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'It's way out of line': With ad spending up 1,000%, sports betting firms entice kids

USA TODAY SPORTS 11/26/2022 Daniel Munoz, NorthJersey.com
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It's the first quarter of the New York Giants game and the marquee players quickly take the field: During a commercial break, actor J.B. Smoove is yukking it up with the Manning brothers in a slickly produced ad for Caesars Sportsbook's online app.

Flip to a Yankees' playoff game and comedian Kevin Hart is pitching for DraftKings − "official sports betting partner" of Major League Baseball.

Listen to your favorite analysts dissect the game? The podcast starts with a spot for BetMGM. Reliving the highlights on YouTube? Prepare for more betting ads.

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Four years after New Jersey helped unleash sports betting across the nation, advertising for online gaming is seemingly ubiquitous, with the industry's marketing budget up almost 1,000%. That's generated millions for state coffers, but gambling experts see a darker side: a surge in betting among children and young adults, with smartphones making it easier than ever to place wagers − and lose big.

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"I've gotten many calls, especially during the start of the NFL season," said Kevin Hackett, a therapist in Bergen County, New Jersey, who specializes in substance abuse and gambling addiction. "It's just impacting a lot of people in our community."

Some of his clients have burned through their savings in a betting binge, said Hackett. Young men and boys make up an increasing number of his patients.

"You turn on the local Giants game on a Sunday afternoon, and you're going to be bombarded with ads from a bunch of different companies," he said, noting that many advertisers entice newcomers with "free" credits that cover any initial losses. "It's these types of aggressive campaigns that are impacting the young people in our community, teenagers who are seeing these opportunities and feeling as though this is a real way they could potentially make money."

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

Sportsbooks, the companies that take and pay out wagers, have inked deals with all the major U.S. sports leagues. TV announcers now announce odds mid-contest. MLB streams games through the DraftKings app.

State regulators have taken notice, though it's not clear what they plan to do about the advertising explosion.

"It's way out of line," said New Jersey Assemblyman Ralph Caputo, who chairs the chamber's Tourism and Gaming Committee.

"It's completely insane. You can't even turn a TV on without seeing an ad."

Windfall: Online sports betting in NJ brings in money — and more gambling addiction. What experts say

More:Six charts show sports betting's digital explosion with NFL season about to kick off

Caputo said the state had limited control over advertising that often crosses state and national boundaries − even though 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're 21. The campaigns introduce adults to a legal, regulated betting environment that's far safer than black-market sites that are often run outside the U.S., said Casey Clark of the American Gaming Association.

Offshore bookies "don’t really care whether you have the money to make that bet or not, or whether you should be betting $1,000 on that game," said Clark, a senior vice president with the trade group. "There are no regular checks on consumer and bettor behavior.” 

It's in the companies' best interests to have a "long-term relationship" with a customer who bets "$20 a weekend for 20 years," he said, rather than one who's ruined by a gambling addiction.

A page out of Joe Camel's playbook?

Nonetheless, critics worry that sportsbooks have taken a page out of the playbook tobacco companies once used to lure children and teens to their products. Think Joe Camel, the cartoon mascot developed by R.J. Reynolds Tobacco Co. In 1991, the Journal of the American Medical Association reported the character was just as recognizable to 6-year-olds as Mickey Mouse. 

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

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

“The growth in the market is dependent on continually attracting new gamblers, and when you have saturated markets as we pretty much do in states like New Jersey, the goal is then to cast a wider net,” she said. “Children and adolescents and emerging adults, it primes them for gambling at a younger age.”

FanDuel, DraftKings and other online gambling apps are displayed on a phone in San Francisco, Monday, Sept. 26, 2022. The campaign that could bring legalized sports betting to California has become the most expensive ballot initiative fight in state history. © Jeff Chiu, AP FanDuel, DraftKings and other online gambling apps are displayed on a phone in San Francisco, Monday, Sept. 26, 2022. The campaign that could bring legalized sports betting to California has become the most expensive ballot initiative fight in state history.

It's no accident the Garden State has become a center for the industry − and its consequences. New Jersey legalized sports betting in the Garden State in 2012, in defiance of federal law that then limited the business to Nevada. That spurred a lawsuit that eventually found its way to the U.S. Supreme Court, which in 2018 struck down the federal prohibition.

New Jersey and Atlantic City casino companies were ready to pounce. According to Sports Handle, a website that covers the industry, betting operations in New Jersey have taken $30.5 billion in sports wagers 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 hit, interest in online gambling and sports wagering surged to new heights from which it has yet to retreat.

Gambling hotline gets busy

So have calls to the state's help line, 1-800-GAMBLER. Calls for aid with a gambling problem have more than doubled, going from 606 in the 2019 fiscal year to 1,439 in fiscal 2021, according to the Council on Compulsive Gambling in New Jersey, which runs the service.

Young gamblers are a rising concern, said Felicia Grondin, the council's executive director.

“Kids, I believe, are going to be looking at it, are probably already looking at it, much differently than I did when I was a kid,” she said. “Kids don’t realize that gambling is an illegal activity because it’s just so commonplace” even if “they might realize they can’t go to a casino.”

Research by the council and Seton Hall University, released in May, found a jump in gambling by first-year college students, mainly via sports betting.

The survey of 333 students, most at Seton Hall and the New Jersey Institute of Technology, found 92% expected to wager within the next month. Among that group, 59% were first-year students and 56% said they gambled on a daily basis. Wagers often reached $100 per bet. 

Hackett, the Bergen County therapist, said friends and family may have a hard time spotting a betting hobby that spirals out of control.

“The interesting thing about gambling, which differentiates itself from other addictions, it doesn’t make itself obvious," he said. "You know if someone has a heroin addiction or an opioid addiction. It’s going to make itself [noticeable] on the person’s appearance."

Features like the "variety games" offered by DraftKings − online games that allow people to bet real money − are a potent draw for first-timers, he said.

"They come off as video games, a little online game you can play, but ... you're depositing real money," Hackett said. "Of course, you're set up to lose."

Critics say video games like Fortnite and Rocket League have helped introduce younger children to a gambling culture. The games for a time featured "loot boxes" that allowed often-underage players to pay real money for a chance to win upgrades to characters or weapons.

Epic Games, which developed both Fortnite and Rocket League, discontinued the practice in 2019. In a lawsuit settlement last year, the company agreed to provide $26.5 million in cash, credits and other benefits to customers who purchased random loot boxes. Players can now see the contents of what they're about to buy in-game before they spend.

"There's various ways to take advantage of young people who grew up with video games" and "turning that into a means of exploiting them," Hackett said.

Fans watch tv screens durig a Jets game viewing party for fans at the FanDuel Sportsbook, located at Meadowlands Racing & Entertainment area in East Rutherford on 09/10/18. © Mitsu Yasukawa/Northjersey.com Fans watch tv screens durig a Jets game viewing party for fans at the FanDuel Sportsbook, located at Meadowlands Racing & Entertainment area in East Rutherford on 09/10/18.

Will NJ restrict sports betting ads?

Grondon, of the state Council on Compulsive Gambling, said the agency has arranged presentations at K-12 schools about the risks of betting addictions. She'd like to see New Jersey make it a required part of the the state curriculum on drugs and alcohol. New Jersey should go further, however, and adopt regulations on marketing for sports betting, “just like there’s restrictions on advertising for alcohol or cigarettes," she said.

Caputo, the state assemblyman, said he'd like to see the Federal Trade Commission set national rules. "They ought to monitor these ads and see how over the top 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 in their court."

Julia Wiacek, a division spokesperson, said the state's Casino Control Act empowers the agency "to ensure that gaming-related advertisements are in no way deceptive and that they contain certain language regarding responsible gaming." State law "may also be applicable to sports betting advertisements" that cross the line, she added in an email.

In a separate interview, Rebuck, the division director, said marketing toward young people was an issue "that's going to be looked at" by sportsbooks, teams, leagues, the media and internet companies. The industry was already feeling pressure to take a more "balancing" approach, he suggested.

Companies "want to reach the people they want to, instead of minors," he said.

"They all have a role to play in ensuring that it does not lead to negative consequences to the vulnerable and the underage, and they know that. I’m very confident that all these various operators and players are going to do something."

Email: munozd@northjersey.com; Twitter: @danielmunoz100

This article originally appeared on NorthJersey.com: 'It's way out of line': With ad spending up 1,000%, sports betting firms entice kids

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