Les Bernal on the Normalization of Predatory Gambling – Corporate Crime Reporter

The firewall between colleges and the legalized gambling industry has collapsed.

Colleges around the country are now partnering with online gambling casinos and sportsbooks.

In September 2020, PointsBet became the sportsbook of the University of Colorado.

In September 2021, Caesars Entertainment was named the official sportsbook of LSU Athletics.

In December 2021, PointsBet became the official sportsbook of the University of Maryland the first Big Ten School to enter into a partnership with a sportsbook.

And in November 2021, Gonzaga basketball star Drew Timme signed a deal where he will advertise for a local tribal casino Northern Quest Resort & Casino in the state of Washington.

The ground is fertile for a sports betting scandal. How would it play out?

Its not a question of if, its a question of when, Les Bernal of Stop Predatory Gambling told Corporate Crime Reporter in an interview last week. As the money flows in, the risk becomes greater. There is no question the risks will increase. We have seen it in Australia and the UK. Its a dangerous high risk situation for many of these athletes now.

Bernal has headed Stop Predatory Gambling for 15 years now.

Since we last interviewed Bernal in 2016, betting has gone from brick and mortar casinos to everyones cell phone. Sports betting companies are now sponsoring college programs. That would have been unheard of just a few years ago.

Do you agree that despite all of your work, the situation is getting worse?

There is no question it is getting worse. And it will continue to get worse over the next two to three years. ESPN and sports talk shows are relentless in pushing these extreme forms of gambling into peoples homes and onto their smartphones. It is driven by very powerful financial interests. These are multi-billion dollar companies. You have state governments that are using gambling as the preferred way to raise money to pay for public services. This is a new form of taxation now.

These states are not taxing billionaires. Instead, its a lot easier to tax the poor using predatory gambling than it is to get wealthier people to pay more. Public officials of both parties have realized that. And they have pushed gambling as a way to fund public services.

LSU, one of the leading colleges in the country when it comes to big time sports, has partnered with Caesars Sportsbook. In September, 2021, LSU named Caesars as the colleges official sportsbook partner.

They are being driven by greed. And there is no check on this. Not a single state Attorney General has brought an enforcement action against predatory gambling operators. Its open season on everyday people. This is a highly dangerous product. This is not about whether you and I had a friendly wager on the Super Bowl. When you get into the sportsbook, its almost certain that over time you are going to end up losing almost everything.

ESPN now has a reporter they assigned to cover the gambling industry. And he interviewed an Australian bookmaker operating now in the United States. And the reporter asked him how many of your accounts are profitable? Out of 500,000 accounts, only fifty were profitable. Thats from the lips of an ESPN reporter quoting a bookmaker from Australia.

The sportsbooks are making the headlines now. They are saying sign up and get $5,000 worth of risk free bets. But these gambling operators dont make the money on sportsbooks. The sportsbook app is a way to get people to sign up. Then they will market to you online casino gambling apps online blackjack, online slots. Then you will have a Las Vegas casino right on your phone wherever you are 24 hours a day, seven days a week. Eighty percent of the profits comes from the online casino piece. Sportsbooks just get people in the door. And thats true even for the brick and mortar casino model.

Sportsbooks just bring people in, but its the online casino games where these companies just feast on ordinary people.

You compare gambling to alcohol and tobacco. With tobacco, civil lawsuits and the state Attorneys General led a crackdown that changed the industry and dropped smoking rates.

Is there any similar movement by Attorneys General or tort lawyers?

Because state governments are a partner with the gambling industry, not a single state Attorney General has ever brought consumer protection litigation against the industry. Commercialized gambling operators are exempt from truth in advertising regulations enforced by the Federal Trade Commission. And thats because the FTC leaves the regulation of the industry up to the states.

Some of these states get ten percent of their public revenues from predatory gambling.

In what way are these casinos partners with the state?

Those apps are legal only if you partner with the state government. You have to have a license with the state government. These state governments are supposedly regulating these online gambling operators. You have to have a state license.

What about civil lawsuits?

The last high profile civil lawsuit against the industry was in West Virginia. The decision came down in 2016. A federal court in West Virginia deferred to the West Virginia Supreme Court. This was a case about a man who was a CFO of a major company in western Pennsylvania. He became addicted to slot machines. He lost millions of dollars.

The West Virginia Supreme Court unanimously ruled that when West Virginia passed its gambling legislation, it said we have to weigh the pros and cons. And we are going to embrace the economic benefits of gambling and we are going to embrace it as a revenue source. And we have to push aside the impact this will have. We are going to rule unanimously that casinos do not have a duty of care to their citizens. Unlike any other business, they are exempt from having a basic legal duty of care to their customers.

When New Jersey passed a law allowing casino gambling, they included strict limits on advertising. Are there any other states that have strict limits on advertising?

Occasionally when there is pushback against the predatory gambling industry in a state, they will put into legislation loss limits, some restrictions on the amount of advertising. But then after a year or two, the industry gains a foothold and becomes the most powerful special interest in the state. They come in and say we are losing to our neighboring states because we have loss limits. We are not contributing as much as we should be contributing to the teachers, we are not funding public education the way we should be because we have loss limits.

Over time, the gambling industry gets what it wants. There is no check on their power. You need federal action. The states have shown that they cannot handle this responsibility. Its completely open season on their own citizens.

Richard Daynard and others who led the way in civil litigation against the tobacco industry have been writing about predatory gambling. What are the prospects for a mass tort lawsuit against the industry?

Its going to happen. There are many potential cases. But these cases are difficult to bring. To get people to invest their time, we have to show there is momentum for reform. Until the pendulum begins to swing back, the ground for civil litigation isnt fertile. In the next five years, there is no doubt in my mind you will see a strong civil case coming forward. But in the next two or three years, probably not. We are going to sink lower before the pendulum begins to swing back.

Last month, a lobbyist, Jack ODonnell, penned an article in Politico titled The Ugly Truth Behind All Those Fun Gambling Ads. He predicted that unless officials crack down on the flood of advertising, a national crisis of gambling addiction is coming.

This Sunday, Americans are expected to wager nearly $8 billion on the Super Bowl matchup between the Los Angeles Rams and the Cincinnati Bengals, he wrote. This number is nearly twice the amount bet on last years big game.

What explains this staggering increase? Its not just the popularity of the teams. This is the first Super Bowl of the online gambling era.

Sports betting has been legalized in 30 states, plus Washington, D.C., thanks to a 2018 U.S. Supreme Court ruling that overturned the ban on sports betting. Now, more than 100 million Americans live in places where they can legally wager. In 2020, the industry hit $1.5 billion in revenue, a 69 percent increase year to year. And in the first quarter of 2021, it is estimated that revenue rose another 270 percent. But it wasnt until the NFL agreed to allow ads for sports gambling on its telecasts at the beginning of this season that the betting floodgates truly opened.

He ends it with this:

In the business of gambling, the house always wins. They are going to make their money it is just a matter of how many lives will be ruined in the process before they are mandated to change the way they prey on their victims. This Sunday, there will be one loser on the field but as you watch the blitz of gambling ads, think about the millions of losers off the field.

How many lives is it going to take?

Right now, its countless lives. We have twenty million citizens in our country addicted to gambling. That doesnt include all of the people in their immediate family who are impacted by this. At least five other people are impacted by someone who is an addicted gambler.

The people who have been harmed by this have to come forward. If you are an addicted gambler in our country, you are treated like roadkill. How could you be so stupid that you could lose all of that money? Who could lose a million dollars on a slot machine? Dont you know that the machines are rigged against you? How could you lose $10,000 on $30 scratch tickets?

They put all of the onus on the individual. The only way this is going to change is the people who have been victimized have to come forward. And thats whats happening right now.

The United Kingdom has sunk lower than the United States. In the words of a member of Parliament there is an epidemic of child gambling in the UK. And now the pendulum has begun to swing back in the UK for reform. And the victims are driving the reform movement. The victims are coming forward and speaking out.

More than fifty percent of commercialized gambling profits come from people who are addicted to gambling. The business model is based on the addicted gambler. But if any state would stand up to protect their citizens, they would lose all of this money thats coming into the state treasury.

Over time the states have to add more and more extreme forms of gambling. States like Texas went from one dollar lottery tickets to $50 lottery scratch tickets. Citizens who are making the minimum wage have to work a full days labor before you can go and piss it all away on a $50 scratch ticket. And its being marketed as your fastest way to wealth.

State lotteries had their best year ever during the pandemic. State governments during the worst of the pandemic were closed, except for one government program state lotteries and predatory gambling. People were spending their public subsidy checks on lottery tickets.

This is a tax on poor people which are primarily black and brown folks. We continue to shift the tax burden from the wealthy and the middle class to lower income people.

Over the next eight years, the American people are going to lose over one trillion dollars of personal wealth to government sanctioned gambling. If we cut the amount of gambling losses by fifty percent over the next eight years, thats $500 billion that you would put back into the daily lives of the American people. There isnt another policy reform idea from the left or the right that comes close to saving that amount of money.

Who in Congress is standing up to the gambling lobby?

Right now, virtually nobody.

[For the complete q/a format Interview with Les Bernal, see 36 Corporate Crime Reporter 9 (12), Monday February 28, 2022, print edition only.]

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Les Bernal on the Normalization of Predatory Gambling - Corporate Crime Reporter