SAFEly symbolic?

By: Sara Dalsheim

Last month two U.S. lawmakers, Rep. Paul Tonko D-N.Y. and Sen. Richard Blumenthal, D-Conn., introduced the Supporting Affordability and Fairness with Every Bet Act (i.e., the SAFE Bet Act).[1] The Act sought to implement federal minimum standards for all sports betting operators throughout the United States.

The lawmakers seemingly put forth the bill because of concerns that citizens are being subject to too many sports wagering related advertisements and promotions along with notions that everyone is becoming a problematic gambler. The bill also attempts to reverse the 2018 Murphy v. National Collegiate Athletic Association decision of the Supreme Court; overturning the 1992 Professional and Amateur Sports Protection Act (PASPA) which made legal sports betting a states’ rights issue.[2]

The bill would require all states with legalized sports betting to obtain permission from the U.S. attorney general to continue offering sports wagering in their state. This would wreak havoc on the legalized industry – 38 states and the District of Columbia have already legalized sports betting, created their own regulated structure, and offer online wagering to their citizens. These states and their operators would now all be subject to the same conditions and restrictions to offer sports betting, including, for example, the universal prohibition of in-game betting as well as college-player proposition betting.

The bill would also create a national self-exclusion list, that the federal Department of Health and Human Services would oversee. Wagering operators would also be required to commit an “appropriate amount” of their revenue for problem and responsible gambling; even though nearly all states already impose taxes on their operators and use a fixed percentage of the gambling taxes to assist such efforts and programs.

There are also three key problem areas the bill addresses: sports betting advertising, affordability, and artificial intelligence. Specifically, the bill seeks to prohibit the use of AI to track player’s gambling habits and individual promotions. It also intends to bar all sportsbooks from advertising in any manner that would induce gambling, such as the use of terms like “no sweat” or “bonus” bets during any live sporting events. Additionally, the bill caps the amount customers can deposit on sports wagering platforms – customers could not deposit more than five times within any 24-hour period. Further, gambling operators would be required to ensure customers can afford any wagers more than $1,000.

The bill has been met with pushback from not only fellow lawmakers (Rep. Dina Titus, D-Nev.), but also a large portion of the gambling industry that sees the bill as uninformed, misguided, outdated, unwarranted, and overly broad, amongst other issues and concerns.[3]

Former New Jersey Division of Gaming Enforcement Director, David Rebuck, recently spoke on an iDEA Growth (iDevelopment and Economic Association) webinar and relayed harsh criticism toward the bill: “It’s mind-boggling to me the arrogance of saying ‘we know more than you do’ without working on things together that we have already reached out to them to work on to make things better for our citizens in all the states that legalize sports wagering.”[4]

The National Council on Problem Gambling (NCPG) is maintaining a neutral position towards the bill but believes the bill, “lacks the necessary investment in public health infrastructure to adequately address gambling addiction.”[5]

In addition to David Rebuck, several other state regulators have found the bill insulting to their pervasive efforts to work collaboratively with their fellow states and the industry to provide safe legal markets.[6] The industry has long tried to combine efforts to create a collaborative self-exclusion list, as the bill mandates.

The bill also discounts all the positive advancements the industry has made to make wagering safer by using AI – as we have previously highlighted in our Ifrah on iGaming Blog, A Positive Result of Legalized Sports Betting is Solution for Betting Corruption and Match Fixing.

The unintended consequence of the bill’s draconian restrictions on play is that it will strengthen the already present and profitable illegal offshore market. The regulated state sports betting operators have made it a key mission to make wagering safer for players by steering them off the offshore market and onto regulated books. The disadvantage to domestic sportsbooks of facing already-heavy regulation and taxation is often outweighed by the fact that they offer genuine consumer safety for their customers. However, substantial restrictions on play are likely to cause players to jump back onto the illegal platforms, since they can wager without safeguards or restrictions.

As Ifrah Law founder Jeff Ifrah stated in response to the federal legislation:

“We’ve all been looking for more help in combatting offshore gaming. Senator Blumenthal, a former AG, he’s into consumer protection measures. But to me, the number one issue is keeping people from unknowingly going to unregulated sites. Regulation gives us transparency and accountability on this site. Let’s put some money aside to deal with offshore…it’s not just about tax revenue, it’s about addiction issues that we can’t even see.”

The negative industry reaction is not the only reason why the bill is unlikely to take effect. The bill would also face legal challenges. It is viewed by many as unconstitutional, and a deliberate contradiction to the Supreme Court’s decision on Murphy. The Murphy ruling relied on an application of the anti-commandeering doctrine, under which federal laws cannot require states to take actions to implement federal policy.[7] In short, the Supreme Court established a federalism principle—not some sort of legislative gap—and as such it does not lend itself to being overturned by Congressional action. The bill could also face First Amendment legal challenges, under its protections of commercial speech, like advertising.[8]

Therefore, while seemingly well-intended, this legislation is unlikely to take effect as it is largely unsubstantiated, unsupported, and problematic under Murphy. Perhaps a better solution for federal lawmakers would be to talk first with industry stakeholders (i.e., experts, regulators, and business representatives), and to get a better idea on the industry’s issues and potential solutions, rather than imposing paternalistic and overly broad restrictions that add layers of bureaucracy to an already-regulated realm.

[1] H.R. 9590, 118^th Cong. (2024).

[2] Murphy v. National Collegiate Athletic Association, 584 U.S. 453, 138 S. Ct. 1461 (2018).

[3] See Jill R. Dorson, Not Much to Like About SAFE Bet Act, Say Industry Insiders and Addiction Advocates, iGB (Oct. 1, 2024), https://igamingbusiness.com/sports-betting/safe-bet-act-hurt-more-than-help/.

[4] Tom Nightingale, Lawmakers, Regulators, Leagues Warn of SAFE Bet Act’s Dangers, SBCAmericas (Sept. 23 2024), https://sbcamericas.com/2024/09/23/safe-bet-act-draws-concerns/.

[5] NCPG Statement on the SAFE Bet Act, NCPG (Sept. 16, 2024), found at: https://www.ncpgambling.org/news/ncpg-statement-on-the-safe-bet-act/.

[6] See Tom Nightingale, Lawmakers, Regulators, Leagues Warn of SAFE Bet Act’s Dangers, SBCAmericas (Sept. 23 2024), https://sbcamericas.com/2024/09/23/safe-bet-act-draws-concerns/.

[7] See New York v. United States, 505 U.S. 144 (1992); see also Printz v. United States, 521 U.S. 898 (1997).

[8] See Va. Pharmacy Bd. v. Va. Consumer Council, 425 U.S. 748 (1976); see also Bolger v. Youngs Drug Products Corp., 463 U.S. 60 (1983).