September 30, 2024
TO: Indian Gaming Association Member Tribes
FROM: Ernest L. Stevens Jr., Chairman
Jason Giles, Executive Director
RE: Representative Tonko Introduces Federal Sports Betting Legislation – “Supporting Affordability and Fairness with Every Bet Act of 2024” (“SAFE Bet Act”)
DATE: September 30, 2024
I. Introduction and Background
On September 12, 2024, Representative Paul D. Tonko (NY-20) introduced H.R. 9590, the “Supporting Affordability and Fairness with Every Bet Act of 2024” (“SAFE Bet Act”) in the House of Representatives. The bill is co-sponsored by Connecticut’s senior senator, Richard Blumenthal. This proposed legislation aims to establish minimum federal standards for sports betting, with a specific focus on mobile sports gambling, and address various public health concerns associated with the industry.
The SAFE Bet Act represents a comprehensive attempt to create a federal framework for regulating sports betting, while still allowing states to opt in and maintain significant control over their individual markets. It reflects growing concerns about problem gambling, public health implications, and consumer protection in the rapidly expanding mobile sports betting landscape. Notably, this bill follows Congressman Tonko’s previous legislative effort, the Betting on our Future Act from the last Congress, which aimed to ban all online and electronic advertising of sports gambling.
II. Key Provisions of the Proposed Legislation
A. State Opt-In System
The SAFE Bet Act would establish a voluntary opt-in system for states wishing to offer sports betting. Under this system, states would need to submit an application to the Attorney General for approval of a “State sports wagering program.” This application would need to include a full description of the proposed program, relevant state laws, and an identification of the state regulatory entity responsible for oversight. The Attorney General would have 180 days to approve or deny the application based on whether it meets the federal standards outlined in the Act. This approach would balance federal oversight with state autonomy, allowing states to maintain significant control over their sports betting markets while ensuring a baseline of national standards.
The Attorney General would have 180 days to approve or deny the application based on whether it meets the federal standards outlined in the Act. Each application approval would be valid for a three-year period and may be renewed. This approach intends to balance federal oversight with state autonomy, allowing states to maintain significant control over their sports betting markets while ensuring a baseline of national standards.
B. Minimum Federal Standards
States that opt in would need to adhere to comprehensive federal standards covering various aspects of sports betting operations. These standards would encompass consumer protection measures, responsible gambling initiatives, advertising restrictions, and regulations on the use of artificial intelligence. For example, the Act would require states to implement self-exclusion programs, conduct affordability checks for large wagers, and restrict certain types of advertising. The legislation would also mandate the use of official league data for settling bets and set criteria for licensing operators. By establishing these baseline requirements, the Act would aim to create a safer, more consistent sports betting environment across participating states.
The Act would also prohibit bets on amateur sports, with some exceptions for Olympics, Paralympics, and College Sports. However, all proposition bets featuring college and amateur athletes would be prohibited.
C. Consumer Protections
The Act would place a strong emphasis on protecting consumers from the potential harms of sports betting. It would mandate the implementation of both state and national self-exclusion lists, allowing individuals to restrict themselves from placing bets across multiple jurisdictions. The legislation would require operators to conduct affordability checks before accepting wagers exceeding certain thresholds, helping to prevent excessive gambling.
Specifically, operators would need to conduct affordability checks before accepting wagers exceeding $1,000 during a 24-hour period or $10,000 during a 30-day period. Additionally, operators would be prohibited from accepting deposits made using a credit card and would be limited to accepting no more than 5 deposits from an individual during a 24-hour period.
To protect consumers’ financial interests, the Act would prohibit operators from imposing unreasonable withdrawal restrictions or dormancy charges. It would also demand clear disclosure of information about bonuses and other offers, ensuring consumers are fully informed about the terms of any promotions they engage with.
The Act would also require operators to maintain a reserve in an amount sufficient to cover all patron accounts and outstanding wagers. This provision would aim to ensure that operators can meet their financial obligations to patrons.
D. Advertising Restrictions
Recognizing the potential for advertising to exacerbate problem gambling, the SAFE Bet Act would set strict federal standards for sports betting advertisements. It would prohibit operators from targeting problem gamblers, individuals with gambling disorders, or those under 21. The legislation would restrict broadcast times for betting advertisements, banning them between 8:00 AM and 10:00 PM local time and during live broadcasts of sporting events. Content restrictions would also be imposed, including a ban on “odds boost” promotions and similar offers. The legislation would also ban betting advertising designed to induce use of gambling products by showing the audience how to gamble or by explaining how wagers work. These measures aim to reduce the pervasiveness of betting advertisements and their potential to entice vulnerable individuals.
E. Use of Official Data
To ensure the accuracy and integrity of wagering outcomes, the Act would mandate the use of official league data for settling bets. This provision would require operators to use data licensed and provided by the applicable sports organization or an entity expressly authorized by the sports organization. After December 31, 2024, operators might be able to use alternative data sources if the state regulatory entity determines they provide substantially similar speed, accuracy, and consistency. This approach would aim to prevent disputes over bet outcomes and maintain trust in the betting system.
F. Licensing and Suitability
The legislation would establish stringent criteria for licensing sports wagering operators and determining their suitability. State regulatory entities would need to conduct thorough background checks and investigations on prospective operators and key personnel.
The Act specifies several factors that would make an operator unsuitable for licensing, including:
- Past involvement in illegal internet gambling activities
- Tax delinquencies
- Certain criminal convictions
- Failure to provide required information or providing false information
- Involvement with entities that have accepted illegal wagers from U.S. residents
- Purchase of assets from entities that have accepted illegal wagers
G. Public Health Measures
The SAFE Bet Act would implement several provisions aimed at addressing the public health implications of widespread sports betting. Recognizing sports betting as a significant public health issue, the Act would authorize the Substance Abuse and Mental Health Services Administration (“SAMHSA”) to conduct an annual National Sports Betting Survey. This comprehensive survey would examine nationwide use rates and outcomes of sports betting, providing valuable data for policymakers and health professionals.
In addition to the survey, SAMHSA would be tasked with creating and maintaining a National Clearinghouse for Self-Exclusion Lists. This clearinghouse would compile data from each state’s sports gambling regulatory entity to create a unified national self-exclusion list. Sports wagering operators, including tribal operators, would be required to check this list before allowing customers to place bets, adding an extra layer of protection for individuals struggling with gambling addiction.
The Act would also require a report from the Surgeon General on the public health impacts associated with the widespread legalization and promotion of sports betting. This report would likely serve as a crucial resource in understanding and addressing the health consequences of expanded sports betting access. To further support problem gambling prevention and treatment, the Act would require operators to allocate a percentage of their revenue to fund related education and treatment initiatives.
Lastly, the Act would establish a National Gambling Addiction Surveillance System to track the epidemiology of gambling addiction. This system would provide ongoing, real-time data on gambling addiction trends, enabling more responsive and effective public health interventions. Collectively, these measures reflect a comprehensive approach to understanding, monitoring, and mitigating the potential negative health consequences associated with the expansion of sports betting.
H. Affordability Measures
The Act would require operators to conduct affordability checks before accepting wagers exceeding $1,000 during a 24-hour period or $10,000 during a 30-day period. This could necessitate new procedures and systems for tribal operators to comply with these thresholds.
I. Technological Considerations
The Act addresses the role of technology in sports betting, particularly focusing on mobile and online platforms. It would require robust location verification measures for mobile betting to ensure compliance with state and federal laws.
The legislation would specifically restrict the use of artificial intelligence (“AI”) in several ways that could impact casino operators:
- AI cannot be used to track the sports wagers of individual bettors.
- AI is prohibited from creating offers or promotions targeting specific individuals.
- AI cannot be used to develop new gambling products, such as microbets.
The Act would also mandate data security and integrity measures to protect consumer information and maintain the trustworthiness of betting platforms.
J. Enforcement Mechanisms
The Act would grant the Attorney General the authority to bring civil actions and impose civil penalties for violations of the Act’s provisions. Civil penalties could be up to the greater of $10,000 or 3 times the amount of the applicable sports wager for each violation. This enforcement mechanism would apply to all operators, potentially including tribal operators, and could result in significant financial penalties for non-compliance.
Overall, these key provisions collectively aim to create a comprehensive federal framework for regulating sports betting, with a particular focus on addressing public health concerns and consumer protections in the mobile sports gambling industry.
III. Provisions Explicitly Directed Toward Indian Tribal Gaming
The SAFE Bet Act contains several provisions that are relevant to tribal gaming operations:
- Definition of “Governmental Entity”: The Act’s definition of “governmental entity” explicitly includes Indian Tribes. This could have important implications for how certain provisions of the Act are applied to tribal gaming operations, potentially giving tribes similar rights and responsibilities as states in implementing and enforcing the Act’s sports wagering regulations.
- Tribal-State Compacts: The legislation would explicitly recognize the validity of tribal-state compacts for sports betting. This acknowledgment would align with the existing framework established by the Indian Gaming Regulatory Act (“IGRA”) for regulating tribal gaming activities.
- Interstate Sports Wagering Compacts: The Act would allow for interstate sports wagering compacts, which could include agreements between tribes and states or between multiple tribes. This provision could potentially expand opportunities for tribal operators to offer sports betting across broader geographic areas.
- Server Location: The Act clarifies that bets made through servers located on Indian lands would be considered to occur on Indian lands if the sports wager and the server are in the same state, and if the applicable state and Indian tribe have entered into a Tribal-State compact authorizing the placing of sports wagers through interactive sports wagering platforms. This provision could potentially impact how mobile or online betting originating from tribal lands is regulated.
- Non-Preemption Clause: The legislation explicitly states that it would not preempt or limit the authority of tribes to enact more stringent measures regarding sports wagering. This clause suggests that tribes may maintain their ability to implement additional regulations beyond the federal standards, should they choose to do so.
- Taxation: The Act specifies that it would not affect the ability of tribes to tax sports wagering within their jurisdictions. This provision would leave intact the existing taxation arrangements for tribal gaming operations.
Tribes may need to carefully analyze the implications of this legislation in the context of their specific gaming operations and existing agreements with states. As the bill progresses through the legislative process, there may be opportunities for tribal input to further clarify or address concerns related to tribal gaming interests.
IV. The SAFE Bet Act’s Potential Impacts on Tribal Gaming
The SAFE Bet Act, while establishing a federal regulatory framework for sports betting, would not supersede or alter the existing structure established by IGRA for tribal gaming operations. Tribes’ ability to offer sports betting would continue to be primarily determined by their tribal-state compacts, not by whether their state opts into the federal program proposed by this legislation.
However, the Act could still have several implications for tribal gaming operations:
- Regulatory Compliance: While the Act establishes federal standards for licensing and operating sports wagering businesses, it does not explicitly exempt tribal operators from these requirements. The potential applicability of these standards to tribal gaming operations remains an open question and may require further legal clarification or potential litigation to resolve. The interaction between this new federal framework, IGRA, and tribal-state compacts is complex and subject to interpretation. If these standards were to apply, tribal gaming operations engaging in sports betting might need to adapt their gaming enterprises to ensure compliance with these federal standards, in addition to their existing regulatory obligations under IGRA and tribal-state compacts. This could potentially lead to increased operational costs or procedural changes, particularly in areas such as consumer protection, responsible gaming measures, and data security. However, the extent and nature of any such impacts would likely vary depending on existing tribal operations and compact terms.
- Competitive Landscape: In states where both tribal and commercial operators offer sports betting, the Act could influence the competitive environment. If commercial operators become subject to the federal standards, it may create a more level playing field. Conversely, if tribal operations are exempt from certain provisions due to their sovereign status, it could potentially provide a competitive advantage.
- Mobile and Online Betting: The Act’s provisions regarding servers on tribal lands could provide clarity on the regulatory treatment of mobile and online sports betting originating from tribal lands. This could potentially expand opportunities for tribes to offer such services, depending on the terms of their existing compacts and state laws.
- Future Compact Negotiations: While the Act would not directly impact existing compacts, the federal standards it establishes could influence future compact negotiations between tribes and states. States may seek to incorporate some of these federal standards into future compacts, which tribes would need to consider in their negotiation strategies.
- Integrity and Data Provisions: The Act’s requirements regarding the use of official league data and integrity monitoring could affect how tribal operators manage their sports betting operations, potentially requiring new partnerships or data agreements. This requirement could necessitate significant investments in data security infrastructure for tribal operators.
- Public Health Measures: The Act’s emphasis on problem gambling prevention and treatment could lead to increased focus on these issues within tribal gaming operations, potentially requiring enhanced responsible gaming programs.
It is important to note that the interaction between this federal legislation and tribal gaming rights under IGRA is complex. The actual impact of the Act on tribal gaming operations would likely depend on various factors, including the specific terms of existing tribal-state compacts, the decisions of individual states regarding opting into the federal program, and potential legal interpretations of how this new federal framework interacts with IGRA. As previously mentioned, tribes would need to carefully analyze the final version of the Act, if passed, in the context of their unique situations to fully understand its implications on tribal gaming operations.
V. Next Steps
The SAFE Bet Act is currently in the early stages of the legislative process. It has been referred to the House Committee on Energy and Commerce and the Committee on Natural Resources. As the bill progresses, there may be opportunities for stakeholders, including tribal entities, to provide input on the proposed legislation via tribal consultations.
If enacted, the Act would become effective one year after enactment. States with existing sports betting programs, including those with tribal gaming operations, would have one year to come into compliance with the new federal standards.
VI. Conclusion
The SAFE Bet Act represents a significant attempt to create federal oversight of the sports betting industry while still preserving a degree of state and tribal autonomy. While it includes several provisions that acknowledge tribal interests, it also presents potential challenges and increased regulatory requirements. As this legislation progresses through Congress, stakeholders in the sports betting industry, including tribal gaming operators, may wish to closely follow its development and potential implications for their operations.
The full text of the proposed legislation can be found here: https://www.congress.gov/bill/118th-congress/house-bill/9590/text?s=1&r=1
Please contact Danielle Her Many Horses at dhermanyhorses@indiangaming.org with any questions or concerns regarding this Alert.