On Second Try, Massachusetts Meeting On Bettor Limiting Amplifies Both Sides

Cory Fox, the vice president of product and new market compliance for FanDuel, didn’t choose the ideal wording when he said during Wednesday’s public meeting hosted by the Massachusetts Gaming Commission, “This is a very limited set of users.”

The topic of the meeting was the practice of regulated sportsbooks in Massachusetts (and throughout the U.S.) restricting the amounts certain customers can wager, and Fox was trying to say that FanDuel’s capping of bets applies only to a tiny percentage of its customers. But without the precise context, it could have sounded like he was taking the aggrieved bettors’ side.

Yes, Mr. Fox, as users we have indeed been “very limited.”

The headline news out of the meeting, however, was not a quote from Fox or anyone else; it was the fact that FanDuel, DraftKings, BetMGM, Caesars, Fanatics, PENN Interactive, Bally’s, and representatives from two land-based local sportsbooks, Encore Boston Harbor and MGM Springfield, showed up.

The first time the MGC tried to hold this discussion, in May, every operator except for Bally’s (which had not even launched yet in Massachusetts at the time) stood them up.

This time, the operators were the spotlight participants in the first half of a nearly three-hour discussion, while the second half featured responsible gambling advocates, journalists, industry veterans, and one operator of a non-Massachusetts-licensed sportsbook that prides itself on offering the same betting limits (or a certain bet size it will accept by default) to all of its customers. 

Boiled down to a capsule summary: The first half largely featured operators opening up to some degree about the when, why, and how of their limiting practices and framing it all as risk management, while the second half saw former casino executive and CEO of players’ advocacy group American Bettors’ Voice (and current Casino Reports columnist) Richard Schuetz respond, “We are no longer in the risk management business. It seems to me we are in the risk avoidance business.”

The sportsbooks’ perspective

“We are here with an open mind and a desire for dialogue,” said MGC Interim Chair Jordan Maynard as he kicked off the meeting and introduced representatives of nine different mobile or retail sportsbooks.

BetMGM Deputy General Counsel Jeremy Kolman led off in trying to offer insights — rarely if ever shared in a public forum before — into what a sportsbook operator is looking for when it limits bettors. Kolman was the first to drop the term “risk management,” which he said could include suspending betting on a market if the action becomes too lopsided for BetMGM’s liking.

He said they’re on the lookout for betting syndicates (groups of customers working together), courtsiding (a practice of attending sporting events live to be able to place in-game bets ahead of any lag in data), and customers who bet on “lower liquidity, higher volatility markets” (like obscure player props). “Our ability to limit this very small minority of advantage players that engage in these types of behaviors,” Kolman said, “that’s what allows us to manage our risk so that we can continue to offer our product … to the 99 percent of players who are not looking for an edge.”

Kolman also explained that the book assigns each player a “stake factor,” with 1.0 being the baseline, and said an advantage player may be marked as a 0.5, meaning their limit for a wager is half the baseline limit for that wager.

Commissioner Nakisha Skinner tried to drill down on whether a recreational bettor could be deemed an advantage player for BetMGM’s purposes, and Kolman said, “If they are engaging in the things that we talked about, like consistently capitalizing on errors, or syndicate betting … then we may consider them to be an advantage player.”

Added FanDuel’s Fox: “We’re reviewing player behaviors on the site in light of the types of wagers they’re making as well as the outcome of those wagers. … We get some insight into whether we believe the user should be limited, either because they might be arbitraging or picking off pricing errors, or whether they have a model that might be better than ours.”

Fox added a noteworthy number to the conversation, reporting that, “In 2023, 0.043 percent of the wagers placed with FanDuel in [Massachusetts] were placed at the maximum amount for that individual.”

Ban, bankrupt, cake, eat

The discussion spanned from use of artificial intelligence to track betting patterns to players using bots to exploit weak lines, and Commissioner Eileen O’Brien even wondered aloud during the discussion of courtsiding whether sportsbooks should stop offering in-game betting if data lags play such a significant role.

Then things picked up when the commissioners asked operators to dive into their approach to notifying bettors that they’ve been limited, with the operators saying they don’t go out of their way to contact customers on that front.

“The concern about disclosure is that if you increase the detail in disclosure, it essentially helps customers develop strategies to evade the controls,” said DraftKings Director of Regulator Operations Jake List.

O’Brien brought up the “ban or bankrupt” model, whereby sportsbooks try to take a customer’s money to the fullest extent they can if that customers lacks skill, but refuse service to customers who are a threat to beat the books long-term.

“It seems you like to have your cake and eat it too, right?” O’Brien said to the operators collectively. “You see the information, and you block the risk.”

Fanatics SVP of Regulator Compliance Alex Smith countered that well over 90 percent of those customers at Fanatics who are beating the book overall “are not limited at Fanatics. So I think the notion that if you win you’ll be banned is incorrect.”

Added Caesars Digital COO Kenneth Fuchs, “We’re not banning customers for beating us. We’re banning them for other reasons that we should be banning them for,” harkening back to Kolman’s insights on syndicates, courtsiding, and so forth.

Representatives of PENN, Encore, MGM Springfield, and Bally’s did not contribute to the discussion, even when Maynard specifically offered an opportunity toward the end of the conversation for them to weigh in.

Before wrapping the session with the operators, Maynard — clearly much happier with the outcome of the meeting than he was when everyone but Bally’s no-showed in May — made a point to emphasize, “If you’re going to sports wager in Massachusetts, this is who you should be wagering with. This group. Not the illegal market.”

‘We don’t want smart players’

The latter half of the session, featuring various industry voices not aligned with the major Massachusetts sportsbook operators, began with talk of responsible gambling, and how, theoretically, limiting practices should be applied to problem gamblers. Brianne Doura-Schawohl of Doura-Schawohl Consulting spoke about the compensation model for VIP hosts and how it rewards taking advantage of possible problem gamblers. Marlene Warner, CEO of the Massachusetts Council on Gaming & Health, added on that topic, “There seemed to be a distinction [in the operators’ discussion] between VIPs and people with gambling problems. Often there is not a distinction. … There’s a lot of overlap there.”

As the conversation shifted from the “whales” and possible problem gamblers to the sharper bettors who are capable of turning a profit, Prime Sports co-founder and executive chairman Joe Brennan Jr. spoke about using smart money to improve lines. “You want that knowledge,” Brennan said, “because it’s going to make your market better for every player that comes after them.”

Maynard asked, “When will Prime limit a player?”

“We won’t,” replied Brennan.

“Would you remove a player?”

“No.”

Brennan went on to further explain his perception of what he calls “the recreational operators,” meaning the bigger U.S. sportsbooks whose representatives spoke in the first half of the public meeting.

“The recreational operators engage in a process of defense against players,” Brennan said. “You heard them talk about it. They talked about advantage players. The translation for that is a good player. … They are saying that we don’t want smart players, because we see them as a threat.”

Commissioner O’Brien opined that when operators flag anti-money-laundering concerns, that should lead to banning rather than limiting, and Brennan agreed.

First-hand experience with limiting

Journalist Jeff Edelstein (full disclosure: Edelstein is a former co-worker of several at Casino Reports) offered personal anecdotes as a small-stakes online sports bettor in New Jersey who has experienced limiting practices first-hand.

“I’m small potatoes. If I’m betting $100 on a game, I’m shaking,” Edelstein said. “And I’ve been limited at a half-dozen books. … I’ve asked why I’ve been limited, and nobody has ever responded with an explanation.”

On the topic of sportsbooks letting bettors know what their max wagers are, Edelstein explained that on FanDuel in particular, if he doesn’t log in to the app, he can enter a wager and see what the book’s maximum amount is — then he logs in and sees what his max is. He noted that for an upcoming MLB game, the generic limit was a little over $15,000, and his limit was just over $3,000.

FanDuel is “less opaque than the rest of them,” he acknowledged.

Added respected journalist David Hill, who has spent much of the year working on a major feature story on the sports betting industry and has spoken to numerous sources on both sides of the counter, “Players believe that posted limits would be the fairest way to handle limiting, but second to that would probably be being able to see what the limit is prior to putting in the bet.”

Hill’s reporting recently took him to Costa Rica, where he met with representatives of offshore books who told him they lost a fair amount of business when PASPA fell in 2018, but that the business has been coming back recently and that the offshores say it’s because of U.S. bettors getting limited at regulated books. “This, at least anecdotally, is not helping” with getting rid of the black and/or gray market, Hill said.

The Massachusetts commissioners made clear that this will not be the end of the discussion of limiting practices, but Skinner expressed a desire to reach conclusions and resolutions sooner rather than later — especially since this is a subject that has been on their radar for over a year.

“You people are the regulators,” Schuetz reminded them toward the end of the meeting. “You have the ability to request information in clear, succinct steps and have them provide it to you. … I absolutely believe you need to take charge.”