a paid partnership with a sportsbook, one potential solution would be to require a mandatory disclosure on his tweets.
“I think really what the Shams thing did was it blurred the lines of influencer and reporter,” Fluharty said. “ … It used to be, in Las Vegas, the public drove the lines. Now, the sportsbooks are driving the lines 100%. They have the ability to do that now. Because they can influence the public using their own people.”
Will draft betting markets remain?
Some states like West Virginia and Nevada require draft markets to be pulled down 24 hours before the event starts.
Draft markets typically have low wagering limits and are not moneymakers for sportsbooks because they rely more on information than athletic performance.
Regulating them is better than the alternative, according to Fluharty, as it allows for monitoring of potential nefarious activity.
Fluharty: regulations could help US sports betting consumers
Regardless, Fluharty wants better regulations in place.
“I’ve seen some stuff from Barstool which I think raises an eyebrow or two,” Fluharty said. “They have the ability at 9 a.m. to say one thing, and then move the book one direction, and then have somebody else come out in the afternoon from the same company on the opposite side to even the book out.
“And we don’t know what communications are taking place as a regulatory body. We don’t know if there’s anything improper going on.
He continued, “It’s just like these financial institutions during the financial crisis with insider trading. Are we going to allow sportsbooks to continue to operate with the ability of insider trading? I would think the answer is no. So if the answer is no, we need to do something about it.”
States standing pat, for now
Regulators in a few other jurisdictions weighed in on draft markets after last week as well.
- A spokesperson for the Ohio Casino Control Commission said it had no plans to re-evaluate draft markets at this time.
- A spokesperson for the Massachusetts Gaming Commission said: “As you may suspect, our sports wagering division reviews our catalog to ensure compliance. Any change (to remove or add) an event or wager would have to come before the Commission. I haven’t heard that this would be a topic of an upcoming public meeting. But as you know items are added and subtracted from time to time.”
- A spokesperson for the New Jersey Division of Gaming Enforcement declined comment.