Bay State regulators have finally settled the advertising rules for sports betting sites — including one bone of contention involving marketing affiliates.
Legal sports betting began in Massachusetts on January 31 at three casinos. Online sportsbooks launched in the state on March 10.
However, even though wagering has begun in the commonwealth, the Massachusetts Gaming Commission (MGC) has still been trying to iron out some of the rules governing sportsbooks and those with which they do business. One debate is over the financial relationships between sportsbook operators and third-party marketing affiliates.
Tweaking the rules
The MGC initially proposed regulations that would ban Massachusetts sports betting operators from entering into agreements with third-party marketing affiliates when compensation for those deals is tied to the number of customers acquired or the volume of wagers placed.
That would block operators from doing business with affiliates such as Covers in Massachusetts, as cost-per-acquisition (CPA) and revenue-sharing agreements are how those relationships function in most other states.
But after holding a roundtable on the matter, the MGC decided to institute a waiver from the CPA and rev-share regulation until April 14. Then, on Monday, the commission approved a new draft of its advertising regulation altogether, which followed comments from the industry and the state attorney general’s office. The former warned the CPA and revenue-sharing agreement ban could have negative consequences, while the latter wanted the regulator to keep the ban in place.
The regulation approved by the commission on Monday would now make operators responsible for the content of all advertising done on its behalf or for its benefit tied to CPA deals, in addition to everything else.
The MGC also dropped its blanket ban on CPA and revenue-sharing agreements for a more targeted prohibition on deals in which an operator pays a marketing affiliate a share of net sports wagering revenue earned from users directed to the sportsbook by that affiliate.
“I think it strikes a good balance between the AG's concerns and the operators' concerns,” Commissioner Nakisha Skinner said of the new regulatory language during Monday’s meeting.
OK with CPA
The decision by the MGC could put some affiliates and operators at ease about doing business in the commonwealth. It also means that the waiver the regulator approved will remain in place until April 14, which is when the new rules kick in prohibiting future net revenue-sharing agreements.
Among other things, the regulation the MGC approved will also require advertisements and promotions for sports betting to disclose whether there is a financial relationship between anyone providing that endorsement or promo to the sportsbook operator.
Furthermore, ads will not be allowed to use people to provide "purported expertise" or sports-betting advice if they are paid by a sports governing body, team, club, or athlete on which someone can wager.
“I'm OK with CPA moving forward because I believe that it will actually curb the onslaught of general advertisements that people are seeing and actually will target those who are seeking out information to play in the market or to actually make wagers,” Commissioner Jordan Maynard said during Monday’s meeting. “But I am somewhat concerned about an unrestricted revenue-sharing at this time.”
