Sports betting and sweepstakes: Semantics, search engines and splitting hairs

The concept of 'identity' has plagued philosophers and linguists since the dawn of time. As such, plenty of different theories have been published over the years...

• The referential theory of meaning: A 'bookmaker' is someone who 'makes' the 'books.'

• The causal theory of reference: A 'bookmaker' does not make books, but one day someone baptised a man accepting wagers as a bookmaker and this understanding was solidified by other people calling him a bookmaker, even if the literal description does not line up.

• Descriptivism reflects how language is used in the evolving world by the public: The word 'bookmaker' has since become outdated, as the public generally calls them 'bookies' now.

All of this is very dry, and a few of you probably sighed and whispered "who cares?" under your breath, and you would be forgiven for this. It is very dry, but all of this is integral to the ways that iGaming is currently evolving. Some of the largest divides in the industry at the moment come down to whether professionals believe that one word means "a," or "b."

Back to school: Language theory

This bit gets a little heavy, so stay with us - we'll be back to gaming terminology in no time.

Gottlob Frege was the German philosopher and mathematician behind the 1892 book, "Über Sinn und Bedeutung," or "On Sense and Reference," one of the most famous pieces of literature on the matter. The idea is simple: "Identity gives rise to challenging questions which are not easy to answer."

Here, he introduces a=a and a=b.

Both "a" and "b" might be similar things, but their sense and meaning could differ.

There are meanings to a word, which he calls "referents." For example, a bookmaker can mean a bookbinder, or someone who accepts wagers. However, the understanding behind these different meanings is the "sense". The 'bookmaker' referent is the same, but the sense is different.

Importantly, if someone says that "a bookmaker physically creates books" and someone else says "a bookmaker receives and pays out bets", you might think that one of these is correct, meaning the other one has to be false. However, both can be true at once.

Gottfried Leibniz wrote: Eadem sunt, quae sibi mutuo substitui possunt, salva veritate (Those things are identical of which one can be substituted for the other without loss of truth.)

So a publishing house and a bookmaker can be seen as identical, as one word can be substituted for the other without losing the meaning: "a bookmaker creates books".

Similarly, you could say: "a bookmaker receives and pays out bets", because this is also another word for a betting shop.

As such, we return to a=a and a=b.

A bookmaker is a bookbinder, and a bookmaker is also a betting shop.

All of these are semantically the same, because swapping them out does not result in any 'loss of truth.'

When is a casino not a casino?

When people play slot machines, they understand that they are gambling. Similarly, when punters place a wager on their favourite football team, they know that this is sports betting.

There has never been a time when people have interacted with these products and been under any illusion that they are not gambling, so what changed?

Well, within the last few years, the sweepstakes casino vertical began to boom in popularity. It was borne out of a desire to play casino games for free, especially in North American states where iGaming or gambling outright was still outlawed. Sweepstakes casinos could not market themselves as casinos, because they did not have a licence.

This meant their popular slot titles were nothing more than 'casino-style' games, and they insisted over and over again that they were not gambling - all in an effort to maintain their position outside of the regulated licence system.

This benefited the business, but caused nothing but confusion for the average player. If the sense was the same between the two words, then why could they not be used interchangeably?

a=a, but a≠b.

However, as regulators and lawmakers continued to battle with the legality of sweepstakes casinos, an unlikely party took matters into their own hands. In early November of this year, Google amended its advertising policy, removing sweepstakes from its previous 'social casino games' classification and placing them into the gambling classification.

It did not matter how much social casinos protested against state regulators and pushed the idea that they operated differently from licensed casinos - Google recognised that they were received the same way by players and presented similar problems in terms of gambling-related harm.

This was a classic case of legality versus semantics and intent, which was not a first for this industry.

In Ivey v Genting Casinos, after Phil Ivey used an edge-sorting technique to win £7.7m ($10.1m) playing baccarat, the Supreme Court ruled that Phil Ivey was knowingly dishonest in his actions, and thus was found to be on the wrong side of the law. Following the case, a new test for dishonesty was created:

What was the defendant's actual state of knowledge or belief as to the facts; and was their conduct dishonest by the standards of ordinary decent people?

According to this, were sweepstakes casinos acting dishonestly in your eyes? The matter is still somewhat subjective and is currently being played out in courts across the US.

A predictable outcome

Sweepstakes casinos are not the only ones being taken to both US courts and the court of public opinion. Enter: Prediction markets.

These sports event contracts were popularised by Kalshi, Polymarket and Robinhood, and allowed customers to place wagers on which sports teams they thought would win, even when sports betting is not allowed in that state. This is because, according to them, prediction markets are not gambling.

This has displeased many; not because they are offering new and popular markets, but because people feel they are operating disingenuously.

After all, a betting shop receives and pays out wagers depending on the outcome of an event, and this remains true if 'betting shop' is replaced with 'bookmakers,' 'bookies' etc. This means that are all semantically identical.

It also remains true if replaced with 'prediction markets', but because Kalshi is currently licensed by the Commodity Futures Trading Commission (CFTC), the semantics differ from the legal perspective.

All of this has culminated in a motte-and-bailey-style fallacy that makes it almost impossible to criticise prediction markets from an industry standpoint. Experts cannot properly address the semantic, operational and marketing similarities with sports betting, simply because the phrase "regulated by the CFTC as a Designated Contract Market (DCM)" still carries so much weight.

While sweepstakes casinos seem to be on their way out, prediction markets are rising in popularity yet are using language in an identical manner. It begs the questions: Did one vertical use language better than the other to greater success? Is the difference entirely down to prediction markets having federal backing, or are sweepstakes markets just further along the bell curve than they are?

Why should we care?

Gambling already carries with it some historical social disrepute, and it does not serve the industry to be ambiguous. Trust is earned through transparency, which has never traditionally been an issue with the public understanding whether a product is gambling or not.

And when players understand the products they are interacting with, they enjoy them a lot more. This was evident with the new research published by the American Gaming Association (AGA), which found that over the course of the past year, a record-breaking number of Americans participated in some form of regulated gaming.

Not only that, but 62% of US citizens now find gambling personally acceptable, while 74% of them state that they support legal sports betting in their state.

Many of those interviewed cited the positive economic impacts the gambling industry brought to each state. All of this goes to show that the US population does not need to be 'tricked' into participating in sports betting - the majority of people actively support regulated gambling.

The difficulty here is introduced by FanDuel and DraftKings, both of which have expressed an interest in offering prediction markets to customers. The simple 'a' or 'b' outcome is much friendlier than the current sports odds system, and has the potential to offer markets outside of sports betting.

This is similar to reality TV betting, which has already grown in popularity in the UK, where viewers can place bets at Ladbrokes and William Hill on which contestant will win on programmes such as Love Island, Big Brother and Eurovision. Betfair also operates as a betting exchange that lets players create their own markets between themselves.

A recent AGA report found that 85% of people believe sports event contracts are gambling and 70% of those asked thought that prediction markets were exploiting loopholes to act as unlicensed sportsbooks.

Kalshi, however, provided its own research in a similar effort, showing 9 out of 10 Americans want to be able to use prediction markets.

The issue of federal vs state regulation may become the ultimate determining battle. But semantics will also play a significant, yet subtle, role.