Two mainstream sports media journalists with an interest in gambling turned a few heads recently by exploring the topic of the New Jersey mobile sports betting sites refunding losing bets. Sports-business-reporter-turned-sports-gambling-reporter Darren Rovell was a guest on last week’s Sports Illustrated Media Podcast with Jimmy Traina, where Traina vented about this practice of sportsbooks giving back money on occasion following a high-profile bad beat.
Traina seemed to feel, in part, that getting refunded on losses goes against the competitive spirit of sports betting. He insisted he’d rather continue betting at shady offshore books than deposit on regulated U.S. sportsbooks that don’t share his views on the sanctity of gambling wins and losses.
Traina expanded on this in an article on Monday, using terms like “amateur hour” and “shortsighted.”
“As a longtime gambler, I hate it,” he wrote of cases like PointsBet refunding UCF moneyline bets after their near-miss against Duke in the second round of the NCAA tournament. “I’d never bet at a book that offers refunds because it makes me think they’re not a legit outlet. More importantly, though, the cherry picking of games for refunds is infuriating.”
Rovell was less opinionated in his follow-up article, but his Twitter followers were not, with 64% of them claiming to oppose sportsbooks refunding losing bets:
Do you like the idea of sports books giving back money to bettors who lost in games that were close calls, to further promote their business?
— Darren Rovell (@darrenrovell) March 31, 2019
Nearly 15,000 of 23,000-plus polled went with the “no” answer.
Are that many people really opposed to getting free money?
Fighting for market share
There’s no mystery as to why the New Jersey sportsbooks are making these “generous” offers: They’re marketing ploys in a highly competitive environment, one currently being dominated by FanDuel and DraftKings. Whether a book refunds losers after the heartbreak of the double-doink field goal attempt, or it pays out bettors before the result is in, the intention is to buy publicity — often less expensively and more effectively than by taking out an advertisement.
“That’s a core part of our strategy,” PointsBet CEO Johnny Aitken admitted to NJ Online Gambling’s John Brennan after refunding bettors in the controversial Rams-Saints NFL playoff game in January. “We want to have the back of our client and extend the goodwill.”
The sincerity of that latter statement is questionable. But the appearance of goodwill — or simply the appearance of unexpected money in a bettor’s account — can build customer loyalty, and that’s what every operator in the booming sports betting space is fighting for.
It must be spelled out, however, that the refunds aren’t always as valuable as they seem. Some sites put money in your account that has to be bet before it can be withdrawn. No big deal there; it’s almost as good as cash.
The refund in the form of a “free bet,” however, is more limited. You have to place a bet for the amount refunded, and if your bet wins, you keep the winnings but not the stake. So if a site gives you a $50 free bet and you make a standard -110 bet, you keep $0 if the bet loses and $45.45 if it wins. So the expected value of a $50 “refund” is actually a little under $23.
And these free bets and refunds are capped. Even if you’d bet, for example, $500 on the double-doinkin’ Bears, you weren’t getting your full $500 back. Refunds are always limited, typically to a maximum of somewhere between $20 and $50.
But, again, isn’t something better than nothing?
A big bettor calls BS
“I just don’t see how getting money back could be seen as a negative,” high-stakes sports bettor Brad Feinberg, an expert analyst for NBC Sports Philadelphia who’ll be a commentator on tonight’s betting-focused alternative broadcast of the 76ers-Hawks game, says to NJ Online Gambling. “I was stunned by [Rovell’s poll results]. If you had said to me, ‘If you asked 100 people how many would be in favor of getting money back?’ hand on the Bible, under oath, I would have said 100 would be in favor of it.
“To me, this is like, you’re walking down the street, there’s a $20 bill, you say, ‘Aw, f— it, I’m not picking it up.’ Yes, maybe the sportsbooks have ulterior motives, but if you get something back on a bad beat, you should be happy, you should be grateful, you should be excited. It’s a nice gesture. Are they doing it out of the kindness of their heart? No. But who cares?”
Feinberg gives another example: Who’s ever turned down a comped room or a free meal at a casino because they had too much pride?
People love free stuff. Even free stuff of almost no value. “When I go to a Sixers game, they throw T-shirts into the crowd. You would think they’re throwing gold. People are diving for these T-shirts as if they’re literally made of gold,” Feinberg says. “But these people are saying they don’t want something free? I don’t buy it. I call BS.”
Subdividing the 64
It’s possible that some of the separation between Feinberg’s perspective and the poll results is a matter of Rovell’s wording. He didn’t ask, “Would you want your money back?” He asked, “Do you like the idea of sports books giving money back to bettors who lost in games that were close calls, to further promote their business?”
So while Feinberg is probably right that 100 out of 100 would say “yes” to free money when it’s offered to them, many of those polled are exposing their own inability to be happy for others, admitting their bitterness over someone else getting a freebie instead of them.
That might well be an influencing factor in Traina’s attitude. He lives in New York, not New Jersey, and admitted on the podcast and in his column that he bets at unregulated offshore sites. From the comfort of his couch or his office, he can’t take advantage of the nonstop flood of promotions, odds boosts, and occasional undeserved refunds being offered to Garden State customers.
So it’s reasonable to suspect that his issue is not just with sites picking and choosing which bets get refunded (although that’s part of it), or with the competitive integrity of sports betting results getting diluted (although that’s part of it), but also with watching other people get free money instead of him.
Also, this is not meant as a slight, but not all of Darren Rovell’s 2.04 mm Twitter followers are Darren Rovell fans. He’s long been one of the most polarizing sports journalists on social media. There are always people trolling him and trying to skew his polls intentionally.
Were there hundreds of poll respondents guilty of that? Thousands? It’s impossible to say. But it’s safe to say 64% is an artificially inflated number.
Then there are the last five words of Rovell’s question: “to further promote their business.” Intentionally or not, he was swaying his Twitter followers to consider the motives of the sportsbooks.
It’s not hard to find people who are turned off by aggressive marketing. Remember how many people were rooting for DraftKings and FanDuel to fail in 2015 because they were sick and tired of seeing all the ads?
Customer satisfaction matters
The example of DraftKings and FanDuel during the DFS boom period is also instructive in terms of the way they churned through customers. Roughly 90% of the players were losing their money to roughly 10% of them, and many of those who lost their initial deposits quickly enough, without experiencing a bit of the thrill of winning along the way, never made a second deposit.
“You want to keep the casual bettors in action,” Feinberg says. “You don’t want them to lose the money too quickly. Keep them playing. If I was running a sportsbook, I would do stuff like [refunds and free bets] all the time.”
The New Jersey sportsbooks are simply following the business model that has kept the lights on in Las Vegas for decades.
“The casinos, when they give you the free room, they’re not doing it out of kindness, they’re doing it for the motive to get you to gamble more,” Feinberg says. “This is the same thing. They’re like, ‘I’m going to put that $50 back in his account. He’ll lose it anyway. But it’s a nice gesture that’ll make him stay.’”
Now you develop a conscience?
For Traina and some of the poll respondents, there’s surely a feeling of wanting to earn your victories. That makes sense.
It’s like when you’re playing no-limit hold’em and you get it in with a small pocket pair against pocket aces, and you suck out. You feel bad. You don’t deserve it. You got lucky. There’s some survivor’s guilt.
But after the emotion of the moment wears off, you’d rather have all those chips than not have them.
If you aren’t OK with losing when you deserve to win and winning when you deserve to lose, well, you should consider another hobby instead of gambling.
When you sit down at a blackjack table and get dealt an ace and a face card on your first hand while everyone else at the table loses, do you reject the payout because you didn’t do anything to “earn” it? Of course not.
When a sportsbook offers you money back on a losing bet, maybe you don’t feel great about it morally. But in the long game of gambling, you won’t get far if you aren’t willing to take a small edge when it’s presented to you.
“I’d really like to see those 64% reject that money when you offer it to them,” Feinberg insists. “I’d love to see it.”
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