Since the U.S. Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) in 2018, effectively paving the way for states to legalize sports betting, 38 states have either launched or legalized sports betting in some capacity.

A Glimpse into the Sports Betting Landscape

Sports betting has a long and complex history in the United States, from colonial American lotteries and 19th-century horse racing to the feverish market we find today. Since the U.S. Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) in 2018, effectively paving the way for states to legalize sports betting, 38 states have either launched or legalized sports betting in some capacity.

Soaring Revenues and the Advertising Onslaught

As the taboo surrounding sports betting has diminished, the money has come flying in. According to the American Gaming Association, the sports betting market enjoyed a $93.2 billion handle in 2022, a new record in the industry. [1] The increase in handle led to a $7.5 billion revenue mark, an astonishing 72.7% YoY bump from 2021. [2] A rise in sports betting advertising has accompanied the rise of sports betting. If you are watching a sporting event on TV, it’s nearly impossible to avoid sports betting commercials. Sports betting operators are spending big to make sure of that. BIA Advisory Services predicted operators would spend $1.8 billion on sports betting and online casino advertising in 2022. From September 2021 to May 2022, US sports betting operators spent an estimated $282 million on TV ads. This generated over 18 billion impressions. [3]

The Complex Relationship Between Sports Betting and Advertising

Goodbye “Free Bets”

The term “free bet” likely has no place in said advertising sweet spot. Promoting bets as “free,” “free of risk,” or “cost-free” was commonplace in states entering sports betting as operators looked to attract patrons to their platforms. However, such promotions have been categorized as misleading, as bettors are often required to deposit and risk their own money to access them and must follow specific terms to access platform-specific credits, which then must be used to wager and cannot be withdrawn.

Ohio and Massachusetts Take the Lead

Ohio and Massachusetts, two states that launched sports betting at the beginning of 2023, bucked this trend and prohibited the use of such promotions. Ohio demonstrated its commitment to eradicating this practice by handing out several fines to operators only days after its January 1st launch for using the words “free” or “risk-free” in advertisements. Ohio’s strict advertising stance certainly did not hurt their launch either. Between midnight January 1st and midnight January 2nd, 11.3 million geolocation transactions were detected in Ohio, outdoing New York’s previous record of 9.3 million transactions in the same time frame.

New York and Pennsylvania, two states that account for almost 20% of all sports betting handle in the U.S., have also banned the use of the term “free bet” in advertising

Established States Follow Suit

Such restrictions should not be, and are not, limited to states that are new to sports betting. States already dominating the sports betting landscape have taken notice of this issue and have adjusted accordingly. New York and Pennsylvania, two states that account for almost 20% of all sports betting handle in the U.S., have also banned the use of the term “free bet” in advertising. Many Pennsylvania sports betting operators had already opted to use alternative wording for their promotions, such as “no sweat” bets, before the Pennsylvania Gaming Control Board (PGCB) announced the prohibition. Such adaptability signifies sportsbooks and regulators’ ability to dial back rather than implement extreme measures and proves that the industry can work together to resolve these issues collectively.

Advertising on Campus

Specific vocabulary is not the only aspect of sports betting advertising under enhanced scrutiny. Colleges, both their students and campuses, also find themselves at the center of discussions around sports betting advertising. In terms of wagering, jurisdictions vary greatly in their restrictions, if any, on college sports betting. The restrictions range from prohibiting betting on in-state colleges to prohibiting prop bets on college sports to outright bans on any college sports betting.

The Role of State Regulators

Despite the lack of uniformity around wagering on college sports, every jurisdiction in the U.S. is committed to prohibiting advertising that targets underage individuals. Yet several states have permitted universities to enter million-dollar partnerships with online sportsbooks to promote their platforms around campuses and offer bonuses to college students. The appropriateness of such partnerships has been questioned by many. State regulators have demonstrated the ability to take corrective yet measured action. The New York State Gaming Commission (NYSGC) is a prime example. Following a noticeable increase in calls to the NY Council on Problem Gambling, specifically by “moms of college-age students”, the NYSGC unanimously passed proposed regulations that would eliminate sports wagering from being promoted in college-owned news assets or advertised on college campuses. Even though the regulations remain in the comment period, operators and universities took notice and were proactive in their approach. All partnerships in New York between sportsbook operators and colleges/universities have since been terminated.

Revenue-sharing marketing affiliates attempt to achieve the same goal as CPA marketing affiliates but are instead compensated based on a percentage of revenue generated by the operator.

Rev-Sharing Marketing Agreements

The NYSGC is not the only regulator to demonstrate adaptability and the willingness to compromise. The Massachusetts Gaming Commission (MGC), fresh off its online sports wagering launch six months ago, has been at the forefront of tight sports betting advertising regulations. Even so, they’ve proven amendable. A major concern for the MGC was the use of CPA and rev-sharing marketing affiliates. CPA marketing affiliates enter into agreements with operators in which the affiliates are compensated a fixed amount per patron that signs up with the operator via the marketing affiliates’ websites. Revenue-sharing marketing affiliates attempt to achieve the same goal as CPA marketing affiliates but are instead compensated based on a percentage of revenue generated by the operator. The MGC feared such agreements, which are commonplace in the sports betting industry, would lead to a flood of advertising and predatory marketing that prompts individuals to bet more than they should. The concern was significant enough for the MGC to originally prohibit such marketing affiliates from operating in the Commonwealth before granting a temporary waiver. However, after several lengthy meetings on the topic, the MGC decided to allow CPA marketing affiliates but prohibit the use of rev-sharing marketing affiliates. The MGC welcomed testimony and evidence from marketing affiliates and operators regarding the benefits of CPA and rev-sharing marketing affiliate agreements. The highlighted benefits include limiting black market betting, providing additional avenues to promote responsible gaming messaging to consumers, and a way to focus marketing to those interested in sports betting rather than mass marketing to all consumers.

Striking the Right Balance in Sports Betting Advertising

As sports betting continues its monumental growth and becomes a norm across the U.S., adjustments to how it is advertised and who it is marketed to will be paramount to its future success. However, it is vital that these adjustments are calculated and avoid overreaching changes that fail to properly address the issues at hand. State regulators and sportsbook operators have demonstrated how to appropriately address these adjustments. Federal interventions and absolute bans on sports betting advertising are not the answer. Continued collaboration between state regulators and operators to fine-tune advertising practices must be fully embraced.