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In Regulating Online Sports Gaming, Don’t Let Consumer Protection Become Competition Prevention

In a recent letter to the Federal Trade Commission (FTC), civil rights leader Reverend Al Sharpton expressed grave concerns about the dominance of DraftKings and FanDuel in the online sports gaming industry. He warned that this “gambling duopoly” could have disproportionately harmful effects on Black Americans and other vulnerable populations.

Reverend Sharpton wrote, “The over saturation of the two gambling platforms is negatively affecting consumer protection in the market.” He emphasized the need for action, stating, “The Federal Trade Commission has a responsibility to ensure that there is a level playing field in the online sports betting market and that consumers are protected from any potential harms associated with the lack of competition.”

These statements allude to the critical importance of protecting consumers in the rapidly growing online sports gaming industry. The FTC is charged with promoting consumer choice and ultimately delivering a safe experience for sports gaming enthusiasts.

When a market is dominated by only a couple of incumbents, as is the case with DraftKings and FanDuel, the companies sometimes seek government intervention to protect their market share – rather than continuously improving their products and services. This lack of customer focus can lead to higher prices, lower quality offerings and a general disregard for consumer preferences.

Moreover, governments often unintentionally help incumbents by erecting barriers to entry for new and innovative startups. By engaging in anti-competitive practices, dominant players can effectively shut out potential rivals offering unique and compelling services to sports gaming fans, thereby depriving consumers of the benefits that come with a dynamic market.

As policymakers and regulators consider the future of online sports gaming, they must prioritize the protection of consumers. Most often this is successfully accomplished via a free marketplace. In limited cases, some narrow action may need to be taken, but it should be carefully targeted to protect consumers while still allowing the market to foster innovation and growth. Any regulation should be evidence-based and proportional, striking a balance between protecting consumers and avoiding overly burdensome measures that could stifle competition.

As with any market dominated by incumbents, regulators have to be careful not to let consumer protection become a means of competition prevention

In addition to narrowly tailored regulatory efforts, organizations like the FTC, which are tasked with protecting consumers, can play a vital role in addressing potential issues within online sports gaming. By conducting investigations into alleged consumer harm and enforcing antitrust laws when necessary, the FTC can help to ensure that the market remains open and responsive to the needs of consumers.

Ultimately, the success of the online sports gaming industry depends on its ability to maintain the trust and confidence of its customers. As the industry continues to evolve, it is essential to protect consumers so that online sports gaming will remain a source of entertainment and excitement for millions of fans.