The overseer of online sports betting sites in the Bay State is hitting the pause button on its ban on certain marketing arrangements.
Members of the Massachusetts Gaming Commission (MGC) voted on Thursday to provide a waiver for its prohibition, until April 14, on cost-per-acquisition (CPA) and revenue-sharing contracts in connection with legal sports betting in the state.
The regulator has a proposed rule forbidding sportsbook operators from striking agreements with third-party affiliate marketers (such as Covers) if those deals are tied to the number of customers acquired or wagers placed, as well as the outcome of wagers. Bookmakers can now use CPA and rev-share agreements under the waiver approved Thursday by the MGC.
Push and pull
Almost no other U.S. state does what Massachusetts is proposing to do (although it might happen in New York as part of a broader reform, possibly inspired by the Bay State in the first place), but some MGC members have concerns about the deals. Those worries are over the potential for a flood of advertising or predatory marketing that spurs players to bet more than they should.
However, during their recent deliberations, commissioners became concerned the rule could have the opposite effect for Massachusetts sports betting, such as encouraging a deluge of mass advertising rather than a more targeted form.
“I think I can speak for the rest of us that we understand the implications of the CPA as helping on the issue around frequency and intensity and push,” MGC Chair Cathy Judd-Stein said during Thursday’s meeting.
With all due respect...
The MGC can now use the next month or so to determine whether it should make the waiver permanent or decide on another course.
Nevertheless, the discussions on affiliate marketing and advertising highlight the decisions regulators must grapple with setting up a legal sports betting market. Event wagering only began at three casinos in Massachusetts in late January, and mobile sportsbooks will start launching on March 10 if there are no further issues.
While the five commissioners were fine with providing a waiver for CPA deals on Thursday, the discussion around revenue-sharing agreement deals with a little more contentious. The vote to authorize the rev-share waiver was only 4-1 in favor, with Commissioner Eileen O'Brien the dissenting voice.
“With all due deference to the perspective of the affiliates, my job isn't to make the affiliates money, my job is to maximize the profit and minimize the risk in the commonwealth,” O'Brien noted at one point during Thursday’s meeting.
