Do Sportsbooks Really Ban Sharps? An MIT Panel Took On The Controversy

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Anyone who reports on the legal U.S. sports betting industry and has any kind of social media presence at all gets plenty of feedback from mostly-anonymous followers who insist that one sportsbook or another has banned or severely limited their betting limits because they are too good.

It’s not something that industry executives are usually willing to talk about, for public-relations reasons. But at the annual Sloan Sports Analytics Conference at MIT this past weekend, moderator Jeff Ma — a numbers and gambling whiz best known as the inspiration for the main character in the blackjack book Bringing Down the House and related movie 21 — well, he “went there.”

That led to the kind of public discussion that, frankly, is sorely needed as legal sports betting grows in the U.S. Ma clearly agrees, so he probed as best he could.

What’s best for business?

Sportsbooks work a tricky balancing act. Most businesses offer a certain product at a certain price, and the more they spend, the more profit the business makes, assuming it is properly run. But while a sportsbook tends to make a more consistent, if modest, profit on the vast bulk of its customer base than some might realize, the outliers tend to be the few “sharps” who can make a consistent living by betting on sports. What to do with them?

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One of the panelists for “Skin in the Game: Sports Gambling’s Emergence in the U.S.” on Saturday was Sharon Otterman, the chief marketing officer at William Hill US, an arm of the British bookmaking company.

“There are philosophies in bookmaking around how you cater to your user base, or what kind of customer base you want,” Ma began. “Sharon, I know that you mentioned recreational bettors. And William Hill has obviously gotten a lot of tough publicity since coming over to the U.S. in not wanting winning bettors.

“The notion is, you guys will kick out people just for winning. I’m not saying that is correct, but that is a rumor that has been read, there have been articles written about that. And then we can sort of go into this idea of, what is the best way to run a sportsbook?”

William Hill executive offers her side

“Let me be clear: It’s not our publicity,” replied Otterman, whose company runs the Monmouth Park sportsbook and also offers its own app. “We have been the victim of getting that reporting. It is not true. We do not kick out winners. When folks have not been allowed to play, there is a lot of other reasons that actually go into it. There is so much more to the customer story.

“I think we were picked on a little bit because we’re the biggest bookmaker in Nevada and with the most amount of customers, so it’s easier to get picked on. But that is not true. We actually do want people to win. As we were talking about, it is fun —”

“Do you want them to win consistently?” Ma interjected. “Like, do you want to have people who you know are a losing proposition?”

“You want happy and satisfied customers,” Otterman continued. “And the analytics prove over time — we have a business. We are not a not-for-profit. Honestly, we are actually public company, right? We are a business. But at the end of the day, you want happy, satisfied customers who have fun playing. I think the industry is picking on this thing that actually really is not true, and taking random stories and putting it together. You do — with recreational bettors, you want them to really enjoy it and to fun with it.”

“What about professional bettors?” Ma asked again.

“We operate two sportsbooks [near]here in Rhode Island,” Otterman said. “So you can imagine, with the Patriots, all the money was on the Patriots to win the Super Bowl. And Rhode Island had a great experience with sports betting. And over time, we’ll have a healthy business and fans will keep coming back. So I’m not sure it’s a real thing, of what is being —”

“I know,” Ma cut in. “Listen, we talked about this backstage. There is a notion that you are a business, you have to make money, and you make money in the business model that you have. So you kept referencing recreational bettors. Do you feel that you guys can cater towards professional bettors, meaning longterm winners, or is that not where you consider to be your customer base to be?”

“We look at our segmentation so differently than that,” Otterman said. “Right, it’s not a matter of the the recreational vs. the longterm … We want people to have high player value. They play with us for a long period of time, and sometimes they win, and sometimes we win. And over time, you have a good business.

“But the most important thing is about the transparency and the authenticity of it. We offer fair odds — you know, for every other business, we offer a price, and people pay the price or they don’t. And there is nothing that is going on underneath, or behind the curtain, that we don’t feel comfortable with. We want consumers to have a good time and have fun with sports betting.”

FanDuel boss tackles the topic

At that point, Ma turned to FanDuel Group President and COO Kip Levin, whose company operates the Meadowlands Racetrack sportsbook and also has its own FanDuel Sportsbook app.

“Kip, do you guys — ”

“As I said before, we cater to all different types of players,” answered Levin before the question was even complete. “We know there are some players that may, over time, be net winners across the spectrum. I think as long as we understand how our business is working, we’re comfortable with that. Look, there are also a lot of other reasons that get confused in this topic about why you might restrict somebody from betting, right?

“We have a huge obligation around responsible gambling, and so on,” Levin added. “So I think things get confused across the board, but look, we largely have policy of, we take money from just about everybody, up to the point where we think there potentially is a problem gambling issue to be aware of.”

Ma then turned to ESPN sports betting analyst Doug Kezirian. “Doug, do you have any thoughts, in terms of you as someone who has covered gambling for quite some time, and you have noted that you are a gambler yourself,” Ma said. “Do you feel like this idea that — what we’re representing on this point of view that there is this idea that there is no such thing as banning someone from a sportsbook for simply winning.

“And I know that’s not true … and I’m not saying that William Hill or anyone specifically, I’m just saying that sports betting is notorious, you’ll see it all the time, that people have trouble getting money down. And the reason they do, often times, is because they have done too well or they have won.”

The conversation floats offshore

Before Kezirian had a chance to weigh in, Ma shifted to the example of a popular — and illegal in the U.S. — offshore sportsbook that specifically caters to professional bettors. That leads to a smaller “hold,” but also to very high volume.

“It’s hard to have this conversation without some acknowledgement that as a business model, not catering to winning bettors is part of that business model, right?” Ma asked. “Are you saying, Sharon, that this is not the case?”

“I’m saying that there is so much more to the story,” Otterman said, “and as Kip said, too — ”

“Absolutely, right?” Ma said. “And I’m sure a lot of it has been blown out of proportion, and it’s edge cases. I’m just curious about it. And it’s not like … if I got to choose whether to run a business that makes 1% or 4%, 4% sounds better to me.”

Kezirian said that if the regulated U.S. sports betting industry was to copy that offshore business model, “I would, if I was working at those operations, want that professional money for that information. And I would have maybe lower limits, and know the ‘sharp side,’ or whatever you want to call it. I would say that the professional bettor money would help me have a higher hold percentage because you can use their bets to help you.”

“And that’s the premise,” Ma said. “it’s an interesting discussion.”

“They go hand in hand, is what I’m saying — or they could go hand in hand,” Kezirian said.

Said Levin: “Well, I would say this is a great sales pitch to the people in this audience who came here who are interested in getting into analytics and this industry. Look, we take money from people who we know are probably going to win over time, because it’s interesting data to plug into all the models we have that are setting the prices for the future.”

‘Should I get into sports betting?’

Ma finished this segment of the panel discussion with a somewhat startling observation.

“If people ask me, ‘Should I start doing analytics for sports betting?’ I tell them, ‘No,'” Ma said. “It’s too hard to get money down if you’re winning. Like, it’s just the way it is.

“And I wonder — I had a hope that maybe legalization would change that, and I’m not sure that it will. It will be interesting to see if we are able to — again, going back to this whole idea of ‘Can we grow the overall pot as big as possible?’

“Well, one of the ways is to allow everyone to bet, right, as long as they’re not felons or whatever, and they’re not cheating, I completely get that. As long they just legally are doing the right thing transacting, I think it’s ‘Let everyone play,’ right, win or lose, and then figure out your business to leverage them.”

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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