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The Ethics of Gambling Advertising

This is an excerpt from Business of Sports Betting epub, The by Becky Harris,John T. Holden & Gil B. Fried.

Gambling advertising has long been controversial. Gambling companies (at least those that are publicly traded) have a duty to their shareholders to generate as much profit as possible within the confines of the law. So if gambling advertising is not illegal, should they be able to do it? The answer is not quite so clear. Professor Per Binde (2014) noted that the ethics surrounding gambling advertising is multifaceted. In the United States, advertising that does not involve something illegal and is not false or misleading to a viewer or listener is generally permitted. Binde (2014) noted that many countries impose restrictions on not only the amount of advertising but also the messages that are conveyed in gambling advertisements.

There is little debate that sports gambling and gambling more broadly can be a dangerous activity if not engaged in properly. Some individuals have a tendency to engage in gambling activities in a way that is detrimental to their physical and mental well-being. However, many gambling advertisements portray gambling as a harmless activity that is engaged in to heighten the enjoyment of a sporting event. This depiction of gambling as a harmless activity is potentially problematic for those who experience tendencies toward problem gambling (Fortunato, 2020). In the wake of the Supreme Court’s Murphy decision, Fortunato (2020) observed that a number of media entities saw the ability to include sports betting content as a new opportunity. Not only were partnerships struck with sports wagering operators but sports betting content became part of television broadcasts. Even ESPN, which is owned by the historically anti-gambling company Disney, revamped some of its content around gambling (Niles, 2021).

The normalization of sports gambling is of particular concern with respect to young people. The integration of sports gambling content across sporting events raises questions about who is receiving the content, and companies need to be cognizant of the potential impact of the messages (Fortunato, 2020). Richard Bomberger (2020) identified several steps that companies can take to improve disclosures of financial conflicts between media companies and sports betting advertising; chiefly, he noted that companies should disclose financial relationships between content and sports betting sponsors. He also recommended that integrated content contain toll-free phone numbers or resources for those who may experience tendencies toward problem gambling.

One of the most prominent examples of the challenges of navigating the ethics of gambling advertising has come from English football (soccer). Nearly every team in the Premier League has at some point had a jersey sponsor that is a gambling company (Day et al., 2022). Although tobacco advertising is virtually nonexistent in sports, and even alcohol promotion has become less prominent, sports gambling is maintaining a strong foothold in sports advertising. Jones et al. (2020) noted that there are two related arguments for challenging the relationship between English football and gambling companies: One is that the association leads to an increase in the amount of gambling in society, and a meaningful portion of gambling company revenues comes from problem gamblers. The other argument thereby follows that by partnering with gambling sponsors, sports leagues are condoning the effects gambling has on society.

The rise of digital platforms has created new means of reaching consumers with advertising content, and sports gambling advertising is no exception. Although some mediums of communication can be regulated, it is much more challenging to legislate what constitutes permissible content in the online universe. Given what is known about advertising and sports betting—that gambling advertising can influence attitudes toward behavior and even behavior itself—there are concerns about who is being targeted with online advertising (Killick & Griffiths, 2023). As sports bettors tend to be younger than other types of gamblers and overwhelmingly male, there are concerns about increases in gambling among an impressionable group. The COVID-19 pandemic increased these concerns: The United Kingdom’s Gambling Commission reported that in March 2020 virtual sports betting increased 88 percent and online poker increased by 53 percent from the previous year. It is believed that the time at home combined with the greater exposure to gambling advertising may have driven increased gambling spending, potentially translating into significantly more problem gamblers over time (Kropshofer et al., 2020).

Although the law sets a floor for allowable content, companies are free to establish higher standards. To date, there has been a great deal of coverage on the influx of sports betting advertising in the U.S. market (see, e.g., Hernandez, 2022). Many of the publicly announced changes to advertising strategy have been driven by a desire to rein in spending rather than concern about the ubiquity of advertising. The high cost of customer acquisition is causing some companies to reevaluate their spending tendencies, and one does not need to watch television for long to see a sports betting advertisement. The U.S. market remains young, and there are concerns that it may be several years behind the United Kingdom, which experienced a wave of problem gambling and has since tried to reel back the content of gambling ads.

Limits on Advertising

It might be easy to suggest that gambling companies should not be able to advertise to protect vulnerable populations, but this type of broad-based restriction is likely not feasible in the United States because of the First Amendment to the U.S. Constitution. The First Amendment states the following:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. (U.S. Const. amend. I)

This single sentence is one of the most powerful restrictions on the government’s ability to control speech. Through the Fourteenth Amendment to the U.S. Constitution, the First Amendment has been incorporated to include state action, which covers acts by state governments and agencies conducting government functions, such as state gaming regulators. Commercial speech, the category of speech into which advertising falls, receives less constitutional protection than the highly protected political speech, but courts still extend commercial speech significant protection. Commercial speech can only be restricted if the government is able to satisfy a test established by the Supreme Court in Central Hudson Gas and Electric Company v. Public Service Commission of New York (1980). The Central Hudson test, as it is now known, asks whether the speech is for something legal and whether the speech is truthful; if these conditions are satisfied, a court asks the following:

  • Does the government have a substantial interest in restricting speech in this area?
  • Does the regulation act to directly advance that governmental interest?
  • Is the regulation narrowly tailored and not vague or overly broad in its scope?

Despite criticisms, Central Hudson remains the test used to analyze the constitutionality of restrictions on commercial speech. Some have argued that the Supreme Court has even taken steps to further increase protections around commercial speech in recent years (Hudson, 2017).

The Supreme Court Weighs In on Gambling Advertising
The Supreme Court has twice addressed the legality of different gambling advertising schemes. In United States v. Edge Broadcasting in 1993, the Supreme Court addressed the permissibility of a North Carolina–based radio station that broadcasted into Virginia advertising the Virginia lottery. At the time, the lottery was legal in Virginia but prohibited in North Carolina. The Court ultimately concluded that the government’s interest in restricting lottery advertising constituted a substantial government interest and that the restrictions disallowing the advertising of the lottery were directly related to advancing the government interest and were no more restrictive than was necessary to achieve the government’s objective.

Six years later, in 1999, the Supreme Court decided another case on gambling advertising in Greater New Orleans Broadcasting Association v. United States. The Greater New Orleans Broadcasting Association case centered on a federal law that banned the broadcasting of advertisements for casinos. After Louisiana legalized riverboat gambling in 1991, operators sought to advertise on local radio stations. Following threats from the Federal Communications Commission of fines if casino advertisements were not pulled from the air, the Greater New Orleans Broadcasting Association, a trade group representing broadcasters, filed suit for a declaratory judgment that the federal law the Federal Communications Commission was citing violated the First Amendment. The Supreme Court agreed unanimously with the trade association, striking down the law. It is worth noting that prior to the Murphy decision, the Greater New Orleans Broadcasting Association case was the only time that the Professional and Amateur Sports Protection Act (PASPA) was mentioned in its 25-year history by the Court. Justice John Paul Stevens noted that some of the act’s exemptions had “obscured congressional purposes” (Greater New Orleans Broadcasting Association v. United States, 1999, p. 179).

Federal and State Regulations
Despite the Supreme Court precedent, the federal government from time to time has continued to target gambling advertisers. In June 2003, the Department of Justice sent letters to various media outlets advising them that advertising online gambling could result in prosecution under the Federal Wire Act. Many companies stopped taking advertising money from online gambling companies. One website, Casino City, filed a lawsuit against the Department of Justice, arguing that the threats of potential prosecution violated the First Amendment. Casino City argued that the gambling its site advertised was legal and therefore was protected commercial speech. The Casino City case was ultimately settled and voluntarily dismissed, which means there was no precedential ruling (Shorey et al., 2006).

Despite questions about the federal government’s ability to restrict gambling advertising, a number of states have passed laws that restrict gambling advertising. Some states prohibit advertising specifically, with a potentially questionable constitutional basis for doing so, whereas other states prohibit gambling less directly by prohibiting the promotion of gambling (Walters, 2021). States have also imposed various advertising guidelines. Though there is some variation from state to state, common themes include the following:

  • Advertisements should not target minors.
  • Advertisements should provide a toll-free phone number or a website where gamblers who may be demonstrating problematic behavior can receive help.
  • Companies need to make available and known that self-exclusion programs are available for gamblers who may require assistance in stopping their play.

Although not completely unable to regulate advertising restrictions, federal and state governments are confined by the First Amendment. Trade associations such as the American Gaming Association (AGA), however, are able to set their own guidelines for members.

More Excerpts From Business of Sports Betting epub