Massachusetts Gaming Commission Signals Intent to Regulate Sports Wagering Limits and Invites Operators to Join the Conversation

By: Abbey Block

At a public meeting held on August 1st, members of the Massachusetts Gaming Commission (the “Commission”) voiced their frustration with sports betting operators’ unwillingness to publicly discuss their position on the issue of bettor and wager limits. Although the Commission has yet to propose any rules that would limit the operators’ ability to impose wager limits on certain bettors, it has indicated its interest in the potential regulation of the practice.

“I want to have the conversation,” Interim Chairman Maynard said about the operators’ silence on the issue. “If there’s an argument to be made, you can make that argument if you are part of the conversation. And it’s harder to do so just on the written record.”

Commissioner Skinner echoed this sentiment, stating that “It is in the operators’ best interest to come and talk to us and tell us what they need us to know.”

The imposition of “limits” on bettors is an industry-wide practice that allows operators to restrict the wagers bettors can place on their platform. For example, the platform may restrict the amount of money a bettor can wager to $50 per bet. Some customers have reported being limited to as little as fifty cents per wager. Patrons argue that the practice is unfair and intended to prevent the most talented of bettors from winning big.

At Thursday’s meeting, Commissioner O’Brien described this line of argument as the “ban or bankrupt” theory – i.e., that players who do well are banned or otherwise limited, while those that do poorly are encouraged to place more bets and spend more money.

By contrast, operators defend the practice and argue that the imposition of limits on certain bettors is a risk-management strategy akin to the table limits imposed by brick-and-mortar casinos. While this analogy may be believable, most in the industry agree – the imposition of wager limits is a business decision, motivated by the desire to mitigate the negative impact on revenue created by the  the success of sharp bettors.

Although wager limits are unpopular amongst bettors, there is currently no rule prohibiting them. Rather, operators generally maintain discretion to implement limits as they see fit – a right they reserve as part of their contractual relationship with their customer. The operator’s ability to set maximum or minimum wager amounts is typically outlined in its rules or terms and conditions. For example, DraftKings has an entire section of its rules dedicated to “Sport Specific Limits,” in which it explicitly states, “DraftKings reserves the right to limit the maximum bet amount (on a per user or aggregate basis, DraftKings sole discretion).”  Indeed, even Massachusetts’s rules governing the Uniform Standards of Sports Wagering recognize that “unless otherwise directed by the Commission, there is no limitation as to the minimum or maximum wager a Sports Wagering Operator may accept.” 205 CMR 247.08.

Wager limits have been a topic of discussion amongst the Commission’s members since May, when the Commission held a roundtable for operators and stakeholders to discuss the practice. However, only one operator – Bally Bet – attended the roundtable. The rest of the operators withdrew their participation 72 hours before the meeting, citing concerns about (1) the public nature of the meeting and the potential disclosure of confidential business practices; and (2) the presence of known professional bettors who they allege were invited to represent the “patron perspective” at the roundtable.

Since refusing to attend the roundtable discussion, the operators have indicated their willingness to engage in a dialogue with the Commission about wager limits and potentially attend another meeting limited to operators.

The Commissioners expressed that they were willing to make certain accommodations to protect the rights and proprietary business practices of the operators. However, Commissioner Skinner emphasized the importance of facilitating a substantive discussion between the operators and the Commission: “I’m not interested in having another round table just to have operators come before us and say they can’t talk.”

Interim Chairman Maynard agreed, “We’re having a larger policy conversation, and it’s hard for me to believe that the operators don’t have an opinion on this policy decision that we may or may not make.”

The Commissioners recognized that “ultimately there could be some regulations that come out of the discussion.” Indeed, Commissioner O’Brien even suggested that the Commission’s legal department could draft a proposed regulation as a “jumping off point” for the conversation with the operators.

But before “any pen is put to paper on a reg[ulation],” the Commissioners agreed to hold another public meeting with operators, bettors, and the responsible gaming community. They agreed that that the conversation would focus on data  and case studies – i.e., information about the number of bettors who have been limited and why they were limited. Thus, although the Commission has yet to propose a particular policy, its members’ comments indicate that they see the operators’ imposition of wager limitations as a problem to be solved.

The Commission’s apparent eagerness to rein in operators’ ability to limit bettors’ wager amounts begs the question – what interest does the government have in intervening in the operators’ business practices? Ultimately, the choice to limit a bettor’s ability to wager large sums of money is a strategic economic decision based upon the operator’s bottom line. Customers are put on notice of the operator’s ability to impose these limits via the platform’s rules, thereby undermining the argument that operators restrict players without any warning.

Although sports betting operators are heavily regulated by the state, they are still businesses whose ultimate objective is to make a profit. It remains unclear what basis the state would have to  intervene in the operators’ exercise of discretion in their business operations and what justification it would have for intruding upon the contractual relationship between bettor and operator.

The state’s usual justifications for regulation, such as public health, corruption, and offering resources for those with gambling addictions, don’t hold water when it comes to regulating wager limits. Indeed, it could even be argued that wager limits are a helpful responsible gaming tool given that they limit the amount of money a bettor stands to lose. Perhaps the state’s desire to regulate would be better directed toward the “VIP” perks  typically awarded to losing bettors to entice them to keep betting and depositing their money. Responsible gaming advocates argue that these “VIP” programs can perpetuate the cycle of problem gaming.

Based on the discussion during Thursday’s meeting, the Commission’s consideration of wager limits – and whether or not to regulate them – is unlikely to end any time soon. Rather, the next public meeting will likely be the operators’ last chance to make their position heard before the Commission takes regulatory action. To this end, Chairman Maynard explained that the upcoming meeting will be more formal than the prior roundtable discussion, and that the Commission is making a “very strong request” that the operators attend. Given the power of the Commission over gaming in Massachusetts, this seems like an invitation the operators will be unlikely (and unable) to refuse.

When they inevitably accept the Commission’s invitation to join the conversation, the operators should avoid beating around the bush and say the quiet part out loud: imposing wager limits on certain bettors is a way for the operators to make a bigger profit – a legitimate business decision that should be respected by the state. Pretending that the operators aren’t in business for the sole purpose of making money off the people who use their platforms ignores the reality of the industry. Once we’ve all accepted the fact that operators don’t offer their services out of the kindness of their heart, it becomes clear that state intervention in a valid business strategy lacks justification and undermines the principle of free enterprise.