Take It To The Limit
Massachusetts sports bettors are being officially notified they are limited, but the reasons why are still a bit unclear.
The Bulletin Board
THE LEDE: Have we learned anything from MA’s disclosure rules on limiting?
ROUNDUP: A look at the stories you may have missed.
QUICK HITTER: More CFTC staff reduction (and promises of a hiring spree).
QUICK HITTER: IL budget taxes prediction markets (and DFS and crypto).
AROUND the WATERCOOLER: That’s a nice little roundtable you have there.
STRAY THOUGHTS: Why after-the-fact explanations don’t cut it.
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The Lede: 3 Takeaways From MA New Limiting Rules
A new rule went into effect on June 1 that requires sportsbooks to communicate with Massachusetts sports bettors why their accounts are limited. The rule is retroactive, so a number of bettors received emails this week, and many were shared on social media.
This is the first topic of discussion in a yet-to-be-released podcast with Sporttrade’s Alex Kane — look for the episode to drop this weekend.
Three thoughts jumped into my head after seeing the social media posts and discussions around these communications.
Thought #1: He Said/She Said
First, operators told the Massachusetts Gaming Commission (MGC) that the vast majority of bettors were limited for violations, not because they are winners. However several of the bettors who posted on social media denied they engaged in the alleged activity, and many of the emails seem to come very close to ‘you’re a winning bettor and we don’t want you’:
Effectively, we are still in the middle of a he said/she said debate between sportsbooks and limited bettors.
We Said ‘No Two-Word Responses’
Second, as InGame’s Jeff Edelstein wrote, “The whole point of the new regulation was supposed to be transparency, but early returns are not promising.”
What bettors are receiving is largely boilerplate offering only vague generalities:
“For internal risk management purposes based on activity indicative of attempting to exploit potential latency associated with live market updates.”
“Of coordinated or structured wagering activity.”
“Targeting perceived market inefficiency.”
“Behaviors observed that align with a network of restricted users that signal potential arbitrage positions.”
As I noted when the rule was approved, the rule was supposed to clearly communicate with bettors that 1) they have been limited, 2) in which markets, and 3) the specific reason(s) why.
Here is the final adopted regulation language (205 CMR 238.30(11)):
“Procedures to provide timely notice to a patron that their wagering activity has been limited, including a specific explanation for the attachment of the limit(s) and identification as to which market(s) are so limited.”
As Edelstein noted, the MGC directly warned operators not to do the bare minimum:
“Justin Stempeck, the chief deputy general counsel, was blunt about it, saying a two-word brushoff wouldn’t be acceptable, and ‘due to a business decision’ (which was floated by an operator) wasn’t going to cut it.
Commissioner Paul Brodeur went a step further and called that sort of non-answer ‘kind of offensive.’
“‘We’ll know pretty quickly who’s making good faith efforts and what, if any, tweaks we need to make to this to accomplish that transparency goal,’ [MGC Chair Jordan] Maynard said when they passed the regulation.”
Vanity Markets
The tweet below, from pro bettor Spanky, sums up one of my biggest gripes with the current sports betting industry, the existence of vanity markets (I’ll likely dive deeper into this again in an upcoming newsletter):
Roundup: So Much News; So Little Newsletter Space
NY bill requires sportsbooks to send bettors monthly win/loss statements [Sports Betting Dime]: The New York Senate today unanimously approved Assembly Member Rebecca Kassay’s (D-4) bill, A10329. The bill requires New York online sports betting operators to electronically provide monthly invoice statements to customers about their betting activity.
Robinhood’s Rothera exchange sees $2M in volume on first weekend [InGame]: “Robinhood has started offering contracts from its own prediction market exchange, Rothera, to its customers. They traded more than $2 million worth of contracts over the weekend, as the stock trading app aims to reduce its reliance on Kalshi for its prediction market offering. Between Friday and Sunday, $2.1 million was traded on the contracts, virtually all on baseball games, Rothera’s volume data shows.”
Kalshi donates to California Gubernatorial frontrunner [Cal Matters]: “Online prediction marketplace company Kalshi cut gubernatorial candidate Xavier Becerra’s campaign a check for $39,200 last Friday, just days before voters decide which two candidates move on to the general election in November. Meanwhile, the company’s marketplace gives Becerra a 74% chance of becoming governor in November as of Monday afternoon.” The donation raised conflict of interest concerns, with Cal Matters asking, “Should a betting marketplace donate to candidates while its own customers are wagering on candidates in the same election?” STTP Thoughts: Of everything going on in the space, this is mild on the spiciness scale.
Connecticut Sen. Chris Murphy calls out ESPN [Awful Announcing]: Connecticut Sen. Chris Murphy wasn’t too keen on an ESPN post about Victor Wembanyama failing to hit his points over: “ESPN Bet and SportsCenter shared a post talking about Game 6 of the Spurs-Thunder series. But instead of highlighting the Spurs’ dominant victory and forcing a Game 7, their post focused on Victor Wembanyama failing to hit the over for his 28.5 points prop because he sat on the bench for the final nine minutes with the game out of reach for the Thunder.”
New poll shows diminishing support for legal betting [Legal Sports Report]: Nestled in an Overton Insights survey focused on political and public policy issues were some findings on Americans’ attitudes toward legal betting: “The poll surveyed 1,377 registered voters between May 16 and May 20. Asked whether they support or oppose legalized sports betting in their state, 31% of respondents indicated support while 47% said they oppose it. Another 22% said they were unsure or had no opinion. Among respondents in support, 16% said they strongly support legalization and 15% said they somewhat support it. Meanwhile, 15% said they somewhat oppose legalization and 32% strongly oppose it.”
Quick Hitter: CFTC Is Cutting More Staff
There is a question I’ve been asking for more than a year: Is the Commodity Futures Trading Commission capable of overseeing sports betting?
I’ve discussed the CFTC’s previous and ongoing staffing issues, which are seemingly getting worse by the day, while its oversight role continues to expand (prediction markets and crypto).
The latest news comes from Politico, which is reporting:
“A top Wall Street regulator is offering buyouts and early retirement packages to certain staff, according to an internal email seen by POLITICO.
“Just as Congress weighs handing the Commodity Futures Trading Commission new power over the more than $2 trillion cryptocurrency markets, the agency told some of its workforce late last week that they had until midnight Tuesday to indicate interest in the offer…
“A person familiar with the offer told POLITICO that it came after a lengthy review of the CFTC’s workforce by Chair Michael Selig. The agency, which regulates obscure markets tied to the price of agricultural commodities, Wall Street indexes and interest rates, is seeking to align its staff as it takes on newer-age financial products like the prediction markets and crypto, said the person, who was granted anonymity to speak freely. The person added that the CFTC is expected to hire up to 100 people by the end of the year.”
Quick Hitter: IL Budget Taxes Crypto, DFS, and Prediction Markets
For the first time since 2023, Illinois lawmakers didn’t raise taxes on sportsbooks, but they did add a new tax on sports-related prediction market contracts by amending the Illinois Sports Wagering Act to impose a transaction tax on “exchange wagers,” as part of the state’s budget.
The new tax is tiered at 1.75% on the first 5 million transactions per fiscal year per licensee and 3.5% on additional transactions. Non-sports prediction markets are exempt from the tax.
Two thoughts on this:
This is just going to trigger more court cases.
The tax applies to licensees, which might be trouble for DraftKings, FanDuel, and other dual sportsbooks-prediction markets, it wouldn’t apply to Kalshi and other prediction markets.
The budget has several other policy items worth mentioning:
A new 0.2% tax on crypto and digital assets: The Digital Asset Privilege Tax.
Creates a new licensing framework for daily fantasy sports and imposes a new 15% tax on DFS contest revenues.
Creates the Targeted Advertising Services Tax Act, a 10% tax on gross receipts derived from “targeted advertising services” provided in Illinois — think algorithm-driven targeted ads.
And in a rare move, the legislature lowered the cost of a master sports wagering operator license fee from $20 million to $15 million.
Around the Watercooler
Social media conversations, rumors, and gossip.
According to Punchbowl News, we’re going to have some more prediction market talk on Capitol Hill today, with a Republican-only roundtable where the American Gaming Association’s Chris Cylke will be outnumbered three-to-one:
Stray Thoughts
I’d rather be judged by 12 than carried by six is a common saying in self-defense circles, but it’s a lazy answer to a very sincere and serious question about necessary force.
Self-protection/self-defense isn’t about winning a fight, it’s harm prevention: physical, mental, and legal. The shoot first, ask questions later mentality is going to leave you wide open to the latter two harm categories: mental and legal.
More importantly, if your answer to confrontation is decisive action you’re missing the forest for the trees. True self-defense (or as I prefer to call it, self-protection) rarely gets to the physical.
As Rory Miller put it, soft skills are options 1, 2, and 3, with hard skills being a last resort.
“It is better to avoid than to run, better to run than to deescalate, better to deescalate than to fight, better to fight than to do nothing.” ~ Rory Miller
Prediction markets, and other upstarts in the gambling industry would be wise to adopt this same layered thinking. If you’re finding yourself having to defend yourself with fists with any regularity, it’s because you’ve already messed up. When a company finds itself regularly needing to defend its offerings, marketing choices, or partnerships, it’s typically because it ignored earlier opportunities for prevention.
You didn’t avoid the problem in the first place. You didn’t recognize the problem as it was happening. And you didn’t course-correct until the issue manifested into a problem.
Here are a couple of recent examples, where we get an after-the-fact explanation from Kalshi — the PR version of defending your “self-defense” actions in court.
And let’s be clear, these aren’t the only missteps, nor are the problems being reduced in frequency. Early on, Kalshi took heat for framing its product explicitly as sports betting in ads, which should have triggered a complete overhaul of the guardrails its marketing department uses. It’s still offering markets that are easily manipulable (mention markets) or known to a select few (pre-recorded events).
Bottom line: A little more emphasis on the front-end steps (the soft skills) would eliminate, or at least reduce, many of the later battles.
As I said when Kalshi took heat for Survivor markets: “If it’s easily manipulable, why offer this market in the first place?” The self-defense version of ‘it’s better to avoid.’