The Current: What We Should Do About Increased Searches For 'Gambling Addiction'
Gambling news today: One sweepstakes casino leaves all states with regulated online casinos; Illinois sends C&Ds to more offshore, fantasy sites; DraftKings seeks to raise $500M via loan
I am going to dig a little more into an item in yesterday’s newsletter: we got a study from the Journal of the American Medical Association Internal Medicine that took a closer look at an increase in searches related to gambling addiction in the short history of expanded legal US sports betting.
What this newsletter is not going to be about: Saying that we should dismiss the research or the idea of increased problem gambling and addiction!
What this newsletter is going to be about: What we can do — that’s not prohibition — that is sensible.
As soon as I saw the study and the initial few stories written, it was easy to tell this was going to be “a thing.” There is now wall-to-wall coverage of the study in mainstream and more niche media outlets. Some are doing a good job with covering it (here’s a balanced piece from NPR, for example).
Some are just not even reading it and saying that “gambling addiction has soared,” when that’s not actually what the data says. (I am looking at you, New York Post):
It continues a recent trend of media outlets finding myriad ways to decry legal sports betting, some of which the industry deserves, some it doesn’t.
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There is a bit of pushback from at least one corner: Reason.com, which published this piece:
“Some of the paper's suggestions are reasonable, such as ensuring a larger share of the tax revenue from legal sports betting goes to gambling addiction services. Others, such as limiting how much you can bet, could result in bettors swapping legal apps for offshore betting sites. But in sum, its results shouldn't be used as an excuse for a regulatory crackdown that would breathe new life into the illicit gambling market.”
I would agree with the takeaway in large part. Here are things I would love to see on the heels of this study:
Divert money from state-level gaming proceeds to supporting resources and groups that work on gambling addiction, responsible gambling efforts, etc. In the rush to legalize sports betting, very few states did enough on this front while opening up their jurisdictions to regulated online gambling. It’s not too late to fix that. Even before sports betting, the amount of spend and resources devoted to helping people on the gambling front has been de minimis. That’s despite the fact that there has been a huge increase in the number of regulated and unregulated gambling options available to Americans in recent decades.
Pass the GRIT Act. Probably never going to happen for myriad reasons, but we can dream. For one, the gambling/sports betting industry would like to see the federal excise tax go away rather than continue to pay a quarter of a percent tax on all handle. And it’s hard to blame them. But sending half the money from that tax to gambling addiction treatment and research would be a win. It would take care of one of the major pain points for the optics of the sports betting industry in one fell swoop. And more importantly, it would help a lot of people! More from the National Council on Problem Gambling on this front.
Somehow figure out how to rein in sports betting advertising. Almost everyone hates sports betting advertising. (Okay that’s not very scientific, and probably not true, but it’s the narrative that exists in the world.). At the same time, I am sure sports betting advertising is very effective. But there has to be some middle ground between what we have today — getting beat over the head with sports betting live reads, in-game and pregame promotions, commercials during breaks, etc., — and absolutely nothing. I don’t know how we get to that middle ground, but I think it’s incumbent upon the industry to figure out how to lessen its footprint in promoting itself before someone does it for them. The American Gaming Association reported last year that the amount of advertising has been decreasing. But I have to say as an end user it still feels pretty prevalent. Will this actually help problem gambling and addiction? Well, it certainly can’t hurt, either optically or in reality.
For the love of god, please acknowledge that legal sports betting doesn’t exist in a vacuum. FanDuel, DraftKings, and the rest of the regulated sports betting industry get all the smoke. But here’s a quick audit of other stuff that you can use to bet on sports, in some cases in 50 states(!), that operates under little or no substantial regulation. How much problem gambling and gambling addiction is manifesting from any of these sources? Who knows! I am a broken record on this front, but I am going to keep beating everyone over the head with it until I am dead, or at least until I get a 100% open rate on my newsletters:
Offshore sportsbooks (and casinos). Everyone I guess knows these exist, but at the same time major media outlets still routinely promote them, lap up their PR, etc. Dozens of affiliate marketing sites will gladly send bettors to these sites. The next time I see someone write about problem gambling from the perspective of offshore sites, it would be the first time.
Kalshi/prediction markets. I can bet on all sorts of sports at Kalshi right now, including the 4 Nations hockey final, a bunch of college basketball tournaments, etc. Yes, this is not a major source of gambling addiction or problem gambling right this second, but if it continues to expand in all 50 states and add more and more markets, it will be soon. Also, here’s a shameless plug to subscribe to my prediction markets newsletter.
Daily fantasy sports. I am talking mostly about DFS 2.0 (fantasy pick’em against-the-house apps such as PrizePicks, Underdog, et al) here. This may very well all be legal fantasy sports and/or a legal game of skill in dozens of states, but it’s unquestionably also gambling. These apps have a huge footprint — far more states than legal sports betting — and are also being downloaded and used by tens of millions of Americans. Again, very little is ever said about problem or responsible gambling in the context of DFS (and that includes DFS 1.0, the original games from DraftKings and FanDuel.) Underdog at least puts some of its money where its mouth is.
Sweepstakes sportsbooks. I am sure some people will yell at me for including sweeps on this list. And while plenty of people use it for free, there is some cohort of people using sweepstakes as a proxy for real-money gambling. Don’t shoot the messenger — here’s a video and a Twitter thread that lay out how the end user can use sweeps sites to do this.
The reality: There’s definitely more gambling addiction out there with the rise of legal sports betting. Whether it’s in direct correlation to how much more people are searching for it is up for debate. But what we can do is try to help people who need help — whether they are gambling on sports at the legal sportsbooks or somewhere else.
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Gambling news today
Sweepstakes casino leaves several states (The Closing Line): High 5 Casino is apparently no longer serving a number of states for sweepstakes play after an update to its terms and conditions.
Here’s an excerpt of an email sent to Pennsylvania users by High 5: “We regret to inform you that High 5 Casino will be discontinuing service in Pennsylvania. This transition will occur in two phases:
1. February 18, 2025: New player accounts and purchases will no longer be available to Pennsylvania residents.
2. March 14, 2025: All existing Pennsylvania player accounts will be permanently closed.
Existing players can continue to play and redeem until March 14, 2025, but purchases will no longer be allowed starting February 18, 2025. These changes apply to Sweeps play only. Classic mobile play will continue to be available in Pennsylvania.”
The states that now appear in the T&Cs that did not previously include: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia. It’s likely not a coincidence that these states also have legal online casinos.
The move comes as VGW brands (ie Chumba Casino, Global Poker) decided to raise the age for play to 21.
Illinois regulators target 11 sportsbooks and fantasy sites (SBC Americas): “Working with the Illinois Attorney General’s office, the Illinois Gaming Board (IGB) sent 11 cease-and-desist letters earlier this month to operators it believed were in violation of state gaming law.” Here is the list, in addition to the previously reported letters to Bovada and PrizePicks, per SBC:
Bet Any Sports
Bet Online
Bet US
Blitz Studios, Inc. d/b/a Sleeper
Book Maker
Taild Sports Inc. d/b/a Chalkboard
Drafters
Heritage Sports
Parlay Play
It’s an interesting mix of some of the larger offshore and fantasy parlay/pick’em sites and apps available to Americans. Sleeper, Chalkboard, Drafters and Parlay Play all allow users to parlay player performances against target scores.
While it had seemed that fantasy pick’em had settled into a state of equilibrium in terms of regulatory action, Illinois likely leads the industry to wonder if there is still more to come.
Light & Wonder Announces Strategic Acquisition of Grover Gaming’s Charitable Gaming Assets (press release): Light & Wonder, Inc. today announced that it has entered into a definitive agreement to acquire the charitable gaming assets of Grover Gaming, Inc. and G2 Gaming, Inc. for total consideration of $850 million cash, subject to customary purchase price adjustments, and a four-year revenue based earn-out of up to $200 million cash. … Privately owned by Garrett Blackwelder, Grover Charitable Gaming has an installed base of over 10,000 leased electronic pull-tab units across five U.S. States (ND, OH, VA, KY, NH) operating under a recurring revenue model.”
DraftKings Announces Launch of $500 Million Term Loan B Facility (press release): “DraftKings intends to utilize the net proceeds of the Term Loan B for general corporate purposes.”
DKNG stock was down to $51 from highs of above $53 that hadn’t been reached since 2021.
Fitch rated DK for the first time and issued a BB+ rating for its Long-Term Issuer Default Ratings. Fitch defines BB ratings as indicating “an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.”
Gambling newsletter roundup
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Love your analyses, Dustin. Thank you for your good work in the gambling space. Your tag, "For the love of god, please acknowledge that legal sports betting doesn’t exist in a vacuum" could also read, "please acknowledge that $2 billion/yr spent promoting legal OSB is a key driver of the growth of illegal gambling." Advertising needs addressed, as you note.