In 2018,
the Supreme Court overturned a law that bans sports
betting in most places in America, a decision that has led to our lives
today, which is waking up and being absolutely waterboarded
by sports gambling advertising. America's number one sportsbook FanDuel
FanDuel casino FanDuel Free chicken dinners with FanDuel casino. By gambling. App bet MGM Sportsbook MGM Bet MGM. What do you want from your sportsbook? Please help me tell my cats. Stop
guessing the helmet Catch. Is it the Caesars spo
rtsbook app with. Caesars rewards or the more you play,
the more stuff you earn. And they have fast payouts because Caesar. Is the man. Yes. My God. They even got the Tennessee Kardashians. Sports betting has become
increasingly normalized in America over the last six years. But critics wonder
if beneath the legal gambling industry's rise looms, a public health
crisis of unknown proportions. So is regulated gambling
a healthy future for sports entertainment? Or have we opened a Pandora's Sportsb
ook,
putting millions of people at risk of addiction? Let's find out. Today, online sports
betting is legal in 29 states and the freely associated island
nation of Washington, D.C., with more states on the way and with how quickly sports betting
has become ubiquitous in American culture, it's easy to forget that gambling
can actually kind of be bad for you. We've now been able to show over the last
25, 30 years that when people who gamble the same parts of the brain
are being activated as if I w
ere taking alcohol, tobacco, cocaine or cannabis. Dr. Tim Fong is the co-director of the UCLA
Gambling Studies Program and a clinical professor of psychiatry. It impacts sleep. It impacts mood impacts,
finances, impacts relationship. And when you have a product
that's being given out and regulated by the government, it's got to be regulated
and it's got to be understood. In 2013,
the American Psychological Association officially classified gambling
as an addiction. Meanwhile, since its 2018
lega
lization, sports betting has generated a gangbusters
amount of economic activity In the US, $220 billion in bets were placed
in just the first five years. It was legal. There are now over 16 million average
monthly users of the most popular sports betting apps, and next year, online sports betting revenue is expected
to approach $12 billion. To understand this growth trajectory, we got to talk about something
called daily fantasy sports. Daily Fantasy is an online version of
fantasy sports, and
according to my wife, a terrible reason to have my phone out
during our kids baptism. Fantasy is
when you pick a bunch of real players, assemble a fake team out of them
and keep track of their stats. But around 2010,
a new turbocharged version of fantasy came onto the scene where you could set
new lineups as often as every day, playing apps on your phone and crucially,
putting money down on the results. So you had two competitors
that really rose to the top of the market
here, DraftKings and Fan
Duel. Kenneth Vogel is a New York Times
investigative reporter who is part of a team that wrote a series of major stories about
the betting industry's rise in America. When they made a business
out of fantasy sports and allow players to wager, not wager,
but put money on the performance of their teams, they would push back
against the use of the term wager there. Even though gambling on sports
was still broadly illegal, Congress had previously determined
that fantasy sports were actually a game
of skill, not luck,
meaning that putting money on the results wasn't gambling.
Which reminds me a lot of an argument. My high school friend Chaz used to make
about the pull out method. The gray
area in which these fantasy companies operated was pretty controversial
even at the time. A lot of state attorney generals
and even some sportsbook CEOs publicly said that they considered
daily fantasy to be gambling, but the industry saw it differently. So you don't. View what you do here at FanDuel as g
ambling? No, that's a word
that isn't used very much around here. Still, FanDuel and DraftKings
clearly understood that they're operating in murky waters and made a huge lobbying
push to defend themselves, and they were pretty successful.
By 2017, 19 states had passed laws explicitly
legalizing daily fantasy sports. But this effort wasn't just about creating
a legal framework for daily fantasy. The industry's big
kahuna was still out there swimming around in the deep blue sea,
just waiting to be
caught. I'm talking about full on sports betting. Breaking news, the Supreme Court this morning striking
down the federal ban on sports betting. Now it leaves it up to the states. When that happened,
the industry was ready to get lobbying thanks to their powerful network
of relationships in state capitals that they built during their daily
fantasy push. There was a lot of like wining and dining. That was my colleague Eric Lipton,
and a photographer who went out to Kansas. This is a party that w
as sponsored by the industry, by lobbyists
who were representing the industry. The lawmakers were smoking
cigars and drinking expensive scotch that was provided by the lobbyists
and sort of schmoozing with them as the debate was unfolding
a few blocks away in the Capitol. The industry's main arguments
for legal sports betting, both then and now, are to fight black market
gambling and generate tax revenue. There is this big illegal market and there's no consumer protections,
no tax revenue being
generated. Why don't we just bring that in-house? A lot of states are understanding
that it's really just common sense legislation
to allow mobile sports betting. It raises tax revenues
and it puts an illegal market. Out of business. And look, I know it's easy to go around
bashing these corporate CEOs, especially when they got this
mid as hell zoom background. But is this a map of the lands
you plan to conquer? Why do you have a black and white photo
of the industrial revolution behind you? Come
on, Matt. It could be worse. You've got some work to do, buddy. But my point, which I am making very clearly,
and without getting sidetracked, my point is that the gambling black market is a problem, and regulating
it would generate tax revenue. One of our biggest concerns, we have so much of the unregulated sports
betting market, right? So these are
the websites that are based on who knows where they take all electronic,
you know, financing so that they're not subjected
to the regulations of t
he state. But trying to shut them
down is impossible. You don't even know where they exist. Now, it's impossible to know the exact
size of the black market at this time. But some estimates had Americans illegally
betting as much as $150 billion per year. But the industry second point was that if states did vote to legalize,
it would instantly create tax revenue. One of the things that the industry,
sports betting industry had going for it, you know, after 2018 was, you know, it's
sort of a perve
rse way to think about it. But there was the pandemic. I mean, the pandemic
put a real dent in state budgets. So the black market, the promise of tax revenue, state budgets
absolutely decimated by the pandemic. It was the perfect storm for sports betting companies
to capitalize on and capitalize they have. There's a huge investor
appetite around that. The companies are turning over
massive amounts of money. Everyone's very excited. Oliver Barns is a reporter
for the Financial Times who's been co
vering the gambling industry
both in the U.S. and the U.K.. Lawmakers are also quite excited, right, Because you're sitting in a state
that's yet to legalize sports betting. You have a whole load of tax revenues. You can just switch on that overnight. But in reality, many states who have voted to legalize
have seen less tax revenue than expected. The industry, the sports betting companies
and the gambling trade groups push for lower tax rates. While lobbying for legalization in states
like Kansa
s. The industry argued that the best way
for states to maximize their tax revenue would actually be to tax
betting companies less because it would create an easier market
for the companies to operate in. Okay,
whatever you say, mister Businessman. All right. But in 14 jurisdictions
that legalized and followed the industry's tax advice, revenues in 2022 were nearly
$150 million less than predicted. And in addition to negotiating lower tax rates, the industry
also convinced many states to classify
huge chunks of their advertising
spend as tax write offs. When we talk about deductions
for advertising and marketing, what we're really talking about
is the promotional bets. And so what that is, is you see an ad
and it says get your first hundred dollars of like free bets or like we'll match your
first hundred dollars or what have you. And this is like an incentive that the gambling companies
are using to bring in new customers and what they did was
they convinced lawmakers in most states to
allow them to deduct the costs
of these promotional bets. In 2022 alone,
the industry gave out almost $1 billion in these promo events, costing seats
more than $120 million in potential taxes. States are losing money
on promotional bets. I'm losing money on promotional bets. You and I are so different
after all. Kansas. Maybe this could work out between us and
the tax revenue generated by the industry. Post legalization has been underwhelming. You might say the opposite
about its approach to mar
keting. Spreads to cover over ticket and chances
to live better from the first down
to the final whistle download BET MGM. You know what to do. The industry
spent about $300 million on TV ads in 2023 and an estimated $1.8
billion in local markets. This marketing push
even made it to college campuses. One deal between Michigan State
and Caesars Sportsbook let Caesars season rise part of its campus,
another between Colorado, Boulder and Pointsbet gave the school $30
every time one of their student
s signed up for the app and placed a bet. Granted, there was a lot of backlash
to these deals. The lead gambling industry trade group now
prohibits marketing on college campuses, and since then, Michigan State, Colorado
and other schools have canceled their partnerships. Well,
what's so bad about these ads anyway? Getting season rise sounds fun, but the. Public health issue
is that this is an addictive product. Oh, I get it to fun. Richard Donard is the lawyer
who designed the litigation strateg
y against the tobacco industry,
resulting in big tobacco coughing up over $200 billion
and changing the way they marketed. Cigarets We lied
and told him we were 60 Minutes and he agreed to tell us about his next
target, the sports betting industry. There's a denial of, you know, of dangers presenting this thing
as simply a harmless way to have fun. March 10th of last year of 2023. That was the day that sports betting was unleashed in Massachusetts. There was just massive marketing. You know, the
re'd be trash
containers, it'd be on the side of busses as well as on, you know, television. Just about anything you turned on
would have an ad for, you know, one of the companies. Unfortunately, it's been a while
since I've turned anything on. Professor
Stanford's Public Health Advocacy Institute recently backed a lawsuit
in Massachusetts against DraftKings, and its focus is on one of those fun
tax write off promotional ads. According to the lawsuit, DraftKings knowingly and unfairly designed a
$1,000
sign up bonus. The $8,000 comes in the form
of additional bets which customers could only get if they first deposited
the $5,000 risk, $25,000 within 90 days, and bet on events
with worse odds than 3 to 1. Which doesn't
sound like I'm going to get $1,000. The idea is for you to continue to bet,
which is the way you develop and heighten an addiction, which is you
keep at it, you keep doing it, and you hope to, you know, encourage,
you know, other litigation. This is hardly the only decept
ive
ad running in the United States. And there is some backlash building. We don't see cannabis ads on TV, do we? We don't see a lot of tobacco
ads on TV anymore. And all of that had an impact on what
people think and feel about that product. Right. When you look at the gambling ads right
now, they're all 120% positive. Regulators in Ohio doled out
almost $1,000,000 in fines last year to betting companies for advertising,
asking their customers can make free bets. Massachusetts and other states
have moved to legally ban advertising on college campuses and all the way
up there in Maine, lawmakers propose banning cartoon characters,
celebrities, athletes and entertainers for being able to appear in ads,
which might sound extreme to us here in America,
but is actually very similar to the way that lots of other countries
regulate gambling advertising. In the U.K., that's like a whistle
to whistle ban on football matches. You can't advertise like during a football
match in terms of like TV
commercials because of the advertising environment
where you're bombarded with ads, it's very difficult to kind of escape
that habit of like recurrently gambling. The U.K. has also banned gambling logos
on the front of Premier League jerseys and other regulators
want to move even further. In Australia, gambling
ads are banned during games between 5 a.m. and 8:30 p.m. in Belgium
and the Netherlands have fully banned gambling advertising on TV, radio,
newspapers and in public spaces. And these reg
ulations are all reaction to the way that gambling
has proliferated in these countries. Post legalization, The U.K. gambling Commission earlier
this year said that as many as 2.5% of their adult population
could be problem gambling. Meanwhile, in Australia, citizens
lose more gambling per capita than in any other country, and some worry
that if the US isn't careful, we might not learn from these more mature
markets. The real issues are escalating up
to a tipping point where we could develop a ga
mbling crisis like a gambling epidemic
like we had with opioids. I don't think we're there yet,
and I think having these conversations now should, I think, prevent and mitigate
a lot of those things like that. Well, it's all in a day's work. Dr. Fong, happy to solve a public health
crisis. One Officer So outside of ad regulations,
what are some options that we have to create
a safer legalized sports betting market? One obvious tool is self-exclusion,
which just mean==s giving people the option t
o tell these sports
betting companies, Hey, don't let me use these apps ever again.
But U.S. self-exclusion technology
lags behind the UK. So I go to FanDuel
and I say, I want to stop gambling self-exclusion from FanDuel,
which you can do in the U.S. but you then also have to go and self
exclude yourself from all the other apps. In some states you can go to the state
regulator and say, Please, self-exclusion from all of them. But in some states that's an online
process where you fill in a form.
In some states you literally have to write them a letter
and you compare that to the UK where I go and by myself from one betting app,
they'll buy me from all of them. When you look at the US
to the actual safety mechanisms in place,
there's just considerably less of them. Other areas where the U.S. can make improvements include eliminating
betting with credit cards, which 20 states allow. Taking a closer
look at live betting during games where bettors can wager on things
like how fast the next
pitch will be. That's
where the odds are more advantageous for the sportsbooks than normal
and increasing the amount of public funding towards problem gambling
resources. In fact, nine states provided zero funding
for problem gambling services in 2023. And according to Dr. Fong, problem gambling receives
just a fraction of the resources versus comparable programs
for drugs and alcohol. Because the funding that's available
for gambling, research and treatment compared to alcohol, tobacco
and subs
tance is infinitesimal. Tiny barely registers. Bars. So we need to better understand
how do we keep people in their lane of social recreational gambling
without harm. Looking at all of these legal problems,
lawsuits and Kevin Hart telling me to download an app
he probably doesn't use. It just makes me wonder
if this is all been worth it. Is the industry right when they argue
that the legalized system we're creating is better than just
the good old black market? I don't know what is someone
with
a smarter voice Think. There's some truth in it, right? Which is, yes, they shifted a large
number of consumers from the black market where there are no protections at all into a regulated market
where there are some protections. But for me, I think the main thing
that's understated in all of that, it's just the denominator. But if you just have more people
exposed to gambling products, you're likely
to get a large number of people who face the negative side effects of gambling,
which is a small
proportion. But if you have hundreds
of millions of people using the product, it's large, right? I think it's disingenuous to say that,
you know, this is a safer environment for all these people
because a lot of those people would not have been gambling,
I imagine, on sports unless it was just shown to them all over
and all these ads and everything. So Malik is a former gambling addict
who now travels the country speaking about the risks of sports
betting. I do think that the technology,
of cou
rse, will accelerate it and also turn people who say their sports betters into casino players very quickly
because the need for action speeds up as it progresses
as an addiction. Well, the good news is now,
with all this growth, the sports betting industry is going to it's
going to take a beat and clear their heads and and really take some time
to get this thing right before we escalate any further. There's actually even a further holy grail
that they're still fighting for and that they even at
that early juncture
back in the 2000 tens were looking at is something that they
that was the ultimate the ultimate goal. Oh, no. What's that, Ken? And that is AI gaming. It's essentially like for casino
gambling on your phone, turn every phone into like, you know, a blackjack table
or a slot machine or whatever. That could operate 24/7. Right now. Gaming is only legal in six states,
and I'm sure for many of you combining doom, scrolling with doom
slotting seems crazy. But also one point
so is t
aking this sucker out dialing up a hitter of a parlay and throwing
that shit on your Amex legally. But think of
how far we've come with sports betting. I mean, look at the NFL in 2003,
the NFL wanted to distance themselves from the industry so much they rejected a proposal for Las Vegas
to air a tourism ad during the Super Bowl. And now the Eagles are doing
paid partnership posts with DraftKings. In two days, the Super Bowl is going to be
in Las Vegas. If all of this could happen in six years,
w
ho's to say what could happen in six more 1218, 24, 30, 36, 42, 48, 54, 66? I mean, it's hard to imagine, really,
but if anything, it's important to recognize that. We are America's number one
sportsbook FanDuel casino. FanDuel. Wait, wait. No, I'm sorry. I'm DraftKings ranking DraftKings,
DraftKings playoffs, baby, the crown is yours. I'm trying to finish the oh. Snap DraftKings new sportsbook app. For good work. I'm There's no better. Feeling than a win
except the BetMGM team winning. For good
.
We're going to do it. I think for anyone in the audience that's
just curious about their own relationship with money or with gambling
or worried about someone else's, The best thing is to just get informed. You know, there are a lot of websites
now like the National Council on Problem Gambling, or they can look at our website,
you see a gambling program dot org. Almost every state in America has gambling
help. One 800 gambler is an easy
first step to get professional support.
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