Sports betting conference takeaways — Mattress Mack, offshore sportsbooks and match-fixing concerns
I attended the SBC Summit North America last week, a high-profile conference attended by many industry stakeholders, including bookmakers, bettors and sports league officials. Here are three questions I came away with:
Why are some people annoyed with Mattress Mack?
Jim “Mattress Mack” McIngvale, the owner of Houston-based Gallery Furniture, regularly makes national news for placing multi-million-dollar bets to mitigate the risk from promotional giveaways. He currently has approximately $4 million bet on the Houston Astros to win the World Series at around 10-1 odds. The wagers coincide with a promotion that gives customers who spend $3,000 or more their money back — if the Astros win the World Series.
The publicity he receives for the large, but practically no-risk bets, in addition to the preferential treatment he gets from sportsbooks, drives some bettors crazy.
McIngvale doesn’t hide what he’s doing and certainly didn’t during a keynote interview Wednesday. In closing, he said with a chuckle, “I’m a huckster.”
His promotions generate sales from customers who maybe weren’t quite ready for a new mattress but like to be connected to sports storylines and have a chance at getting free furniture.
“Unless we do something that’s fun for the customers, we’re going to go out of business,” McIngvale said.
McIngvale said he’s already sold through the potential $40 million in winnings he has on the Astros World Series bets he placed in May with Caesars Sportsbook and WynnBET. He is looking to get down more and repeatedly asked the audience full of bookmakers if they’d take his action. If the bets win, he will use the winnings to pay the refunds to his customers. Even if the bets lose — and many of them have — they not only generate sales but also massive publicity. He said his marketing team estimates his wagers have generated $20 million in publicity.
This ticks some bettors off, especially ones who have had their limits reduced by sportsbooks. They see his large wagers publicized by the same sportsbooks that won’t even let them bet a $100 on a game and resent Mattress Mack for being able to get his big bets down. When asked about sportsbooks’ practice of limiting successful bettors, McIngvale said, as a salesman, he doesn’t understand why bookmakers would take heavy-handed approaches to winners.
“Open up those windows,” he said. “Every time I bet, you get as much publicity as you want and people can live vicariously through what I bet.
“I think winners are the best advertising in the world,” he added. “Winners make the business.”
FanDuel CEO Amy Howe said during a Thursday keynote panel that 25% of bettors who play with some offshore sportsbooks don’t get paid. Is that true?
The short answer, in my opinion, is no.
If a quarter of bettors who played offshore weren’t getting paid, there wouldn’t be much of an industry. Instead, there remains a handful of sportsbooks located in places like Costa Rica and Antigua that continue to serve U.S. bettors.
However, the major problem with betting into an unregulated sportsbook is that if they don’t want to pay — for whatever reason, legitimate or not — there’s nothing the bettor can do except complain about it online. There is a no avenue for recourse and getting stiffed does happen, bettors and bookmakers will attest, albeit likely to far less than 25% of all bettors.
Payment issues are a common problem in the pay-per-head world. Pay-per-head sportsbooks typically operate on credit, with settlements occurring person-to-person. Pay-per-head books utilize websites often located offshore to facilitate wagering and handle settling up in person, sometimes using crypto currency. These are the modern-day local bookies.
The recent crash in the value of crypto currency, which has coincided with the slowest calendar period for sports betting, has led to an uptick in bettors being stiffed, multiple sources have told ESPN. Even so, Howe’s claim of 25% of bettors getting stiffed in the unregulated market is an exorbitant estimate.
Is the sports betting industry doing everything it could to combat match-fixing?
Again, in my opinion, no.
A Wednesday panel on sports integrity, featuring representatives from the NFL, the International Betting Integrity Association (IBIA), PointsBet and the Global Lottery Monitoring System (GLMS), addressed the challenges facing the evolving U.S. market. The good news is that the percentage of sporting events that exhibit suspicious betting patterns is miniscule, less than 1%, according to Khalid Ali, CEO of the IBIA.
The bulk of the events that attract suspicious betting are lower-level events, like minor-league tennis and soccer. The bad news is that regulated U.S. sportsbooks continue to offer betting on these vulnerable events, instead of distinguishing themselves from the unregulated market by refusing to offer things like low-level tennis, soccer and table tennis.
“The question ultimately becomes, does that help?” Jake Williams, a senior vice president of strategy and operations at PointsBet, said regarding whether sportsbooks should stop offering betting on lower-tier sports. “Is that going to push someone to the local bookie, to the offshore operator who does offer it? I think there’s reasonable limits to these questions. I think there’s a healthy amount of debate that’s required to where the line is and where the line is blurry.”
Ludovica Calvi, president of GMLS, added that when licensed sportsbooks in Europe have stopped offering betting on smaller events, it has led to match-fixing episodes occurring within the illegal market.
“As long as you can control and monitor within a regulated environment, you are in much safer conditions than having everything always under water,” Calvi said. “It’s not through banning that you achieve and find the solution. It’s education and prevention.”
These are valid points, and I’d add that if U.S. sportsbooks were to eliminate betting on the more-vulnerable events, match-fixers may pivot and spend more time targeting major leagues like the NFL, NBA, NHL and Major League Baseball.
However, without liquid betting markets on lower-level tennis tournaments, there would not be any incentive for match-fixers to attempt to compromise players and umpires. This is where the giant international betting data companies, which provide odds to hundreds of sportsbooks, including some in grey markets, could help the cause. Independent sportsbooks are unlikely to dedicate the resources required to create odds on a lower-level tennis or soccer match. They rely on data providers to provide the odds. If those odds aren’t provided, it’s possible the books stop offering those events or, at minimum, reduce betting limits.
American bettors can expect to have access to licensed betting exchanges potentially as early as football season. Companies like Sporttrade and Prophet Exchange are working their way through compliance and aiming to launch this fall in New Jersey.
Betting exchanges work differently from house-banked sportsbooks. In an exchange, bettors can buy or sell sports outcomes, similar to trading stocks. The exchange takes a commission for brokering the trade. Betfair and Smarkets are examples of betting exchanges in Europe.