Can Pennsylvania Find the Happy Medium Between a Free Market and Real Responsible Gambling Controls?
Credit: Peter E. Alizio/Flickr
A study in Pennsylvania recommended several seismic reforms to the state’s gambling policies. Now, stakeholders must perform a tricky balancing act.
As always, the dilemma is this: A lighter touch allows the market to flourish and generate abundant tax revenue, which the state needs. At the same time, the state has a duty to look out for its citizens, some of whom can fall into self-destructive behaviors if there are few restrictions on gambling.
One of the recommended policies from the Joint State Government Commission Study is one that’s increasingly seen as a no-brainer: disallow betting with credit cards. The issues with that are self-evident. Over half a dozen states have already taken that step, while others are considering it. In the meantime, even certain operators have begun taking matters into their own hands. FanDuel and DraftKings voluntarily removed credit card deposits earlier this year. BetMGM followed suit, as did Caesars.
The study also recommended advertising restrictions. More states have begun looking at these policies, including New York.
I want to focus on a third recommendation, though. It’s actually the first one listed in the study, and it’s the most interesting. The study recommends that online casinos provide anonymized data about player behavior to an outside nonprofit. Researchers there could then identify problem gamblers and spur intervention at the individual player level.
“The deliberate measure would use actual player data to generate responses to more precisely protect gamblers while continuing to maximize revenue,” the report states.
That sentence captures the obvious problem therein: maximizing revenue and minimizing harm may be competing ideas in many cases. As State Sen. Wade Fontana noted, a trade-off is inevitable.
The whole discussion may be moot because the AP report said reforms would face “long odds” due to casino lobbying money. But it’s a discussion worth having as gambling harms become an ever-greater topic of conversation amid continued gambling expansion in the U.S.
There is a Massive Underinvestment in Responsible Gambling
Year after year, sportsbooks rake in billions of dollars in revenue. Yet, hardly any of that money, including tax dollars, goes to responsible gambling efforts.
According to the American Gaming Association, sportsbooks pulled in about $17 billion in revenue last year. Yet, the gambling industry as a whole spent about $60 million on responsible gambling, according to a study released in April.
A study released in 2024 revealed that less than $0.01 of every dollar generated in sports betting taxes went to problem gambling resources. As of the study, eight states did not fund problem gambling services at all.
Industry Must Slow Down Self-Destructive Behavior
Reasonable opinions can vary on how much operator revenue and tax money should be allocated to help problem gamblers. But the numbers are objectively tiny, relative to the revenues generated.
The trick is finding the right balance between nanny-state policies and player protection.
It’s no secret that online casinos and sportsbooks thrive most when catering to high-value customers. So-called whales drive a huge chunk of revenue. Reports vary on the exact share these players contribute. But one study of the U.K. market said that, “aggregately, the top-10% of customers provided 79.0% of operator revenue and the top-5% just over two-thirds.”
The VIP programs employed by the online operators are currently under scrutiny in several states.
Of course, some high-value customers can absolutely afford the staggering sums they gamble away. The key is differentiating these high-income whales from spiraling individuals who are gambling beyond their means.
That’s where the data sharing would theoretically come into play.
Can Anonymized Player Behavior Data Strike the Right Balance?
Nobody wants to be told what to do, and how much they can bet. That’s where the nanny state fears come into play.
Cautionary tales exist overseas. Increased regulation in Europe has kneecapped the gambling industry in some countries. In some countries, such as France, the black market has an estimated market share greater than 50%. The U.K. market is undergoing massive upheaval after a major tax increase last year. So-called “affordability checks,” combined with the tax increase, could push more gamblers to unregulated markets, local operators argue.
Yet, putting operators in charge of limiting problem gamblers amounts to giving the fox the keys to the hen house. As much as the operators bluster about commitments to responsible gambling, the fact of the matter is that they benefit financially when distressed individuals bet outside their means and chase their losses.
Helping limit gamblers runs contrary to their inherent mission of separating them from their money.
Sharing anonymized player data to an outside, impartial source has the potential to strike the right balance here. It’s a novel idea, and one that has some basis in logic. Hopefully, it can at least be trialed on a limited basis to see if it has any positive effect. A study comparing its effects with a control group could provide key insights to boost responsible gambling efforts.
Image credit: Peter E. Alizio/Flickr (license)
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