Les Bernal on the Case Against Predatory Gambling

Earlier this year, ahead of Super Bowl LVII, Congressman Paul D. Tonko (D-New York) introduced the Betting on our Future Act, new legislation that bans all online and electronic advertising of sports gambling. 

“This Sunday, millions of families across the U.S. will tune in to watch the Super Bowl,” Tonko said.  “Between the plays, the halftime show, and the excitement, tens of millions will be bombarded by ad after ad from DraftKings, FanDuel and others promising so-called ‘risk free’ or ‘no sweat’ bets in their ruthless pursuit to get new customers hooked on their products.”

“In the years since the Supreme Court legalized sports betting, these unfettered advertisements have run rampant, with betting companies shelling out billions to ensure they reach every screen across America. These ads pose a particularly dangerous threat to adolescents and young adults unaware of the risks involved in gambling, and to individuals prone to addiction.” 

“The excessive, uncensored promotion of these sites needs to be put in check. My legislation puts a halt to this dangerous practice and sends a powerful message to the online sports betting advertisers. Congress must take the necessary steps to reel in an industry with the power to inflict real, widespread harm on the American people.” 

Since the 2018 Supreme Court decision to strike down a federal ban on sports betting, at least 36 states have moved to legalize gambling on sports in some capacity, with 26 states legalizing mobile sports betting. 

In the first ten months of 2022, Americans wagered $73 billion legally on sports, a 70% increase from last year, according to the American Gaming Association. 

Modeled after the Public Health Cigarette Smoking  Act, which banned tobacco advertisements, the Betting on our Future Act takes aim at harmful and pervasive online sports betting advertisements by prohibiting advertising of sports books on any medium of electronic communication subject to the jurisdiction of the Federal Communications Commission. 

To get an update on the move against the spread of gambling nationwide, we checked in with Les Bernal, national director of the public interest group Stop Predatory Gambling.

Since we last spoke, there is a growing backlash against predatory gambling. It seems as if the crisis is peaking. Is it?

“The crisis is definitely more intense than it has ever been,” Bernal told Corporate Crime Reporter in an interview last week. “It’s certainly not peaking. It’s going to get a hell of a lot worse before major reform kicks in. What the American public is seeing right now is an epidemic of child and teen gambling. Commercialized sports gambling is coming into the home through every phone, tablet and computer.”

“For the first time in American history, you have teenagers walking into Gamblers Anonymous meetings across the country. We are talking to high school principals and middle school principals in states that have online sports gambling. And what kids are talking about today at the cafeteria tables and in school locker rooms – they are talking about commercialized gambling. Kids used to grow up collecting baseball cards of their favorite teams and athletes. Now they are talking about sports gambling.”

“Sports gambling is certainly profitable today for the gambling industry. But that’s not where the bulk of the profits are. This has been developing in America for more than 40 years.”

“Why are Americans seeing this crisis for the first time? Because it’s entering the middle class and upper class homes with ads for sports gambling. But if you live in a low income community anywhere in the United States, you have been inundated with gambling ads for the last 40 years.” 

“In a state like Texas, where the minimum wage is $7.25 an hour, the government sells $100 scratch off tickets in low income communities across that state. You have to work two full days at a minimum wage job in Texas to buy a ticket for $100 that you can lose in five seconds.”

“So yes, there is an epidemic of predatory gambling right now. But the reason it’s getting so much mainstream press attention is because it’s now affecting middle class and upper class families. But also this form of gambling, online gambling, is like opening a Las Vegas casino right in your bedroom. It’s more addictive than the forms of gambling that have come before it. But we’ve had a major form of predatory gambling before this.” 

How much money are we talking about?

“The total loss to consumers from state lotteries, regional casinos and online gambling every year exceeds more than $150 billion a year. That’s from all forms of state sanctioned predatory gambling. And that’s a conservative figure. That’s from the state gambling commissions. That equates to more than $1 trillion of personal wealth lost over the next six years.”

“Until states started legalizing sports gambling, it was already legal for people to place a sports bet. Anyone in America could place a friendly wager with a friend. You could have your March Madness bracket, the office pool, a friendly wager on the golf course. It was all legal. What was illegal was you couldn’t run your own sports book. That was illegal everywhere except for Las Vegas and a couple of other places. But that was it.”

“All forms of commercialized gambling are illegal in the United States – with one exception. And that exception is when you partner with a state government. When you go into gambling as a business, it becomes inherently predatory. Unlike any other business, there is an adversarial relationship between the gambling operator and the person who is gambling. The gambling operators are trying to take you down. When you go out to buy a pair of shoes, you go to have a beer, you go to the movies – the business owner is not trying to destroy you. In the gambling business, I’m trying to take you for all you are worth. I’m trying to make you lose.”

“It’s in the same family as price gouging and false advertising. It’s a con. The industry likes to wrap up commercialized gambling like it’s any other form of entertainment. But at the core, commercialized gambling is a financial exchange that’s mathematically stacked against you. The longer you participate, the more frequently you participate, it’s a mathematical guarantee, you are going to lose it all.”

Who are the big online sports book players?

“The states that allow online gambling give out a handful of licenses to specialized gambling companies – MGM, Caesar’s, Penn National. Those are some of the traditional brick and mortar gambling companies that have moved into the online gambling business. You also have these new companies that have merged that came in as fantasy draft companies – companies like FanDuel and DraftKings. Millions of Americans played fantasy sports for decades. It kept people engaged in sports. It was done for fun. But then it became a way to acquire customers as they moved to overturn the nation’s prohibition on online sports gambling.” 

They are also partnering with news outlets like ESPN – 

“And the Associated Press. One of the big online gambling operators has a partnership to post the odds with the Associated Press. The newspapers in states that have legalized online sports gambling all cater to these gambling operators.”

One of the top New York sports podcasters, Mike Francesa, is now sponsored by BetRivers. And back in the day, I remember he was opposed to sports gambling. Now he’s pushing it.

“The sports media is a full partner with sports gambling. It’s podcasting, sports talk radio, the pregame show, the post game show, the stadium advertising. Go to Fenway Park and look at the iconic Green Monster. MGM’s logo is painted on the Green Monster. DraftKings’ logo will come up in the middle of a major league baseball game.”

“When it comes to sports today, they have squeezed the sports around the gambling. Gambling is front and center in American sports today. That’s why you are seeing this massive epidemic of young adults and teens and in many cases children who are now addicted to sports gambling.” 

“A woman who leads a major problem gambling addiction center on Long Island said the number one demographic calling the gambling addiction hotline in New York State is young adults and teens. This is completely self-inflicted. This is a totally new phenomenon just in the last year or two driven by the greed of these big gambling operators, state governments, the pro sports teams and media companies who are all profiting from this.”

“And the advertising is creating the perception that you are not a fan anymore unless you are betting on the game. It’s important for your readers to understand here that this isn’t just about betting on the spread of a game. Gambling on sports is like betting on a slot machine. If you are watching a baseball game, you are betting on every pitch – is it going to be a strike or a ball? In a football game, is this next play going to be a run or a pass? They come up with an unlimited number of bets. Will the quarterback throw for three touchdowns in the first half?”

“You have people paying these parlay bets on almost anything that’s out there. But the real money comes in on in play wagering. It’s a slot machine type experience. Young people literally can’t watch a sporting event anymore without gambling on it. Young people will bet on a football game. And when the football game is over, they will message them with – did you know that there is a Belarusian table tennis game on now that you can gamble on? Or Hungarian bowling. It’s not about the sport. It’s about keeping you in constant gambling action.”

“There is a UK study that shows that 86 percent of online gambling profits are coming from five percent of the gamblers. It’s all about taking the casual gambler and seeing which people will chase their losses. That means – if you lose $50, do you then go and put money back into your account? You put more money on credit, you keep going after it to make up your losses. If you show a likelihood of chasing your losses, they aim their marketing canons right on you. Every minute you stay on that app, at every price point, they know you are going to lose x number of dollars. So they keep incentivizing you with bonus bets, including you with phone calls from a VIP host. They will assign someone to you, to text and call you if you haven’t gambled that day, to keep you in constant action. This is all being done with the blessing of the state governments. It’s the equivalent of putting Dracula in charge of the blood bank.”

Are the states making money on it?

“It’s a budget gimmick. People are losing enormous sums of money on a known, dangerous and addictive product. And for the state, it’s a tiny percentage of the state budget. It costs the states way more than the money they are taking in.”

You say people are losing $150 billion a year on legalized gambling. The American Gambling Association says that Americans place $510 billion worth of bets with “illegal and unregulated operators.”

“Those numbers are not coming from the FBI or some other law enforcement agency. They are coming from the gambling industry. They use a phony number to push states to pass legalized gambling. When they talk about illegal gambling, a lot of it includes the March Madness pool in the office, the Super Bowl wagering in the office pool. That’s a huge portion of it. There are no real numbers on illegal gambling. What we do know is that the American Gambling Association has pushed this phony narrative we need to legalize gambling to wipe out illegal gambling. They have been saying that for 40 years.”

The Los Angeles Dodgers star Shohei Ohtani is caught in a gambling scandal. He says his former interpreter stole $4.5 million and gambled it away with illegal operators. 

“When you legalize commercialized gambling, you normalize the activity. There is no evidence in any state that the introduction of legalized gambling has reduced illegal gambling. If I use an illegal operator for sports, I don’t have to pay taxes. They let me use credit. They give me bigger odds.” 

“That interpreter would not be betting if Major League Baseball had kept its distance from gambling. Instead, it embraced gambling.”

The Cleveland Cavaliers basketball coach Bernie Bickerstaff told a story about how he has been threatened by sports gamblers who bet on the team, they lose their bets and they call and threaten the coach. He says that these are not wealthy people. They are relying on their bets to pay off so they can pay their bills. They are trying to make ends meet.

“I give coach Bickerstaff credit for having the guts to stand up and speak about this. Most coaches see this happening and don’t say anything.” 

Let’s talk public policy. There seem to be some loners in Congress who are pushing for reform. What should Congress do?

“The first one is investigative hearings focusing on these online gambling operators. Put them under oath before Congress and grill them. Have them answer questions about their business models, the data tracking they are using. Put this in a national spotlight. Up until now, this has been a state issue. The states legalized gambling. The federal government has to be the solution. So priority one is to have investigative hearings.”

“Priority two is to restrict gambling advertising and marketing the same way we did for other known dangerous and addictive products like tobacco. Marlboro is not advertising in the middle of a Super Bowl. They don’t have their logo on the Green Monster.”

“This isn’t me saying it’s a known dangerous and addictive product. It’s recognized as that by the American Psychiatric Association (APA). The APA says that gambling addiction is on the same level as opioids, cocaine and heroin addiction. That’s how they categorize.”

“In the name of protecting children, we need to restrict commercial gambling advertising and marketing. That’s priority one. The same model that restricts tobacco advertising and marketing should exist for commercialized gambling.”

“Step three is to make commercial gambling operators legally liable under our nation’s laws the same way that every other company is legally liable. They essentially now have no legal duty of care. In the Scott Stevens case in West Virginia, the West Virginia Supreme Court said there was no legal duty of care in West Virginia. Gambling operators have no legal duty of care to their customers. The court said that the state took all of that into account when they legalized gambling.”

Why not criminalize online sports gambling?

“We would definitely support that.”

But why isn’t it one of your top three?

“It’s hard to go from where we are in 2024 to criminalizing it. It’s hard to have that conversation with people now. Not everyone recognizes the problem yet. By restricting commercialized gambling, marketing and advertising, it’s an acknowledgement that this business is inherently predatory, dangerous and addictive. Then you can move onto not just online gambling, but all the forms of extreme gambling in the public square.” 

“But it’s very hard to have a meaningful conversation about criminalizing online sports gambling when states are selling $100 scratch off tickets to poor people and when you have regional casinos in practically every poor community in this country.”

[For the complete q/a format Interview with Les Bernal, see 38 Corporate Crime Reporter 15(12), April 8, 2024, print edition only.]

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