Gambling Regulations: Balancing Consumer Protection and Market Growth

The mobile sports gambling industry has taken the United States by storm since May of 2018. The first domino to fall was the state of New Jersey, who spearheaded the movement to overturn a federal ban on sports gambling, taking the issue to the Supreme Court in the Murphy v. National Collegiate Athletic Association. In barely five years since then, nearly 75 percent of states in the union have voted to legalize the pastime, with more sure to be on the way.

Despite the explosive progress, with billions of dollars of tax revenue brought in each year for state and local governments, the industry still has its drawbacks. Legislators don’t want to sacrifice the livelihoods of their constituents to the almighty dollar through negligent efforts toward consumer protection, so they’re trying to find the proper balance between allowing the gambling market room to grow while still keeping a consumer’s best interests in mind. This is how they find that sweet spot.

Market Growth

We’ll start by talking about the big bucks. Viral marketing is part of what has helped the gaming industry explode over the past half decade. Anyone who watched the Super Bowl this year—or any other sporting event, honestly—is sure to have been inundated with dozens of ads promoting the gambling industry and the best sports betting apps.

Some people see the onslaught of ads as a predatory business practice, with promises of massive winnings luring in unsuspecting customers. Other factors spurring the market explosion are betting promotions, which often go hand in hand with these advertisements. Betting platforms promise consumers things like second chance bets, where they have a chance to wager for free again if their first bet fails.

Another popular promotion type is deposit matches often up to $1,000 where casinos and sportsbooks will sweeten the deal by throwing some of their own cash into a user’s account to help them get started.

Betting platforms are able to claim these giveaways as deductible business losses, reducing the taxable income they’re liable for and essentially luring customers in for free.

Whether at the grassroots level or in state legislatures, many are starting to push back on these business practices, looking to limit what has been a free for all on the part of betting platforms so far.

Other Consumer Protections

One of the main allures of mobile betting is the ease of access. Rather than having to travel long distances to find the nearest physical casino to spin the slots or sportsbook to wager on a game, it’s as simple as whipping out your phone and pressing a few buttons. That makes it easier for problem gambling habits to arise, so some state governments have taken steps to limit these functions.

These approaches vary from hardline tactics, like banning mobile gaming outright in favor of the retail locations, to more discreet ones. Not all consumer protections are mandated by law: some come from the betting platforms themselves, born out of a desire for ethical conduct.

For instance, some apps try to limit impulse gaming through mandatory cooldown periods: bettors can only deposit so much money into their accounts at a given time, often limited by how long they’ve had an account with the platform. This pumps the brakes on the learning curve: rather than diving head first into the industry and going hog-wild, depositing money and placing bets at will, consumers are forced to ease their way in, taking it slow and steady as they get acclimated to the business.

Other types of cooldown periods make it so that the money has to be cleared from someone’s bank account before they can start wagering: rather than having those funds immediately available, they have to wait a few days first. Once again, the layover time limits the possibility to place wagers impulsively. It also helps protect consumers and businesses alike from fraud, giving adequate time to ensure that the money is coming from a legitimate source.

Finding the Middle Ground

Finding a happy medium is key to most aspects of life, whether it’s business, politics, or someone’s personal life. The sports betting industry is no different, and most politicians and voters want the industry to continue operating, even if they think it needs to be reined in a little.

We’ve already seen some of these compromises take place, like when a gambling advertisement is offset with resources for problem gamblers like addiction hotlines.

Changing tax laws to limit the rampant presence of promotional bets is another thing that will probably happen soon, but again, legislators want to find a middle ground: by increasing tax rates, they’ll limit the revenue that gambling operators bring in, making it more expensive to conduct business operations. It’ll be interesting to see how the process shakes out for an industry that is still in its infancy. We’ve seen healthy growth so far, but there are certain to be growing pains as the industry continues to mature.

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Aaditya Sharma

Die hard fan of Call of Duty series! I own an Xbox One and a Nitro 5 (but I mostly game on my laptop because I love higher frame rate) but I don't game on my phone! Always wanted to be a pilot but ended up studying medicine! You can contact me on

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