This Sunday, Americans are expected to wager nearly $8 billion on the Super Bowl matchup between the Los Angeles Rams and the Cincinnati Bengals. This number is nearly twice the amount bet on last year’s big game.
What explains this staggering increase? It’s not just the popularity of the teams. This is the first Super Bowl of the online gambling era.
Sports betting has been legalized in 30 states, plus Washington, D.C., thanks to a 2018 U.S. Supreme Court ruling that overturned the ban on sports betting. Now, more than 100 million Americans live in places where they can legally wager. In 2020, the industry hit $1.5 billion in revenue, a 69 percent increase year to year. And in the first quarter of 2021, it is estimated that revenue rose another 270 percent. But it wasn’t until the NFL agreed to allow ads for sports gambling on its telecasts at the beginning of this season that the betting floodgates truly opened.
Companies like FanDuel, MGM and Caesars have spent hundreds of millions of dollars over the past year hawking their wares on TV and social media with celebrity-filled advertisements. Anyone who uses a computer, watches television, carries a smart phone or listens to the radio, likely has been exposed to Jerry Rice dumping Gatorade on a winning DraftKings bettor or some other celebrity-filled come-on. The barrage has been relentless, consistent and so widespread that it is safe to say anyone older than 12 understands where and how to make a bet on everything from the final score of Sunday’s game to whether Bengals quarterback Joe Burrow’s first pass will be a completion or not.
This has not happened by chance. It is a strategic and methodical effort to make sports betting seem no different than going to the grocery store to pick up a loaf of bread. The difference, however, is that gambling addiction can and will cause suffering to individuals, families and businesses. The evidence is abundant. According to the Wall Street Journal, the National Problem Gambling helpline (1-800-522-4700) received an average of more than 22,500 calls a month in 2021, up from a monthly average of 14,800 the year before. Problem gamblers carry an average of $55,000 in debt and more than 20 percent end up filing for bankruptcy.
I know the gambling industry intimately. I know how the C-suite thinks. I know what investors demand from the companies. I know how the marketing people develop strategies and promotions to get the consumer to play the games. I know because I developed those strategies. I have held positions as Senior VP of Marketing for Steve Wynn, president and COO for Donald Trump, and COO for Merv Griffin. I also owned or operated gambling operations in five U.S. States and Greece. I know the language of “hooking” a small-time gambler and how to land a “whale,” someone willing to risk tens of thousands of dollars on a single bet. But for the past 20 years, I have worked in the addiction and behavioral health field. Currently, I am the CEO of C4 Recovery Foundation, an organization that, among other things, is an advocate for individuals suffering from addiction.
To the uninitiated, this might look like the free market at work. If the activity is legal, one might ask, why shouldn’t companies be allowed to attract customers by any means necessary? For the same reason, we don’t let cigarette companies make smoking look fun by using “cool” cartoon camels. Smoking might be legal, but we know it’s dangerous. The same logic should apply to sports gambling.
For elected officials concerned with protecting their constituents, runaway gambling ads should be their worst nightmare. But unfortunately they are sleeping on the job. Despite studies that show a direct correlation between increased exposure to gambling advertising and problem gambling, the last time a local or state government cared about the social impact of gambling on its residents was back in 1976 when New Jersey first legalized casino gambling.
As a result of the citizens of New Jersey voting to approve casino style gambling in Atlantic City as a tool for urban development, a strict set of regulations was enacted. In 1977 the New Jersey Casino Control Act was signed into law. At the time, the state referred to legalized gambling as an “experiment.” Regulators and state officials were skeptical that the benefits of legal casinos would outweigh the negative. The most pressing concern was that of increased crime and the social impact gambling would have on the state’s residents. They were particularly concerned about increases in gambling addiction.
One of the thousands of regulations and controls the state deemed necessary was to limit advertising of the gaming products. A casino property could advertise its hotel, food offerings and entertainment, but it was forbidden to advertise the casino games themselves, including slot machines and the size of the jackpots or odds offered. That, the regulators deemed, was too dangerous to leave in the hands of the operators. Regulators were convinced that if allowed, the industry would prey on the young and those who could least afford to be spending money in a casino. Regulators knew the industry would make false and unrealistic claims about betting and would glorify the ease of winning.
The example that regulators gave was the only other legal location to gamble at the time: Nevada. In Nevada, every street in almost every town had billboards with enticements to gamble. Advertisements screaming “Loosest Slots, 99% payback” created a can’t-lose impression. One could even play slot machines at the local grocery store. New Jersey was determined not to let the operators do to Atlantic City what they had done to Nevada. Problem gambling afflicts 6 percent of Nevada residents, according to the International Problem Gambling Center, well above the national average of just over 1 percent.
The story of New Jersey is actually a great case study comparison for what is happening with sports betting currently. New Jersey eventually relaxed many of its restrictions on advertising, as gaming expanded, and competition increased. But the state didn’t surrender total control. There were still limitations and approvals needed for certain types of promotions and offerings to entice people to play the games. There was a time when every promotion required advance approval, to assure it was not misleading or unfair to the potential customer. There have been no such restrictions for sports betting.
So, what should regulators be concerned about today? Brain chemistry. The neuroscience of gambling is exactly the same as other addictive behaviors, such as drugs, alcohol, sex and eating. Like other addictive behaviors, when one gambles, the brain releases dopamine, which is a feel-good neurotransmitter that makes you feel excited. It would be logical to think this feeling only occurs when one wins, but the brain releases dopamine no matter the outcome. An individual who gets a “positive” response from an activity is not capable of logically deciding when he should stop betting.
The problem lies with advertising “hooks.” The operators of sports betting sites are not just making betting available, they are offering incentives to begin betting and to keep on betting. A good example is one site that offers a new customer $200 in free bets for making just one $5 bet.
Why does this make good business sense? The answer goes right back to brain chemistry. The operators know the more bets an individual places, the more dopamine is being released in the brain. So instead of feeling good for one single bet, they are assuring that the player is going to get several more feel-good jolts, making it very likely that the player will crave more after they have exhausted the $200 of free play.
Back in the early days of Atlantic City, every casino gave free cash to people who rode buses on day trips to the city. You could get $50 for simply showing up. The casino operators knew that most of the $50 would be deposited in the slot machines in the first hour after they arrived. With five more hours before the bus left for home, the customer would reach into his own pocket to keep the rush going. The only difference between the tactic the casinos used back then and what the online companies are doing now is that bettors are using their phones while sitting on their couch at home.
And like most products, the sports betting companies know that familiar pitch men and humor can appeal to various demographics, creating a sense of trust. Older bettors are bound to feel good seeing Brent Musburger encourage one to place a bet, and every 30- to 40-year-old will undoubtedly believe Drew Brees, having watched him play for the past 25 years, encouraging you to live your “Bet life.” And the even more troubling creation of fictional characters dressed in costumes having fun in a fantasy world, reminiscent of Camel Joe cigarette ads and his appeal to younger demographics, including underage individuals.
I am not suggesting that everyone who watches an ad for sports betting is going to become addicted to the activity. The reality is, like other forms of gambling, it is a very small percentage of individuals who become addicted. It is estimated that at least 2.5 million Americans have a severe addiction to gambling. But most experts agree the number is likely much larger.
There are no physical side effects as with alcohol or drug addiction. The first sign to an outsider that a person is suffering from a gambling addiction might be the loss of a home, divorce or even suicide.
But the easy accessibility of gambling products, accelerated by ubiquitous advertising, means that the pool of individuals susceptible to addiction has grown enormously, without adding some type of guardrail for the industry. DraftKings, currently the largest company providing sports betting services, believes there are in excess of 50 million bettors in the U.S. — roughly one in seven Americans. And they admit their goal is not only to target existing bettors, but also to “expand the aperture,” meaning create new bettors.
At a recent conference of the American Gaming Association in New Jersey, when discussing the overwhelming frequency of betting ads, industry leaders asked their membership, “How much is too much”? They expressed a fear of backlash from legislators and gaming regulators. The last thing they want is anything that will make it harder to create new bettors. They also admitted that the current spending pace on advertising is so over top that it is not sustainable for the industry. It will undoubtedly drag some sports betting companies into bankruptcy.
But the industry cannot self-regulate. I know how the industry thinks: They will say that illegal betting has been around forever and it’s enough for them to include some warnings and toll-free numbers in their ads. Beyond that, they’ll say, they have no obligation to protect the public from itself. But the gambling companies are not the ones who have to cover the social costs of an epidemic of gambling debt. This alone is reason enough for legislators to step in and provide the kind of national guardrails that New Jersey once applied.
In the business of gambling, the house always wins. They are going to make their money; it is just a matter of how many lives will be ruined in the process before they are mandated to change the way they prey on their victims. This Sunday, there will be one loser on the field but as you watch the blitz of gambling ads, think about the millions of losers off the field.
