At DraftKings’ Investor Day, the renowned sports betting platform announced a game-changing betting product called “Progressive Parlay.” This new offering mirrors the style and functionality of apps from smaller fantasy gaming operators, hoping to attract some of their growing user bases. Companies like PrizePicks and Underdog Fantasy have faced increasing pressure from industry leaders who allege they operate outside the law.

Progressive Parlay Targets a Specific Market Niche

DraftKings’ new product visually resembles and operates like other fantasy apps, enabling bettors to build parlay cards and potentially win money even if some bets lose. However, it strictly falls under regulated sports betting and won’t be accessible in fantasy-only states. The betting giant did not specify a launch date but remained optimistic Progressive Parlay would engage bettors.

“Those are the… things we’re focused on. The customer likes it, but there are so many of those products that can be great financial drivers for DraftKings.”

Jason Robins, DraftKings CEO

A successful launch could significantly bolster DraftKings’ impressive US presence, aiding its growth ambitions. The company’s recent Q3 financial results highlighted the success of its overall strategy and the positive impact of the company’s investments. A successful Kentucky launch means the leading operator is well underway to a record-breaking fiscal year.

DraftKings’ ability to swiftly recognize and adapt to industry trends has been one of the leading factors for its unparalleled success. Its newest Progressive Parlay product directly responds to the rising popularity of fantasy gaming, offering a similar experience for real-life sports. The gambling giant hopes it will attract new types of players, helping it compete against more niche operators.

Fantasy Sports Operators Remain on the Rise

Established operators like DraftKings argue that prop products like those offered by fantasy gaming companies are a form of gambling and should be subject to appropriate regulations, lobbying state legislators to take action. However, the fantasy operators disagree, emphasizing DraftKings’ and FanDuel’s origins as upstart fantasy operators in legal grey areas.

The intensifying feud has escalated as smaller fantasy gaming companies exhibit substantial growth in popularity and revenue. For instance, PrizePicks, operating in Arizona, reported $28.2 million in entry fees this year through August, significantly surpassing DraftKings and FanDuel in the fantasy realm. However, the two companies recorded $115 million in traditional mobile wagers, highlighting their massive scale.

While modest compared to the betting giants, the success of these smaller fantasy companies highlights their well-designed user experience and willingness to offer products in states where sports betting remains illegal. DraftKings’ new product hopes to match some of these offerings, leveraging its leadership position to increase competitiveness in regulated markets.

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According to Australia’s ABC News, residents there are being targeted by at least one online casino through Facebook even though the operator has been formally warned not to solicit business there.

Australians are free to play wherever they wish with no fear of criminal penalties, but harsh civil and criminal penalties can be levied against operators that are not licensed there. No online casinos have been licensed since the law was amended to codify such penalties.

Several years ago, Facebook changed its policy of not allowing any entity to advertise online gambling services on its platform to allow “authorized gambling partners”. For a company to be considered for “partnership” it is purportedly required to show that its advertising is lawful in the target market.

BTC Casino Finds Ways to Reach Australian Customers

The online gaming site behind the controversy is Bitstarz, one of the first and most successful BTC casinos online. The Australian Communications and Media Authority (ACMA) found in 2021 that BitStarz provided a “prohibited interactive gambling service” to Australians and the authority issued a formal warning to the company.

Since the Gambling Act Amendment of 2001 was given prosecutorial teeth in 2017, the ACMA has blocked over 700 websites from appearing on the internet for residents with Australian IP addresses.

For some background, Facebook advertisers are given access to a backend system that allows them to create a variety of metrics in order to target ads to highly specific groups of users, including particular regions. In an effort to stem the tide of misinformation targeting specific users, viewers are able to bring up information about “why am I seeing this?” and one of the metrics identified by the news outlet was a direct target of viewers in Australia.

According to the report, the ads also included images of the Australian flag, “leaving little doubt about the intended audience.”

Professor Daniel Angus, from the Queensland University of Technology, is a chief investigator for the Australian Ad Observatory – a project run by nine Australian universities.

“Meta needs to do a whole lot more here,” Professor Angus says. “There are several civil society organizations, universities, and others, regulators indeed, who would be willing to help them come up with stronger protections … to ensure these kinds of ads don’t make it out into public.”

“If I was a regulator, I would certainly be asking Meta [Facebook]

.”

Australian Broadcasting Corporation (ABC) is an Ad Observatory project partner as well as the national broadcaster of Australia. It is funded by direct grants from the government and administered by a board appointed by the government.

Does Facebook Actually Breach Australian Law?

In most countries, including Australia, the US, and other large markets, Facebook enjoys certain potential immunities from prosecution or other liability as it is considered a “platform for ideas” rather than a publisher. So, while Bitstarz would appear to be directly violating Australian law, it is much more difficult to determine whether or not Facebook is as well.

Whereas it would be clearly illegal for a radio or television company in Australia to air such ads, “there’s a bit of a loophole when it comes to the digital media platforms that are based overseas in the US,” said Professor Christine Parker from the University of Melbourne law school, a participant in the Australian Ad Observatory.

Dr. Charles Livingstone, a gambling researcher at Monash University argues: “If ACMA doesn’t have the power to block these ads or take them off, then I think the reality is that we have to give them that power,” according to the report.

Most national regulators that block residents from viewing “illegal websites” often use other tools of determent as well such as France delisting online casinos from search engines like Google or even prosecuting financial service providers when they assist in deposits or withdrawals. Australia is also one of the very few outside of the Muslim world that doesn’t hold a monopoly or a revenue-positive benefit through taxes or other financial incentives to steer residents away from unlicensed sites and through government-sanctioned casinos.

It doesn’t take much imagination or skill for Australians to get around simple ISP blocking, especially when an operator such as Bitstarz runs at least 8 website URLs “mirroring” the main site. In a report on the ACMA and French regulators earlier this week, we counted at least three operators in the French market that had about 50 different iterations each.

In markets with particularly harsh penalties where the operator might face prosecution if caught out, we’ve seen “rotating mirrors” with only about a dozen addresses out of several more dozen active at any given time – presenting a cat-and-mouse chase for regulators who are more likely to visit a “dead” websites as a “live” one at any given hour of any day.

“Some illegal online gambling services attempt to circumvent blocking by setting up alternate websites, but the ACMA continues to monitor for and take action against, such websites,” a spokesperson for the ACMA told the ABC.

Offshore Casinos Can Operate with Impunity

While regulators are not shy about issuing official warnings or using some of the tools at their disposal to deter Australians from gambling at unauthorized sites, even potential criminal penalties or civil penalties as high as A$10.3 million a day do not seem to stop offshore companies that are beyond the reach of local prosecutors.

According to the ABC, Bitstarz‘s parent company, licensed in Curacao, has been issued 48 formal warnings by the ACMA for breaching the Interactive Gambling Act. According to one affiliated website, the company runs as many as 70 different core labels, white labels, or online storefronts before and that number is before counting any variations on the URL, obfuscating iterations, or mirrors.

An online gambling inquiry by parliament is currently underway and expected to be completed and handed down later this year. One inquiry focus will reportedly be the effectiveness of Australia’s current efforts to keep residents away from unlicensed gambling websites.

Source: Online casinos based offshore are illegally targeting Australians on Facebook. Who is responsible? The ABC, March 21, 2023

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