As he promised in the spring, Rep. Paul Tonko introduced his SAFE Bet Act this week, which aims to create federal standards for sports betting and require state regulators to uphold them. He announced the bill’s official introduction to the legislature in a press event on Sept. 12. Accompanying Tonko were Sen. Richard Blumenthal, two representatives for the Public Health Advocacy Institute, and Gordon Douglas, an addicted gambler in recovery, who was there to provide a personal account of the dangers of disordered gambling.
Industry organizations like the American Gaming Association (AGA) and iDEA Growth responded negatively to the news, as they did to the original proposal.
September is an appropriate time for such a piece of legislation, being Responsible Gambling Awareness Month. However, the upcoming November election may be a distraction.
Tonko was also the force behind 2023’s unsuccessful Betting on Our Future Act, a blanket ban on sportsbook advertising. By contrast, SAFE Bet is somewhat gentler on the advertising front yet considerably broader in scope. It would introduce limitations and obligations for the betting industry on three fronts: advertising, affordability, and the use of artificial intelligence.
As things stand, the rules for sports betting and their enforcement fall to the states. Yet, although the Supreme Court struck down the federal prohibition on sports betting in 2018, it allowed the federal government room to impose regulations on the industry.
Blumenthal’s justification for the bill touched on the cross-border nature of advertising:
What we need now are standards that can be applied across state boundaries, because we know that advertising and enticement are across state boundaries in their reach and their design.
Microbetting in the Spotlight
However, although Tonko’s efforts to impose federal regulation on the gambling industry began with advertising, that no longer seems to be the focus. The standards the bill would impose on advertising are akin to those for alcohol. It would limit the times and places that advertising is permitted to avoid excessive exposure for children and impose restrictions on the content of the ads.
Tonko explained:
Just like you don’t see people drinking in alcohol ads, you shouldn’t see celebrities teaching you their favorite parlay in sportsbook advertising.
During the press event, Tonko and Blumenthal both seemed to place more emphasis on the threat of artificial intelligence and, in particular, its use in developing lines for “microbets.”
These new betting products are similar to in-play bets but at an even smaller scale. During a baseball game, for instance, a microbet might be on whether the next pitch results in a ball or a strike.
Even in their infancy, microbets caused some consternation from responsible gambling advocates. The frequency of a gambling stimulus is one of the risk factors for addiction, which can be an issue with slots. Some, like Keith Whyte of the National Council on Problem Gambling (NCPG), have warned that we will likely see similar results with microbets. He told the Associated Press last year:
That heavy frequency [of microbets] is associated with gambling problems. You can get a hit of dopamine every few seconds; it’s more akin to playing a slot machine than betting on sports.
(The NCPG has not issued an official statement on the SAFE Bet Act, and Whyte did not immediately respond to a request for comment.)
Industry Pushback on SAFE Bet Act
The AGA is rarely a fan of legislative proposals at the federal level. As an organization, it would prefer to deal exclusively with state legislators and regulators. Past disputes with the federal government have involved PASPA (the prohibition on sports wagering), whether the Wire Act applies to forms of gambling other than sports betting (it doesn’t), and the federal excise tax on sports betting handle.
On the same day as Tonko’s press event, the AGA issued its expected rebuttal—a short statement reading:
Today’s regulated sports wagering operators are contributing billions in state taxes across the U.S., protecting consumers from dangerous neighborhood bookies and illegal offshore websites, and working diligently with over 5,000 state and tribal regulators and other stakeholders to ensure a commitment to responsibility and positive play. Six years into legal sports betting, introducing heavy-handed federal prohibitions is a slap in the face to state legislatures and gaming regulators who have dedicated countless time and resources to developing thoughtful frameworks unique to their jurisdictions, and have continued to iterate as their marketplaces evolve.
Tonko and Blumenthal were critical of state regulators and the framing of responsible gaming as an individual responsibility for players.
iDEA Growth, an organization dedicated to promoting regulated markets, pushed back on the idea that state regulation hasn’t been effective. In a statement on its website, it says:
While we strongly support efforts to promote responsible gaming and player protections, this legislation represents an unnecessary and harmful federal overreach into an area that has been successfully regulated at the state level since the Supreme Court’s decision to overturn the federal sports betting ban in 2018.
iDEA remains committed to working with lawmakers, regulators, and stakeholders to enhance player protections in a way that empowers states and preserves the benefits of a well-regulated, competitive market. We urge Congress to reject this misguided federal mandate and instead support state-based solutions that are already working across the country.
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