Pay For Your Mistakes
The New Jersey Division of Gaming Enforcement doesn't want to hear excuses. If a sportsbook makes a mistake, the DGE expects them to pay for it.
The Bulletin Board
NEWS: New Jersey is not a palp-friendly state; DGE requires Bet365 to pay more than $500k in wagers.
LOOSE ENDS: Shakeup at PrizePicks; Bally Bet targets four unnamed states by EOY; Senators call for election betting ban; News from across the transom.
VIEWS: Will bettor loyalty lessen the impact of DraftKings’ proposed surcharge?
QUICK HITTER: MGC postpones discussion on limiting bettors.
AROUND the WATERCOOLER: Waiting on Penn’s earnings call with bated breath.
STRAY THOUGHTS: I got fooled.
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New Jersey DGE Continues Hardline Stance on Palps
Bet365 is learning that the New Jersey Division of Gaming Enforcement doesn’t side with operators when they have “obvious” pricing errors or, in industry-speak, palps.
As reported by Sports Betting Dime, “The New Jersey Division of Gaming Enforcement is requiring bet365 to pay out more than $519,000 to 199 New Jersey sports betting customers after it was found the sports betting operator revised odds to already concluded bets due that were placed with “obvious errors.”
The wagers were discovered during an April 2022 audit when the DGE discovered that bet365 revised odds on “obvious” pricing errors without DGE approval.
“bet365 failed, in all instances, to recognize that although bet365’s House Rules were approved by the Division, it was with an express statement and caveat that bet365 was prohibited from voiding any wager without prior Division approval, as is the standard course in Division approval of House Rules and as set forth in Division regulation N.J.A.C. 13:69N-1.11(d),” DGE Interim Director Mary Jo Flaherty wrote in a letter to bet365.
The first well-publicized instance of palps occurred in New Jersey in September 2018, when an in-play line in an Oakland Raiders-Denver Broncos game was mispriced at +75,000 instead of -600. FanDuel originally paid out the wager at the -600 odds but later paid out the full wager at +75,000, following discussions and not-so-gentle nudges from the DGE.
Some jurisdictions have taken a New Jersey approach to palps, while other jurisdictions have been more lenient.
As I wrote in December following a significant pricing error during a Denver Nuggets-Los Angeles Lakers game:
DraftKings has asked multiple states to allow it to cancel wagers placed during a Nuggets-Lakers game where a third-party supplier error caused DraftKings to offer incorrect totals for approximately 13 minutes - long enough for savvy bettors to jump on the opportunity and place thousands of bets.
How states are responding to the cancellation request varies:
Connecticut regulators denied DraftKings’ request to cancel the bets.
New York, Colorado, and Indiana allowed DraftKings to cancel the bets.
Illinois and Pennsylvania are still reviewing the matter.
Massachusetts landed in the middle, allowing DraftKings to cancel the bets but requiring DK to refund affected wagers 3x.
Loose Ends: Shakeup at PrizePicks; Bally Bet Targets 4 Unnamed States; Senators Call for Election Betting Ban
Adam Wexler pivots from CEO to Executive Chairman at PrizePicks: Adam Wexler, the CEO of PrizePicks, is being replaced by Mike Ybarra. Wexler, who founded the company in 2017, will shift over to an Executive Chairman role. Ybarra joins PrizePicks after serving as president of Blizzard Entertainment and in leadership roles at Microsoft. The news comes on the heels of PrizePicks confirming it had retained Moelis to explore merger and acquisition opportunities, including a potential sale of part of the company.
Bally Bet expected to launch in four more states in 2024: “We expect to launch sports in an additional four states in the second half of the year and continue to plant the seeds for an expanded iGaming across our geographies,” Bally’s CEO and President Robeson Reeves said during the company’s Q2 earnings call. Reeves did not indicate what states it might launch in. Reeves said that because of the “ongoing successful rollout of Bally Bet across our markets, we’re generating improved volumes and profitability, particularly as the transition onto Kambi and White Hat platforms has garnered good customer feedback and helped us differentiate our offering.”
Senators urge CFTC to tighten restrictions on election betting: A group of US Senators is calling on the Commodity Futures Trading Commission (CFTC) to further restrict the already very restrictive rules around election betting. “We strongly support the proposed rulemaking to prevent further corruption of our electoral system by moneyed interests,” the letter to the CFTC reads. “Specifically, we support the Commission in finding that the outcome of a political contest, including an election, constitutes “gaming” and is, as such, contrary to the public interest and may not be listed on CFTC-regulated markets. Political event contracts do not serve the economic purpose of futures markets, and the Commission does not have the congressional mandate to regulate election and campaign activity.”
Across the Transom:
Illinois could bring in billions by regulating, taxing online gambling
Keeping Pace: You Get A Casino ... And You Get A Casino ... And You Get A Casino [an argument for a casino at Meadowland Racetrack]
Indian country weighs impact on tribal gaming regulations of Supreme Court’s Chevron decision
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Will Bettor’s Accept DraftKings’ Surcharge Because of Loyalty?
Today’s surcharge news…
According to JMP Securities, “We have found a tidbit within the Juice Reel data that suggests DraftKings would be able to implement a surcharge without eroding market share. The answer: loyalty.”
Per JMP’s research, bettors have more sports betting apps installed, but the number of books used is declining.
It’s an interesting trend, but I would caution that many factors are at play: new state launches (and the number of operators in the market), seasonality, and new operators entering markets (and spending bonus dollars).
For example, the chart on book usage (figure 14) spikes around the launch of ESPN Bet, which coincided with the start of the NFL season.
So, while JMP notes that “Players have been increasingly loyal over the last year, with signs of alliances with just one book,” I would posit that this has little to do with true brand loyalty, as the most popular operators are also the biggest spenders and have the best tech at the moment. We don’t know if these customers are loyal to the brand. In lay terms, have bettors committed, or are the current leader’s doofers? As in, they’ll do for now.
On the surcharge specifically, I agree with JMP’s assessment that bettors aren’t overly price-sensitive. As well as their muted concerns about VIPs” “but VIPs, comprising a large concentration of revenue for operators, could end up being the deciding factor given how statical these bettors are around outcomes.”
I would add that the in-your-face nature of the surcharge isn’t the same as a slightly worse line. It’s the difference between value sensitivity and price sensitivity. A customer would have to line-shop to notice a higher line, and even then, they might accept occasional higher lines if all the others are similar out of convenience. The surcharge is front-and-center.
People will avoid the known-to-be expensive grocery store. On the other hand, if a town has three competitively priced stores, they are unlikely to go through the store flyers to find the lowest price on each item and then visit all three stores (there is little value to that decision); they’ll choose the one that has the best prices on most of the things they need. That’s the difference between value and price sensitivity.
Quick Hitter: MGC Cancels Meeting to Schedule a Meeting
The Massachusetts Gaming Commission canceled yesterday’s scheduled agenda-setting meeting on the topic of limiting sports bettors.
As I mentioned in yesterday’s Around the Watercooler section, the issue has created a rift between the industry and the MGC, with bettor advocates happily hammering the wedge deeper.
At issue, the MGC wants to hear from all sides; the industry wants an operator-only discussion.
A memo to MGC Commissioners ahead of an August 1, 2024 meeting noted, “Each Operator has since expressed commitment to have an Operator-only discussion with the Commission regarding this issue during a public meeting or round table.”
As Sports Betting Dime’s Robert Linnehan reported, “The MGC has yet to reach out to @BettorsVoice for their insights on limiting users, as they said they would, but CEO Richard Schuetz said the MGC has been in general contact with the advocacy group. “Unlike the operators, we respect their desire to learn,” he said.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
This entry is a look ahead, as Penn Entertainment’s earnings call is scheduled for 9 AM today, the precise time I publish the newsletter.
Penn’s calls are always newsworthy, with analysts and industry watchers keenly interested in ESPN Bet, but today’s call has added significance. The entire sports betting world is waiting to find out if Penn will follow DraftKings’ lead and implement a surcharge in high-tax states.
I personally agree with Robert Linnehan on Penn:
Given the blowback DraftKings has received, I don’t believe FanDuel is much more likely to announce a surcharge. Further, the two market leaders announcing a similar policy so close together could raise collusion allegations.
Stray Thoughts
Yesterday’s newsletter included an incredibly outdated entry on Minnesota. It came across my radar from a news aggregator I use regularly and have never felt the need to fact-check.
No excuses. My fault for not double-checking.
It does point to a larger problem that is happening with much more frequency, which is edits (sometimes stealth edits) of older content. The Google search entry shows the original article as being just 11 hours old, which is likely how the gaming news aggregator was duped:
