Ohio Gaming Regulator Alleges Sports Betting Advertising Infractions by Barstool

Sports betting has not yet gone live in Ohio, but the state’s gaming regulator has flexed its muscles in relation to one industry player’s advertising efforts ahead of the January 1 launch date.

On December 14, 2022, the Ohio Casino Control Commission (“OCCC”) announced that it had issued a $250,000 fine against Penn Sports Interactive and Barstool Sports in relation to a Barstool event at the University of Toledo last month. According to the Commission, Barstool—presently a marketing affiliate of Penn and soon to be a Penn subsidiary—violated two provisions of the state’s gaming regulations by advertising sports betting to college students and to underage consumers.

Still, state law offers Penn and Barstool the opportunity to be heard on the matter, and the state’s advertising rules seem to permit advertising of the sort at issue in this case. But if it stands, the OCCC’s administrative action could set a dangerous precedent for operators and affiliates nationwide.

Barstool Visits University of Toledo

On November 15, 2022, Barstool hosted the Barstool College Football Show from a stage at the University of Toledo, broadcasting before a live audience in advance of Toledo’s game against Bowling Green State University that night. Although the Barstool College Football Show is a live event, it also appears live on the internet, including on YouTube and Twitter, such that viewers can tune in from across the country and around the world.

Late in this installment, the Barstool hosts discussed the forthcoming launch of the Barstool Sportsbook. Host Kayce Smith announced a promo code that would allow users who “pre-register” for Barstool Sportsbook to access promotional funds for sports betting and Penn casino games. In addition, the online broadcast featured an on-screen banner showing the promo code.

The show otherwise featured some of the same components of many modern sports talk shows, with discussion touching on game forecasts and odds. Of course, betting lines are now a regular component of sports coverage, with national media companies regularly previewing contests with information relevant to sports betting.

Notice of Violation

On December 9, the OCCC delivered to Penn and Barstool a “Notice of Violation” asserting two violations by the companies. The Commission announced the Notice at its December 14 public hearing.

First, the Commission asserts that the companies “advertised or promoted on a college or university campus” in violation of Ohio Adm. Code 3775-16-08(E). That provision states in full:

A sports gaming proprietor must not advertise or promote on college or university campuses located in the state of Ohio except for generally available advertising, including television, radio, and digital advertising. Any advertisement shown to be targeting the area of a college or university campus is not generally available and will be a violation of this paragraph.

The rule extends to affiliate marketers like Barstool via Ohio Adm. Code 3775-16-08(I).

In this instance, Barstool’s show undoubtedly met certain components of the statute: A gaming proprietor’s marketing affiliate advertised and promoted sports betting on a university campus. The provision’s exception—for “generally available advertising, including . . . digital advertising”—will likely factor heavily in the coming proceedings. The OCCC seems likely to argue that by broadcasting from the University of Toledo, wearing Toledo school colors, and promoting the Toledo football game, Barstool’s show “target[ed] a college or university campus” and therefore does not qualify as “generally available.”

On the other hand, the Commission likely cannot show that Barstool’s show or promo code targeted college students alone. The Barstool Sports YouTube channel has more than 1.39 million subscribers, and the Toledo show has been streamed 32,000 times on YouTube alone—a figure far exceeding the University of Toledo’s student enrollment of just over 20,000. Furthermore, the promo code was available to all viewers, not only college students or University of Toledo students.

Second, the OCCC asserts that the companies “targeted individuals under the age of twenty-one” in violation of Ohio Adm. Code 3775-16-08(B)(2). Under that rule, betting advertisements cannot “[t]arget individuals under the age of twenty-one.”

This provision does not include a carve-out for advertisements that are “generally available” to the public. Rather, the parties are likely to focus on the meaning of the word “target,” which is undefined in the state’s gaming laws and regulations. On the other hand, the same data discussed above will likely be relevant to the Commission’s analysis, and it is not clear how the Barstool College Football Show “targets” younger viewers any more than any other sports shows or gaming advertisements.

Broader Implications

The OCCC’s action in this case could serve as a template for future actions in the state and for other regulators considering a stricter approach to legalized sports betting.

For its part, the OCCC circulated guidance on December 23 reminding operators of advertising compliance measures, with a focus on responsible gaming compliance and restrictions on advertising to consumers under the age of 21. There, the Commission reiterated prior guidance requiring operators and advertisers to include conspicuous references to responsible gaming support in all advertisements and preventing operators from targeting younger users.

Ohio’s regulatory action also comes at an interesting time in relation to emerging partnerships in other states. In recent months, several universities have announced formal partnerships with betting operators, including the University of Maryland and the University of Colorado (partnering with PointsBet) and Michigan State University Louisiana State University (with Caesars).

Meanwhile, several other states feature restrictions akin to those at issue in the Barstool case, including Arizona, New York, and Virginia. Meanwhile, Maryland—which launched sports betting last month—bars licensees from targeting “at-risk” individuals with gaming advertisements, a loosely worded standard that could encompass a broad category of consumers.

Potential First Amendment Questions

Regulatory efforts to limit gaming advertisements in this context could also raise First Amendment concerns. Under the U.S. Supreme Court’s decision in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), “commercial speech” is protected by the First Amendment but receives “lesser protection” than other “constitutionally guaranteed expression.” In general, for regulation of commercial speech to be upheld, (1) the regulated speech must concern lawful activity, (2) the regulation must support a substantial government interest, (3) the regulation must directly advance that interest, and (4) the regulation must not be more extensive than necessary to serve that interest.

While no case has squarely addressed the constitutionality of limiting gaming advertisements to college students, a 2013 case before U.S. Court of Appeals for the Fourth Circuit considered the potentially analogous context of restrictions alcohol advertisements in college newspapers.

In Educational Media Co. at Virginia Tech, Inc. v. Insley, 731 F.3d 291 (4th Cir. 2013), the court ruled in favor of newspaper organizations challenging the application of those restrictions, concluding that the regulation was not “narrowly tailored” to serve the government’s interest in reducing underage and abusive drinking. Specifically, the court determined that the challenged rule violated the First Amendment because it “prohibit[ed] large numbers of adults who are 21 years of age or older from receiving truthful information about a product that they are legally allowed to consume.” The court also cited Pitt News v. Pappert, 379 F.3d 96 (3d Cir. 2004), a Third Circuit decision reaching a similar conclusion on similar facts, and Lorillard Tobacco Co. v. Reilly, 553 U.S. 525 (2001), a Supreme Court case that struck down a restriction on tobacco advertising for similar reasons.

The same reasoning likely applies in the gaming context, as a significant portion of college students are 21 years of age or older, such that they are legally permitted to participate in sports betting in Ohio and other states. Accordingly, regulators seeking to block advertising on college campuses might run afoul of operators’ and affiliates’ First Amendment protections.