Courts throw open American gambling doors but socially conscious demands increase

It’s been an eventful few weeks for the big players in the gambling industry. Back in May, the United States Supreme Court ruled 6-3 to strike down the federal prohibition on gambling on the outcome of sporting events, paving the way for sports betting to take the United States by storm.

And don’t be surprised if it does.

The American Gaming Association estimates that Americans are already so fond of a punt that there is a black-market worth at least $150 billion annually on sports betting alone. Coupled with the size of the sport crazy US population, it’s little wonder that the major players in the gambling industry on this side of the pond have been preparing for this moment for some time.

Take Paddy Power Betfair; revenues for last year at its US division were up 15per cent to £109 million and a succession of moves in recent years leaves it well positioned to take advantage of the Supreme Court ruling. In the United States, Paddy Power Betfair (PPB) owns TVG, the nation’s leading horse racing TV and betting network; the Betfair Exchange in New Jersey; fantasy sports platform DRAFT and, as of late-May, an additional fantasy sports site, FanDuel. It’s no wonder then, that the PPB share price has recently risen to its highest point in well over a year.

 

Controversial machines

However, for some in the industry, there is a feeling that despite one door being thrown wide open, another has been slammed shut. This is the result of the UK Government’s decision to limit the maximum stake that can be placed on Fixed Odds Betting Terminals (FOBTs) to £2 in the UK.
High street bookmakers, reliance on such controversial machines is clear. Forbes reported that a reduction in betting stakes to £2 could cost some companies as much as £449 million next year. Just one of several mistakes that the industry would be well advised to avoid as it enters the United States market.

Gambling companies have an opportunity to profit significantly from the US Supreme Court’s decision, learning from some of the developments in the UK market. Given the trail set by the UK, and the price that market is now paying as a result of negative social implications and regulatory updates, the US market now presents an opportunity to build a socially conscious, sustainable business model for the provision of sports gambling services.

Should business models be developed with the intention of averting negative social outcomes, and the associated publicity, this will future-proof the US sport gambling market from potentially damaging regulatory challenges in the future.

In fact, given the lessons learned in the UK, many would argue it is their responsibility to ensure that they enter the US market in a way that stresses the importance of responsible and transparent sports gambling.

 

Guessing game

While the US Supreme Court struck down the federal ban on sports betting, it is up to individual States to draft, pass and implement the relevant legislation required to define this new market.

 

Ensuring that everyone who gambles, does so in full awareness of its risks

 

Just how long it takes them is really a guessing game. Nevada, New Jersey and Delaware are already there, while there are moves towards legalisation underway in 20 or so other states. Through their engagement with legislators, the industry can inform and influence US sports gambling policy in a positive way.

This means putting their money behind extensive responsible gambling protocols and services to help those suffering from problem gambling or addiction. It means avoiding situations whereby misconceptions can be made regarding marketing campaigns that have been the hallmark of the industry in the UK and Ireland – particularly towards soon-to-be-eligible customers such as teenagers – and instead focusing on educational and awareness campaigns in partnership with State governments and the sports leagues themselves.

This would go some way towards ensuring that everyone who gambles, does so in full awareness of its risks.


Regulatory control

Closer to home, demands for stronger regulation of the Irish gambling industry continue to be made, with the gambling sector increasingly acting as a centrepiece of some fierce debates calling for tighter regulatory control.

Next month will mark five years since the Fine Gael-Labour Government published the General Scheme for a Gambling Control Bill in July 2013, the first step towards a Bill which would modernise Ireland’s legislative framework for all types of land-based and online gambling, repealing and replacing the existing 50-year-old rules from 1931 and 1956.

However, with no movement on the Scheme since 2013, opposition party Fianna Fáil brought forward their own piece of legislation to the Dáil last month, in an attempt to force the government’s hand and make progress in the sector.

Crucially, the Government did not oppose the proposed bill when it was debated in May, a move which would have been somewhat controversial given how similar it is to their own 2013 General Scheme. However, they stressed that they do intend to introduce their own revised gambling legislation before the end of the year, along with a separate Gaming & Lotteries (Amendment) Bill, to update certain areas of outdated gaming legislation from 1956, such as raising the monetary limits on stakes and prizes for gaming machines.

 

Gambling legislation

However, no deadlines for the introduction of the full Gambling Control Bill have been set so it is unclear as to how likely this will be, particularly given how far down the list of priorities this legislation is in a Department hampered with policing, courts and immigration issues.

So, in the space of months, from a time when gambling legislation appeared to be off the table entirely for the current government, there are now three pieces of legislation either on the legislative agenda, or promised as soon to be.

A crucial period for those attempting to influence what gaming and gambling in Ireland will look like in the future.


Joe Bishop is a senior account manager at Hume Brophy in Dublin