The American Gaming Association (AGA) has updated its Responsible Marketing Code for Sports Wagering for the first time since its creation in 2019. The changes reflect adjustments already being made by operators and regulators in response to media criticism. These include a ban on using the words “risk-free” and most college partnerships.
The AGA is a trade organization representing regulated commercial and tribal gambling operators in the US. This includes companies in the new online and sports betting sectors but excludes public sector lotteries and unregulated companies whose products skirt the legal definition of “gambling.”
As well as promoting the industry and advancing its interests, part of the AGA’s mandate is to promote best practices for social responsibility. In a press release, CEO Bill Miller said:
Established in 2019, AGA’s Responsible Marketing Code reflects the commitment of our members to set and adhere to a high bar for responsible advertising. Today’s updates advance that commitment and represent our intention to protect consumers and evolve our standards as this nascent market matures.
In consultation with its members, it drafted the Marketing Code in response to the wave of sports betting legalization following the repeal of PASPA. That original 2019 version focused on the following:
- Avoiding marketing strategies designed to appeal to minors
- Including responsible gambling messages
- Compliance with geolocation and other regulatory requirements
The most significant changes to the new 2023 version of the Marketing Code are:
- Clarification about the legal betting age and marketing to minors
- The addition of a section titled “Limiting College and University Advertising”
- New items in the responsible gambling section, including a ban on the words “risk-free”
- Provisions to review the code annually and promote awareness of any further updates
Why Are Risk-Free Promotions so Controversial?
Although it’s only a single line in the new code, the “risk-free” ban is one of the more significant updates. Promotions using this description were, until recently, widespread in the industry and became a target of media criticism and new regulatory policies.
Most gamblers dream of having a chance to win without incurring any risk in the process. Within the professional gambling community, that’s what’s known as a “freeroll.”
Capitalizing on that is a natural marketing strategy for gambling companies. When it comes to online casinos, we often see no-deposit bonus offers for that reason. On the sports betting front, risk-free bets were the go-to concept. Unfortunately, it’s one that’s ethically problematic for two reasons:
- Gambling with profit as a primary motive is a risk factor for developing a problem since most gamblers will lose money over the long term.
- The promotions formerly described as “risk-free bets” aren’t truly without financial risk; players can still lose money while taking advantage of them.
At least two gambling operators are currently facing the prospect of class-action lawsuits over their use of the phrase.
The Risks of ‘Risk-Free’ Betting
In a typical “risk-free” betting offer, players place a sports bet using their own money, up to some maximum. This is often a fairly large amount, such as $1000. If the bet were truly “risk-free” by the plain English meaning of those words, a losing bet would be refunded in cash. Instead, such promotions usually pay out a losing wager as a free bet of the same amount.
If that free bet also loses, the player loses their original stake. Thus, there is risk involved. Not only that, but free bets that win pay out only the profit, not the stake. That means the statistical value of a free bet is less than its “face” value, depending on what the player uses it for.
For instance, a free bet used to bet on a game spread at -110 odds will win about half the time and pay out $909.09. So, a “$1000 free bet” used that way has a statistical value of 50% of $909.09, which is $454.55, and not the full $1000.
Media Backlash and Regulatory Shifts
Predictably, the gambling industry has come under fire from mainstream media outlets due to its rapid expansion. The deluge of sports betting ads saturating the airwaves is one central point of frustration. However, coverage from the New York Times and other major outlets has also been sharply critical of the industry’s lobbying practices and its promotions. These pieces often point to the term “risk-free” as an example of problematic marketing.
A gradual shift in regulatory policies has come alongside that backlash. Even before the media coverage peaked, the Canadian province of Ontario announced it would ban all advertising of promotions that involve a financial incentive. That included “risk-free” bets and other common sign-up bonuses like first deposit matching.
More recently, the Ohio Casino Control Commission has emerged at the forefront of stricter regulation in the US. The rules for its market, which launched on Jan 1, 2023, included a prohibition on the use of “free” or “risk-free” for promotions that require the user to make a real money wager. Almost immediately, it began issuing six-figure fines to operators it found in violation of the policy.
Massachusetts, another new market, adopted a similar policy, then the Pennsylvania Gaming Control Board adjusted its rules to follow suit. However, by that point, many operators had already begun backing away from the terminology of their own accord. The operators’ decisions may have been due to the backlash and the complexity of handling national marketing campaigns when the rules differ from state to state.
In announcing its decision, the PGCB said it targeted “a small number” of operators still using the language and told PlayPennsylvania it was trying to create consistency. The AGA’s new policy appears to be coming from a similar place.
Other Changes to Avoid Marketing to Underage Players
One advantage of regulated online betting is that Know Your Customer checks make it difficult for underage players to bet. Even so, fears of gambling companies preying on youth feature prominently in criticisms of the industry. Marketing partnerships between sports betting companies and colleges or college athletes have come under particular fire.
The only mention of colleges in the original Marketing Code was a prohibition on advertising on campus or through college- or university-owned news outlets. The new version adds to that by prohibiting any partnership with such academic institutions to promote betting. Partnerships with alum networks are excluded, and companies can still partner with colleges for responsible gambling education.
Another rule prohibits using college athletes’ names, images or likenesses for sportsbook marketing.
Meanwhile, the section on marketing to youth has had its language adjusted from “below the legal age” to “under 21.” Although most commercial sports betting jurisdictions have a minimum age of 21, there are exceptions, particularly for retail casinos and sportsbooks in the tribal gaming sector. The new rules close any potential loophole related to those exceptions.
At the same time, they require that actors used for sports betting ads are also at least 21 and that no advertising can be done through channels where more than 26.4% of the audience is expected to be underaged. (The rationale for that strange-looking percentage is that it equates to the portion of the overall population that’s currently under 21, according to census data.)