Seven of the country's largest gaming companies are teaming up to create a trade group to promote responsible gaming and, for the first time ever, will share information about problem gamblers.
The seven operators – fan duel, kings project, MGM House, bin entertainment, Fanatics Betting & Gaming, Hard Rock Digital and bet365 will form the Responsible Online Gaming Association, or ROGA, the group announced on Wednesday.
Members represent more than 85% of the legal online betting market in the United States. They have collectively pledged more than $20 million in funding for ROGA.
“I'm very excited to move forward with this and do some impactful things and really expand knowledge through research, creating evidence-based best practices and really empowering players with information,” said Jennifer Chatley, executive director. From Roja.
ROGA members are committed to working together on issues ranging from education, responsible gaming best practices, to advertising and marketing across the industry.
The new group will also create an independent clearinghouse, or database, that will allow them to share key information related to consumer protection, although details about how it will work are not yet clear.
Justin Sullivan | Getty Images
ROGA says it will create a certification program to evaluate members' responsible gaming efforts and provide an incentive for operators to participate.
The new consortium comes at a time when sports betting, both online and in retail outlets, has seen explosive growth across the country since 2018. Thirty-eight states plus Washington, D.C., now offer legal sports betting.
This year, a record number of Americans bet on the Super Bowl. Online transactions totaled nearly 15,000 per second, doubling last year's peak, according to geolocation platform GeoComply.
But as gambling becomes more mainstream — and as sports betting ads spread across television, streaming and social feeds — there are also headlines involving betting and sports scandals.
In recent days, Los Angeles Dodgers star Shohei Ohtani has found himself in the middle of a $4 million betting scandal involving his translator and an illegal bookmaker. Ohtani insists that he never bets on sports. The NBA is investigating Toronto Raptors player Jontay Porter for betting violations. US Integrity, a technology company that works to combat illegal betting in college sports, reported anomalies around betting lines at Temple University men's basketball games.
As a result of these allegations: the potential to spark public outrage and criticism that could become an inflection point for the gambling industry in the United States. There is also the possibility that the explosive growth of gambling will undermine the integrity of sports and tempt bettors into addiction.
Problem gambling
An estimated 2 million American adults meet criteria for serious problem gambling, according to the National Council on Problem Gambling. It is believed that between 5 million and 8 million American adults have a mild or moderate gambling problem.
Problem gambling has led to regulatory crackdowns in Europe and particularly in the UK over the past two years, impacting the profitability of sports betting and changing the way they conduct business.
There have been concerted efforts in the US gambling industry to police itself and avoid stricter regulatory frameworks.
U.S. Rep. Paul Tonko of New York is introducing national legislation that would crack down on what he calls a “public health crisis.” The “Support Affordability and Fairness with Every Bet” law, which Tunku introduced last week, would regulate gambling advertising, limit the number and size of deposits, and restrict how artificial intelligence can be deployed to acquire customers.
“You're going to have a lot of people satiated by this opportunity, with all these clever concepts of bonus bets and free bets and celebrity spokespersons,” Tonko told CNBC.
He said the influx of gamblers would lead to a significant increase in the number of people suffering from addiction.
Some states have imposed fines on operators for gaming violations. In August, the state of Maryland fined DraftKings $94,000 for marketing to underage players. AwardPicks reached a $15 million settlement in New York for operating illegally. In Indiana, the Gaming Commission fined FanDuel after eight people used illegally obtained debit cards to fund their betting accounts, causing “significant harm” to partners in joint bank accounts, according to Indiana Gaming Commission Chairman Milton Thompson.
Customer protection
Some gambling insiders are skeptical of ROGA, questioning what they see as a marketing ploy to address a PR problem.
Caesarwhich was noticeably absent from founding group ROGA, told CNBC it has learned best practices over its 35 years in dealing with responsible gaming.
“While we applaud all efforts to ensure online gaming is operated and marketed responsibly, we are confident in our approach to responsible gaming,” the company said in a statement.
Caesars said it only focuses on the 21-and-older audience and doesn't allow anyone younger than that to sign up for a Caesars Rewards account, even in states like Rhode Island or Kentucky where 18-year-olds are allowed to bet.
Many fantasy sports and social betting platforms that operate on a lottery model allow players 18 years of age or older, and many of Caesars' competitors also allow customers 18 years of age and older to play fantasy sports. Some also allow sports betting in that age group in the few states that do.
But the industry is working to better insulate its younger, more vulnerable customers.
Last March, the American Gaming Association launched an agreement aimed at providing protection for college-age students against sports betting marketing and advertising.
Silkia Patel, (right), 29, watches the game after placing her bets at FANDUEL Sportsbook during Super Bowl LIII in East Rutherford, New Jersey, US, February 3, 2019.
Eduardo Munoz | Reuters
Responsible gaming goes back to good business,” said Peter Jackson, CEO of Flutter, FanDuel's parent company. However, he warns that when legal operators come together to improve responsible gambling, the illegal market will always be willing to take bets from problem gamblers.
“I urge state regulators to help us by clamping down on some of the black market operators,” Jackson told CNBC.
