Under pressure from research showing that legal sports betting has not done much to stamp out illegal wagering, the Massachusetts Gaming Commission met last week to hear about an issue that has some bettors crying foul and could threaten to entice them toward the illicit and untaxed market.
Prodded by bettors who said their wagering was limited by sports betting companies after cashing regular wins, state gambling regulators have been interested for months in digging into the controversial topic of how and why sportsbooks restrict how much or how often someone can bet. After a false start in May, the commission got nine operators to address the issue in public on Wednesday, September 11.
“To effectively manage risk, we limit a small minority of patrons that we consider to be advantaged players who attempt to take advantage or find ways around our risk management framework. This group of limited patrons, many of whom self-identify as professional bettors, are loud in insisting that limiting patrons is a pervasive practice by operators. However, this is not accurate; it is actually the opposite,” said Sarah Brennan, senior director of compliance at BetMGM, adding that her company currently limits the betting activity of 1 percent of its Massachusetts customers. “And it is our ability to limit that small minority of advantaged players that allows us to continue to offer competitive lines, competitive odds, and a wide variety of markets for the 99 percent of non-advantaged players that play with us.”
Operators stressed to commissioners that they don’t limit a bettor based on outcomes like wins, but rather based on patron activities and betting behavior patterns. Limits are imposed by “stake factor” — a bettor with a stake factor of 1 can bet up to the maximum set for that event by the operator, while a bettor with a stake factor of 0.5 can only bet up to 50 percent of the operator-set maximum.
Cory Fox, FanDuel’s vice president of product and new market compliance, emphasized that the operators are not refusing to take action from these “advantaged” players but are taking steps to “manage our liability exposure and avoid unsustainable losses” from players who may be looking to capitalize on an operator’s pricing error, are arbitraging lines and prices against other competitors, or trying to gain an advantage by placing live bets on a game they are physically attending.
“On an average day, FanDuel takes wagers on 2,700 unique events and over 37,000 different markets within those events. So in limited cases, over all of those markets, some users may have more information than we do. Some users may have a better model than we do,” he said. “We’re comfortable taking wagers for them, but we have to do it in a responsible manner that protects our company.”
Bettors from around Massachusetts and other states wrote to the state Gaming Commission earlier this year detailing the circumstances that led them to be limited by sportsbooks, with many people claiming they did nothing untoward. A survey conducted in both 2022 (pre-legal wagering) and 2023 (the year that legal betting launched) by the UMass School of Public Health and Health Sciences found there was no change in the proportion of monthly gamblers who engaged in illegal sports betting between the two years.
“I didn’t take advantage of any system — I have specialized knowledge about sports and work with modeling sports outcomes,” a Bay Stater named Alec McCarren wrote. “The sportsbooks will limit smart bettors playing within the rules, but offer predatory VIP programs and invest a ton in targeted advertisements to bettors that consistently lose, fueling addiction to fuel their profits. They can’t have it both ways.”
Commissioner Eileen O’Brien pointed to similar sentiments Wednesday, telling operators that there is a phrase that comes up often at the conferences she attends around the country — “ban or bankrupt,” the perception among some bettors that they will either be enticed with glitzy ads and promos to wager until they run out of money or have their ability to bet at all significantly curtailed as soon as they start to win.
Operators stressed that they have entirely separate teams that use data and other tools to keep an eye out for bettors who show signs of problematic gambling, and that the limiting of players by stake factoring is not meant to be a responsible gaming strategy. A consultant who specializes in problem and responsible gambling policy, Brianne Doura-Schawohl, told the commission that one of her biggest takeaways from the operators’ panel was “a real appreciation of how much data drives the decision making of the operators.”
“And while I can appreciate and hear that they stated over and over again that about roughly 1 percent of folks are limited … I’m looking at a stat that the National Council on Problem Gambling believes about 5 percent of any active player base might be struggling with a problem,” she said during a second session Wednesday. “So for me, top of mind is two things: Are we using data in the same way to make decisions on limiting someone who might be experiencing gambling-related harm? And what are those percentages that the average operator is limiting someone for true, responsible gaming concerns?”
The Challenge of ‘Courtsiding’
The operators also clued the commission in Wednesday on another reason a bettor might find himself limited: “courtsiding,” which refers to bettors who either attend a game in person or are in touch with someone who is present in order to place in-game bets on live action during the lag time between when an event actually occurs and when an online betting platform’s feed refreshes to account for that event.
O’Brien told the operators that it would seem like a solution to that problem “may very well be shutting down when you can bet on that” so that the operators are accounting for the lag in their feed.
“That seems to be something that could be adjusted on your guys’ end to eliminate that area,” she said.
Fox agreed with O’Brien that “that is the solution,” but said it’s more complicated as sportsbooks try to cater to the millions of bettors watching the action on television with a delay and wrangle technology.
“If our feeds were perfectly calibrated timing-wise, it would stop that. But it is a challenge to get the timing just right, given all the technology happening on the back end … and then also with an acknowledgement that, for our users who are watching from home on television, there’s a delay in when they’re actually seeing the activity,” he said. “So trying to get the timing just right so that you can actually place a live bet does create some difficulty, and also getting it shut down at the exact right moment.”
Fox acknowledged that bettors who engage in courtsiding are not necessarily doing anything wrong, but defended his company’s use of wager limits to counteract some of that activity.
“I think it’s on the operators to either lose the money to them or to fix their feed to get it exactly right. They can do that, but also it’s our ability to manage our risk by stake factoring them if that’s the way they’re going to engage with the product,” he said.
‘The Talking Needs To Slow Down’
During the second session, which included some panelists who said they have been or are currently limited at certain sportsbooks, some said they think it’s on the regulators to do something if there is going to be a change in the perception of the legal market among some bettors.
Richard Scheutz, the chief executive officer of Bettors Voice who told commissioners he’s been in the gambling business longer than many of them have been alive, said he has “never seen anything quite like what is going now, and that is the tail is wagging the dog.” Noting that Massachusetts is the first and so far only state in the country to publicly tackle the issue of wager limits, he implored commissioners to use the powers they have to dig deeper.
“You people are regulators. You have the ability to request information in clear, succinct steps and have them provide it to you, and have the ability to offer that. And I think that’s where, as long as you keep talking about that, you’re going to continue to be going around in circles,” he said.
Scheutz said he thinks many of the regulatory agencies around the country “are insecure about not fully understanding either the Internet delivery product of games or sports betting that they’re just sitting back in the background” as various gaming interests shape the legal online sector.
“I don’t think there’s a lot of agencies that are in the position you have, where you have kind of this innate curiosity and you’re committed to doing the job right, it seems. And I just totally admire that. But you need to get after these people,” he said. “The talking needs to slow down and the data-acquisition needs to start, in my opinion. Get the facts.”
But the commission’s acting chairman, Jordan Maynard, said at the close of the two-part session Wednesday that more talks are exactly what the commission has in mind for next steps.
“We look forward to more discussions to follow. I know that patrons and those who follow the commission’s work are eager for quick determinations, but we are a deliberative body, and we will not sacrifice getting an issue right just for expediency’s sake,” the chairman said. “And so just continue to stay tuned, continue to give us information. We will continue to do our duty and meet.”
New to NewBostonPost? Conservative media is hard to find in Massachusetts. But you’ve found it. Now dip your toe in the water for two bucks — $2 for two months. And join the real revolution.
