The Casino Control Commission of the State of Ohio recently imposed more than $800,000 in fines on sports betting companies. Two of the biggest violators were some of the biggest players in the industry. DraftKings illegally claimed bettors could make “free” bets and sent 2,582 ads to residents under the legal betting age of 21, urging them to download its mobile app and claim $200 in free bets.
Penn Entertainment, which runs Barstool, was fined for promoting its mobile sports betting app in a college football show despite the ban on advertising to people under the legal age of 21.
Both the above companies lost millions of dollars in fines and faced legal action. Compliances, when not followed, can result in major losses for sportsbooks and sports betting operators. However, compliance also protects these operators from losing credibility and business because laws maintain fairness in the industry, while safeguarding both players and operators.
Is sports betting a form of gambling?
Is sports betting gambling? Yes and no. Sports betting, unlike gambling, involves a significant skill in terms of knowledge of the sports: player statistics, tournament statistics, historical data, analysis etc. In this context, sports betting is not gambling but a conscious form of betting that’s done on something known. However, because it does involve putting bets, it is a form of gambling.
When it comes to compliance, there are many regulations and laws related to both gambling and sports betting in different countries. Sports betting is provided by sportsbooks that are companies or individuals who accept bets.
Sportsbooks can be brick-and-mortar retail centers or mobile applications or websites.
The legality of sports betting in different states in the US
Currently, 39 states and the District of Columbia have legalized sports betting in the United States. Out of these, 22 allow online and mobile sports betting. There are 10 states that either do not have the laws or are considering legalizing sports betting. These states are Alabama, Alaska, California, Idaho, Kentucky, Maine, South Carolina, Texas, Utah, and Vermont.
Laws legalizing sports betting in other countries
In the United Kingdom, sports betting is legal and is regulated by UK Gambling Commission. That means whether it is the physical sports betting centers or online sports betting, everything is legal.
Most of Australia legalizes sports betting with licensing laws that differ from state to state. Sports betting operators are governed by Interactive Gambling Act 2001. However, it is illegal to advertise or offer real money on online interactive services such as online casinos or poker.
Why is compliance important in the sports betting industry?
Fairness
Sports betting requires putting wagers skillfully using one’s knowledge to win bets. There are enough chances of fraud and partiality by online poachers, sports betting operators etc. This puts customers or their money at risk while also jeopardizing the credibility of the operator as well as the industry. Compliance ensures fairness of the betting and protects players. For example, compliance requires operators to have a random number generator (RNG) system that provides a fair chance for the players to win. Licensing requires that a third party auditor audits the RNG, thus eliminating the chance of the operator to cheat.
Protection against addiction to minors
Most sports betting laws prohibit minors from engaging in bets. These compliances protect minors or college-going individuals from becoming addicted to betting because they often do not have disposable income to lose money in gambling or betting. New rules in New York State prohibits sports betting companies from advertising in schools or college campuses. States of Maryland, Maine, Massachusetts, Ohio, and Connecticut have also introduced similar laws.
Discouraging money-laundering and terrorist financing
Enhanced Due Diligence (EDD) is a requirement that makes it necessary for sports betting operators to perform in-depth examinations of customer activities and their backgrounds to curb money-laundering or any kind of terrorist financing.
How can sports betting platforms comply better?
# 1 Know federal and state-level regulations
Sportsbooks and betting companies should ideally get all the information they can about federal laws and state laws related to sports betting. They can hire an attorney or take the help of sports betting development companies who know the rules and will inform them of the various steps to safeguard against those rules.
# 2 Time-based limits
Sportsbooks can add time-based limits on their online sports betting apps or websites to allow players to set restrictions they can spend on betting in a single session. This shows that you care for your players’ addiction, and you are committed to making betting safe.
# 3 Reality checks and reminders
Sports betting is done in real money. As an operator, you can set reminders and reality checks to inform players about how much money they have bet.
# 4 Age and identity verification
In order to ensure that minors do not play on your platform, you can set age and identify verifications on your sports betting website. Some robust features can be put in place to follow this restriction stringently.
# 5 Data-driven player monitoring
Today data analytics can empower you about the players’ statistics and online behavior. These tools will help you monitor patterns among your players and help those who may be at risk.
Final thoughts
Sports betting involves a lot of trust between players and providers. This is why following compliances and safeguarding the interests of the players are factors that go a long way in building credibility as an operator. This is good for your business as well as your goodwill.
