Since The Supreme Court’s 2018 decision in Murphy v. NCAA ended the federal prohibition on sports gambling, there has been a boom in sports gambling. But this new gold rush has come with controversy, with advertising now the latest facet of gambling to come under scrutiny.
After the ban was lifted, ‘risk-free’ bet promotions rose in prominence, and have now been outlawed in some states. Now, legal in 33 states and Washington, D.C., sports betting is a multibillion-dollar industry now attracting class-action lawsuits.
‘Risk-Free Promotions
‘Risk-free’ promotions, widely used to attract new customers, have become a focal point of regulatory and legal challenges.
These offers typically refund losing initial wagers with non-withdrawable credits, requiring users to win subsequent bets to recoup their original stake.
Players and critics are now finding that these so-called ‘risk-free’ bets do indeed carry risk.
Regulators in states like Massachusetts, Ohio, and Pennsylvania have banned the term “risk-free” in advertisements, while others, including the New York Attorney General, have labeled the term ‘misleading’.
But the gambling industry is nothing if not resilient, sportsbooks are now shifting to alternatives like ‘bonus bets’.
Legal Challenges
Class-action lawsuits, such as Sale v. BetMGM, claim ‘risk-free’ promotions violate consumer protection laws by misleading consumers.
Under New York law, for example, a practice is deceptive if it is “materially misleading to a reasonable consumer”. While players might find language misleading, the sportsbooks will argue that everything is clear in the small print.
Speaking to Reuters, experts at the law firm Skadden, Arps, Slate, Meagher & Flom LLP, say disclosures about promotional terms, such as time-sensitive credits and opt-in requirements, strengthen a sportsbook’s defense.
However, it is widely accepted that sportsbooks are risking litigation with language which operates in a gray area.
Legal challenges and the Federal Trade Commission are helping in refining how Americans are marketed to by gambling businesses. And this includes how professional sportspeople and influencers endorse sportsbooks.