Massachusetts regulators probe sportsbooks limiting expert bettors

The probe has sparked debate from both sides of the conundrum on fairness, responsible gambling and industry practices.

In somewhat of a landmark, two-part hearing on Wednesday, members of the Massachusetts Gaming Commission zeroed in on the sports betting industry’s practice of sometimes imposing severe limits on certain bettors.

Sportsbook executives made their arguments

Representatives for BetMGM, Caesars, DraftKings, Fanatics and FanDuel offered a peek into how and why the practice is utilized.

The executives stressed that this issue – which gets wide play in some social media circles – impacts no more than 1% of all bettors. 

The most commonly used word during the three-hour session that may not be familiar to casual gamblers was “courtsiding.”

How does courtsiding work?

This is a situation where an expert gambler who is in attendance at a sporting event sometimes can place a live bet while the game is “in-play”, a second or two before the odds are properly adjusted after a significant moment in that contest occurs. That gives the gambler a significant edge over the sportsbook, and such wagerers are called “advantage players.”

Sportsbook employees are able to flag these bets, and in many cases, that will cause them to sharply reduce the amount that bettor can risk for the rest of that contest.

Sarah Brennan of BetMGM said such measures allow the books to be able to provide “fair odds” for the vast majority of gamblers, since the books don’t hemorrhage losses to a small number of experts.

Limits also are set based on irregular betting patterns

Colleague Jeremy Kolman and others testified that the limitations are placed more because of betting patterns than if a gambler is making too much money. Coleman said that, for example, a player who typically makes $25 bets suddenly attempts to wager $5,000 on a single result is noticed. So, too, are those who appear to be part of a betting “syndicate,” simultaneously betting as a group on the same outcome.

“We want to avoid unsustainable losses,” is how FanDuel’s Cory Fox explained it, adding that his sportsbook might handle as many as 2,700 events worldwide with up to 37,000 different wagers on the board. “Some users may have more information than we do, and only 0.043% of bets are placed at the maximum amount allowed for that individual.”

Caesars executive Kenneth Fuchs stressed that “we are not banning customers for beating us; we are banning them for these other reasons that we should be banning them for.”

Is limiting sharp bettors the only way to protect the sportsbooks?

With so many of the “advantage” issues pertaining to in-game betting, commission member Eileen O’Brien asked if rather than limiting some gamblers’ wagering amounts, it would be better to simply cut back on the number of such bets offered. The general response was that the result would be lower gross revenue for the sportsbooks – and therefore, lower tax revenue for the state.

A part of the concern of the commission members is whether or not sportsbooks take every conceivable measure to limit losses to expert players – while having no such concerns about reckless amateur players who might lose huge sums that they cannot afford. The concept is known as “ban or bankrupt.”

But several executives spoke to their “responsible gambling” teams as working diligently with bettors who appear to be spiraling downward.

Still, responsible gambling consultant Brianne Doura-Schawohl pointed out that it is common practice for sportsbooks to reward so-called “VIP hosts” whose clients generate the most annual revenue for the books – creating a worrisome incentive.

Gamblers also have their say

The second session included several ardent gamblers, as well as longtime industry members such as longtime casino industry executive Richard Schuetz – now CEO of the American Bettors Voice group – and Joe Brennan Jr., executive chairman for PrimeSports operating in New Jersey and Ohio.

Brennan explained that as a relatively recent startup, his sportsbook actually welcomes “sharp bettors,” explaining that “those players are working for us, in a way. You want that knowledge.”

That’s because these experts often have a unique level of knowledge about less-common sports or leagues – Brennan offered Patriot League basketball (which includes Massachusetts schools Boston University and Holy Cross) as an example. That early large bet enables Prime to recognize where it has set “soft lines,” allowing it to adjust to what could become a profitable number for the book.

Would betting limits encourage a return to irregulated betting?

Brennan also spoke to an issue that has been a cornerstone of the commission’s approval of sports betting in the state in 2023. Residents already were wagering quite a bit at illegal, offshore sportsbooks. So the goal has been to do everything possible to migrate them over to legal books that offer full consumer protection, while also providing the state with new tax revenue.

“But if these operators are limiting their action, what are (expert bettors) supposed to do?” Brennan asked.

Journalist David Hill provided an answer to an issue about which many regulators have been curious – have residents in the 37 states with legal sportsbooks since 2018 (not including pioneer Nevada) abandoned their previous illegal “partners?”

Hill said that during a recent trip to Costa Rica – home to many of these websites – he was informed by those sportsbook operators that the legalization initially produced a significant loss of business. But they added that increasing diligence by sportsbooks in limiting winning bettors’ maximum amounts has been driving some of those gamblers back to the unregulated market.

All of the commissioners clearly were pleased that the operators did not reprise what amounted to an industry boycott by failing to appear at a similar meeting that was held in May. Commission Chairman Jordan Maynard stressed that the agency is a “deliberative body,” and that it would take time to weigh what – if any -action the commission would need to take.