A long-standing issue within many states that have already legalized sports gambling is the question, “How to deal with sweepstakes games?” Prize Picks, Underdog, and Kalshi’s are just a few of the many companies out there that offer wagering on a variety of sports outcomes and other events. On the surface, even to someone inexperienced in the sports gambling world, it’s clear what is being offered by these companies. To put it simply, the product being offered by these companies and others like them is sports gambling. People are allowed to make wagers on a player or team going over or under a number set by the company. These companies are utilizing “legal acrobatics,” as stated by Bill Miller, chief executive of the American Gaming Association, an advocate for regulated and responsible gambling across the industry by both gamblers and operators alike.
It is by these means that the aforementioned companies and others have been allowed to continue to operate within the United States. Within the last year alone in multiple states that have legalized sports betting, cease and desist letters have to be used in efforts to eliminate these operations within their respective jurisdictions. These companies operate with none of the regulations and taxation that has been placed on every sports gambling operator regardless of the state in which they are located. This includes the fees companies have to pay simply to apply to be a legal operator within a state, and in many instances these application fees amount to six figures or higher.
The vast majority of pushback against these sweepstakes operators has been from the legal operators. In the instance a legal operator is not in compliance with the regulations of that particular state, hefty fines can and have been handed out by state officials. The same cannot be said for sweepstakes operators. Through the exploitation of legal loopholes, these sweepstakes are allowed to stay in place. As a sports bettor, the most concerning part to all this is the fact that these companies are allowed to operate with almost zero regulations. This highlights one of the biggest problems faced by the gambling industry, and that is the protection of the consumer.
There are laws in place at both the state and federal level that are primarily to prevent industries from abusing the consumer, such as price gouging laws, but for a sports bettor or gambler, there is little to no protection in place. The governing bodies currently in place have shown more concern in regulating the means by which legal operators advertise themselves, while little to nothing is done in the form of protection to the consumer. The lack of concern or concerted effort to eliminate these sweepstakes operators only further creates rifts that allow for off-shore bookmakers and black market, i.e. bookies, to fill that void.
The casual sports bettor is not concerned with the legality behind which operator they are using, whether through ignorance or negligence. They are simply looking for a means to quickly and swiftly place their bets. This also means they are unaware of the potential risk that they are opening themselves up to. While legal operators may be seen as the lesser of the two evils, something like being able to withdraw any deposited funds or winnings is a non-issue, but the same cannot be said for the sweepstakes operators and others operating outside of legal realms.
In a day and age where a word such as lobbyist is seen as taboo, lobbyists such as the AGA appear to be the only ones voicing concern for the consumer, and without sports bettors, there is no sports betting industry. This is not to imply that people will stop betting on sports, but it does mean that people will turn to less scrupulous means such as off-shore bookmakers. While that doesn’t sound horrible, at face value it removes a considerable amount of money from the industry. With sportsbooks and state regulators seemingly focused on little else, such a drastic move might be required to draw true focus to the aliments within the industry, and until then we will likely remain in this “wild west” like mentality.
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