Legal sports betting is spreading quickly across the US, but according to two industry veterans, fast-paced expansion might not be in the industry’s best interest.
The remarks were made by Art Manteris, the vice president of race and sports operations for Station Casinos, and Keith Whyte, executive director of the National Council on Problem Gambling, during the second annual U.S. Sports Betting Policy Summit in Washington, D.C.
They made the comments for entirely unrelated reasons.
For his part, Manteris warned that rushed legislation can bring about unintended consequences. Whyte cautioned the rush to legislate has led to a near-absence of responsible gaming policies and funding.
Here’s some of what the pair had to say …
These are not the results you were looking for
When asked about the possibility of federal legislation, Manteris pointed to history:
“If there’s federal oversight in sports gambling or interstate compacts as you describe them there is always the risk of unintended consequences. I would caution regulators and legislators to take things very slow in this regard, and to be aware of the prior unintended consequences of the Unlawful Internet Gambling Enforcement Act and PASPA.”
Manteris’ experience goes back to pre-PASPA times. He went on to explain that in his opinion, contrary to its intent, PASPA created the offshore illegal gambling industry.
“That certainly wasn’t the intent of the federal legislation but that was the unintended consequence,” Manteris said.
He also pointed to UIGEA’s creation of the daily fantasy sports industry. Once again, that wasn’t the intent of the legislation. But the fantasy sports exemption allowed some smart people to exploit it and to create an entirely new product that no one crafting the bill could have envisioned.
Another way rushing could lead to problems
On a separate panel, Manteris revisited the topic of legislation. He opined the current rush to legalize sports betting could make the inevitable industry’s growing pains more problematic.
As Manteris explained:
“I think the next 12 months is going to be eventful in this area … Because you’re going to see a lot of states passing laws that legalize betting … And it’s going to be something that is more visible, and on people’s minds than ever before.
“And so we need to be responsive to that, making sure that not only are we doing the right things, but also communicating that we’re doing the right things, because at some point, something’s going to happen.
“There’s going to be some incident which, hopefully, isn’t a match-fixing-type incident. It could be something that is more peripheral, you know a junior person places a bet because they didn’t know the rules, or something like that … Who knows what it’s going to be?”
Look alive out there
Manteris added that it’s crucial that when something happens, you can’t be scrambling or even give the appearance of being unprepared.
But preparation requires thoughtfulness. As Manteris explained, sportsbooks need to think of every possible situation, and put the right policies and procedures in place. Further, the industry has to communicate these things to the public.
He went on to say, when something happens you want the reaction to be, “Good job catching someone,” rather than, “Oh, so that means your whole organization is corrupt.”
Step-by-step approach to starting sports betting
As such, Manteris believes states should begin with retail-only sports betting.
“I would advocate for a retail market first, and then taking steps towards remote gambling,” he said.
He went on to list the difficulties online sports betting presents, from enforcement of policies and procedures, to state regulatory requirements, to the federal law enforcement requirements.
According to Manteris, “It is easier to operate, and protect those issues in-person on-site at the casino location, and then, as the market develops, then reach out and make the market broader as the need arises.”
Not everyone agrees about retail-only
This view wasn’t shared by his fellow panelist, Stanton Dodge, the chief legal officer at DraftKings.
Dodge pointed to the robust player verification and geolocation safeguards that govern US legal online gambling. He went on to make a case that each state needs to consider a number of factors before deciding on mobile sports betting.
According to Dodge, mobile will lead to an open, competitive, robust mobile marketplace that will be better for consumers.
It will also lure people away from the offshore market and generate more revenues for the states. It also will provide integrity and consumer protections, Dodge said:
“A mobile service offering also helps ensure game integrity, because I think, you know, as the senator noted, every transaction is tracked, and it’s very easy to just upload it, crunch the numbers, determine if there’s something fishy going on, and take immediate action.
“And also, with the mobile product, it helps protect consumers. We have algorithms that help identify people that might be engaging in problem gaming activity. All their previous transactions are there, so the consumer can actually see them themselves and take a look at what their history has been. And we also allow people to opt out and do timeouts.
” So those are the things that I think folks need to consider: game integrity, stamping out the offshore market, and consumer protections.”
NCPG wants to slow the process for a different reason
Whyte also called for a more deliberate process, but not for the same reasons as Manteris.
Whyte’s argument for a less-hurried approach has to do with responsible and problem gambling policies.
When it comes to problem gambling, Whyte called the state-by-state model sports betting is taking, “a history of failure, in a lot of cases.”
“There’s still, today, 20 percent of U.S. states that provide no support, no public funds whatsoever for problem gambling programs. And so as we expand into sports betting, some of these same states are expanding into sports betting without any infrastructure or responsible gaming framework.”
As Whyte noted, the majority of sports betting bills passed thus far don’t include additional funds for problem gambling programs.
Whyte said, the NCPG is calling for legislation at the state or federal level to include at two of its five principles:
- 1 percent of revenue (not handle) is devoted to problem gambling programs
- A minimum responsible gambling requirement within the legislation
“That’s the minimum standard,” he told attendees.
Most of the bills passed can’t even meet those two criteria. Whyte called current legislative efforts akin to “watching a slow-motion train wreck.”
“Everybody agrees that consumer protections are important,” Whyte said. “And yet the majority of bills that have passed don’t have them.”
Is sports betting different?
Whyte, who is neutral on legal gambling expansion, is particularly worried about sports betting.
“The evidence is pretty clear, that people who bet on sports are more likely to have gambling problems than almost any other type of gambler,” Whyte said.
He went on to lay out the two key risk factors as, the perception of skill and the speed of play.
To make his point, Whyte used the example of a semi-fictional sports bettor chasing losses in the fourth quarter by hammering in-play bets.
“Imagine that you’ve just lost $300 on various in-player prop bets during the first three-quarters of the game.
“It’s the fourth quarter, and now your phone has a buzzer and, let’s just say, some company is going to say, “You know what, Keith? We know you’re down $200. Here’s a 20 to 1 shot that you’ll be able to make up all your money in the fourth quarter, right now.”
“Just press play.”
“You’ve already got an account.”
“There’s a danger there. With the high speed of play and with the perception of skill.”
But Whyte also believes the danger can be mitigated.
“We know how to address it,” Whyte said. “Technology can really help, and there’s a lot of innovative stuff we can do. If you want to go mobile, we have internet-responsible gambling standards. We absolutely know how to do this.”