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Mass. gambling regulators look to rein in VIP programs by sports betting apps
The Massachusetts Gaming Commission is eyeing regulations for VIP programs used by online sports betting companies that offer perks to frequent bettors.
VIP or loyalty programs at companies like DraftKings and FanDuel have come under increasing scrutiny over concerns they target gamblers who are losing money and encourage them to keep playing by rewarding them with trips, sports tickets or bet credits.
“VIP programs should be for those who can afford to be VIPs, and it shouldn’t be predatory,” said Chair Jordan Maynard said at the commission's Oct. 9 meeting.
In Massachusetts, an analysis by the gaming commission last month found that online sportsbooks have restricted customers who win regularly, while extending VIP status and rewards primarily to those who often lose.
The commission began reviewing VIP programs used by sportsbooks operating in Massachusetts earlier this year. At last week's meeting, Commission Research Director Mark Vander Linden said that while research is limited, VIP programs are linked to “higher risk gambling behavior.”
He said studies from other countries found VIP customers are more likely to be problem gamblers — and that loyalty programs sometimes weaken the resolve of people who wish to quit gambling or dial back their spending.
Vander Linden’s presentation included some potential regulations that could provide guardrails for customers, including:
- Setting a minimum age of 25 for VIP status and participation. (The legal age to bet in Massachusetts is 21.)
- Requiring affordability checks before granting VIP access. (In the U.K. for example, gambling operators must check bank statements.)
- Eliminating risk-promoting incentives.
DraftKings and FanDuel, the biggest online sports betting companies in the U.S., didn't return requests for comment.
While similar loyalty programs have long existed in brick-and-mortar casinos, the online VIP programs used by sports betting apps rely on “hosts” who communicate through text messages and emails to their VIP customers.
Several lawsuits filed against DraftKings and FanDuel have accused the VIP programs of leading some to gambling addiction and financial ruin. Hosts contacted struggling bettors, sometimes daily, the lawsuits allege. (Two high-profile lawsuits were settled with details not disclosed by the Boston-based DraftKings earlier this year.)
Nationally, some in the sports betting industry have denied that their VIP programs encourage more gambling and say VIP hosts undergo training to recognize problem gambling. They argue VIP programs are no different than customer loyalty programs offered by businesses in other industries.
Massachusetts Gaming Commissioner Eileen O’Brien expressed concern that VIP hosts could be compensated based on how much or often their VIPs bet.
“I want more information about what exactly are the host incentives when it comes to compensation,” she said.
The commission will request more information and data from the gambling companies as it studies VIP programs.
