Senate hearing on sports betting takes unexpected turn, Deutsche Bank analyst says

After describing himself as “a libertarian when it comes to gambling,” Sen. John Kennedy of Louisiana hijacked a U.S. Senate Judiciary Committee hearing on sports betting in order to veer into a discussion of transgender athletes. Kennedy’s digression was also made by Sen. Josh Hawley of Missouri.

“We are not sure how this advanced the discussion on sports betting and we are fairly confident that it didn’t,” noted Deutsche Bank analyst Carlo Santarelli. “We are also fairly confident that Governor [Charles] Baker is not on Amazon, at present, looking to acquire ‘a spine,’” he wrote in reference to the NCAA president, who testified.

Baker, late of Massachusetts, advocated for federal intervention in sports betting. His primary concern is wagering-related harassment of student-athletes. He also proposed outlawing prop bets on college games, which are legal in 19 states, and intensifying prosecution of illegal gambling websites.

Baker was followed by former professional football player and NFL Players Association member John Bademosi, who took the discussion of harassment to the pro level. Under the rubric of protecting game integrity, the ex-footballer proposed outright bans on under bets on player performance and on the acquisition of biometric athlete data.

Problem-gambling-treatment advocate Keith Whyte of the National Council on Problem Gambling advocated a less-sweeping federal role, observing (as Santarelli put it) “that states lack the wherewithal to establish and maintain proper problem gambling support.” In particular, he backed the GRIT Act, which would create a federal-funding mechanism to help people with gambling disorders.

Dr. Harry Levant equated betting with tobacco and drugs as an addictive substance. Levant argued that the federal government should regulate it in comparable fashion. He also termed alliances between social media and sports leagues “unthinkable,” contending that artificial intelligence had transformed “every micro-moment in each game or event into more and more gambling action.”

Santarelli described Levant as “somewhat aggressive,” particularly his argument that the term “responsible gaming” is a euphemism for industry self-policing. He described sports betting as a “public-health crisis.”

Witnesses included Jonathan Bademosi of the National Football League Players Association; NCAA President Charlie Baker; Harry Levant, Northeastern School of Law Director of Gambling Policy; National Council on Problem Gambling Executive Director Keith Whyte; and David Rebuck, former assistant attorney general and former director of the gaming division in New Jersey.

The only witness to vouch for the status quo was David Rebuck. He cited the 2013 inception of sports betting in the Garden State, followed by igaming in 2018, as examples of successful autonomy. While saying he was cognizant of the dangers of unlawful betting markets, Rebuck said, “Federal oversight is clearly not needed.”

Implying that the dice were loaded against the gaming industry, Santarelli wrote that the hearing began with “a heavy focus on the advertising and marketing of sports betting, including a video that highlighted some of the advertisements, as well as clips of the ’60 Minutes’ episode, before a series of clips related to problem gambling.”

The American Gaming Association published a statement agreeing the hearing lacked witnesses from the gaming industry.

“This unfortunate exclusion leaves the committee and the overall proceeding bereft of testimony on how legal gaming protects consumers from the predatory illegal market and its leadership in promoting responsible gaming and safeguarding integrity,” said AGA Senior Vice President of Strategic Communications Joe Maloney. “We remain committed to robust state regulatory frameworks that protect consumers, promote responsibility, and preserve integrity of athletic competition.”

Following the ’60 Minutes’ video presentation, committee Chairman Sen. Richard Durbin of Illinois cited various statistics about gambling disorders, which he said are on the rise. Durbin also pointed to post-game threats made to athletes by disgruntled bettors. He opined that online-sports-betting operators need to do more to address problem gambling and that federal scrutiny is currently needed.

Connecticut Sen. Richard Blumenthal asked witnesses to support his SAFE Bet Act, currently before Congress. Only Rebuck declined to do so, while Levant was particularly supportive.

Newly sworn-in Sen. Adam Schiff of California agreed with Baker that prop bets should be outlawed, implying that he would extend the ban to professional sports. He also voiced concerns about the industry’s limitation and discouragement of winning bettors, querying whether it was justified.

Dr. Jennifer Shatley, the executive director of the Responsible Online Gaming Association, noted in a release that the Senate Judiciary Committee hearing “highlighted some of the opportunities that exist to innovate around responsible gaming.”

“Over the last year, ROGA and its members are creating a strong foundation to help address issues that may impact players’ experience,” Shatley said. “We as an industry will continue to invest in research and technology to evolve responsible gaming programs, tools, and resources. Furthermore, we are working closely with our advisory committee, state regulators, and local entities to help the industry comply with all applicable laws and regulations and support operations according to industry standards.”

Santarelli concluded that the hearing produced more heat than light and in itself was inconclusive, “a trading event and little more.” He felt that the real meat would be in the follow-up to the testimony or the absence of it.

The analyst penned, “We find the lame duck timing of the session to be rather unusual, though interpreting the timing, and the implications, is challenging. We remain of the view that the regulatory and media scrutiny around the industry is elevated at present, though we don’t know that today’s hearing does more to illuminate this view.”