The Federal Trade Commission should establish a federal regulatory framework for sports betting.

Well-designed federal regulations prevent addiction by limiting access and protecting the vulnerable.

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The effectiveness of gambling addiction prevention laws depends on their design and enforcement. Well-structured regulations can reduce gambling addiction by limiting access to gambling activities and protecting vulnerable individuals. For example, age restrictions prevent minors from engaging in gambling, lowering the risk of addiction later in life. Additionally, regulations can require gambling operators to monitor players’ behaviors and identify signs of addiction. This may involve tracking spending patterns and offering interventions to those at risk. In this context, trauma-informed care plays a vital role in addressing gambling addiction by recognizing the deeper emotional and psychological factors that contribute to compulsive behavior.

Illegal sportsbooks fund organized crime and expose consumers to risk.

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2026. “Online illegal sportsbooks may look legitimate and can be found with a simple online search. These sportsbooks may be legal for bettors in other countries, but not in the United States. It is the responsibility of each bettor to ensure they wager legally and responsibly. The American Gaming Association estimates Americans bet nearly $64 billion with illegal online sportsbooks and bookies. Criminals use illegal sportsbooks for a variety of reasons, to include tax evasion, ease of entry, and the lack of reporting requirements and betting limits. Organized crime groups often use the money made from illegal gambling to fund other criminal activities, like the trafficking of humans, drugs, and weapons.Placing a wager with illegal sportsbooks puts individuals at risk of extortion and threats of violence, which bookmakers may use to collect debts.

State sports betting laws are inconsistent and failing in the digital age.

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The sports betting regulation landscape is failing: states have filled in the lack of a federal framework with inconsistent regulations…. That fails to address the intricacies of the digital age: Gross 24 [Bennett Gross, Georgetown Law J.D. Candidate 2025; University of Pennsylvania Master of Behavioral and Decision Sciences 2021; Cornell University B.S. 2020. have legalized sports betting in some capacity. Of those states, nine (Delaware, Mississippi, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Washington, and Wisconsin) have limited sports betting to brick-and-mortar establishments and consequently do not allow people to bet on mobile devices. Currently, there are four states (Alabama, Georgia, Minnesota, and Missouri) that prohibit sports betting but are considering legalizing it in 2025.

Turn - Over-regulation pushes consumers to the black market.

Wirtz 25[Bill (consumer policy analyst @ Consumer Choice Center), “Overregulating Sports Betting Only Scores Black Market Wins,” Newsmax, 06-24-2025, https://www.newsmax.com/billwirtz/sports-betting-black-market-regulations/2025/06/24/id/1216255/, DOA 01-23-2026] abhi

Let’s begin with a basic economic truth: When a legal market is smothered by excessive regulation and punishing tax rates, a black market inevitably fills the gap. Legal sports betting apps — where permitted — can offer consumers safe, transparent, and regulated environments.¶ But in many states, such competition is either banned outright or heavily throttled. That leaves room for illegal bookmakers to flourish, often with ties to organized crime, little regard for age restrictions, and zero incentive to protect vulnerable populations.¶ Consider Montana. The state’s only legal sports betting option is run through the Montana State Lottery, which only allows betting on the premises of licensed brick-and-mortar establishments. Smartphone users can download the app, but it becomes functional only when they’re physically inside a betting location.¶ This system is wildly out of step with modern consumer behavior, which demands mobile convenience, not location-based restriction.¶ Worse still, Montana’s SB555 would go even further by expanding the definition of "gambling" so broadly that it might sweep in crypto exchanges and even free-to-play gaming apps.¶ Instead of innovating to provide safe, regulated digital betting, the state is reaching for more prohibitions — an approach that has already failed to suppress black market activity.¶ Taxation is another major barrier. States like New York, Rhode Island and New Hampshire advertise a 50% tax rate on sports betting profits, but due to additional operating costs, effective tax burdens reach a staggering 81%.¶ No other leisure industry faces this kind of punitive financial environment. These high rates make it nearly impossible for legal operators to compete with illicit ones, who of course pay no taxes and incur no regulatory compliance costs.¶ This heavy-handed model is spreading. Massachusetts recently proposed the “Bettor Health Act,” which would raise taxes on digital platforms to 51% — in line with the worst offenders — and add strict advertising bans and daily affordability checks.¶ These proposals, while perhaps well-intentioned, would tie the hands of legal platforms and give illegal operators a wide-open lane.¶ The impact of such policies isn’t just theoretical. The latest research from the American Gaming Association paints a clearer picture of consumer behavior: 51% of sports bettors use only legal platforms, 34% mix legal and illegal options, and only 15% rely exclusively on illegal sources.¶ That 15% is where the problem lies — and that’s the group that good policy should be focused on bringing into the legal fold. But when states limit access to legal, easy-to-use platforms, and raise the cost of doing business so high that legal services become uncompetitive, they unintentionally push more people toward shady alternatives.¶ Contrast this with the more open, competitive frameworks in states like Nevada, Iowa, Wyoming, Kansas, and West Virginia. Nevada may be the gold standard with its full 55/55 score in regulatory rankings, but smaller states are also showing how smart policy can foster a thriving legal market while minimizing illegal activity.¶ The national trend is promising: The number of states where sports betting is illegal has fallen from 15 in 2022 to just 11 today. And that number will likely shrink further, with states like Hawaii, Minnesota, and Texas currently considering legislation to legalize sports betting. These states should take care not to repeat the mistakes of jurisdictions that treat betting as a vice to be controlled rather than a consumer activity to be regulated.¶ The key lesson here is simple: Prohibition and overregulation don’t eliminate demand — they just drive it underground. If policymakers are serious about curbing the black market, protecting consumers, and generating public revenue, they must embrace competitive, legal sports betting markets that are accessible, fairly taxed, and digitally enabled.¶ States that have done so are already reaping the benefits. Those that haven’t — like Montana — remain cautionary tales of how too much control can lead to chaos.¶ Let the legal market work. It’s not just good economics — it’s good policy.

Takeout - State regulations already protect integrity; federal action disrupts them.

SBJ 25 — (Bill Millers, The CFTC must respect state and tribal authority in regulating sports betting, Sports Business Journal, Febuary 27 2025,https://www.sportsbusinessjournal.com/Articles/2025/02/27/the-cftc-must-respect-state-and-tribal-authority-in-regulating-sports-betting/, accessed 2‑12‑2026) //Eliac

Over the last seven years, states have diligently worked to legalize and regulate sports betting, implementing stringent rules to protect consumers, ensure fair play, and generate significant tax revenue, nearly $3 billion in 2024. Today, 40 jurisdictions have established regulatory frameworks that provide crucial oversight for sportsbook operators. These laws mandate key protections, including age verification, geolocation services, anti-money laundering measures, and responsible gaming initiatives. Allowing a nationalized betting market to emerge through event contracts, lightly regulated and absent of these safeguards, would not only severely disrupt an effective framework but fully threaten the very sovereignty state elected leaders have harnessed to legalize — or choose not to legalize — sports wagering.

FTC lacks jurisdiction over gambling, making federal regulation overreach.

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2026. “However, the FTC faces significant limitations. The Supreme Court’s unanimous 2021 decision in AMG Capital Management v. FTC eliminated the FTC’s ability to seek equitable monetary relief such as restitution or disgorgement in federal court—historically the agency’s primary tool for obtaining consumer refunds. The FTC also lacks criminal prosecution authority and must refer such matters to the Department of Justice. Additionally, the FTC has jurisdictional carve-outs for banks, insurance companies, nonprofits, and common carriers. The FTC’s Current Relationship with Gambling With the only exceptions above, the FTC does not currently have direct regulatory jurisdiction over gambling or sports betting. Gambling regulation has traditionally been a state function under the Tenth Amendment, with limited federal criminal law enforcement through the DOJ.