Online Gambling Bankruptcy Protections

MODEL LEGISLATION

Pre- vs Post- Policies

Existing gambling regulations — help lines, counseling, ‘problem gambling awareness’ — were designed for casinos rather than 24/7 mobile betting. These policies help only after someone already has become addicted. They have no efficacy for reducing addiction rates or preventing bankruptcies, both of which have surged in every state that has legalized online gambling. Counseling and help lines only help after families have already lost their life savings.

Policy That Works

Legislation that protects the public must do one of two things:

1. Reduce the likelihood of creating new gambling addictions.
2. Protect individuals and families from going bankrupt.

Model Bills

1. Cross-Operator Loss Limit + Mandatory Cool-Off
   • Establishes a statewide Responsible Gambling Limit System (RGLS).
   • Defines “net loss” and a loss threshold that triggers a mandatory cooling-off period.
   • Requires operator reporting and real-time checks before wagers and deposits are made.
   • Includes privacy limits, error review, civil penalties, and license sanctions.
2. Duty to Intervene for Problem Gambling
   • Requires the regulator to define auditable “High-Risk Gambling Indicators.”
   • Mandates operator monitoring and a “hard stop” suspension when indicators are met.
   • Prohibits inducements and limits marketing to high-risk patrons; requires notices.
   • Includes reporting, audits, privacy/fairness requirements, and civil penalties.
3. Require Spousal Consent for Joint Accounts
   • Prohibits funding from joint accounts without written consent of other joint owners.
   • Requires disclosures, verification standards, and patron attestation.
   • Provides revocation rights and rapid de-linking after revocation.
   • Includes recordkeeping, audits, penalties, and rulemaking.
4. Prohibit Credit Card Deposits
   • Bans credit-card deposits and other credit-funded wagering transactions.
   • Prohibits operators from extending credit for wagering.
   • Defines permitted funding methods and requires compliance controls and disclosures.
   • Includes penalties, license discipline, and rulemaking.
5. Mandatory Waiting Period Between Deposits and Bets
   • Imposes a mandatory waiting period before deposited funds can be wagered.
   • Requires segregating in-waiting-period funds and clear consumer balance displays.
   • Prohibits promotional or product-based circumvention of the waiting period.
   • Includes penalties, audits/recordkeeping standards, and rulemaking.
6. Prohibit Inducements and Promotional Bonuses
   • Defines inducements broadly and bans bonuses, “free bets,” cashback, boosted odds, etc.
   • Prohibits VIP host programs and referral/affiliate recruitment incentives.
   • Provides limited exceptions for error correction and non-promotional accommodations.
   • Includes audits/records, civil penalties, and rulemaking.
7. Raise Minimum Age for Mobile Sports Wagering to 25
   • Raises the minimum age for mobile sports wagering to 25.
   • Requires robust age verification and controls against account sharing.
   • Requires suspension/closure of existing underage accounts and return of balances.
   • Includes operator penalties and rulemaking (with optional patron misrepresentation penalties).
8. Advertising Restrictions + Required Warnings
   • Restricts sports wagering advertising in public places, including outdoor and transit.
   • Requires prominent addiction/financial-harm warnings on permitted ads.
   • Prohibits misleading content and includes an optional “live sports” ad restriction module.
   • Enforces via license conditions, civil penalties, and rulemaking.
9. App Store Age-Gating for Gambling Apps and Ads
   • Requires app stores to enforce the state minimum age for wagering app downloads.
   • Prohibits app-store ads being shown to users under the minimum legal age.
   • Requires operator certification, records, and audits of age-gating settings.
   • Enforces via license conditions, civil penalties, and rulemaking.
10. Prohibit In-Game (In-Play) Betting
    • Prohibits sports wagers placed after a sporting event begins (“in-play” / “live” betting).
    • Requires market closure before and during the event.
    • Requires compliance controls, auditable logs, and incident reporting.
    • Includes civil penalties, license consequences, and rulemaking.
11. Close the “Investment Contract” Sports Gambling Loophole
    • Defines sports-event outcome contracts and treats them as sports wagers for state purposes.
    • Prohibits offering/trading such contracts in-state unless authorized under sports wagering law.
    • Provides Attorney General + regulator enforcement authority, including injunctions.
    • Includes civil penalties, coordination authority, and rulemaking.
12. Economic Impact and Inflow/Outflow Reporting
    • Requires an annual economic impact report plus periodic independent comprehensive studies.
    • Mandates inflow/outflow reporting (in-state vs out-of-state payments and profit flows).
    • Requires operator submissions with confidentiality protections and no patron-level disclosure.
    • Funds via operator assessment and includes penalties and rulemaking.
13. Effective Public Health Messaging on Gambling Harms
    • Creates a statewide public health education campaign on addiction and financial harms.
    • Sets message-quality standards and minimum themes (plain-language, targeted reach).
    • Requires message efficacy polling and annual reporting to the Governor/Legislature.
    • Funds via operator assessment and includes implementation authority.