New Google Ads gambling rules seem unfair to some sites and companies

Google has begun to take advertising from gambling companies, but the rules seem unfair to some of the most established websites and operators.

Most large companies will attest that Google Ads (formerly AdWords) is probably the best way to generate interest in a product or service if one can afford it.  Almost everyone on the internet uses the Google search engine and there is no better way to generate interest than to have an ad for a service or product pop up that corresponds to the search being made. That is precisely how companies like Wayfair became so large when someone typed in a search for furniture. Google does have some prohibited products they will not allow to use Google Ads per their terms of service, particularly counterfeit goods and dangerous goods or services (eg. contraband, weapons and tobacco), and they have restrictions on some products and activities. For example, adult content (including strip clubs and sex clubs) are allowed if they don't target minors and the law of the land permits it, but sexual services including escort services are prohibited from being advertised. The same apparently holds true for alcohol and gambling. The following is the exact wording from Google regarding gambling products:

Google gambling adds biasWe support responsible gambling advertising and abide by local gambling laws and industry standards, so we don't allow certain kinds of gambling-related advertising. Gambling-related ads are allowed if they comply with the policies below and the advertiser has received the proper Google Ads certification. Gambling ads must target approved countries, have a landing page that displays information about responsible gambling, and never target minors. Check local regulations for the areas you want to target. Examples of restricted gambling-related content: physical casinos; sites where users can bet on poker, bingo, roulette, or sports events; national or private lotteries; sports odds aggregator sites; sites offering bonus codes or promotional offers for gambling sites; online educational materials for casino-based games; sites offering "poker-for-fun" games; non-casino-based cash game sites.

For that reason, Google always strayed away from allowing gambling ads in the United States. Google changed their tune, however after the U.S. Supreme Court repealed PASPA and originally allowed AdWords for sports betting in New Jersey, Nevada and West Virginia . Recently, Pennsylvania, Rhode Island, Montana, Iowa and Indiana were added.

The new rules are clearly designed to take advantage of the changing regulatory schemes in states that have passed laws to legalize gambling, but are causing frustration and confusion among companies located in jurisdictions that legally allow gambling sites to operate. They are also frustrating companies that accept advertising for those offshore jurisdictions but are not gambling companies themselves. For example, gambling sites located in jurisdictions like Costa Rica, Antigua and Kahnawake can't buy Google ad space and any site that advertises gambling for those sites can't buy Google Ads either. However other sites that offer gambling information and news, such as Vegas Insider, can purchase Google Ads even though they are not licensed by any particular state.  As well, companies that advertise pay per head and tout services are not prohibited from using Google Ads even though they are not technically state licensed.

One industry analyst said that Google's decision is unfair and is very much déjà vu.

"This is the USTR vs. Antigua all over again. If Google truly has a moral objection to gambling then fine, don't allow it. Apple and Microsoft still don't permit gambling ads. But don't say you’re morally opposed in some instances only. That’s what the U.S. government did when they told the WTO they wouldn't allow Antiguan products in the U.S. because remote gambling violated U.S. morals but then argued that remote gambling on horse racing and lotteries in the U.S. was fine because it was somehow different. The WTO said that argument was nonsense and Google's decision to allow gambling advertising in some instances and not others is nonsense too. Companies like Betonline and Bovada are licensed and operating legally in the jurisdictions they are set up, just as FanDuel is in New Jersey." 

I asked Larry Walters, a first amendment attorney whether Google is acting in an unfair manner and he acknowledged that Google may be acting in a way that seems unfair, but as a public company they have the right to do so. He also indicated there is a case in California against a public company that could apply here to some degree:

"Google can make up its own rules when it comes to who is allowed to use its services. If they denied services based on race, creed, religion, sex, or national origin, that will pose a problem. But Google can discriminate against advertisers based on occupation or business model, under current law. There is one case pending in California, brought against Square (the payment processing service) by some bankruptcy lawyers, alleging discrimination based on occupation under California law. So far the court has not ruled on whether there is a valid discrimination claim, and the California statute does not specifically include occupation as a protected class. But that’s the closest I’ve seen to the kind of claim you’re describing. There is no federal remedy available, and we'll see how the courts interpret California's unique statute as that case proceeds."

I also asked Larry why he believes Google may have singled out gambling as the industry to lay down the law and he said it probably had to do with past experiences:

"It may be that Google is treating the sites that have affiliate programs differently than those which simply provide information about betting (like odds), since the Department of Justice has taken the position that advertising online unlawful gambling services constitutes aiding and abetting illegal activity. You’ll recall that Microsoft, Google, and Yahoo! paid millions of dollars back in 2007 for allowing gambling ads, so they likely see this activity as much higher risk than other products and services."

So Google has reversed their moral objections to gambling services in some instances and it is almost certain that companies located in larger states like New Jersey, Pennsylvania and Illinois will use Google Ads extensively, as long as there is competition. And eventually companies in New York and other large states that have licensed and regulated sports betting will advertise heavily with Google Ads as well. All analysts agree, however, that Google Ads will only be beneficial for gambling companies in states where people can sign up and play immediately online. For companies in states that require a bettor to go to a physical location and sign up in person there is little benefit. 

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!

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