Big Debate: With Ontario’s regulator banning athletes in gambling advertising, will other NA regulators follow suit?

Yes

Ramy Ibrahim, managing director of Moelis

Although the regulated online gambling market in North America is large, growing, and showing no signs of slowing anytime soon, it is still in its early innings. Compared to more mature markets in Europe, the current phase of development in the North American market has been relatively operator friendly. However, regulators are moving quickly to assert their role in ensuring integrity, responsible gambling, and consumer protections, particularly among underage youth.  

Abroad, signs continue to point to a more restrictive environment developing. Europe, which has been a bellwether of online gambling, has recently tightened restrictions, with further regulation likely on the horizon. The UK’s restriction on celebrity and athlete sponsorship for online gambling, as well as recent restrictions on Premier League jersey advertising, are both prime examples. The recent restrictions overseas have shared a common goal: preventing gambling operators from targeting underage sports fans. This issue has gained widespread support throughout Europe.

In North America, relationships between sportsbooks and colleges are under scrutiny. Less than two years after sportsbooks began signing sponsorship deals directly with universities, several of those deals have been terminated because of public and academic backlash. Furthermore, high-profile incidents at major universities and celebrity athletes caught wagering on sports have catalyzed a national debate on sports betting.

Regulators in North America are taking action. Maryland recently passed regulation that abolishes a university’s right to profit from partnerships with online gambling companies. Ontario will soon prohibit the use of athletes and restrict celebrity endorsements in advertising and marketing for online gambling operators.

For firms in North America, self-regulation may be the best offense to defend against potential over-regulation.

No

Scott Miller, COO of North America at Better Collective

This issue seemed to pick up some steam in Canada after active NHL stars Connor McDavid and Auston Matthews struck advertising deals with sports betting operators BetMGM and Bet99, respectively, in Ontario. At the time, these were dubbed as “groundbreaking” deals because they actually were. Matthews was the first active athlete in North America to strike a betting deal, and McDavid followed shortly after.           

A slew of highly visible advertising campaigns followed, which ultimately led to the crackdown from the Alcohol and Gaming Commission of Ontario (AGCO). But we’ve yet to see this marketing strategy take hold in the US, where operators have instead focused on celebrity endorsers or retired athletes. And given this recent ban in Canada, I doubt the main US operators will pivot that strategy to active athletes any time soon. Part of the reason is the number one league in the US, the NFL, bans its players from endorsing sportsbooks.

I’d guess there’s close to a 0% chance the NFL’s stance on this will change given the recent uptick in gambling-related suspensions. The MLB, NBA, and NHL do allow their players to endorse sportsbooks, but I think we can eliminate the NHL as a possibility in the US. The handle and revenue that sportsbooks derive from the sport isn’t significant enough to justify much investment there. That leaves MLB and NBA as possibilities, with the NBA being of much greater interest. The volume of games and how betting activity tends to skew toward profitable same-game parlays make it a possibility that we could see a major sportsbook sign an active NBA player to its endorsement roster but, again, I wouldn’t view it as likely with what’s happened in Canada and recent athlete scandals involving sports betting.

So, while US regulators could always see what’s happening north of the border and proactively change their regulations, I’m betting it’s not toward the top of their priority list.