Largest U.S. sportsbooks join forces to tackle problem gambling

The seven operators — FanDuel, DraftKings, BetMGM, Penn Entertainment, Fanatics Betting & Gaming, Hard Rock Digital and bet365 — will form the Responsible Online Gaming Association, or ROGA, the group announced Wednesday.

The members account for more than 85% of the legal online betting market in the United States. Collectively they have pledged more than $20 million to fund ROGA.

“I’m incredibly excited to move this forward and to really do some impactful things and to really expand the knowledge through the research and to create these evidence-based best practices and to really empower players with information,” said Jennifer Shatley, executive director of ROGA.

ROGA members commit to work together on issues ranging from education, responsible gaming best practices, conscientious advertising and marketing across the industry.

The new group will also create an independent clearinghouse, or database, that will allow them to share key information related to protection of consumers, though the details on how it would work aren’t yet clear.

ROGA says it will create a certification program to assess members’ responsible gaming efforts and provide an incentive for operators to participate.

The new consortium comes as sports betting, both online and in retail outlets, has seen dramatic growth across the nation since 2018. Thirty-eight states and Washington, D.C., now offer legal sports wagering.

This year, a record number of Americans bet on the Super Bowl. Online transactions totaled nearly 15,000 per second, doubling last year’s peak, according to geolocating platform GeoComply.

But as gambling has become more mainstream — and as advertising for sportsbooks spans television, streaming and social feeds — so, too, have headlines involving betting scandals and sports.

In recent days, Los Angeles Dodgers superstar Shohei Ohtani has found himself at the center of a $4 million betting scandal involving his interpreter and an illegal bookie. Ohtani insists he’s never bet on sports. The NBA is investigating Toronto Raptors player Jontay Porter for irregularities around wagering. And U.S. Integrity, a tech firm working to combat illicit betting in college sports, flagged anomalies around the betting lines for Temple University men’s basketball games.

A result of those claims: The potential to provoke outrage and public criticism that could become an inflection point for the U.S. gambling industry. There’s also the potential for gambling’s explosive growth to undermine integrity in sports and entice bettors into addiction.

An estimated 2 million U.S. adults meet the criteria for a severe gambling problem, according to the National Council on Problem Gambling. Another 5 million to 8 million U.S. adults are considered to have a mild or moderate gambling problem.

Problem gambling prompted regulatory crackdowns in Europe and especially in the United Kingdom over the last couple years, impacting sportsbooks’ profitability and changing the way they conduct business.

There has been a concerted effort in the United States for the gambling industry to police itself and ward off harsher regulatory frameworks.

U.S. Rep. Paul Tonko of New York is introducing national legislation that would crack down on what he calls “a public health crisis.” Tonko’s “Supporting Affordability and Fairness with Every Bet Act,” which he introduced last week, would regulate gambling advertising, limit the number and size of deposits, and restrict how artificial intelligence is deployed to acquire customers.

“Your going to have a lot more people saturated with this opportunity, with all these clever concepts of bonus bets, free bets and celebrity spokespersons,” Tonko told CNBC.

An influx of gamblers will result in a dramatic increase in the number of people struggling with addiction, he said.

Some states have slapped operators with fines over gaming violations. In August, Maryland fined DraftKings $94,000 for marketing to underage players. PrizePicks reached a $15 million settlement in New York for operating illegally. In Indiana, the gaming commission fined FanDuel after eight people used illegally obtained debit cards to fund their betting accounts, causing “great harm” to partners on shared bank accounts, according to the Indiana Gaming Commission Chairman Milton Thompson.

Some gambling insiders are skeptical of ROGA, suspicious of what they consider a marketing stunt to address a public relations problem.

Caesars, which is noticeably absent from the group founding ROGA, told CNBC it’s learned best practices from 35 years grappling with responsible gaming.

“While we applaud all efforts to ensure online gaming is both operated and marketed in a responsible manner, we are confident in our [own] Responsible Gaming approach,” the company said in a statement.

Caesars said it’s solely focused on the 21-and-older crowd and does not permit anyone younger than that to sign up for a Caesars rewards account, even in states like Rhode Island or Kentucky where 18-year-olds are permitted to wager.

Many fantasy sports and social betting platforms that operate on a sweepstakes model permit players 18 and older, and many of Caesars’ competitors allow 18-and-up customers to play fantasy sports. Some, too, allow sports betting in that age group in the few states that permit it.

But the industry is working to better insulate its youngest and most vulnerable customers.

The American Gaming Association launched last March an agreement aimed at providing college-aged students protections against the marketing and advertising of sports betting.

Peter Jackson, CEO of Flutter, the parent company of FanDuel, said responsible gaming comes down to good business. Yet, he warns that as legal operators come together to improve responsible gambling, the illegal marketplace will always be willing to take wagers from problem gamblers.

“I urge the state regulators to help us by clamping down on some of those black market operators,” Jackson told CNBC.