A Whale Of A System: Inside The Online Gambling VIP Economy

John Earle couldn’t help but laugh out loud.

The former senior member of the VIP host teams at upper-echelon U.S. sportsbooks and casinos scrolled through back-end pages revealing wins, losses, and revenue generated from the big spenders.

“Look at this — this guy here is a winner for the night. He is a massive loser all-time for [the sportsbook], but it’s just funny, we caught him on a good night here,” said Earle (not his real name) in an interview with Casino Reports. Earle required anonymity in order to speak candidly about a sensitive subject. “This is someone where if he says, ‘I want to go to the F1 in Miami,’ he’ll get four tickets, all expenses paid, dinner, and everything else.”

Every licensed operator covets the VIPs, for they represent the lion’s share of betting volume and gross gaming revenue (GGR), somewhere around 65-80% of both for many operators. So it’s important to keep the whales, or VIPs — the difference is a matter of degree and philosophy — happy and engaged. 

A “VIP” is a player who is considered highly valuable to a casino or sportsbook because of their high level of engagement, significant bankroll, and in most cases, the substantial revenue they deliver the operator because they play a lot and, in many cases, lose a lot. Operators will pair a VIP with a host based on similar interests, geography, and possibly even ethnicity if the common background helps cement a bond. Through the course of conversation, the hosts will reward high-rollers for their deep pockets and loyalty with offers like deposit bonuses, rebate dollars as a percentage of what they’re betting, or perks like basic apparel, event tickets, or even throwing out the first pitch at an MLB game. In the digital sports betting and iCasino ecosystem, top VIPs betting millions per month are known as “whales,”and whales drive the currents.

Meanwhile, there is significant dissent in the industry about what kind of patron actually constitutes a VIP. And the distinction matters. The biggest bettors, the whales, don’t usually have gambling problems, stakeholders say. Or to borrow and modify a quote from Charles Barkley, it’s not a gambling problem if it’s money they can afford to lose. But the VIPs on lower tiers — those betting tens of thousands a year — may be more likely to develop a habit rooted in addiction rather than entertainment, and it may be harder to spot. Being able to identify those players is critical to fostering a healthy industry, one in which clients spend within their means and stay entertained for the long haul.

When individuals make comments to their VIP hosts implying that they may have a gambling problem, it’s not usually the high-net-worth individuals, according to Dillon Borgida, a former VIP leader at DraftKings, FanDuel, and William Hill. Rather, it’s the less affluent VIPs, talking with less seasoned staff, more commonly writing to customer support or to their hosts with remarks such as, “My wife is gonna find out.” Or in the case of the psychiatrist profiled in The Wall Street Journal, the player might have asked if the sportsbook offered loans to VIPs, which the subject sought to use to pay her mortgage.

“Generally, the players at greatest risk are people that have lost anywhere from maybe $10,000 to $100,000 over the course of the year,” said Borgida, who founded betonu, a consultancy focused on the healthy growth of sports betting and entertainment in the U.S. “To them, it’s super significant, and those are the ones that are hardest to track. Maybe they lost, say, $17,000, which isn’t going to make that big of a dent to the VIP host. But it could have been the last of that person’s savings, and maybe because they were depositing relatively smaller amounts, they were never asked to provide a [bank] statement.

“Those are the toughest responsible gambling situations to catch, and I think the ones that are happening the most. Whereas, the guys that deposit six-to-seven figures, we’re getting your bank statement, so we can be much more confident that you have the funds.”

Conflicting incentives

Setting aside the challenge of disparate definitions of a VIP and levels of financial wherewithal, there is a collection of other potential problems festering within the VIP economy. First, consider the VIP hosts facilitating the gambling, or curating the gambling experience. How much training do they receive? How adept are they at spotting a real gambling problem? Is anyone acting as a backup for the less experienced hosts?

Second, even when there is oversight, how does that work when VIP hosts have their bonuses tied to how much their clients bet? In other words, there are somewhat conflicting incentives. That is the baseline structure at most if not all of the major U.S. sportsbooks. 

“[A host] should know that the company’s got their back if they say, ‘Hey, I’ve got a VIP player who I think is going on tilt [out of control], and I think you should cut them off or limit them,’” said Keith Whyte, executive director of the National Council on Problem Gambling, who added that people with gambling problems are more likely to spend more money and they are more likely to be identified as VIPs. “My guess is that most VIP hosts are either absolutely or primarily incentivized to increase revenue from their players.”

For the long-term prospects of the VIP economy, the gambling industry would be wise to heed warnings from the U.K., a frequent presage for the events that have unfolded within the U.S. regulated gambling industry. In the U.K., the 2005 Gambling Act opened the door for widespread regulated gambling, online and otherwise. A torrent of advertising followed and the market exploded, and not at all times for the better of public health in the region.

Regulation was an incomplete patchwork unequipped to handle the impact of ubiquitous smartphones and gambling apps. In short order, scores of stories emerged, such as that of an average postman taking payday loans to support his gambling habit. This culminated with the long-awaited white paper in 2023 that is attempting to guide some sensible policies, though some of the measures like “affordability checks” have proved controversial and will remain so, as more frequent checks take root in a new pilot program. Still the reforms press on, in part because too many tragic cases in the past nearly 20 years have involved a suicide. And those kinds of stories do serious long-term damage to the psyche of a nation and the way it feels about gambling. 

“I think in North America, the biggest lesson that they should take away is that they’ve got to balance the commercial with the consumer protection,” said an industry source familiar with bookmaking operations in the U.S. and U.K. “And if they do that, then there is money in them hills, and they will do it in a way that people will still continue to enjoy it. But when you get to those larger sums, that bit of common sense needs to apply because those revenues are short-term and short-lived if you are basically openly exploiting someone who is not able to spend that amount of cash.”

Training day(s) 

So who are the people working as the VIP hosts, how much training do they have, and what is the nature and frequency of their communications with their clients? 

“I’ve seen it differently across the board,” said Borgida. “I’ve seen people interact with clients after a week of training. But I’ve also seen some places where it takes three to four weeks to get ingrained. I would say the average would probably be like two to three weeks and you’re gonna start interacting,” often shadowing more experienced hosts during a training period.

According to Earle, when someone enters a VIP team for one of the larger operators, whether they have experience in the field or not, they will speak with all the different departments: compliance, fraud, payments, consumer experience, trading, and casino, to name several. It’s important because during the course of their work, VIP team members will be dealing with all these departments. And, at least for now, humans are in some ways more adept than artificial intelligence at reading social cues and spotting problem gambling warning signs.  

If coming from a competitor or brick-and-mortar casino, part of the selling point to these firms is that you have a book of clients, whether it’s 10 players or 1,000. So a new hire would be expected to go after their people right away, in addition to receiving some “organic” leads, or patrons who have already signed up with the sportsbook and may be labeled a potential VIP. 

At that point, a lot of texts and emails will follow. At some operators, there is a degree of oversight into these communications, in addition to weekly one-on-one meetings with more senior staff to discuss clients and communications. At other shops, there may be no oversight at all.

“Probably 90-plus percent of the communication between VIPs and hosts is via email and text,” said Borgida. “At the bigger shops, if they’re using Salesforce, all the communication is tracked and the managers have visibility to it. And whether that’s email or text, the only thing that may go untracked could be some phone calls.”

Speaking about some of the VIP programs at smaller operators, Earle said the amount of oversight on communications between hosts and VIPs is pretty limited.

“The only reason a manager on the VIP team or anyone else would even get involved in the host’s data is to reach out if there’s an escalation from the host themselves,” Earle said. “Or if the VIP reaches out and knows the director’s name. Back in the day at DraftKings, when it was a much smaller company, people might DM Jason Robins to say, ‘my host stinks’ or something, and that’s how they might get involved. But that’s not happening anymore, I don’t think. Otherwise, the assumption is that everything is kosher until it’s not.” 

VIP hosts are basically a combination gambling buddy and concierge. A host is someone to talk about the games who may also invite the higher-end VIPs to in-person events such as pro games, watch parties or golf outings. The host may help troubleshoot issues like geolocation hiccups or log-in problems. Or the host may make sure that the player isn’t securing better promotions elsewhere, and will seek an opportunity to match or do better if they are. Many VIPs hold accounts at multiple sportsbooks or casinos, possibly including offshore operations, and they may use one more than another depending on how they’re incentivized. 

At their best, a host is providing quality customer service like a waiter at a five-star restaurant, and at their worst, it’s somewhere between transactional and uncomfortable.

“I think if the host is good at their job, rarely are they pushing or encouraging betting, or selling,” said Earle. “Maybe you’re calling a few times a week and you’re just shooting the shit, and you’re talking about the games and you’re acting more like a friend than a salesman. The play is gonna come naturally, and I think that’s the best way to do it. If every reach-out that you make is transactional, where you’re like, ‘You know, hey, we have a 20 percent deposit bonus,’ I think the host is just not great at the job.”

Borgida acknowledged that some of the job is, indeed, steering the horse to water.

“Encouraging play is definitely a small part of it, and what it should be is that you’re encouraging play from people who you know have the wallet to accommodate that,” Borgida said. “Maybe they’re playing half of their [bankroll] with a competitor or have these offshore accounts and you’re trying to get their entire wallet. So if I were to put a percentage on it, I’d say 10 to 15 percent is like you’re trying to encourage play and the other 85 percent is you’re just trying to maintain that relationship and give them the best experience possible.”

Let’s keep the humans

“One of the things the industry says, which I actually agree with, is that VIP teams may be able to better spot signs of a gambling problem than an algorithm,” said Whyte. “That doesn’t mean you do one or the other, you’ve got to do both. And I think that’s really important to have different layers of protection.                                                        

“The human interaction part of it, having a host and having interaction with them — that’s a possible protective factor. But you’ve got to make sure the host is not only trained, but also incentivized to report on these signs, and they’re not going to lose their bonus if they identify real issues. Meanwhile, I think the algorithms are still first or maybe second generation and they’re going to need a lot of improvement because human gambling behavior is so complex, human behavior is so complex.”    

Whyte notes that there are simply more opportunities for retail staff to see signs of a problem because they’re interacting in person and they see the customer body language. But in either case, Whyte’s position is that it is incumbent upon the industry to demonstrate that it has actually trained its people to recognize the signs of a real problem, and that the operators are supporting their staff to take action when those signs are exhibited. 

That doesn’t mean diagnosing everyone that utters a certain word, or shutting down everyone that an algorithm suggests has a certain number of markers of potentially having a problem.

“We’re still in the early days in using tech to really mitigate gambling harm,” said Whyte. “And I think there’s a lot more that we need to know without it being Orwellian — recognizing that people are complex and that there’s many of these signs that are associated with the problem, but it doesn’t necessarily mean that someone has a problem. Someone may just gamble in sort of odd or high-risk ways. But not everybody who meets every marker of harm is someone with a gambling problem.”

Some people just like gambling and have the money to gamble. A good VIP host, as Borgida noted earlier, will have a true sense of someone’s “wallet” size and if some of that wallet is getting unloaded elsewhere, whether it be at another sportsbook or some casino.                   

Borgida explained some of the interplay that occurs between hosts and managers. At one-on-one meetings is where you may look at the customer’s language and sentiments and consider any key trigger words. And if those come up, that’s when a host would forward them to the responsible gambling team, which would then take over. And that point, the VIP host would basically stop communication with the customer, or at least keep it very surface level.

“I think it’s interesting when the VIP goals cut directly against the RG [responsible gambling] goals,” said Borgida. “I don’t think the RG teams have a goal of, say, ‘we must shut down 25 VIP accounts a month.’ But their goal is to shut down accounts where there’s RG concerns, or at least get on the phone with some of these players where there might be concerns. Whereas the VIP team, the goal there is to generate handle, or sometimes it might be to increase GGR.”

“If you’re a host and you lose two or three players in a month, assuming they’re bigger players, that could really hurt you,” Earle said. “It also hurts the team, and then you’re speaking to the executives who may ask, ‘Hey, why was casino handle down a million this month?’” 

If the answer is RG concerns, that’s probably the end of it, but maybe not.                           

“But suddenly if there’s a bunch, let’s just say it’s five or six people that are playing a million dollars a month, those things add up,” Earle explained. “And now, you know, that’s when I don’t want to say an executive is going to tell an RG person, ‘Let it go,’ but there might be more conversations and RG has to have a really cut-and-dried case for closing an account.” 

Scale is a factor in all of this too. A system that works for the top two sportsbooks and casinos won’t necessarily mesh at a smaller operation that’s catering to a more select group of big bettors and affluent players. One such group is Prime Sports, which is now live in New Jersey and Ohio. The group is led by industry veteran Joe Brennan Jr., who is the company’s executive chairman. 

“There’s a lot of people who just play high [stakes],” said Brennan. “What is the dividing line between playing high [stakes] and having a problem, and having that sensibility to it? In our member services department, we are proactively looking at players. We don’t have anywhere near the number of players that FanDuel and DraftKings or the two casino companies [BetMGM and Caesars] do. We’re still, by comparison, a little more artisanal and farm-to-table in our vetting. So we can take a real direct, personal look at our players. And we do this revolutionary thing where we talk to our players, so we’re trying to be much more vigilant about potential gambling problems.”

VIP treatment and the sports-casino dichotomy

Rapid sportsbook and iGaming legalization post-PASPA created an environment where all kinds of bettors were drinking bonus dollars from a firehose at the outset. Although the availability of bonuses and promotions has cooled, the early period created a clientele used to receiving a lot of freebies, and always expecting more.

“These days, there’s quite a bit of demand and insistence and entitlement on the part of players,” said Brennan, who noted that Prime Sports has taken a firm stance against bonuses in favor of offering reduced juice on main markets. “I’m not talking about guys who are betting like $50,000 and $100K. Yeah, those guys they do, but all the way down the food chain, the market is just oriented towards, ‘What are you gonna give me if I bring my business?’”

But over the long haul, the house advantage, or the vig, will coarse through the volume like a river through a canyon. The goal of the VIP host is to keep the play moving and keep the experience positive. 

For hosts, the play-by-play is more akin to what you’ve probably experienced at a casino: The dealer is actually rooting for you, not against you. Dealers get their tips on winning hands. Through sustained good relationships with players, and positive experiences with the sportsbook or casino firm, the VIP hosts will eventually get their reward, or hit their targets. 

“I think operators like to keep the bonusing (reinvestment given back to the player) between the 15 and 25 percent range, although you’ll have outliers,” said Earle. “Hitting your handle target is more what I’ve seen in terms of goals. So it’s more about incentivizing play. If the volume is high enough, the vig will work itself out.”

Of the companies that have both sportsbook and casino, it’s a fairly even split of VIPs, according to Borgida. There’s a subset of sports betting VIPs that also dabble in casinos, and that happens much more than the reverse. Earle agrees, noting that pure casino players who don’t bet on sports at all are quite common. And dealing with these clients can be quite a bit different and more challenging than the sports VIPs.

“From my experience, communication with casino VIPs tends to be more difficult,” Borgida said. “It’s tougher to manage because you don’t have the talking points of what’s happening in sports, or how the game went, or talking shop about the sports business in general. I think with casino players it’s just tougher because I just find the exchanges to be more transactional, and more negative communication.”

With the action centered on a more singular casino activity, rather than a televised communal event, there’s just less to discuss. Perhaps also the people dialed into online casino games require or seek less social interaction, at least from their VIP handler, and prefer to stick to business.

Whether socializing or just transacting, many stakeholders feel that a sense of entitlement has permeated the betting public. 

“In 2018 and before PASPA fell, obviously the offshore industry was offering bonuses and still does, and brick-and-mortar casinos have dealt with VIP players who play high stakes,” Brennan said. “The ‘whales’ have negotiated packages and edges, particularly in the casino side of business. It’s kind of a subtle art in player development — how to get to a package where you can attract a whale player, give him something to entice them, while at the same time making sure that they’re in a position to make money that they’re not just gonna get cleaned out.”

A place in the ocean 

Whales or true high-volume VIPs do introduce a kind of unpredictability that not every sportsbook wants to or is prepared to handle.

“It’s very difficult to handle VIPs, because they are so volatile,” said one industry source who spoke on condition of anonymity. “If you’re a small startup operator or trying to make a name for yourself, the last thing you want is someone that could swing your books a couple of hundred thousand dollars in an hour. Handling a VIP is not everyone’s dream scenario. There is a downside to having someone on your books that is volatile, and it’s a very special skill to be able to manage it.”

The team that vets and handles VIPs for any competitive casino or sportsbook is vital, because it will notice if the whale leaves. One such large migration was captured in a recent report by Eilers & Krejcik Gaming, which in March indicated how a single VIP player shifted significant market share in New Jersey from DraftKings to Fanatics:

The rival firms are currently mired in an explosive lawsuit over allegations that former DraftKings executive Michael Hermalyn, who was in charge of VIP customer acquisition and retention, took his book of clients as well as trade secrets, allegedly, over to Fanatics Sportsbook and Casino.

In some cases, for the VIPs, the goal isn’t about procuring a big rebate percentage on their overall spend or some other perk; it’s about simply getting money down. Remember, big bets mean big volatility for the operator, and some are more tolerant than others, many not at all. There is even a kind of cottage industry for identifying VIPs, handling them, and connecting them with sportsbooks and casinos interested in taking the action. One such firm specializing in this area is White Glove Bets, co-founded by Kevin Smith, who serves as managing partner and previously sat in the operator chair as chief marketing officer at PlayUp Sportsbook, which has since exited the U.S.

“I think another really good sweet spot for us, and this speaks to our operator partnerships: A lot of these guys have been either cut off [by more sensitive operators] not because they’re necessarily sharps, it’s just because of the liability that they represent,” Smith told Casino Reports. “A lot of these guys can’t get their money down, so they come to us. We have relationships with operators that are confident in their lines and don’t mind taking that liability. Some shy away, but operators like Prime, they bring ‘em on.”

Meanwhile, iGaming VIPs, that niche of the market — regulated online casinos — is in its infancy, with only seven states having legal online casinos. At a minimum, though, it’s an entertainment option and a way for operators to keep their sportsbook VIPs engaged. 

“Once the NBA and NHL playoffs are done, the summer is kind of the doldrums of the sports betting world,” Smith said. “A lot of the sports VIPs are blackjack guys, some of them are poker. So it’s a way for those operators to keep them engaged during the offseason. But the other thing we found is, guys that hit big, as a way to retain them, keep them from making an immediate withdrawal, is to kind of incentivize them, give them bonuses or deals on the casino side. I think the value from the operator side is a way to keep those guys engaged when the games aren’t going on and obviously keep them engaged in a channel that offers far higher margins for the operator.”

There are potential responsible gambling concerns within that tactic — enticing someone to keep playing and, well, eventually lose it all in the name of entertainment. But maybe it can just be seen as effective marketing. 

For the future, look to the U.K.

The public’s uneasiness in the U.S. with the mass-market onslaught on sports and casino gambling, combined with a steady string of incidents involving professional athletes, has borne out in recent months through scores of articles in mainstream national outlets. It’s everywhere from The Washington Post to CNN, to local publications, and even National Geographic is asking the question of whether gambling’s ubiquitousness today has become a problem. It’s become low-hanging fruit and good fodder for a Saturday Night Live sketch, too. And when the public gets riled up, regulation may follow. VIP programs already are on the radar of prominent lawmakers including Sen. Richard Blumenthal of Connecticut, author of the GRIT Act (Gambling Addiction Recovery Investment, and Treatment) who in April wrote letters to eight major sports betting companies (DraftKings, FanDuel, BetMGM, ESPN Bet, Fanatics, Caesars, Betfred, and Bet365) requesting information including about their VIP programs.

“We’re in a kind of backlash moment right now,” Brennan said.“It was always going to happen, the industry pushed forward so aggressively to get started, and they had a willing partner in government. And then the industry took advantage of this by saying, well, in order to do that we’re gonna have to more or less saturation-bomb the airways with advertising so we can create a market. And that really wasn’t necessary. They’re trying to turn this into a mass market recreational activity. And our approach at Prime is, well, no, this is kind of a serious thing.” 

Currently, some U.S. sportsbooks through the course of funding and anti-money laundering (AML) procedures may require a consumer to turn over some financial and personal info to the sportsbook operator for compliance obligations. But the U.S. is not yet at the scale as in the U.K., where the gambling commission has ramped up its protections and procedures in the name of safer gambling. 

A conversation with the U.K.-based ClearStake, a company that makes it simple to request and analyze financial data, helped illustrate the current state of affairs and where things may be headed in the U.S. 

According to ClearStake founder and CEO Martin Burt, in the U.K., from the moment the customer walks through the front doors, whether physically or online, the operator is obligated by regulation to understand that customer in as much detail as possible that is relevant to their current level of play. “They are expected to monitor at every stage changes in behavior, changes in gameplay, changes in frequency of velocity, deposit levels, spend type, payment method.

“And currently the operator is then also required to interact with the customer based on various triggers to request financial information in order to assess levels of risk, which is obviously a very difficult task to do and causes a lot of the friction between operator and customer due to the cumbersome nature of sharing and analyzing such data and documentation,” Burt continued.

Burt explained that this is where a product like ClearStake steps in: To help understand a customer’s level of financial risk, they can send them down an operator-branded user journey to securely connect their bank accounts and seamlessly share their data in a few seconds. From there, ClearStake would manage that data and pass only the relevant information on to the operator to allow them to complete their assessment in real-time.

“I also think it’s a great chance for an industry, in particular in another jurisdiction, to do things slightly differently and look at what’s happened in the U.K. and other jurisdictions and take out what has gone wrong and what has gone right,” said Burt. “And also be able to sidestep some of the issues and work with regulators to adopt new technologies and build in more sustainable practices from the get go.” 

On the horizon

No matter how the market evolves in the U.S., there’s a segment of the population, VIPs or otherwise, that will be content to continue betting through illegal, unregulated channels. It may be that they desire more anonymity, want to bet on credit, don’t want to pay taxes on winnings, don’t want to participate in any financial checks, or simply that they like their bookie. They have their reasons, which may also include living in California or Texas, where sports betting remains illegal. 

In the U.S., public sentiment has begun to sour against widespread legal gambling. And there are potential ramifications, including mandates for watered-down VIP programs that don’t reward based on spend. For the operators that rely on VIPs and VIP programs to juice their handle and revenue, more lawmakers and regulators will take notice.

If operators do not change course and find a better balance of consumer protection, compliance, and commercial interests — more consideration for lifetime value rather than the next quarter’s net revenue — the clampdown will be coming. 

“I think there is a place for VIP programs, I do,” said Whyte. “I think that it has to be seen as a much higher risk area, perhaps one that deserves not just more staffing, but more senior staffing because of the potential for reputational, legal, and even personal risk amongst the customers.

“I do think that having the human interaction of a host with the player can also be valuable in spotting potential markers of harm. But for that promise to be realized, it’s going to need a lot more training, a lot more support, and frankly, we rarely have ever heard from recovering gamblers that they had a positive interaction regarding responsible gambling with the host. So if it is happening, I don’t know that it’s happening at the scale that it needs to happen.”

Put away the scale for now and look at public sentiment toward gambling. The backlash may have been inevitable, but it isn’t great, especially if you’re a proponent of free will and unfettered access to regulated channels. 

None of this is to suggest this problem gambling among VIPs is an easy problem to fix. It is not. But industry stakeholders will have to become a more active part of acknowledging problem gamblers under their own roofs, and implement effective tools to address them. Otherwise, and maybe even either way, they’ll have to look out for the hammer. 

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