In its quest to leverage its database of existing sports merchandise customers, Fanatics recently ran a promotion in which it offered betting credits equal to the money spent in its online store as long as customers signed up for the Fanatics Sportsbook app.
The Ohio Casino Control Commission (OCCC) thought otherwise, and told Fanatics to shut the promo down, another in a series of unacceptable promos since the state’s market went live January 1.
On May 19, the company confirmed to PlayOhio that the promotion was scuttled as requested. The OCCC provided PlayOhio with the following statement:
“Fanatics has ceased the promotion in question. The Commission appreciates Fanatics’ attention in this matter.”
The way the online retailer set up the logistics of the promotion, it would have appeared in front of those under 21 if they purchased something, a clear violation.
Had that happened, the app would have prevented an underage person from signing up thanks to the state’s Know Your Customer regulations that require verification of a user’s age and identity.
The bet credits are apparently not illegal, but the exchange on behalf of merchandise may be.
There are two specific rules:
- That responsible gambling messaging has to be on every ad and that it has to be “conspicuous.”
- That “free bets” or “risk-free” promotions are misleading if they require the user to risk any of their own money.
Ohio’s law states: “Promotions or bonuses described as free or risk-free must not require the patron to incur any loss or risk their own money to use or withdraw winnings from the free wager.”
Ohio sportsbooks have switched to the language of “bet credits,” not “free bets” in ads.
In general, Ohio sportsbooks have largely adhered to the state’s responsible gambling rules and advertising regulations, but there have been a few missteps along the way.
The state has fined sportsbooks more than $1.29 million so far, with big-name operators like DraftKings, Caesars, BetMGM and Barstool paying six-figure fines each.
On May 1 Fanatics opened its sportsbook to select users in Ohio via its retail customer database. The company then purchased the U.S. operations of PointsBet Sportsbook on May 14. PointsBet is active in 14 states, including Ohio. In March, PointsBet took over $5.6 million in bets in Ohio, which ranked ninth among the state’s 17 online sportsbooks to report revenue that month.
The promotion was pointed out by responsible gaming advocate Jamie Salsburg via Twitter. Salsburg tweeted a screenshot that a $29.99 hat purchase would yield a $29.99 bonus bet; the Fanatics’ promotion included the following message:
“We’re matching your eligible purchase as a Bonus Bet to use on the Fanatics Sportsbook app. New Fanatics Sportsbook accounts only. One per account. Cannot be combined with any other offer. 21+. Ohio only. See offer terms. Gambling problem? Call 1-800-GAMBLER.”
The OCCC did not expound on the matter when asked a follow-up question by LSR.
Fanatics has been open about its intentions to cross-sell within its platform.
“We believe that long-term, even today, we have an advantageous customer-acquisition model,” Fanatics Betting & Gaming CEO Matt King told LSR earlier this month. “ … And ultimately we think that the best product and the best rewards program will win. And we think that when we deliver those two things combined, with our acquisition model, we can be No. 1 in 10 years.”
Wishful thinking?
“If you know one thing about Fanatics, don’t underestimate CEO Michael Rubin.”
On the topic of states, you would think Fanatics’ purchase of PointsBet would come with automatic entry into the lucrative New York marketplace, Except it won’t. No rubber stamping here.
New York State Gaming Commission (NYSGC) Executive Director Robert Williams said there will be no transfer of a license in the state if and when the Fanatics-PointsBet deal closes. Rather, Fanatics wants to become the new owner of the PointsBet-related entity that holds the New York license.
“The transaction itself requires staff review, and Fanatics will begin the process of the background investigation of it, its related entities, and persons who are designated as qualifiers,” Williams told Covers. “Published reports indicate that they have a goal of the start of the upcoming NFL season for Fanatics to assume control of the PointsBet entity, with PointsBet anticipating a shareholder vote on the deal in late June.”
Williams added that he is recommending consideration of the transaction at the commissioner level, given that Fanatics is new to the state’s gaming market and the scope of the deal.
“New York’s casino-gaming statute generally prohibits agreements in which the payment of any direct or indirect interest, percentage or share of any money or property gambled at a gaming facility, any money or property derived from gaming activity, or any revenues, profits or earnings of a gaming facility,” a memo to the gaming commission explained. “Fixed-sum compensation is permitted.”
NYSGC Chair Brian O’Dwyer said the most recently proposed rules would allow for third-party marketing. He added that he will watch closely over the next six months to see the effects of that marketing.
“If I find that within the next six months to a year that there have been significant problems with the type of advertising that’s coming down, I will come back to the staff and to my fellow commissioners and ask that we revisit that rule and prohibit third-party advertising,” O’Dwyer said during Monday’s meeting.
