ESPN Bet And Fanatics Present New Regulatory Challenges For NC Lottery Commission

Ohio and Massachusetts gaming regulators have passed regulations limiting Fanatics and ESPN Bet, which could influence North Carolina regulators preparing to launch online sports betting.

The North Carolina Lottery Commission is drafting the rules for sports betting in this state. NCSharp expects both Fanatics and ESPN Bet to be among the largest books applying for online licenses in the state. Moreover, we believe they will be two of the biggest sportsbooks to vie for third position behind industry leaders DraftKings and FanDuel.

NC online sportsbooks will launch at some point in the first six months of 2024, by statute.

Ohio bans cross-promotions; Massachusetts requires 21+ warnings

Both Ohio and Massachusetts gaming regulators have come down hard on operators over advertising and marketing tactics. With Fanatics entering the sports betting industry from sports memorabilia and ESPN Bet entering from sports media, both brands have challenged regulators to ensure that sports betting content does not leak into other types of content.

In October, the Ohio Casino Control Commission passed a regulation prohibiting Fanatics from promoting its new sportsbook app during transactions unrelated to betting.

For example, when a customer buys merchandise at a Fanatics sports apparel store and receives a promo for bonus bets to the Fanatics betting app, that type of cross-promotion by a brand would be prohibited in Ohio.

In Massachusetts, regulators with the Massachusetts Gaming Commission recently expressed concern over PENN Entertainment’s planned rebranding of its sportsbook from Barstool to ESPN Bet.

The MGC is concerned that ESPN’s broad reach, epitomized in such shows as College Gameday, will lead to sports betting content reaching underage viewers. As such, they’ve required all sports betting branding within view of a major sports stadium to carry a 21+ warning.

How will North Carolina oversee ESPN Bet and Fanatics sportsbooks?

The questions beg to be asked: Would the North Carolina Lottery Commission do the same thing that Ohio and Massachusetts have done? If it moves to rein in sports betting brands’ marketing efforts, how would that impact operators like ESPN Bet and Fanatics, which market heavily outside of the sports betting spectrum?

NC gaming regulators will debate these and other important issues for sports betting, such as whether to allow prop bets for college sports. A framework for the sports betting rules was released last month, and a public comment period just closed on the first batch of those proposals. A second batch of rules will likely be unveiled during the next NCLC meeting on Nov. 7, and a new public comment period will soon follow.

For now, the proposed rules presented by the NCLC do not contain specific language that would restrict Fanatics from devising promotional offers or require online sportsbooks to display 21+ warnings.

Indeed, this first batch of rules focused heavily on definitions and deadlines. We can expect the NCLC to wade further into the regulatory weeds once it codifies the necessary definitional framework.

The regulatory concerns presented in Massachusetts prove that some who oversee sports betting operators worry that ESPN mixed with betting could be a behemoth that’s difficult to control. Sterl Carpenter, deputy executive director of sports betting for the NCLC, came to North Carolina from Massachusetts.

Carpenter and other regulators in North Carolina may add rules that protect vulnerable parties from unwanted gambling promotions. We expect them to pay special attention to those under 21 who live on a college campus or attend a university. This because the state has legalized betting on college sports, including in-state colleges, and student gambling protections remain a top priority for the NCAA.

About the Author

Dan Holmes

Dan Holmes writes about sports betting, sports media, and sports betting legislative matters. He's the author of three books, and previously reported for Major League Baseball, as well as the National Baseball Hall of Fame and Museum.