Online-gambling giants conquer U.S. with tactics deemed too tough for Britain

Flutter’s Chief Executive Peter Jackson publicly apologized for failing to intervene, saying the company had a responsibility to do so “when our customers show signs of problem gambling.”

Over the next few years, another one of Jackson’s customers — this time in America — spiraled even further out of control, gambling millions of dollars of stolen money with Flutter’s U.S. brand FanDuel. Amit Patel, then a mid-level finance manager at the Jacksonville Jaguars football team, deposited $20 million of his employer’s money into his FanDuel account between 2019 and early 2023, and then lost most of those embezzled dollars, according to court documents. Patel and the British animal-shelter chief each pleaded guilty to fraud.

Despite the enormous sums, FanDuel didn’t question the source of Patel’s funds until late 2022, his lawyer, Alex King, told Reuters. Patel’s annual salary was less than $90,000, King said. FanDuel not only didn’t intervene as Patel’s losses snowballed, according to King, but also assigned Patel a VIP customer representative who encouraged him to continue gambling.

Flutter and FanDuel didn’t answer questions about Patel.

In Britain, where online gambling is more established than the United States, Flutter and other bookmakers have in recent years acknowledged some of their previous practices risked causing harm and ended those practices. Some have also publicly accepted a responsibility to protect customers from problem gambling as cases of addiction, suicide and gambling-related crime stacked up there.

In Britain, the two gambling giants volunteered to curtail VIP programs that induce customers to spend more after acknowledging the potential for harm to gamblers. And Flutter introduced protections for bettors under 25 years old, having said “younger people can be more vulnerable to experiencing gambling harm.” Critically, advocates for gambling addicts say, the firms also accepted that keeping customers safe requires monitoring the affordability of their bets and intervening when there are signs of problem gambling.

The two companies haven’t acknowledged that they should be subject to some of the same requirements in America, such as affordability monitoring. What’s more, in the U.S. — where public and regulatory scrutiny of the online gambling industry hasn’t been as intense as in Britain — they employ some practices forbidden by regulators in Britain, including offering some online slots features such as enabling gamblers to set the game to play automatically without even having to watch the screen. Such features encourage gamblers to lose control of their gambling and suffer unaffordable losses, consumer protection advocates say.

Betting online in the U.S., like bricks-and-mortar casinos, is largely regulated on a state-by-state basis. The key difference is that online gambling involves new types of products and bets can be placed round the clock via a mobile phone, a factor that consumer protection advocates say dramatically increases the risk of gambling harm.

In 2020, Flutter CEO Jackson told investors that its UK account managers who oversaw the activities of the most active gamblers weren’t incentivized for the amount customers spent, a point he stressed as “important.” It’s a “way of ensuring we don’t get on the wrong side of that affordability point,” he said.

In the United States, advertisements for roles as VIP account managers on FanDuel’s website visible as recently as April 2024 said candidates would be expected to “increase player activity and drive revenue.” After Reuters asked about the ads in April, FanDuel removed the phrase from its VIP job ads.

And Flutter in 2021 introduced a limit for UK customer bets on online slots games to £10 per spin, or about $13. The world’s largest online gambling company by revenues has said it did so because it had identified a trend in its data that “suggested that customer risk levels may increase more sharply” among clients wagering more.

Online betting companies offer incentives to lure new customers such as bonus bets, which are credits that can be used for wagering. REUTERS/Dado Ruvic/Illustration

When asked by Reuters why Flutter uses practices in the United States that the company acknowledged as potentially harmful in Britain, Jackson said Flutter is committed to high standards of customer protection in all markets it operates in. “We help engineer and lead a race to the top in terms of the standards,” said Jackson, 48, speaking to Reuters in May at the sidelines of the company’s annual meeting in Dublin.

Flutter said in a statement the company operates “in strict accordance” with rules and regulations in the jurisdictions it is licensed in, and implements strategies tailored to the local markets it serves based on maturity and the competitive landscape.

American football star Rob Gronkowski accompanied Flutter CEO Peter Jackson at the company’s New York Stock Exchange listing earlier this year. REUTERS/Brendan McDermid

BetMGM co-owner Entain, in a statement, said it operates in dozens of markets and “it would simply not be feasible or commercially viable to have a ‘one size fits all’ approach.”

“It is true to say right now the U.S. is in its infancy, and there is less of the kind of protections that you see in the UK,” Entain’s Chief Financial Officer Rob Wood told Reuters in April. He defended BetMGM’s practices, saying “we don’t apply low standards anywhere.”

Together, FanDuel and BetMGM account for about half of U.S. online net gambling revenues.

Patel, 31, is currently serving a six-and-a-half-year prison sentence. It should have been clear to FanDuel “that he was gambling very large and growing amounts and having excessive losses,” said his attorney, King. “And they did nothing to dissuade or try to prevent him, or anything but encourage him to continue to gamble.”

‘STILL MATURING’

U.S. Representative Paul Tonko, a New York Democrat who has drafted a proposed bill to regulate the online sports betting industry in America, said the Reuters examination suggests the companies are knowingly putting their U.S. customers in harm’s way.

In March, Tonko announced plans for a bill that would require sports betting operators to introduce measures to help prevent gamblers spending more than they can afford, including not accepting deposits via credit card and assessing a customer’s financial circumstances before accepting large wagers. Tonko told Reuters the companies opposed his bill. Neither Tonko nor the companies provided Reuters with any specifics.

Several analysts told Reuters they don’t expect big regulatory pressure anytime soon for the online operators in America. Some state legislators have proposed advertising restrictions, but for now, the analysts said, state lawmakers are more focused on the potential tax revenue they can raise from online gambling than on curbing the industry.

Jackson, who became Flutter’s CEO in 2018, told Reuters he didn’t foresee federal regulation of the industry in America.

Entain’s Wood, who is 44 and like Jackson is British, said he expects the industry in America to voluntarily improve player protections over time: The market is “still maturing and it’s still working out the best way to self-regulate.”

Common measures aimed at protecting gamblers offered in the United States by FanDuel, BetMGM and others include company ads urging self-restraint, and offering clients the ability to set deposit limits or to “self-exclude” — temporarily suspend their accounts for a period of time. FanDuel and BetMGM also fund research into gambling behavior in America.

However, experts on gambling addiction say these types of measures are insufficient because addicts are not good at exercising self-restraint — a position Flutter and Entain have acknowledged in Britain.

The United States has seen rapid growth in wagers placed online in recent years, fueled by the legalization of sports betting. REUTERS/Eduardo Munoz

Britain requires online betting companies to use data on client behavior to identify potentially compulsive or problem gambling. To help identify people who gamble beyond their means, operators also must seek evidence of the source of large deposits to try to prevent the use of stolen money. Companies also are expected to look at publicly available information, such as what someone does for a living or court judgments on unpaid debts, to check if a customer suffering significant losses can afford it based on their income or wealth. And, if the customer isn’t clearly in a position to afford the losses, the companies are expected to probe further, such as potentially requesting payslips.

Some consumer advocates say that anecdotally they have seen fewer instances of extreme problem gambling being missed and both Flutter and Entain have reported more frequent client interventions. Analysts also say both companies are shifting their client focus in Britain to recreational gamblers, away from very active ones.

Earlier this year, Flutter estimated the impact of new regulations currently being rolled out in Britain will cost up to 250 million British pounds each year in lost revenue.

Joe K, a recovering New Jersey gambling addict who spoke on condition that his surname not be used, said he lost around $250,000 of an inheritance by gambling online during a relapse in 2020.

The 58-year-old former broker and father of two said he placed bets with FanDuel, BetMGM and smaller operators during his spree, playing online slots and poker and placing sports wagers. The games included some slots features barred in Britain, such as high-speed play and $100 spins, he said.

He doesn’t expect online gambling operators to give up growth opportunity voluntarily. “They make their money off compulsive gamblers,” said Joe.

ONLINE BETTING BOOM

FanDuel and BetMGM are flooding American sports fans with advertising, including featuring celebrities such as the former NFL player known as “Gronk.” He is seen here in a screengrab from a video from FanDuel’s YouTube account.

Movie star Jamie Foxx is a BetMGM brand ambassador. In one ad he encourages users to try betting on a variety of outcomes during a game “every time they throw the ball, kick the ball, dribble the ball.” This image was made available to media via Entain’s website. Credit: BetMGM

Representatives for Foxx and Gronkowski didn’t respond to requests for comment.

FanDuel and BetMGM have credited their rapid growth in America in part to the experience they bring from the UK. Among know-how honed in Britain is an emphasis on complex wagers such as parlay bets, which allow people to bet on multiple things happening together with the promise of a bigger payout. Parlay bets typically are much more profitable for companies because customers are less likely to win.

Online sports bookmakers alone took $114 billion of U.S. bets in 2023, according to the American Gaming Association, the industry’s main lobbying group. Across both sports and casinos online, gross gaming revenue — or bets taken minus winnings paid out — was $16.9 billion last year, more than double just two years earlier and up from $1 billion in 2019. That could reach $65 billion of revenue by 2033, according to Goldman Sachs forecasts.

The focus on the American market has come as increased regulations and self-policing of online gambling in the United Kingdom squeezed the companies’ profitability there. Both online sports betting and online casinos have been legal and regulated far longer in Britain than in the United States.