The advertising explosion worries gambling experts

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It’s the first quarter of the New York Giants game and the celebrity players are quickly taking over: During a commercial break, actor JB Smoove scolds the Manning brothers in a cleverly produced ad for Caesars Sportsbook’s online app.

Jump into a Yankees playoff game and comedian Kevin Hart pitches for DraftKings – Major League Baseball’s “Official Sportsbook Partner”.

Do you listen to your favorite analysts analyze the game? The podcast begins with a spot for BetMGM. Relive the highlights on YouTube? Prepare for more betting ads.

Four years after New Jersey helped spread sports betting across the country, online gambling advertising is seemingly ubiquitous, with the industry’s marketing budget increasing by almost 1,000%. That’s raked in millions for the state coffers, but gambling experts see a darker side: a rise in betting among children and young adults, with smartphones making it easier than ever to place bets — and lose big.

“I got a lot of calls, especially early in the NFL season,” said Kevin Hackett, a Bergen County therapist specializing in substance abuse and gambling. “It’s just affecting a lot of people in our community.”

Some of his clients have burned their savings in a gambling frenzy, said Hackett, whose office is in Midland Park. Young men and boys make up a growing number of his patients.

“If you tune in to the local Giants game on a Sunday afternoon, you’re bombarded with ads from a number of different companies,” he said, noting that many advertisers lure newcomers with “free” credits that cover initial losses. “It’s these types of aggressive campaigns that impact the young people in our community, teenagers who see these opportunities and feel like this is a real opportunity to potentially make money.”

According to Nielsen Media Research, online sports betting advertising grew nationwide from $25 million in 2018 to $265 million last year, with spending led by industry heavyweights Caesars Entertainment, FanDuel, DraftKings and BetMGM.

Sportsbook, the companies that take and pay bets, have deals with all major US sports leagues. Broadcasters are now announcing odds in the middle of the competition. MLB streams games through the DraftKings app.

State regulators have taken note, though it’s not clear what they intend to do about the ad blast.

“This is completely off the mark,” said New Jersey Assemblyman Ralph Caputo, chair of the chamber’s Tourism and Gaming Committee.

“This is completely insane. You can’t even turn on a TV without seeing commercials.”

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Caputo said the state has limited control over advertising, which often crosses state and national borders — although New Jersey already imposes some restrictions on gambling ads. Still, he said he’d like to see the State Division of Gaming Enforcement, which oversees the industry in New Jersey, take a closer look.

The industry says it doesn’t target minors who can’t legally gamble online or in-person in New Jersey until they turn 21. The campaigns introduce adults to a legal, regulated betting environment that’s far safer than black market sites, which are often operated outside the US, said Casey Clark of the American Gaming Association.

Offshore bookies “don’t really care if you have the money to make that bet or not, or if you should bet $1,000 on this game,” said Clark, a senior vice president for the trading group. “There are no regular reviews of consumer and betting behavior.”

It’s in companies’ best interests to have a “long-term relationship” with a customer who’s wagered “$20 a weekend for 20 years,” rather than one ruined by a gambling addiction.

A page from Joe Camel’s playbook?

Nonetheless, critics fear that sports betting has taken a page from the playbook tobacco companies that were once used to lure children and teenagers to their products. Consider Joe Camel, the cartoon mascot created by RJ Reynolds Tobacco Co. In 1991, the Journal of the American Medical Association reported that the character was as recognizable as Mickey Mouse to 6-year-olds.

In September, e-cigarette maker Juul settled with 33 states for $440 million over its alleged predatory advertising practices. Gun maker Smith & Wesson is being sued for allegedly targeting young men and teenagers.

“I think it’s exactly the same thing,” said Lia Nower, director of the Center for Gambling Studies at Rutgers University.

“The growth of the market depends on constantly attracting new players, and when you have saturated markets, like we pretty much do in states like New Jersey, the goal is to catch a wider net,” she said. “Kids and teenagers and aspiring adults, it prepares them to gamble at a younger age.”

It is not for nothing that the Garden State has developed into a center of industry – and its consequences. New Jersey legalized sports betting in the Garden State in 2012, in defiance of federal law that restricted the business to Nevada at the time. This led to a lawsuit that eventually made its way to the US Supreme Court, which overturned the federal ban in 2018.

Casino companies in New Jersey and Atlantic City were poised to pounce. According to Sports Handle, a website that covers the industry, betting businesses in New Jersey have raked in $30.5 billion in sports betting since the court ruling, tops in the nation. That generated $2.2 billion in revenue for companies and $265 million in tax payments for the state.

When COVID struck, interest in online gambling and sports betting soared to new heights from which it has yet to retreat.

The gambling hotline is busy

So call the state hotline 1-800-GAMBLER. Calls for help about a gambling problem have more than doubled, from 606 in fiscal 2019 to 1,439 in fiscal 2021, according to the Council on Compulsive Gambling in New Jersey, which operates the service.

Young players are a growing problem, said Felicia Grondin, the council’s executive director.

“I think kids will look at it, probably already look at it, very different from what I did as a kid,” she said. “Children don’t realize that gambling is an illegal activity because it’s just so commonplace,” even though “they may realize they can’t go to a casino.”

Research by the council and Seton Hall University, released in May, found an increase in gambling among freshmen, mainly through sports betting.

The survey of 333 students, most of them at Seton Hall and the New Jersey Institute of Technology, found that 92% expect to wager within the next month. Among this group, 59% were freshmen and 56% said they gambled daily. The stakes often reached $100 per bet.

Hackett, the Bergen County therapist, said friends and family might have trouble recognizing a gambling hobby that’s spiraling out of control.

“The interesting thing about gambling, which is different from other addictions, is that it’s not obvious,” he said. “You know if someone is addicted to heroin or opioids. It will make itself [noticeable] on the person’s appearance.”

Features like the “variety games” offered by DraftKings – online games where you can wager for real money – are a strong draw for beginners, he said.

“They seem like video games, a little online game that you can play, but… you’re depositing real money,” Hackett said. “Of course you are prepared to lose.”

Critics say video games like Fortnite and Rocket League have helped introduce younger children to a gambling culture. The games featured “loot boxes” for a time, which often underage players could use to pay real money to win character or weapon upgrades.

Epic Games, which developed both Fortnite and Rocket League, stopped this practice in 2019. In a court filing last year, the company agreed to provide $26.5 million in cash, credit, and other benefits to customers who purchased random loot boxes. Players can now see the content of what they buy in-game before spending it.

“There are different ways of taking advantage of young people who grew up playing video games” and “turning that into a means of exploiting them,” Hackett said.

Will NJ Restrict Sportsbook Ads?

Grondon, of the State Council on Compulsive Gambling, said the agency has arranged for presentations to K-12 schools about the risks of betting addiction. She would like New Jersey to make it a mandatory part of the state drug and alcohol curriculum. However, New Jersey should go further and enact regulations on marketing for sports betting “just like there are restrictions on advertising for alcohol or cigarettes,” she said.

Caputo, the state assemblyman, said he would like the Federal Trade Commission to establish national rules. “You should monitor these ads and see how exaggerated they are,” he said. “Years ago they did it with alcohol. They did it with other products.”

The State Division of Gaming Enforcement could also be more aggressive, he added, saying, “The ball is theirs.”

Julia Wiacek, a department spokeswoman, said the state’s Casino Control Act empowers the agency to “ensure that gaming-related advertising is not in any way misleading and contains certain language related to responsible gaming.” State law “may also apply to sports betting advertising” that crosses the line, she added in an email.

In a separate interview, Rebuck, the department head, said that marketing to young people is an issue “that will be explored by sportsbooks, teams, leagues, the media and internet companies.” The industry is already feeling the pressure to take a more “balanced” approach, he suggested.

Businesses “want to reach the people they want to reach, not minors,” he said.

“They all have a role to play in making sure this doesn’t lead to negative consequences for the vulnerable and the underage and they know it. I’m very hopeful that all these different operators and players are going to do something.”

Daniel Munoz reports on business, consumer affairs, jobs and the economy for and The Record.

E-mail: [email protected]; Twitter: @danielmunoz100