Legal sports gambling has spread rapidly across the United States since 2018, and state legislatures have been establishing the rules of the road.

But as concerns about the rise of gambling addiction grow, two Democratic members of Congress are calling for the states to be held to a set of minimum regulatory standards. 

A bill introduced earlier this month by Rep. Paul Tonko, D-N.Y., and supported by Sen. Richard Blumenthal, D-Conn., is the most sweeping legislative effort yet to address the harms caused by legal sports betting.

The measure — known as the SAFE Bet Act — appears to have little chance of becoming law anytime soon. But it is the opening salvo in a policy debate that has major implications not only for gamblers and sports book operators, but also for banks and payment companies.

“I believe that the onus should be on the sportsbooks to not serve customers who are ‘chasing losses,'” Tonko said in a written statement that compared his proposal to existing laws barring the sale of alcohol to visibly intoxicated individuals.

“To ensure that, my bill prohibits deposits placed by credit cards and requires operators to conduct affordability checks on customers before accepting wagers of more than $1,000 over a 24-hour period or $10,000 in a 30-day period.”

The legislation would bar states from allowing sports gambling unless they met those standards, which are designed to ensure that gamblers can afford to lose the money they bet. The states could go further by enacting even tighter restrictions.

The measure would also establish a floor for the regulation of advertising and the use of artificial intelligence in sports gambling. It would prohibit ads for sports betting during live sporting events, and it would ban the use of AI to create individualized offers and promotions.

The American Gaming Association has assailed the legislation, pointing to the tax revenues that legal sports gambling generates and the fact that the state-regulated industry provides an alternative to bookies and illegal offshore websites.

In a written statement, the trade group also indicated that it believes the correct approach to staving off the harms from addictive behavior is to provide tools and resources to help bettors manage their time and money.

“Six years into legal sports betting, introducing heavy-handed federal prohibitions is a slap in the face to state legislatures and gaming regulators who have dedicated countless time and resources to developing thoughtful frameworks unique to their jurisdictions, and have continued to iterate as their marketplaces evolve,” Chris Cylke, senior vice president of government relations at the American Gaming Association, said in the group’s statement.

Isaac Boltansky, a policy analyst at BTIG, describes himself as “bearish” on the bill’s chances. In a recent note to clients, he wrote that the proposal “lacks bipartisan support, there is little urgency around the issue on Capitol Hill, and there is a natural deference to the state regulatory structures that have taken shape since the Supreme Court overturned the sports-betting ban in 2018.”

Still, the introduction of the SAFE Bet Act is a sign of growing pressure on lawmakers to mount a more proactive policy response to the problem of gambling addiction.

In the last six years, 38 states have legalized sports betting, and 30 of them allow wagers from mobile phones, according to Tonko’s office.

Last year, a survey of roughly 3,500 New Jersey residents found that just under 6% of the respondents were “high-risk problem gamblers” and an additional 13% reported low to moderate gambling problems.

“State regulation is fainthearted and half-baked,” Blumenthal said at a Sept. 12 press conference where he spoke after Tonko. “This bill is a matter of public health. It is a matter of stopping addiction, saving lives and making sure that young people particularly are protected against this exploitation.”

Advocates for gambling reform see banks as well positioned to help address the problem. Banks provide credit — often via credit cards — to bettors who have depleted their savings. And banks hold reams of transaction data that can provide insights about whether a particular customer has a gambling problem.

So far, the U.S. banking industry has kept a low profile on the issue of problem gambling. A spokesperson for the American Bankers Association declined to comment Wednesday on the SAFE Bet Act.

One provision in the legislation that would affect banks is the proposed ban on the use of credit cards to fund accounts at sports books. Such bans are already in place in a handful of states, including Iowa, as well as in the United Kingdom.

Iowa state Sen. Tony Bisignano, an architect of the Hawkeye State’s online sports gambling legislation, said in an interview last year that he believes Iowa’s ban on the use of credit cards in gambling has saved lives.

“I think credit is the final destination before you’re done,” Bisignano said.

But critics of credit card bans argue that there’s an easy way around the restrictions, since cash advances on plastic don’t trigger a gambling-related merchant category code.

The other part of the SAFE Bet Act that has implications for U.S. banks is the proposal for so-called affordability checks.

A similar idea is already in the works in the United Kingdom, where the debate over policy responses to gambling addiction has been underway longer than it has in the U.S.

In April 2023, the U.K. Gambling Commission proposed a system of “financial risk checks” for gamblers who breach certain loss thresholds. Gamblers who rack up bigger losses would be subject to more intrusive checks, which would provide more insight into the bettor’s discretionary income.

The U.K. Gambling Commission has said that it expects most of the checks could be done by contacting credit reporting agencies — and that it is working with the financial services sector to explore how the more intrusive checks would be conducted.

Tonko’s legislation calls for an analogous approach in U.S. states where gambling is legal.

“In practice, sportsbooks would have to verify that the individual depositing more than the established limits isn’t spending more than 30% of their monthly income,” Tonko said in his written statement. “This is a sensible approach to preventing the disastrous financial harms of unchecked sports betting.”