Sports betting industry abuzz over marketing rules

by Lindsey Francy Mar 24, 2023 News
Sports betting industry abuzz over marketing rules
Patrons place sports bets at kiosks at Encore Boston Harbor casino in Everett.

The sports betting industry is on one side while the attorney general's office is on the other. Some marketing arrangements will have to be decided by the gaming commission.

Third-party affiliate marketing is where a company pays websites and publishers to promote its product. Sports betting related websites are often paid to promote the legal sportsbooks they partner with.

Sports betting companies can't enter into revenue sharing or cost-per-acquisition agreements with third-party marketing affiliates if the compensation is based on the number of people who sign up for an account or if it's based on the number.

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But the commission approved a waiver that keeps that specific part of the regulation from taking effect until mid-April, and regulators on Thursday pondered over the flood of comments they got from betting companies, marketing affiliates, and the Attorney General's office.

"The operators, the broadcasters, entities like [iDevelopment and Economic Association], the teams, the sports teams who also commented on this, basically everybody in the regulated industry side has advocated for removing this section in its entirety or limiting it in different ways." He said that the attorney general's office asked in their comment letter to retain this section.

The 49-word subsection dealing with third-party marketing was the most commented on part of the commission's advertising regulations. Penn Entertainment, which owns Plainridge Park Casino and Barstool Sportsbook, as well as a coalition of affiliates, made comments.

This regulation is unprecedented in the sports wagering industry and prohibits standard marketing practices and agreements currently in place across multiple countries. There is no ban on establishing agreements with third party marketing entities based on the volume of patrons or wagers placed, or the outcome of wagers, in 12 of the 15 countries where PENN operates online sports wagering.

Friedman, who worked as counsel and chief policy advisor to former Senate President Robert Travaglini and as first assistant attorney general under Attorney General Martha Coakley, said that these affiliate models are commonplace in the industry.

Should the Commission back away from its current prohibition on commission-based payments to third-party marketing, the issues Campbell's office raised earlier this month would become even more problematic.

Third-party marketing vendors give advice on prospective wagers to the public. Moore wrote that if a vendor impliedly advises a particular wager, that vendor must not be compensated based on the use of the sports wagering operator's site or app.

Advertising rules for ages under 21

An updated version of the advertising regulations that the Gaming Commission reviewed Thursday appeared to incorporate some of the suggestions that Moore and Campbell's office made earlier this month when he and other attorneys briefed the commission.

Sports betting ads on social media platforms can't be shown to people under the age of 21 if adequate controls aren't in place.

Moore had flagged social media and connected TV platforms for their potential to expose younger people to betting ads and said many of those platforms allowed people under a certain age to be excluded from an advertiser's audience. He said on March 9 that the operators should be required to use it.

In the last few weeks, sports betting ads have dominated TV and radio programming.

There were 62 pages of comments on the advertising regulations in the commission's meeting materials, and the commission wanted to know how other states treated third-party marketing. Commissioner Jordan Maynard said there is a chance that Connecticut may be going the other way.

Another important matter was put off by the gaming commission.

The commission has been considering how to handle promo play credits for tax reasons.

The question has significant tax revenue implications for the state and profit implications for operators, but lawmakers did not make a statement about promotional play in the compromise betting bill. The gaming commission has been asked for more information on how promo play is being treated.

The issue has not been heard by the commission since the vote to allow them to interpret it. Promo play has not been deducted from the revenue since sports betting began.

Commissioners discussed putting the topic out for public comment and arranging a Roundtable with operators, responsible gaming advocates, the attorney general's office, the state Treasury and the governor's office.

The amount of tax revenue the state takes in from sports betting could be reduced with the help of the Executive Office of Administration and Finance.

The gaming commission was told by Campbell's office that regulators should ban referral promotions and vet other specific promotions before they are allowed to be deployed here.

Operators should not use the cost of promotional incentives to offset their gaming revenues if the Commission determines that they are safe and responsible, the office wrote in a letter. The people of the Commonwealth didn't want to give a tax subsidy for gambling.