States with online sports betting receive failing grades for consumer protections, report says

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2025/08/18: Circa Sports and DraftKings to receive mobile sports betting licenses in Missouri 2025/07/07: Consumer protection law firms in California launch lawsuit against DFS operators 2025/12/03: The United States Igaming Revenue Report – October 2025 2025/08/14: Australian regulator fines BlueBet maximum penalty after failing to intervene before customer gambled AU$700,000 in four months

The Backstory

Why the scorecard stings now

The Center for Addiction Science, Policy and Research’s March 4 grades land at a moment when legal online betting is both scaling and fragmenting across the United States. The report’s framing — that states with no online gambling rank safest while legal markets score below a D — cuts against a decade of policy that has prioritized tax receipts and gray market suppression over uniform consumer safeguards. That tension has sharpened as states test new licensing models, push larger acquisition campaigns and confront the rise of daily fantasy pick’em products that blur lines between games of skill and sports wagering.

Recent regulatory steps illustrate the split screen. Missouri is preparing for a full sports betting launch on Dec. 1, 2025 after issuing its two untethered mobile licenses to Circa Sports and DraftKings. The Missouri Gaming Commission emphasized integrity, sustainability and responsible gaming among seven constitutional criteria, signaling a governance-first posture even as operators jockeyed on marketing clout and high-stakes wagering. At the same time, booming online casino revenue from established markets keeps building political momentum to expand access, raising the stakes of whether guardrails on product design, payments and intervention will keep pace.

Market expansion outpaces guardrails

Online casino revenue has never been higher. In October 2025, all seven legal igaming states set records, producing $907.4 million, up from $688.4 million a year earlier. Michigan, New Jersey and Pennsylvania each cleared $250 million as documented in the U.S. Igaming Revenue Report. Connecticut more than doubled year over year. Even small jurisdictions like Delaware and Rhode Island set new highs. The scale underscores why states tolerate product breadth that drives time on app, and why the CASPR methodology rewarded jurisdictions with fewer online options and stricter limits.

The report’s criteria — credit card bans, loss limits, intervention rules and curbs on high-velocity bets — target the mechanics that accelerate losses. Those mechanics have become core commercial features. Same-game parlays, micro-markets and 24/7 in-app play deliver engagement and tax revenue but increase exposure when paired with aggressive promotions or VIP programs. The scorecard also dings states that run campaigns seen as normalizing or promoting betting, a clash with public messaging strategies used to migrate consumers from offshore operators.

That disconnect is evident in how new markets position themselves. Missouri’s licensing contest underscored how scale in advertising can win audience fast while niche operators tout sharper odds and higher limits to attract whales. The commission’s criteria captured these tradeoffs but left open questions on daily limits, data-driven interventions and product-level exclusions that CASPR elevates. As states move from launch to optimization, these line items will decide whether grades improve or criticism intensifies.

Enforcement flashpoints and gray markets

States also face a widening perimeter of unlicensed or quasi-licensed activity. Michigan moved to protect its regulated market by ordering Costa Rica-based BetUS to cease taking wagers from residents, warning that unlicensed operators “undermine the integrity” of state oversight. The cease-and-desist highlights the compliance burden for regulators who must monitor offshore books, affiliates and payment flows while maintaining robust onshore standards.

California shows a different pressure point. With sports betting still illegal statewide, class action lawsuits accuse leading daily fantasy firms of offering sports wagering under a fantasy label. Soon after the filings, Attorney General Rob Bonta issued a formal opinion deeming such contests illegal. The litigation and AG stance, outlined in consumer protection suits against DFS operators, challenge the industry’s reliance on pick’em formats to grow in closed markets. For regulators and lawmakers, the episode illustrates how product innovation can outrun statute, forcing reactive enforcement instead of proactive rules on bet type, speed and funding sources — the very categories CASPR uses to score safeguards.

Both cases map to the scorecard’s core thesis: access without harmonized protections invites leakage to unregulated channels or edge-case offerings that strain definitions. States that score better often impose blunter constraints — on payments like credit cards, on promotional inducements and on micro-betting — but those tools can push price-sensitive or high-limit consumers offshore unless states simultaneously strengthen enforcement and public awareness.

Lessons from abroad on VIP oversight

International actions offer a cautionary template. In Australia, BlueBet received the maximum penalty after a customer wagered about AU$700,000 in four months and was upgraded to VIP status. Regulators found the company missed repeated red flags and that its VIP manager lacked harm-minimization training. The BlueBet fine reads like a checklist for failures the CASPR model legislation seeks to prevent: inadequate training, incentive structures that reward heavy play and slow or ineffective intervention when payment issues arise.

U.S. operators have already pared back some VIP practices, but the economic logic remains. High-value customers and high-velocity products deliver outsized revenue and tax collections, as the October records show. Without prescriptive requirements on real-time risk scoring, cooldowns and proactive outreach, states risk replicating the BlueBet pattern. The cost is not just consumer harm but political blowback that can freeze market growth or trigger blanket restrictions that penalize compliant operators along with laggards.

What to watch as states recalibrate

The scorecard’s most potent effect may be as leverage for policymakers in 2026 sessions. Expect bills that revisit credit card funding, tighten rules on in-app micro-markets and codify mandatory intervention protocols. Missouri’s launch phase will test whether licensing criteria translate into operator accountability once apps go live. California’s DFS litigation could accelerate a broader reset on definitions that clarify where fantasy ends and betting begins, with ripple effects in non-legal states using similar products to gain market footholds.

Regulators will likely intensify cross-border enforcement, following Michigan’s playbook, to shrink the gray market that skirts consumer protections. Meanwhile, revenue momentum in igaming states will sharpen the political tradeoff: accept lower near-term tax growth in exchange for stricter guardrails, or prioritize expansion and advertising while relying on voluntary operator measures. The CASPR grading rubric, which awards states for fewer avenues to gamble and stronger limits, pressures lawmakers to defend the balance they strike.

For consumers, the stakes are straightforward. Payment methods, bet types and promotional mechanics dictate how fast money can move and how quickly losses can pile up. For operators, clearer and more uniform standards could reduce regulatory risk and reputational hits but may soften growth. For states, the choice is between fragmented, reactive oversight and a harmonized framework that addresses the product features driving harm. The record revenue of late 2025 shows demand is durable. The back-and-forth of 2026 will determine whether protections catch up.