U.S. Compulsive and Problem Gaming – Another Patchwork

When European countries come to the U.S. to participate in iGaming or sports betting, they are often shocked about the invasiveness of U.S. regulators. Renowned gaming attorney and former regulator Susan Hensel (l.) explains why it happens and how to deal with it.

U.S. Compulsive and Problem Gaming – Another Patchwork

One of the first doses of reality that a foreign company experiences when it undertakes efforts to enter the U.S. gaming market is the realization that there is no such thing as a U.S. gaming market. Instead, companies quickly come to understand that the United States is a patchwork of state gaming jurisdictions with different regulatory models. This is true in terms of market access, taxation, licensing requirements and many other aspects of the business.

Companies coming from other parts of the world are frequently surprised by the rigors of certain areas of state gaming regulation. For instance, applicants can be caught off guard by the emphasis placed on suitability and the depth of required disclosures and background investigation needed to satisfy regulators that the applicants possess the requisite character, honesty and integrity to participate in the industry.

Another surprise is the approach taken to compulsive and problem gambling. Not only do foreign operators find the U.S. lacks uniform problem gambling standards, but they also discover a broad variance in overall attention being paid to the issue.

For European sports wagering operators, the markets in which they have experience are often more mature and tend to impose stricter problem gambling controls than are present in the U.S.

France, Italy, Spain, Australia and the Netherlands are among the latest countries to crack down on advertising and anti-player protection practices. In some cases, the industry has been the target of increased regulatory scrutiny after public reports of compulsive and problem gambling failures. The U.K. is a prime example, with numerous steps taken or under consideration to curb gambling addiction, including the banning of credit card use, a mandatory levy on industry revenues to fund addiction treatment and tougher affordability checks.

By comparison, the U.S. sports wagering business is still in its relative infancy and, depending on where you look, its focus on compulsive and problem gambling reflects its short track record. Requirements to identify, discourage and assist problem gamblers are not always robust. For instance, four jurisdictions that offer sports wagering and nine states overall do not allocate any money for problem gambling services. One jurisdiction, Washington D.C., recently removed funding for problem gambling from its annual budget. While some states require the inclusion of the national 1-800-GAMBLER hotline on marketing materials, others do not. Some states have yet to implement self-exclusion programs, and others allow sports wagering at the age of 18.

By contrast, approximately 10 states require operators to submit a compulsive and problem gambling plan with their initial licensing applications. Some states have imposed large fines for responsible gambling failures. At least one state requires online operators to analyze player tracking data to identify at-risk activity. Some states have adopted comprehensive responsible gaming frameworks, while others have revamped their self-exclusion programs to eliminate friction in the registration process. Several state gaming authorities have designated a staff position to handle issues impacting problem gambling initiatives.

Why is problem gambling treated so inconsistently? One argument is that the U.S. does not sufficiently prioritize problem gambling as a health and wellness issue. The federal government does not recognize problem gambling as an addiction eligible for resources and treatment through the Substance Abuse and Mental Health Services Administration.

Instead, states take the lead on problem gambling funding, education, research, treatment and prevention efforts, with the gaming regulator and the healthcare and treatment communities all playing a role. The result is that the commitment to and accomplishment of efforts are all over the map.

Another factor is the speed with which sports wagering has been launched nationwide. While the spread of land-based gaming was decades in the making, sports wagering has been authorized in nearly 40 U.S. states in a matter of years. Once authorized, pressure to open has driven some jurisdictions to launch sports wagering based more on the NFL calendar than on methodical preparation by regulators and this haste has, in some cases, resulted in problem gambling concerns being an afterthought.

There is also the tightrope the gaming regulator must navigate as both industry supporter and public protector. A gaming regulator’s fundamental responsibility is to create a sustainable industry to ensure the policy goals that underpin a jurisdiction’s authorization of gambling, such as tax generation, job creation and economic development, are achieved over the long term. The regulator is a stakeholder in the success of the industry. At the same time, the regulator must also protect the integrity of gaming and that includes protecting the vulnerable. With day-to-day interaction with the industry part and parcel of the job, the voice that is often loudest in the regulator’s ear is the industry’s, not the small percentage of players for whom gambling is a problem.

The U.S. is still at the beginning of its experience arc with sports wagering. Other countries are on the backend of that curve and are working to address the problems that have arisen along the way. Some operators have paid attention and gotten proactive about problem gambling and are funding and creating their own above-and-beyond programs to target the issue. Others are strictly following the rules as written and doing no more and no less than what is required of them.

But as has been witnessed in parts of the world without sufficient controls for problem gambling in place, stories about the negative impact gambling is having on young people, athletes and other individuals who have gotten in over their heads have the potential to lead the U.S. down the same path of course correction. With the shine of the early days of sports betting’s availability beginning to wane, a period of reassessment about what is and what is not working is already underway.

Some states and the American Gaming Association have now taken action against promises of “guaranteed wins” or “risk-free” bets. Concerns about too much sports betting advertising and the appropriateness of ad placement have led to limits being considered or imposed by state and federal lawmakers and some regulators. Colleges and universities are also taking a closer look at the impact sports wagering has on their athletes and the integrity of their sports programs. While no one has a crystal ball for where the U.S. sports wagering problem gambling journey will lead, it is inevitable that the future will not be the status quo.

Articles by Author: Susan Hensel

Susan Hensel is co-founder of Hensel Grad P.C., a law and consultancy firm focused on gaming clients. Hensel is the former director of licensing for the Pennsylvania Gaming Control Board and the former two-term president of the International Association of Gaming Regulators. Susan has spoken around the world on gaming law and regulation. All opinions expressed are hers alone.