Legal Expert Kate Pokorski Weighs in on US House Bill to Ban Sportsbook Advertising
Gambling.Re interviews Kate Pokorski on the implications of US House's Betting on Our Future Act banning sportsbook advertising on FCC media platforms
In a move that could have significant ramifications for the gambling industry, the US House of Representatives has introduced a new bill that seeks to ban all forms of sportsbook advertising on media platforms under the jurisdiction of the Federal Communications Commission (FCC). The proposed legislation, known as The Betting on Our Future Act, is modeled after the Federal Cigarette Labeling and Advertising Act, which outlawed tobacco advertising in the US back in 1965. If passed, any violation of the ban would be deemed a violation of the Communications Act of 1934.
To shed more light on this development, Gambling.Re spoke to Kate Pokorski, an attorney at Snell & Wilmer, Phoenix AZ, who specializes in gambling and sports law.
We asked Ms Pokorski about the current trend towards online sports betting regulation and legalization affecting the future of the industry.
KP: So far, the biggest story of 2023 in legalized sports betting is advertising regulations. There seems to be a consensus among key industry players and United States government regulators that the advertising status quo needs to change. The question, however, is to what degree. Right now, state, and potentially federal, legislation is a spectrum of restrictions. For example, Ohio law has prohibitions addressing narrow issues. Ohio sports betting rules and regulations do not allow sportsbooks to advertise promotions as “free bets” or “risk-free” when customers are required to bet their own money first. Ohio law also prohibits sports betting companies from advertising to people younger than 21, the legal age to place sports bets there. Where Ohio’s legislation targets predatory behavior, more expansive measures have been introduced at the federal level. In this regard, “Betting on Our Future Act” federal legislation has been introduced by New York congressman Paul D. Tonko. The Act seeks to prohibit the advertising of sportsbooks on any medium of electronic communication subject to the jurisdiction of the Federal Communications Commission, and for other purposes. Congressman Tonko takes the position that the advertisements are excessive and a dangerous threat to adolescents and young adults, and to individuals prone to addiction—a common sentiment among regulators.
What these restrictions mean for the business of sports betting is a limiting one of the industry’s primary vehicles for customer acquisitions—traditional advertisements. Sports betting and betting-adjacent companies likely need to undertake more self-policing to proactively address consumer protection policy concerns such as advertising to a younger audience and
representation of “free bets”. This shouldn’t be a difficult undertaking if the industry players reflect on how the oversaturation and substance of sports betting advertisements in the U.K. led to a serious crack-down on advertisements. After the U.K.’s Gambling Act 2005 came into force, there was a significant increase in advertisements, including those containing the all too familiar “risk free” language. As a result, the U.K.’s regulations evolved to touch on more areas of advertising than those covered in the Betting on Our Future Act. Gambling operators advertising to British customers must comply with both the Broadcast Committee of Advertising Practice Code, covering all adverts and program sponsorship credits on radio and television and the Committee of Advertising Code, applying to non-broadcast adverts, sales promotions, and direct marketing communications. If the U.S. sports betting operators don’t take it upon themselves to reign in advertising, there’s real potential for similar federal laws to move forward in the States.
We asked Ms Pokorski her expert opinion on the potential impact the Betting on Our Future Act may have on the relationship between sports leagues and the sports betting industry.
KP: The Betting on Our Future Act is a very short bill with, if passed, big implications. Given the brevity of the bill, there is a lot open to interpretation. Notably, it does not define “advertise.”
The bill’s sponsor says that it is modeled after Federal Cigarette Labeling and Advertising Act, which banned tobacco advertising—and was successful in doing so. That regulatory framework, however, was crafted before the Instagram era and before professional sports teams had in-arena sports books. Sports betting has engrained itself in the sports industry in a way that may require leagues, teams, the betting companies, and the athletes themselves to come to the table to make these “what is advertisement?” judgment calls.
Very quickly, sports betting became a principal sponsorship category for professional sports teams and leagues, even extending into states where the practice isn’t legal. This brings into question how this ban may impact existing sports sponsorship agreements. For example, whether simply mentioning an in-arena sports book establishment on-air (as opposed to saying “place your bets at ‘X’ sportsbook”) constitutes an “advertisement” is an exercise of risk allocation that teams, leagues, and the sports betting companies will have to navigate together. If sponsorship agreements do not include language to address this hypothetical and similar scenarios, then all parties involved likely will need to come to a common resolution despite competing interests.
We also discussed the potential unintended consequences of a federal ban on sports betting advertising that the industry should be aware of.
KP: With any sweeping piece of legislation, lawsuits are inevitable. Even though legalized sports betting is only a recent development in the United States, the tension between regulators and the gaming industry over advertisements has been playing out for decades. There is United States Supreme Court precedent dating back to 1993 addressing federal legislation that generally prohibited the broadcast of lottery advertisements. See United States v. Edge Broad. Co., 509 U.S. 418, 113 S. Ct. 2696, 125 L. Ed. 2d 345 (1993) (discussing the constitutionality of Title 18 U.S.C. § 1304). That advertising legislation was slowly chipped-away by exemptions and inconsistencies, in part stemming from First Amendment challenges.
If the Betting on Our Future Act passes, similar First Amendment challenges from a variety of stakeholders may be pursued. Speaking at a high-level, if there is a First Amendment challenge to a government restriction on commercial speech, a court likely would examine the following: (1) whether the speech at issue concerns lawful activity and is not misleading; and (2) whether the asserted governmental interest is substantial; and, if so, (3) whether the regulation directly advances the governmental interest asserted; and (4) whether it is not more extensive than is necessary to serve that interest. Undoubtedly, a range of stakeholders—from influencers who have a sports betting partner to a professional sports league—will likely question whether an outright ban directly advances a governmental interest, and if such a ban is more extensive than necessary to serve this interest.
The aforementioned legislation banning lottery advertisements was eventually held unconstitutional by the Supreme Court, as applied to advertisements of lawful private casino gambling that were broadcast by radio or television stations located in Louisiana, where such gambling was legal. See Greater New Orleans Broad. Ass’n, Inc. v. United States, 527 U.S. 173, 173, 119 S. Ct. 1923, 1925, 144 L. Ed. 2d 161 (1999). In reaching this decision, the Court acknowledged that, in the judgment of both Congress and many state legislatures, the legitimate social costs supporting the suppression of gambling are offset, and sometimes outweighed, by countervailing policy considerations, primarily in the form of economic benefits. Both the industry and the regulators should be aware of this historical clash when rolling out advertisements, in the case of the industry, and in crafting broad legislation, in the case of regulators.
Responses were prepared by Kate Pokorski, Snell & Wilmer, Phoenix AZ. Kate is an attorney in the firm’s Corporate and Securities practice group, as well as the Gaming Services and Sports and Entertainment industry groups.
Ms Pokorski’s insights into this proposed legislation provide valuable guidance for those in the industry. As the debate over the Betting on Our Future Act continues, it will be interesting to see how this plays out and the impact it could have on the future of sports betting advertising in the US.