Beards, Election Betting And Other Wagering Minefields | Sports Betting News | LSR Podcast 239
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Beards, Election Betting And Other Wagering Minefields | Sports Betting News
A wild lawsuit targeting DraftKings and a prominent professional sports bettor drops in New York, leading to larger discussion around how sharps get action down at sportsbooks. Plus, MGM makes a big purchase for its international business, DC finally moves past its sports betting folly, and UK election betting scandals offer a cautionary tale in the US.
Full transcript
Matt Brown (00:15):
Hello and welcome to episode number 239 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry. With me, I have Adam Candee. You can find him over on the Twitter machine, Adam Candee, that’s two E’s, no Y. If you hate yourself, you can follow me @MattBrownM2. Of course, we are on all of your favorite podcasting platforms, so do appreciate the little subscribe button hit. The little rate, the little review. We’ll take anything four and five. If you’re a three, just, just … it’s fine. It’s fine. Continue to not leave a review, if you’re going to do a three. Adam, a good time for us to kind of say here on the podcast over as we head in towards the fall, we’re going to be booking more guests here on the podcast.
(00:58):
We’re going to start getting some more diverse voices on here, tapping into your resources over at LSR and Legal Sports Report to have more people come in on some stories that they have worked on, on some research that they have worked on and all of that. And I know everyone loves just listening to me and you. I’ve gotten the feedback, I hear it all the time, just how much they love listening to just me and you, but we said, you know what? You know what we’re going to do? You’re going to love listening to the two of us and a third person.
Adam Candee (01:24):
To be clear, what they have said, Matt, is we were so tired of listening to Dustin Gouker. It’s such a relief to only listen to your dulcet tones, Matt Brown and Adam Candee. Thank god that Gwerker guy is gone.
Matt Brown (01:40):
That’s pretty much what happened. If you’re listening, Dustin, we only got one email that said that. That’s it. So don’t worry about it. We’re going to talk about some M&A here, a little bit of M&A. We’re going to talk about what’s going on in DC. Good news for you guys over there. An interesting story coming out of the UK, but Adam, I kind of usually hear scuttlebutt and stuff and whatever in the industry. I know you do as well. But then this story that we’re leading off with hit me out of nowhere. I was like, I thought something like this, I would’ve heard. I would’ve heard some rumors, I would’ve heard whatever, but I’m sure it was … Since we didn’t talk about it off-air, I can only imagine. It was kind of a shocker to you too.
Adam Candee (02:24):
The fact that something big was coming in our space via court was something that had been teased a bit on social media, but what it ultimately came in the last 24 hours was in no way expected by any of us in the sports betting space. And I’ll start the discussion of Jacobs v. DraftKings v. Spanky with this. If you want all the details of the filings here, go to legalsportsreport.com. Matthew Waters wrote up the initial filing by Steven Jacobs. By the time this posts, he will have written up Spanky’s long and detailed response to this, and you’ll get all of that situation laid out in front of you. Now, let’s give you the basics of this. A lawyer in New York named Steven Jacobs filed a lawsuit against DraftKings alleging that DraftKings conspired with Spanky. And if you are out there on sports betting Twitter, you know that he’s a professional bettor who makes his voice quite loud at times on Twitter.
(03:31):
And the accusation in here is that DraftKings leaked personal information about Jacobs to Spanky and an associate of Spanky. And then Jacobs was allegedly threatened by a masked person saying that he owed Spanky half a million dollars and that he would be killed if he did not pay up. Now, this lived out there for most of the day before Spanky put out a long and detailed response, and the crux of his response is that my associate and I identified this guy as a potential beard for us, right? We identified him as someone we could use to get money down at DraftKings in large quantities because Spanky himself is banned at DraftKings. Something that he openly discusses in that long Twitter thread.
Matt Brown (04:28):
Yeah. This is not new, by the way, to anyone that’s paid attention to him over the years. It’s almost a badge of honor of the different places that he’s been limited or banned and whatever and stuff like that.
Adam Candee (04:39):
It is. And it’s not just about DraftKings, it’s about a number of legal sportsbooks. So I’ll leave the details of it there, Matt, and we’ll get more into discussing this case, I’m sure, as it continues its way through the court system or doesn’t because DraftKings has already moved for it to be dismissed this week. We’ll see what ultimately becomes of that. But Spanky’s accusation is essentially, yeah, this guy got himself deep into debt and is suing as a way to try to get himself out of what he owes me and my associate, which is more than a million dollars. It’s a wild case. There’s a lot to unpack in here. But Matt, I think what you and I will ultimately get into discussing here is this is the strongest evidence in the … I guess in the spotlight, in the daylight that we have seen of the games that professional bettors play in terms of trying to find beards or people that they can use whose hands are clean to get money down at sportsbooks where they’ve been banned.
Matt Brown (05:43):
Yeah. So if you guys don’t know how this works, sometimes you will hear a lot of these dudes that are not only just single operations, syndicates, et cetera, look for outs. They will be, hey, how many outs do you have? How can we get ahold of those? Is there anything we can do to kind of partner up and stuff like that? Of course, there’s a vetting process that goes along because Adam, as you well know, if someone comes in and they are … If they’re freshly out of college and haven’t had a real job yet or anything like that, that is going to blow up all the KYC stuff that happens with any of these sportsbooks, and you’re not going to be able to get down any money. That person is useless to a syndicate or to a guy like Spanky or whatever it might be. So you actually have to go find people who, whenever there is some work done within the sportsbooks, that it all checks out, right?
(06:34):
They’ve got income, they’ve got disposable income, they have whatever, et cetera. So it is a process, and it’s a little bit more elaborate I think than a lot of people even want to acknowledge. There’s some sophistication that goes on in all this stuff. I know that there’s this almost like Hollywood thought of what a professional gambler and professional bettor looks like and how they act and whatever, but that’s not present day and that’s not really what goes on with all this. These guys are grinding spreadsheets and grinding algorithms and have bots that are giving them information, stuff like that. And then the other side of the business is what you just mentioned is actually just finding ways to get the money down, right? I mean, that’s the other biggest thing is being able to get down the volume and the amount that they’re looking to get down when it’s all said and done.
(07:20):
And so, as you mentioned, this is kind of the first time … We knew it anyway, and honestly, most of them are not shy about talking about it either, right? I mean, this is something that is just … It’s kind of hidden in plain sight. Everybody knows it’s happening, they talk about it, but you don’t really hear and see stories and stuff about it. But as you mentioned, this is kind of the first time where we up close and personal, get a look at this. No, this is a guy that we used because it all checked out with him, and it was a dude that we were able to get down decent money with because it looked like he was able to afford to make these bets.
Adam Candee (07:54):
I would point actually, Matt, to something that your friend and mine, Gill Alexander had on the recent airwaves a little while back where he has regular appearances by Bill Krackomberger. A guy who’s well known, I think from the Action documentary and also to anyone who pays attention to media in the sports betting space. And Bill gave a pretty impassioned speech on Gill’s airwaves there to say, you keep trying to ban us. We’ll just keep finding beards. We’ll keep finding new people. That’s just part of the game, and it is an open discussion and an open cat and mouse game between the sportsbooks and not always just the legal sportsbooks, right? It can be at the offshores, as well. This is not a problem that’s unique to the US or anywhere else, is legal sportsbooks. This is something that goes on everywhere. It’s not something that we say, oh, well, the legal market is unique to this.
(08:49):
It’s not the case at all. So we will see what ultimately plays out here in court. I think the most interesting part is that … I mean, I posed this question to some legal folks to say, is Spanky in some way incriminating himself in something that he shouldn’t be doing, and would it be potentially against the law in some way? The initial reactions I got were that no, it wouldn’t be. And of course, why would he be out there incriminating himself? It would be hubris to do that. It would be more about the violation of terms of service at DraftKings, and guess what? Not particularly concerned about that, right? That is not his number one worry because if you were worried about that, you wouldn’t be doing it in the first place. Is just another example of Matt, why we talk about the fact that limiting, as we’ve discussed on the last couple of podcasts, limiting and banning is such a hot topic among the sports betting Twitter, among the legal folks, among the regulatory folks.
(09:52):
And we know that the Massachusetts Gaming Commission is going to come back to this topic in August. We talked about that on the last podcast. One of the first times that we’ve seen US state level regulators try to get themselves involved in the discussion in some way of how legal operators go about this. Matt, you tell me. I have to feel like a situation like this will only help the sportsbooks in their case for saying, “Hey, this is a real problem for us. There’s only so much that we can talk about because we’re dealing with these high level things that are a major threat to our bottom line.” Whether that’s true or not is for someone else to parse out. I’m just thinking from the PR perspective.
Matt Brown (10:32):
Yeah. And you bring up Bill and Spanky, they’re two of the biggest voices about the whole limiting and banning thing and stuff like that. And Adam, honestly, I like their position on it too because there needs to be that voice, right? There needs to be those people who are saying, “Well, here’s the lengths that I have to go to in order to be able to bet legally inside the United States.” Right? So I think that I like their side too, because they’re giving you firsthand experiences and all these things, and as we’ve also mentioned, it can’t just be a free for all. So we understand somewhat what the sportsbook side of all of this is, and it is why whenever we talked about this last week, I honestly believe this is going to be ongoing. It’s going to be the hardest discussion for us to have in this industry because there is at least a general consensus amongst how should advertising be handled, what should and shouldn’t be said.
(11:23):
How do we go about that? What’s the frequency that makes sense? Yeah, there’s a little bit of debate there out, but there’s a general consensus on how that should go. All these other hot topics, you kind of get to where there’s some sort of middle ground, whereas this, I don’t know what the answer is. I don’t know the right answer because as Bill, like you said goes on Gill’s show and says … Or Spanky, you see in this type of deal. If you want me to bet legally in the United States, you don’t want me offshore, you don’t want me at bookies, something like that, then I got to find somebody that I can get money down because you won’t let me get money down.
(11:52):
And so it just becomes this incredible circle that we’re going to go through. And I do believe at some point there will be the states stepping in on something like this. I don’t know if that’s anytime soon. But I do believe at some point there’s going to be the state stepping in and say, “Listen, if you’re going to offer betting, you’ve got to at least offer X amount to every person that comes in because we’re not going to let you have one-way traffic on all this.” Right? While we understand there are choices out there, if you guys are all doing the same thing, there’s really no choice.
Adam Candee (12:24):
And don’t think that this is something that is magnanimous by the states to promote clean business. They have an interest in this. They want to get as much revenue in for their tax collection as possible. Why else would they choose to regulate beyond what we’ve already discussed with responsible gaming and the ability to better track bettors and the ability to potentially help problem bettors? That is a real thing. But it is also a real thing that they want to maximize the tax revenue that they’re getting out of legalizing sports betting.
(12:54):
And if large dollar bettors are clearly saying, “Hey, I’m not playing in the legal market because I can’t get any money down,” that is a voice that has to be listened to. Much the same as it is the sportsbook voice that needs to be listened to when they say, “Yeah, these guys are using all sorts of avenues that might potentially go against our rules for how they get their money down.” I’m not telling you anybody is right. That is a much, much larger discussion for another day, and there probably has to be a solution that lands somewhere in between those two extremes.
MGM makes a big purchase for its international business
Matt Brown (13:28):
It is. It’s fascinating and something that I know we’re going to talk about, I mean all the time here on the podcast. Adam, for a hot minute there, there was a lot of M&A, there was a lot of M&A talk. We were wondering what was going on. Now it kind of settled down there for a while, but here comes some news out of the MGM world about an acquisition.
Adam Candee (13:48):
A Tipico situation in these Tipico times, for those who might enjoy the Dave Matthews Band. Tipico, one of the lower market-share entries in the US that had of course made significant money in Europe over the years and really hadn’t cracked much of the egg here in the United States has sold its US-facing business to MGM Resorts International, so one less brand in the US market. What is key to this deal is understanding that MGM plans to use the Tipico assets, and by that we mean the Tipico tech, to further its rest-of-world product. This is not something that goes to BetMGM. The purchase is actually being made through LeoVegas. Another previous purchase by MGM Resorts. Bill Hornbuckle had teased the fact that there was an acquisition coming here as MGM tried to better its sports betting and iGaming product internationally. And that is where the typical assets will be focused.
(14:53):
Financial terms not yet discussed, although we are coming up on Q2 earnings reports. So you assume that we will get more information in that at the very latest. But as of right now, what we know is that one of the smaller brands in the United States … Another I should say of the smaller brands in the United States is no more. And Matt, the consolidation that happens in every new business that comes up and around, we have just seen a lot of it come from similar places with foreign based entries that have not necessarily been able to capture what it is that the US sports bettor is looking for or just has not been willing to invest the resources at the volume and pace of losses that some of the larger operators have been willing to do in order to establish themselves with market share.
Matt Brown (15:46):
Yeah, we always talk about the giants in the industry in DraftKings and FanDuel. And Adam, we know that there’s money behind Caesars and MGM because of all of the legacy stuff and all the land-based casino operations and whatnot. The thing that we’ve kind of been preaching was, OK, if you’re not one of the brands that everybody is super familiar with and you’re not one of the big two in DraftKings and FanDuel, you kind of better be doing something different. How else are you going to separate yourself? You better be doing something different. I talked to a couple of buddies, I have some friends that are pro to semipro bettors up in Colorado, moved to Colorado actually whenever Colorado got going because of all of the market access that Colorado had, there were just so many sportsbooks up there that everybody wanted to move where they were the most outs.
(16:33):
And Tipico never came up, right? Just as one that people were betting on, using for any sort of certain thing. There were never any of the crazy bonuses. There were never any of the differentiating factors inside of an app or markets that were available, et cetera, et cetera, et cetera. And so it’s one of those deals where we look at this and there’s DraftKings or FanDuel. Then basically everybody else that … As we talked about in previous podcasts, some analysts out there say is not even a level two. There’s just a level three. There’s level one, skips level two, it goes down all the way to level three, and it’s the deal we mentioned, at least with Fanatics. Maybe there’s some sort of bonus thing where you’re tapping into the collectible side of deals, whatever, and that’s at least different. That’s what we’ve always talked about. At least try to differentiate yourself some way, shape or form. And Tipico really never did that and kind of was an afterthought even for us here on this podcast. Hell, what have we mentioned them, three times in 200 episodes?
Adam Candee (17:27):
Yeah. I think the most important thing to keep in mind with whether it’s Tipico or whether it’s a number of the other small operators, there was a thought over the last, let’s say 12 to 18 months, that maybe we pivot the whole idea to waiting for iGaming, right? That when iGaming launches, potentially it’s a different market, we’ll have a different advantage. We have a different set of customers that we can try to bring into this. And I think what’s become clear throughout the last 12 to 18 months is that there’s not going to be the same velocity to iGaming being legalized at the state level that there was to sports betting being legalized at the state level.
(18:03):
There are 38 states that have some form of legal sports betting, and you’re looking at seven right now for iGaming. And any of the momentum that began this year was minimal in terms of what they got done in 2024 and what could be coming in 2025. And so I think any smaller operator that thought maybe we’ll try to hang on for the next iGaming launch is realistically looking at the landscape and saying it’s not coming in a time that makes sense for us to make a profit.
DC finally moves past its sports betting folly
Matt Brown (18:33):
Adam, it’s the only time we have ever said on this podcast that if you live in jurisdiction X, you should just keep betting offshore. You should just keep doing it because there’s no reason for you to enter the legal market. But that’s what we said when DC legalized. It was the biggest joke of a launch that we’ve ever seen. It was the most off-market, off-brand, off craziness that we’ve ever seen in any sort of launch when it came to lines and markets and all the things that were going on out there. But DC slowly started to get their act together a little bit. And now if you do live in DC, it looks like there is light at the end of the tunnel.
Adam Candee (19:11):
“Slowly started to get their act together” might be the nicest thing that you can say about how DC ultimately decided to make changes to its sports betting market. Recall the fact that DC started out with a single-operator model, right? They decided to go with only one mobile sports betting operator. And instead of going with any of the established or up-and-coming operators, they decided to stick with their lottery provider Intralot for a product called GambetDC. And this turned out to be maybe the single biggest failure in legal sports betting over the course of GambetDC’s … let’s say ignominious tenure as the only platform in DC. We were seeing that when it was William Hill and then Caesars that a physical sportsbook where the Capitals and the Wizards play was consistently outpacing the online app in terms of handle from DC residents. Why? Because the odds and the usability were that bad for GambetDC.
(20:15):
And when I’m talking about the odds, I’m not saying, “Oh, well there was a nickel difference in a line,” right? This isn’t 110 versus 115. This is your standard sides being offered at -140, -150, and people who have any serious interest in betting looking and saying, “No, the tipping point for me in terms of will I walk down to a kiosk versus will I place this bet in my underwear is placing an extra $30 or $40 on a hundred dollar wager to make the same bet? I’m just not doing that.” It’s also the same app that crashed during the Super Bowl. And so even if you wanted to bet from home, you didn’t have the option. So what we’ve seen now is Councilmember Kenyan McDuffie pushed through a change via the DC sports betting, I should say, through the budget process for sports betting in DC that is eventually going to open up this market to more operators.
(21:11):
What it does in the short term is FanDuel is established as the new preferred operator in DC, but it also will give the sports franchises, which have been able in the past to make deals with sports betting operators, but then only offer their app within a two block geo-fenced radius of their stadium. Cool.
Matt Brown (21:33):
Yeah. Cool.
Adam Candee (21:34):
Should now be able to do this district wide. It could be up to seven of those. So you’re finally going to see a modern competitive market in Washington, DC, which Matt, I don’t know if you know, this is a pretty high per capita area in terms of income.
Matt Brown (21:48):
Yeah. And there’s more people in DC, I think, than people realize as well. And so this is huge. It’s big news and also just good for the consumer. We talk about this all the time. Having options is good. Being able to make people do the right thing is good. And when there’s only one option and there’s only one thing out there, sometimes people don’t make the right choice. And that’s what we saw for sure with Gambet. I’m glad that you brought this here, Adam. This is a story that 99% of the stuff we talk about here on the podcast, you can go to Legal Sports Report, you can find the written version, you can get more in-depth details on all of that stuff. But this is just some interesting news that was out there. We thought it’d be worth a couple of minutes.
UK election betting scandals offer a cautionary tale in the US
Adam Candee (22:29):
Those who follow legalsportsreport.com know that our focus is on US and Canada news for the most part. However, there are times that news from overseas I think is worth us discussing, especially in the context of where we are on the calendar right now. So if you’ve been watching what’s been going on with the UK Parliament, you know that legal election betting exists in the UK, and some people who should not be betting and some people who had information that they allegedly should not have had, have been betting. And what it has led to is a major, major scandal in the UK in which two of the leading parties in the UK have had to have their candidates removed, stepped down for leading those parties in the election. Because of alleged irregularities in terms of betting. One candidate bet on himself to lose and said he was going to give the proceeds to charity.
(23:27):
A number of police officers and other folks involved in integrity allegedly used inside information about when the date of the election was going to be set. Because if you know elections overseas in the UK, it’s not one static election date like it is in the United States. Well, they apparently had some inside information allegedly that allowed them to place wagers on this market, which according to Reuters, is a very popular market in the UK. And for our UK-based listeners who hear me say, according to Reuters, sorry, we don’t follow the market as closely as we do in the US. But here we stand, Matt, in June of 2024, just a few months away from the US presidential election. And we have heard over and over and over again the debate of whether election betting should be allowed in the United States in legal markets. You and I have been on different sides of this issue in the past.
(24:22):
I don’t imagine that any of that changed overnight, but this is something that needs to be strongly considered by any market that is doing this. And in terms of the markets that we cover, Ontario in Canada does allow legal betting on the US election. Now, that’s a different story than allowing folks within the same country to bet on elections. I’ve always brought up the idea of people betting their financial interests instead of betting their political or community interests in elections as a potential problem with election betting. I wasn’t thinking about the actual candidates themselves trying to get action down, nor was I thinking about those with inside information, inside politics, trying to place bets as well. So quite the cautionary tale for any country, not just the US thinking about how to do election betting going on right now in the UK.
Matt Brown (25:18):
Yeah, no, it’s certainly interesting. And the main thing too is the fact that there could be inside information involved in all of that. My stance has never been that there should be crazy big election betting. Mine was more for entertainment purposes only, right? So limit it to a hundred bucks, whatever, 200 bucks, whatever it might be, and it’s like you could get a little bit of action down on who you think might win election X, Y or Z or something like that. It was never a, hey, let’s make this a full-fledged market. One, it’s just a little dicey, as you mentioned. It does make it for things that are … If we want to really get into the moral side of things and all that, there is a side to talk about with that and all that. So for me, it was more just for entertainment purposes only type of deal.
(26:02):
But then you hear something like this. That being said, we do have static dates when elections are happening. We aren’t betting on what date the election is going to happen. We aren’t betting on things like that. It’d just basically be who’s going to win, who’s not going to win and get down a little bit of a sweat, I guess. Is it needed? Not really, right? That’s kind of one of those things we were talking about with the college props, right? Or the props that are available for the 13th guy off the bench or something in the NBA.
(26:28):
Is it needed? Not really. I mean, what’s it going to really do to the bottom line? I mean, yeah, once every four years in a presidential election, you might actually get some handle, but then it’s three years in between. So it’s kind of like, do we really need to have a market for something out? Do we really need to legalize something? Do we really need to go through all of the jumping through hoops and the back flips that it would take to do this for something that the handle’s really only going to matter once every four years anyway?
Adam Candee (26:56):
And also, Matt, as we discuss integrity and people’s trust in betting, right? We’ve had so much conversation about leagues getting into partnerships with sportsbooks and what that ultimately means for people’s perception of whether or not there is an integrity threat. And you mentioned the 13th guy, you mentioned the Jontay Porter situation. You can also talk about just how close MLB ended up flying to the sun with wax wings in the Ippei Mizuhara and Shohei Ohtani situation. Because if Ohtani had been found to be anywhere near the Ippei Mizuhara betting, it would have been a scandal of a hundred times the proportion of what it ultimately became.
(27:34):
Now think about what would happen if we were talking about the integrity of an election that were compromised by betting markets. That is something that would probably swallow up the entirety of legal US sports betting. And you want to know what would get Congress involved in legislating on sports betting? That is what would get Congress involved in legislating sports betting immediately. Because then it would be their own interests that would be threatened, and we know that that’s generally when action would be. So is the juice worth the squeeze, to put it real short? I don’t think that it’s anywhere close.
Matt Brown (28:09):
Yeah, it’d be different if it was a year-round thing every year. But again, it’s like you’re going to get meaningful handle once every four years. So it’s kind of like, is it really worth it? I just don’t think it is. We’re not betting on … One, it wouldn’t be a market anyway on your local election, so that’s not going to be anything anyway. No one’s betting on who’s going to win governor or whatever it is. It’s just not. You’d get the handle of what you get on cornhole. So it’s like, what’s the point? It’s just no point.
Adam Candee (28:38):
For that sweet, sweet cornhole handle, I’ll tell you what, though. If I were able to bet on Matt Brown as mayor of Summerlin, I think I might actually want to get … I don’t know who would book it for me, but I want that action.
Matt Brown (28:52):
I don’t think I want people digging into my past, so I’ll just not run for anything or whatever. Man, thank God cell phones didn’t have cameras when we were in college.
Adam Candee (29:05):
Oh, you sir, a smart man.
Matt Brown (29:08):
Yeah. That’s a good thing. Guys, as we said, everything we do, absolutely free. So all we ask of you in support is going ahead, hitting that subscribe button. That is what you can do to help us climb up the charts and bring this podcast to more ears out there. We’re on Apple, Spotify, Google, et cetera, et cetera, all the different platforms. So do appreciate all of that. The words to everything we talked about today, obviously outside of the UK election stuff, you can find over at legalsportsreport.com. So please go in, take in all of the good work that Adam and company are doing over there. They’re listening to these things. They’re reading these things, they’re summarizing these things, so you don’t have to, just remember that. For Adam, I’m Matt. Talk to you guys next week.
The post Beards, Election Betting And Other Wagering Minefields | Sports Betting News | LSR Podcast 239 appeared first on Legal Sports Report.
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