The state of Michigan is set to launch online gambling in some form either in late 2020 or early 2021. Like New Jersey and Pennsylvania, Michigan went the route of legalizing both online casino gambling and online/mobile sports wagering.
While it’s unclear which will come first for Michigan or if both offerings will launch together, the Wolverine State is expected to be one of the top online gambling markets in the nation, rivaling gambling handle produced by players in Pennsylvania and New Jersey.
The gambling industry has long waited for Michigan to authorize launches and the wait is almost over.
While the lawmakers crafted laws and regulators crafted regulations that are basically industry standard for problem gambling, a panel of industry experts on the topic said last week that the U.S. online gambling industry and regulators still have a ways to go to ensure a sustainable and noncontroversial future as internet betting continues to proliferate. Gambling is a highly addictive and destructive activity for many, many people, and doing it over a smartphone or computer can greatly exacerbate the risks.
The panel was part of iDEA Growth’s three-day webinar series and included Elizabeth Lanza, director for the Office of Compulsive and Problem Gambling at the Pennsylvania Gaming Control Board; Keith Whyte, executive director of the National Council of Problem Gambling; and Emma Richardson, general counsel and head of legal, compliance & regulation for White Hat Gaming. It was moderated by Jeremy Kleiman, a partner at Saiber Law.
Uniform gambling hotline, self-exclusion list
The National Council of Problem Gambling, a D.C.-based nonprofit organization considered an “advocate” for responsible play, is neutral to the expansion of gambling to the internet. Whyte called the U.S. approach to regulation in general a “laissez-faire” approach, and that’s no different for responsible gambling.
While the industry is in favor of varied state-by-state regulation as opposed to ham-handed federal intervention, there are some in the industry who would welcome some sort of federal responsible gambling regime, which could include funding to the states and various public health awareness efforts. In a damning industry study released earlier this year, the American Gaming Association found that some states aren’t even using all of their meager problem gambling funding for its intended purpose — and not every state with legal gambling has problem gambling funding at all.
And that was before the pandemic rattled state budgets. In Michigan, only a combined $1 million in additional annual funding for compulsive gambling was allocated in the two pieces of legislation authorizing online/mobile sports gambling and online casino play.
According to Whyte, states right now can’t even get on the same page with regard to a uniform problem gambling hotline, despite years of advocacy from the NCPG.
“We’re rapidly entering an age … where let’s say one of the major leagues does the right thing and promotes a helpline number on the betting advertisements that are run on a national TV football broadcast,” Whyte said. “There is a national number, most states just choose not to use it. We’re really getting ready to miss an opportunity to help operators and vendors, to help leagues and to help regulators, and most importantly help consumers, just because we have 800 jurisdictions when you add every single tribe, every single state, every single state lottery, and every single horse racing commission, and it’s been a struggle to get folks to just do the simplest things.
“What we don’t want to see is, for example … at the bottom of the ad, in two-point font: ‘In Pennsylvania call this number; in Michigan call this number; and in New Jersey call this number.’ But that’s where we are heading because, frankly, Pennsylvania probably doesn’t care very much what happens in, you know, Utah, or vice versa. It’s a big roadblock. We’ve been working on this for a couple decades. We’re closer, but it’s going to take a lot more effort by everybody, including us, to try to adopt, push towards a voluntary harmonization. … There’s no national regulator, which makes national harmonization almost impossible.”
As for a national self-exclusion list for online gambling, Whyte said he sees a likelihood of a “fractured” list that includes the bulk of jurisdictions but where many problem gamblers can slip through the cracks.
“I don’t think, unfortunately, you’ll get every state to require, nor every operator to voluntarily commit,” he said during the hour-long panel. “I think you’ll get close. I think you’ll get 90% of states, 90% of operators who will voluntarily participate in some sort of list. But, you know, technology is helping. In the online space [as opposed to a retail casino], you can get close. There are just too many jurisdictions and too many operators, and too little regulatory imperative” for a totally harmonized list.
Public education, data to monitor at-risk behavior
States could use their funds for education on responsible gambling, but perhaps a national approach to education could go a long way toward preventing at-risk behavior from taking root.
“If the first time you’ve ever heard about setting limits or randomness [in gambling] is when you are logging on to a gambling website, that’s far, far too late,” Whyte said. “That’s like saying the first time we are going to teach you about alcohol use and not driving drunk is when you sit down at a bar when you are 21.”
Part of a public health approach to problem gambling involves public access to operator data with regard to at-risk behavior, according to Whyte.
“No U.S. jurisdiction I know requires operators to do anything with the data they collect for responsible gaming purposes,” he said. “In fact, most operators make a big deal of not doing that because they want to avoid the liability. It’s a requirement in the U.K., and [U.S.] operators could voluntarily do it. I know some of the online operators have said they do, but we don’t see any results from that. We aren’t aware of any real concrete, publicly verifiable programs, so trust but verify when it comes to the potential of online responsible gambling, which is superior [to in-person gambling]. It’s just got to be put into practice, it’s got to be verified by third parties … you have to show how this is being done, and that’s been [where], I think, advocates like us will be able to come forward with our full weight. It’s just not just theory, it’s practice. We can show how it’s being done. We can show people are being protected better. We can’t do that right now.”
He urged “third party review of anonymous payments data” by gamblers to see what is going on.
“No one is going to trust the industry, either company or association, just to say, ‘Trust us, most people don’t have problems.’ That’s true, but you’ve got to show it,” Whyte said.
It’s estimated that about 2 million adults meet the formal criteria for gambling addiction, with another 4 to 6 million experiencing gambling problems. Those are relatively dated estimates, however. The figures don’t include those under 18 who may also have issues with illicit betting, as no U.S. jurisdiction allows minors to legally gamble. Sports betting ads will be consumed by minors who may become more likely to seeking out ways to bet illegally. And, of course, it also doesn’t factor in the people adversely impacted by a loved one with a gambling problem.
In March, not long after the pandemic struck, the NCPG was already aware of the potential impacts that COVID-19 could have on problem gambling, due to isolation and financial strain. Through the first eight months of 2020, New Jersey online casinos/poker platforms won or raked $597.97 million from gamblers, a greater than 100% increase in a year-over-year comparison. Through the first eight months of 2019, online gaming win was up only about 56% in a year-over-year comparison.
Those figures don’t include online/mobile sports wagering in the Garden State.
The point of iDEA Growth’s panel is to start trying to prevent the U.S. problem gambling rates from increasing significantly due to online gambling’s proliferation. At this stage in the game, it doesn’t appear the industry and regulators will be successful on that front, unless major advances are made.