A bill that would put the federal government atop the totem pole of legal sports betting regulators will be a tough sell, but some of its other ideas may give state watchdogs something to think about — and perhaps borrow from.
New York Rep. Paul Tonko and Connecticut Sen. Richard Blumenthal formally introduced the SAFE Bet Act on Thursday, a far-reaching piece of proposed legislation that would create a blanket ban on sports betting across the U.S. unless authorized by the Department of Justice.
It’s a long way before the bill becomes law, if it becomes law at all. Moreover, 38 states and the District of Columbia have already authorized some form of sports betting. Are they really keen to go to the feds to ask for permission for something they’re already doing?
"We need to roll up our sleeves and inform and educate and advance and encourage people to join us in this effort," Tonko said on Thursday.
Today, I introduced the SAFE Bet Act that creates nationwide consumer protections for the mobile sports gambling industry. This industry has hijacked Americans' love of sports by recklessly peddling a known addictive product. Our bill puts an end to those dangerous practices. pic.twitter.com/4gOPfVPNTb
— Paul Tonko (@RepPaulTonko) September 12, 2024
But if you set aside the odds of the SAFE Bet Act passing, and start digging into what’s being proposed, there is food for thought. And while state lawmakers may not take kindly to the idea of the federal government asserting themselves as arbiters of legal sports betting, state regulators may at least see some proposals that pique their interest.
Indeed, Tonko and Blumenthal made a point of criticizing state regulation of event wagering. That could be viewed both as a rationale for their bill, but also as a call to action for state regulators, or perhaps a way of goading those watchdogs into doing some of what the federal lawmakers want.
"Right now, states have legalized gambling, but they failed to protect citizens against those excesses, abuses, and exploitation,” Blumenthal said on Thursday. “State regulation is faint-hearted and half-baked. That's why we need a national standard — not to ban gambling — but simply to take back control over an industry that is out of bounds."
The "standards" that Tonko and Blumenthal want might be the most crib-worthy. Some have already been considered or implemented by state lawmakers or regulators, such as banning sportsbook ads during live sporting events, prohibiting certain promotional language like "no sweat" and "bonus bets," and outlawing college props.
If you have to ask ...
However, some other, more novel ideas could maybe catch the eye of a state regulator or two. The legislation would, for example, ban operators from taking more than five deposits from a customer over 24 hours. It would also require operators to run “affordability checks” on bettors before they take action over a certain amount in a day or month.
The notion of affordability checks has been given serious thought in the United Kingdom. There, the U.K. Gambling Commission announced in May "light-touch financial vulnerability checks" that will begin at the end of August for customers who deposit more than £500 a month. That bar will be lowered to £150 at the end of February.
“[The checks] will focus solely on publicly available data and, following feedback through consultation, will not require gambling businesses to consider an individual’s personal details such as postcode or job title,” the regulator said.
Bot out of it
Furthermore, the SAFE Bet Act proposes to rein in the use of artificial intelligence by sportsbook operators. Bookmakers would be banned from using AI to track a player's wagering habits and to create specialized offers and promotions for players. A similar restriction would be put in place for AI-created microbetting markets.
The use of AI by sportsbook operators is something on the radar of at least one state regulator, and perhaps more. The federal focus on it may renew or maintain that curiosity.
Just this past week, one member of the Massachusetts Gaming Commission (MGC) asked operators about their use of AI and analytics in deciding to limit the amount players can wager.
“I understand your position in terms of confidentiality or trade secrets, but is there a use of AI and analytics that's involved in that?” asked commissioner Eileen O’Brien.
No answer was given, which means it could be a topic the MGC revisits, either through the lens of sports bettor limiting or the betting industry more broadly. Tonko and Blumenthal seem more interested in the latter.
"Currently, sportsbooks use AI to scoop up all sorts of data, data that are relevant about customers, including when they like to bet and whom they would like to bet on," Tonko said on Thursday. "They use this information to create individually targeted promos with one purpose: to keep you gambling, to chase those losses and losing money on their platform at all hours of the day and all hours of the night."
At any rate, the conversation has begun. And, as Tonko noted, the same Supreme Court decision in 2018 that paved the way for the expansion of legal sports betting also kept the door open for the feds to get involved — if enough lawmakers can get on the same page.
It could be that the SAFE Bet Act is just the opening act and not a finale.
"What the Supreme Court did explicitly lay out in their decision … was that Congress retains the right to regulate sports gambling," Tonko said. "So that's what we're all gathered here today to announce, as an effort that we're going to embrace."
