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Two patrons sit at a Long Island bar/restaurant that features several screens showing different sports.
Patrons at The Main Event in Plainview, New York, on February 10th, 2022, just days ahead of the Super Bowl.
Alejandra Villa Loarca/Newsday RM via Getty Image

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Sports betting: Pretty fun, probably terrible

Inside the sports betting land grab, where everybody wins, except (probably) you.

Emily Stewart covered business and economics for Vox and wrote the newsletter The Big Squeeze, examining the ways ordinary people are being squeezed under capitalism. Before joining Vox, she worked for TheStreet.

I’m not a huge sports person. I’m definitely not a gambler. And yet, on a Thursday night in mid-January, I found myself quite excited that my parlay bet that the Milwaukee Bucks would win and Giannis Antetokounmpo would achieve a triple-double had paid off. I’d turned $11 into $130 essentially at random — I had to ask a friend what a triple-double was — with a handful of taps on my phone. “Is sports betting actually good?” I wondered. More selfishly, I thought, “Am I a secret genius at it?”

The answer to the latter question was absolutely not — my early luck wore out about a week later, when I started to lose money. The answer to the former question is tougher to assess. Sure, sports betting is fun. But is it good for society? Probably not so much. What is clear is that there’s an enormous amount of money being thrown at it, with sportsbooks — meaning companies that let you place bets on sports, like DraftKings — spending billions of dollars to suck people in. Leagues, media companies, and teams are recognizing the moneymaking opportunity, too. (Disclosure: The sports network SB Nation, which is owned by Vox’s parent company, Vox Media, has a partnership with DraftKings.)

“You’re talking about an industry that is in land-rush mode, where there are more competitors than there will be winners,” said Chris Grove, CEO of American Affiliate, a company that recruits new customers for sportsbooks. “We are absolutely in a heightened marketing environment right now.”

Sports betting is everywhere. It and crypto were basically the themes of this year’s Super Bowl commercials. In New York, where online sports betting became legal on January 8, it feels inescapable — the other weekend, I watched part of an hour-long DraftKings infomercial twice. Within the first 10 days of sports betting being allowed in the state, 1.2 million new accounts were created, most of them by people completely new to the space.

New York surpassed $1 billion in total bets in just over two weeks, and the state’s reported total hit nearly $2 billion in wagers over the first 30 days, generating $70 million in tax revenue. New York is hardly an anomaly. According to the Action Network, as of mid-February, full online and mobile sports betting is legal in 13 states, including Louisiana, Pennsylvania, and Arizona, and in-person sportsbooks or limited mobile betting options are available in multiple more. A sports law expert told me he thinks it will basically become legal everywhere but Utah at some point.

The goal of sportsbooks and casinos, whatever marketers tell you, is to separate people from their money. The push coming from companies indicates they believe there’s a lot of cash to be had here, and that pulling out all the stops to acquire customers — including taking the risk of ultimately losing the turf war — is worth it. The more customers they get, the bigger they get, and the better they become at figuring out exactly who they need to be targeting and how. The goal is to get their hooks in and then have at it with more offers and options to keep extracting cash.

“Hovering over all of this is not what kind of value will I extract from customers from sports betting, it’s what am I going to be able to sell that user base three, five, 10 years down the road?” Grove said. “There is an ever-expanding universe of ways to spend money on uncertain outcomes, and the most bullish sportsbook operators believe that they’re going to be able to offer a buffet of those to customers at some point in the future.”

You can imagine a world where a sportsbook also offers crypto trading, or sports stadiums that offer betting and online poker. Gambling, a longtime no-no in sports, is now driving the money train. With dollar signs in view, the moral calculus has changed.

Why sports betting ads are everywhere

In recent years, the ground has shifted in the relationship in the US between gambling and sports. The rise of DraftKings and FanDuel has made daily fantasy sports, where people assemble made-up teams of real players, more prevalent. Instead of people picking their fantasy teams at the start of a season, they’re able to keep at it all season long. While that doesn’t technically count as sports gambling (it’s supposedly a game of skill), it kind of is. Regardless, in 2018, the Supreme Court struck down a federal law prohibiting sports gambling, opening the door for states to legalize it.

Companies like FanDuel, DraftKings, Caesars, and MGM are spending a ton of money to establish themselves as leaders in the space. It could be a little questionable as a business venture, given profit margins. As Sahil Patel at the Information notes, betting services usually keep $6 for every $100 bet made, and after taxes and marketing, that can drop to as little as $1.

Apparently, though, these companies have made the calculation that the low margins are worth it, and this will all pay off down the line.

Take the example of Caesars, the casino and hotel company whose commercials for sports betting have become inescapable lately. I see actor J.B. Smoove’s face, who plays Caesar in the company’s ads, more than I see pretty much any of my family or friends. If I could choose an “I get it” option to get out of seeing the Caesars stuff at this point, I would. Caesars isn’t just spending money on marketing, it’s also giving out big bonuses that make at least dabbling in sports betting super appealing. For a while, it was matching deposits up to $3,000, and handing out a $300 bonus and other offers to get people to sign up.

Eric Hession, co-president of Caesars Digital, told me the company hopes to differentiate itself through integration with its rewards program tied to its casino brands. Sports betting gives Caesars a new line to its existing customers, for example, getting a New Yorker who frequents its casinos when in Las Vegas to start betting with the app on NFL games. But it also serves as a pipeline to get new customers into its broader ecosystem — customers who are often a different demographic from the usual. Caesars’ current database tends to skew older and more female, with slots being among the most popular games. Sports bettors skew younger and male.

“One thing I know about this from people in the gambling industry is that everyone’s looking for a younger audience,” said Andrew Brandt, a former Green Bay Packers executive and the director of the Moorad Center for the Study of Sports Law at Villanova University. “Everyone wants to engage young people because these sports fans are skewing older, especially for a sport like baseball, and that casino engagement is skewing much older. So the best way to attract young fans is this new sports betting.”

Caesars’ hope is that once people are into sports betting, they stay in, that they keep playing after the bonuses are dried up, and maybe start hitting up their casinos. While the bonusing may seem like a lot, casinos are deeply experienced with the mechanism of giving things away in order to make more later.

To be sure, not everyone’s going to do that. Once I bet through the $300 bonus on Caesars, I took the $400 or so in my account (thanks largely to that Giannis bet) and cashed out. Some people put in $3,000, got the match, and, once they bet through that, cashed out, sometimes making a few thousand free dollars. When I raised that possibility to Hession, he acknowledged it wasn’t ideal.

“We assume there’s a certain percentage of people who will do that, and it’s too bad that that’s the reality,” he said.

It’s hard to feel too bad for Caesars. After all, it’s a business, and if they’re out to get people’s money, it’s only fair that people have the opportunity to try to get their money, too. Just as gamblers accept risk when they place a bet, Caesars is taking on a bit of a risk that its spending on sports betting will pay off — it thinks it will be profitable in sports betting by 2023’s football season.

“Traditionally, sports betting has been more of an amenity within the casino, but now that it’s able to be mobile, it’s going to be a much bigger part of the company going forward,” Hession said. Prior to the Supreme Court’s decision, it was allowed in Nevada, where both mobile and in-person sports betting were available, though everyone had to register in person at a casino first (it’s still the case there). Delaware also offered parlay betting on the NFL.

In the sports betting land grab, there are going to be losers and consolidation as some players inevitably win out. Keith Whyte, executive director of the National Council on Problem Gambling, said that within the gambling industry there is debate about whether the bonuses that companies are offering to get customers is excessive — hence why companies are being so aggressive at getting people in and getting them hooked.

“There’s a lot of marketing technology aimed at separating gamblers from their money,” he said. “The amount of data the industry collects and the way they utilize that is really underexplored.”

The more people who start sports betting, the more data the industry collects so that companies and marketers can better identify and target potential new customers as the sector expands. The leagues are producing data, too, as a way to make money and give sportsbooks more for customers to bet on. The ideal customer is someone who’s cheap to acquire, who’s sticky, and who’s likely to expand their wallet as sportsbooks offer them new products. When I took my money and ran after the bonus, maybe I helped Caesars avoid someone like me in the future.

Matt Heiman, CEO of The Game Day, a sports betting online entertainment network that helps funnel customers to sportsbooks, said his company is getting better at figuring out what types of new bettors will really pay off — and that sports betting companies are willing to pay for it. Heyman says that with the number of customers they’re converting for sportsbooks operators, they’re starting to be able to suss out “what looks like a good customer versus a bad customer.”

Even if people do manage to get in and get out initially, they sometimes return. I recently found myself out with someone who’d lightly admonished me over my short-lived betting habit, warning me it was a bad idea. He claimed he’d gotten on and off the train (betting through a website in Anguilla) long ago and wasn’t about to start again. While at the bar, I noticed him checking scores on the ESPN app — turns out he’d placed some new bets. He knows infinitely more about sports than I do. I think he still lost.

Everybody wins, except maybe us

Professional sports leagues spent a lot of time pushing back on sports betting but suddenly became mostly fine with it once it was legalized. The reason: It’s lucrative.

“Up until 2018, they were saying betting on sports is a threat to the very foundation of the game. Now, they are actively partnered with the gambling companies. There’s a lot of money to be made,” Whyte said. Sports betting, like fantasy, is an incredible fan engagement tool. It gets people to watch games they might not otherwise be interested in, and watch to the end. “Why is a fan in New York going to care about a game between Seattle and Denver?” Whyte said. “The reason is almost 100 percent gambling.”

Sports betting is a potential boon for media companies and TV networks trying to get a piece of the pie. As Rick Maese points out in the Washington Post, Barstool Sports and Fox Bet have sportsbooks available in several states, and ESPN has reportedly been looking at licensing deals that could total at least $3 billion. And the states legalizing sports betting? They’re on board, too. It’s tax revenue after all (part of which goes to funding gambling addiction treatment).

“You don’t see the state of New York saying, ‘Hey, buy another carton of cigarettes because we put a really high tax on that, too,’” Whyte said. “As far as I know, [gambling] is the only addictive activity that the state legalizes, monopolizes, and monetizes.”

Sports betting worsening gambling addiction is obviously an important concern. According to the National Council on Problem Gambling, people who bet on sports and pay to play daily fantasy are two to three times likelier than other gamblers to report “problematic play,” and an estimated 6 million Americans struggle with a gambling addiction. Companies say they want people to bet responsibly and that they have guardrails in place to make sure people don’t get in over their heads, but the fact of the matter is, to keep the business going, they’ve got to get people hooked and keep them coming back. Bettors often come to believe that they’re especially skilled at their wagers, but most aren’t.

“If you’re an exceptionally talented sports bettor, you’re good 50 and a quarter percent of the time. There’s a reason the house always wins,” said Patrick Keane, CEO of the Action Network, a sports media company. But sports betting, like all gambling, is good business. “It’s recession-proof; it’s withstood the millennia of consumer activity and interest.”

Sports betting companies, media companies, and sports leagues appear to believe the sky is the limit on sports betting right now. Grove, from American Affiliate, says he’s keeping an eye out for sports stakeholders such as arenas and teams getting further into the game.

In Arizona, for example, many teams have gotten licenses in conjunction with sportsbooks, but they could start operating on their own, too, and expand more into other gambling operations. “The question of what happens when states move beyond sports betting and start authorizing online casinos as well, do sports stakeholders go along for that ride, too? Is this a path to convergence, where sports stakeholders are really now on track to become full-fledged gambling operators?” Grove said.

There’s also likely to be a lot of consolidation in the industry as certain players win and lose and the field of sportsbooks is winnowed down. That means a lot of customers — and a lot of data — is going to be rolled up in the hands of just a few players eventually.

I have a hard time figuring out exactly how to feel about sports betting. On the one hand, it can be a good time, and it brings in revenue for states to go toward spending that is, presumably, good. New York puts a whopping 51 percent tax on sports betting revenue. Plus, illegal sports betting was already happening, so it might be better to have it out in the open.

On the other hand, it’s hard not to wonder whether this is another vice that truly needs to be made legal. Being able to bet on sports essentially 24/7 from your phone is super easy to get sucked into. This is almost guaranteed to exacerbate gambling addiction. The ads from Caesars are essentially like, “Hey, emperor, don’t you want to put down $50 on the game later?” with the immediate follow-up: “Also, FYI, here’s a hotline for your gambling addiction.”

A new raft of stories warning about gambling addiction are already starting to crop up. It’s hard not to worry about the people who are playing with money they can’t afford to lose, or wonder what it says about the state of our economy that so many people are willing to play in an arena where the odds are so obviously stacked against them, all in the hopes of hitting it big. Then again, aren’t the economic odds stacked against us always?

I didn’t entirely get got with sports betting — at least not yet. Although, I will say that since withdrawing the $428.53 from the app, I have missed it. I know, objectively, that in gambling, losing is only a question of time. I got out while I was ahead, but a lot of people won’t. And that’s exactly what the sports betting industry is placing very big bets on.

We live in a world that’s constantly trying to sucker us and trick us, where we’re always surrounded by scams big and small. It can feel impossible to navigate. Every two weeks, join Emily Stewart to look at all the little ways our economic systems control and manipulate the average person. Welcome to The Big Squeeze.

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