4 minute read | April.22.2024
Massachusetts Finalizes New Sports Betting Data Privacy Regulations
An Occasional Editorial Comment
Massachusetts regulators have finalized a set of rules covering sports betting operators’ data-privacy obligations. The Massachusetts Gaming Commission (MGC) agreed to several clarifications to its regulations, which were originally adopted in August 2023. To allow for questions to be raised about the new rules, sports betting operators were granted waivers until June 2024, at which point they will be required to comply with the measures.
The final round of changes to the regulations included clarifying that operators could use personal information for necessary commercial purposes, for instance in the event of a merger or acquisition. The rules also prohibit operators from using confidential information to promote certain types of bets to individuals based on “any computerized algorithm, automated decision-making, machine learning, [or] artificial intelligence.” The MGC views these tools as potentially contributing to making sports betting more addictive for certain consumers.
Another amendment clarifies that individualized data can be used to promote responsible gaming practices.
The rules provide for patron rights to access their personal information being held by an operator and to require that their information be deleted when it is no longer required to be retained by applicable law or judicial order.
We have decided to spice up our Updates with occasional editorial comments – this one from practice chair, Behnam Dayanim.
The Washington Post, in an April 11 editorial, focused on recent scandals involving sports leagues and sports betting. The editorial decried the “pernicious” expansion of mobile bets and micro-wagers and the gaming industry’s purported resistance to “virtually all proposals for regulation.”
The paper called for a number of federal measures to address what it sees as these problems.
What struck me most about the editorial is something that I expect would strike any gaming lawyer or executive reading it: in what universe could one conclude that the gaming industry lacks substantial regulation? It is among the most regulated industries on earth.
I think what the paper really meant - or at least what I’d like to think it meant - is that we are regulating the wrong things. The current regulatory model stems from an era when the principal concern was keeping organized crime out of the casino business. Hence, there are extraordinarily burdensome disclosure and suitability requirements.
But that is really not a concern in this age of gaming respectability, with public companies and shareholder reports. Instead, the focus should be on those issues that are important: responsible gaming, responsible advertising, sports integrity and the like.
Railing against gambling is like raging against the weather. It will be with us whether we like it or not. Before legal sports betting, there was illegal sports betting (and there still is - see Shohei Ohtani). What states should do is take a hard look at how they can streamline those regulations that no longer are fit for purpose and examine where new rules may be appropriate.
Keeping that ossified structure in place and layering over it even more (state or federal) regulatory mandates is not the right approach. Contrary to popular belief, in sports betting “the house does not always win,” and, indeed, the industry as a whole has been struggling to reach and maintain consistent profitability. Adding more regulatory overhead without any relief will only exacerbate those issues and make the licensed industry less competitive - driving more activity to unregulated, offshore actors.
Whether the specific proposals identified by the Post make sense, and whether Congress – rather than the states – is the right forum to address them, are separate questions that deserve thoughtful treatment. But allow me one example of unanticipated consequences that may lurk behind some of the paper’s positions: several states – including my own (Maryland) – have banned college prop bets on the theory that, particularly with amateur athletes, they can lead to abuse. So, what happened during the recent NCAA basketball tournament? Unlicensed offshore books advertised that they were accepting those prop wagers. I would be willing to, ahem, wager that their volume increased substantially as a result.
The importance of real reform – considering both adding and removing regulatory requirements – has never been greater. Getting it right would be a worthy challenge for a forward-thinking regulator.