Which Is Prop Betting And Which Is DFS? | Sports Betting News Today | LSR Podcast 187
Join us today on the Legal Sports Report podcast for the latest sports betting news and updates. A pair of two-leg parlays look strangely similar on a sportsbook app and a fantasy sports app, but do regulators care? Also, Tennessee wants to tax handle, the gray market is still thriving in Canada, and why it is a terrible idea for a sportsbook rep to talk to 7-year-olds about brackets in 2023.
Matt Brown (00:10):
Hello, and welcome to episode number 187 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry. With me, I have two of those. Dustin Gouker, Adam Candee. You can follow them on the Twitter machine absolutely free, and you should. @DustinGouker, @AdamCandee. Two E’s, no Y. And if you hate yourself, you can follow me, @MattBrownM2. Everything we do, absolutely free. So appreciate the support over on the website, legalsportsreport.com. And of course any subscriptions buttons, whether you’re doing this on the video side, the audio side, wherever it might be, just hit that subscribe button.
And then if you want to rate, review, all that, things like that help us climb up the charts. Do appreciate that as well. We’ll see what’s going on with Coolbet up in Ontario. Yes, a real company. We’ll talk about what’s going on in Tennessee as well. But Dustin, let’s kick things off here with a question you and I probably have had for quite some time with everything, and certainly some of the other sites that are out there and that have popped up, where DFS has resembled a decent amount of kind of like a parlay of props. We’ve mentioned a couple of these throughout the course of the run of this show as well. So it feels like a pretty good time to hit on that again.
Dustin Gouker (01:26):
Yeah. There’s not really any news here, but I’ve brought this up as a topic that I really think needs addressed. And I think with the backdrop of people … every week we talk about the hand-wringing about sports betting and regulated legal sports betting. That’s fine and that’s OK, but over here on the side we have daily fantasy sports apps that, they’re probably legal. They’re probably operating legally under a network of federal and state laws. But they’re offering gambling. They’re parlays based on what people are doing, what players are scoring, or their rebounds, or the number of hits they’re having. The two things are basically identical, but you’re not parlay betting because they’re using a combination of the UIGEA, state DFS laws and state game-of-skill laws to say, “Hey, we’re legal.”
And I think in this current atmosphere of what we’re seeing about around pushback in sports betting, these sites are getting a pass because they’re over here. They’re not real … yes, they’re regulated to some extent as DFS. But I think it’s a problem. We were having this discussion … you and I probably had this exact same discussion in 2015 about the original iteration of DFS. I would imagine if I could go back and see those conversations, we didn’t agree about whether that original form of DFS was a game of skill or a gambling game.
And here’s the thing: all things that are gambling have skill on the spectrum. There’s skill in poker, there’s certainly skill in DFS, there’s skill in sports betting. That doesn’t mean that you can just call it a game of skill and it’s not gambling. Again, I’m not talking about this from a legal standpoint. I’m talking about this from a, we can all look at the parlay products … again, I’ll name check some of the companies we’re talking about here. Underdog Fantasy, PrizePicks. Sleeper is one that has largely been season-long, but I see now that they have a daily fantasy, quote unquote, product as well.
This is gambling. This is parlays based on player performances. And whether it’s legal or … it could very well be legal. Probably is. But we’re here to tell you that it’s gambling. And if you’re looking at this product and could say with a straight face that it’s not gambling, then I think you have a problem.
Matt Brown (03:38):
Yeah. Listen, there is one of the things that I’m glad you did clear up, Dustin. Because it is without a doubt … because I’ve done it all. There’s a lot of skill that goes into all of this stuff. You cannot just randomly throw stuff together and win at a consistent basis. It’s just not going to happen. And there’s a reason why you can go over to a site like RotoGrinders that has put out rankings in DFS, where they chart these guys’ success. And it’s the same like 25 names every single year at the top of this chart, because these guys are just better than everybody else at all this stuff.
And of course you mentioned poker, and even sports betting as well. You can’t just randomly fire over and over and over again and think that you’re going to have long-term success, or you’ll end up losing to the rake with all of that. But at the same time, it is skill-based gambling. It is still skill-based gambling. There is a gambling aspect to all of this stuff. You don’t know what card is going to come out on the river, the same way you can’t predict that a player you had on your team in DFS gets injured, the same way that you can’t in sports betting. Kind of the same deal. Tom Brady goes down, and then your bet is sunk.
So you look at this, Adam, and I think as long as people can just have two thoughts at the same time, that yes, there is skill involved in all of this, but yes, it also is probably gambling, then I think we can all play in the same sandbox here.
Adam Candee (05:00):
I think we can think about that in our heads and make sense of it. The question is, how does it comport with what’s actually on the books for laws? And that, to me, is a question not only for regulators, but I think in the end this question’s going to come down to what the big companies like DraftKings and FanDuel think about it and how much effort they want to put into it, because in the end if someone were to say, “Who is being impacted by it?” Well, it’s those companies. It’s those companies that started out as DFS companies, that rode the very serpentine path to get to this point through the laws and through the gray areas in the laws, and now sports betting has been legalized and there are regulatory and overhead costs that go along with sports betting and laws that certain companies have to pay attention to and have to play along with that the companies that are offering sports betting under the guise of DFS are not having to deal with in the same way.
That some places they can operate as DFS where there is no law and it’s not all that different than 2015. We’re talking about companies like DraftKings and FanDuel that were offering DFS either in unregulated areas or in some states that had it and had to shut it down in other states that had laws expressly prohibiting it. And if you look closely at some of the companies that are operating right now in the DFS space under DFS law, but offering these products that are clearly parlay betting products, just take a close look at which states they’re in and which states they’re not and you’ll learn very quickly that they know exactly what’s going on.
There are states that are tougher on the enforcement of these laws where some of these companies are choosing not to operate because they know. They don’t want to run afoul. And again, that’s not all that different than what we’ve seen for a number of years. But in the end, I think the argument that a lot of people make, and I know that Dustin’s had this argument with a number of people on social, is some people are saying, “Leave it alone. This is my only option. I don’t have another way to bet.” Yeah, we get that.
And obviously the bettor is not the person who’s being affected by this. The person who’s being affected by this or the entity that’s being affected by this is sports betting companies that are operating under different laws than the DFS companies are. So do they want to pursue it? I’ve always held over time that I thought that the DFS companies were positioning themselves to be purchased by these larger sports betting operators. Then that’s why the sports betting operators were perfectly willing to let them continue for a while until such time as they had sufficient enough databases to be purchased.
Now, it hasn’t really happened yet beyond Monkey Knife Fight, so I don’t know if that’s ultimately what’s going to happen. And Bally’s and Monkey Knife Fight obviously didn’t work out all that well for Bally’s, so we don’t know if it’s a model that will be repeated. But Dustin brings up a point that I think at least needs to have a serious discussion in the space, about what is truly gambling and what is daily fantasy?
Dustin Gouker (07:53):
I think Adam, in a private conversation we had, said it best. We can all understand it’s gambling. It’s gambling. If everybody’s cool with this form of gambling that is semi, quasi, sometimes regulated, that’s fine. But let’s understand that this is out there. This is another thing that’s out there. Even the American Gaming Association called this industry out by name in their state of the industry just last month. A couple other key points is the reason there’s some kind of, not danger but impact to the sports betting, these companies operate in the three largest states that we always talk about: California, Texas and Florida.
They are offering parlay betting, daily fantasy sports, whatever you want to call it in those three states where nobody can … yes, DraftKings and FanDuel are getting customers with DFS, with the regular iteration of DFS that, again, I can shout at a cloud all day but people have given up on that as ab… that’s settled law. I don’t think everybody knows that this stuff exists. Again, people say, “Oh, why hasn’t anybody done anything about it yet?” When this crackdown came into DraftKings and FanDuel, 2015, nobody … they had been around for four years. It’s not like … people say, “Oh, why didn’t they do anything?” Because people didn’t know or people didn’t care.
I think the other thing that’s important to note is that, except for a few states, this is generally, the age to play these games is 18 as well, which again, if we’re call … Again, call it gambling and it’s OK and you don’t want to regulate it, fine. But again, it’s a gambling product that is now being offered to 18-year-olds. And the gambling age in the United States, whether you agree with it or not, is 21. So there’s just a lot around this industry that … I said there’s a reckoning coming. I don’t know if there’s a reckoning coming or not, but I think we should at least be having a discussion. If we’re going to all sit here and pound our fists about what the sports betting companies are doing, these guys are getting off scot-free and not having to deal with any of it, and I don’t think that’s right.
Matt Brown (09:48):
Yeah. No, absolutely. As an aside here, I would like to just take this moment to let everybody know how much I miss playing DFS on a daily basis. And it really does hurt my heart. It was one of my favorite things to do. Cannot play it here in Nevada. I could drive to the California border, but I live a little hot minute away from the California border, so not anything that I could do. If I lived where Adam lived, I could just pop right on down there. It wouldn’t be a big thing. But it is for me anyway.
Tennessee wants to tax handle
Tennessee wants to do something, Adam, that we are looking at as one of those things where we say, “Hey, look, we knew that when all of these laws were getting passed and all that, that we were going to get amendments. We were going to get people introducing new things. We were going to get adjustments and tweaks and things like that.” So Tennessee looking to make a little bit of an adjustment and a tweak as well.
Adam Candee (10:44):
I wish I could explain the thinking that has gone into Tennessee sports betting law and regulation from the very start because it’s one of those situations where there is this round item called a wheel that most other states seem perfectly content to put different hubcaps on the wheel, maybe different tread on the tires. And Tennessee is over here trying to take a square and make it roll down the road. And it doesn’t really happen that way. So what we’ve seen is that Tennessee of course has the only mandatory minimum hold in all of the country at a mandatory minimum 10%. Now, operators aren’t necessarily playing along with that. They were given options to try to make what were called true-up payments to get to compliance with Tennessee law or be told that they might have black marks on their regulatory record when they go to try to apply in other states.
That’s its own issue. So now Tennessee is trying to change not only that part of its situation. They’re trying to now tax handle instead of revenue. Look, I know we don’t all have long memories with this stuff, but we did this already, everyone. We already went through these wars. This is 2017, 2018 when we were first discussing the idea of, how do you tax sports betting revenue? And it’s been proven repeatedly that taxing handle is not the way to do this.
Now, I understand that there have been flaws in the way that revenue has been taxed that has not led to states realizing what they wanted to. That has a lot to do with promotional deductions and not taxing free bets, and states are going back and looking at how that’s done. But there is a bill working its way through the Tennessee Legislature right now that would tax handle at 1.86%. That is absolutely insane when you figure out what that would equate to in terms of a revenue tax. You’re talking about pushing 40-odd percent when you do an equivalency on that.
And don’t take me to court on the math there. That’s just the quick math that we do in our heads on these things when we talk about the fact that we were looking at taxing 1% of sports betting handle in the beginning of this and equating that out to like 25% revenue tax. So in the end, this is an absolutely nuts idea. Every state has taxed revenue, and it has worked for every state in some way, shape or form. That is being tweaked as we go, but the idea of taxing handle long ago was proven to be a non-starter for most sports betting companies, that they would not be able to operate and make any sort of a profit in those states.
Matt Brown (13:25):
Dustin, one of the things that we talk about a lot of times about the difference between the gray market and then the black market and then also the regulated market is, listen, we’re saying people that jump up and down and beat the table. “Why can’t I get the same price for this? And why do this better than this?” Whatever. And we’re like, “Well listen, there are costs involved with being regulated that a black market, gray market person doesn’t necessarily always have.”
Of course we have licensure. We also have the taxes within the state. We have the marketing expense. So we have all of that. One of the things we don’t bring up all the time is the fact that there’s also a cut being taken by the federal government for Nevadans anyway. And we take a look at this. And it’s not like, in the grand scheme of things, this massive, super huge amount of money, but I mean $20 million is $20 million. And so we do wonder where that money is even going and what it’s being used for.
Dustin Gouker (14:22):
Yeah. And whether this has any chance or not, we’ll see. But again, we have representatives in Congress trying to offer up a bill to get rid of the federal excise tax that oversees gambling. And it’s a 0.25% tax, again on handle, which is nuts. But this is, again, a lot of money. This is $500 million we estimate has been … LSR estimates has been paid since the end of PASPA. And that’s a lot of money. Not a lot of money in the federal government’s standpoint, but this is a lot of money that operators that are operating legally in the United States are paying to the federal government.
Representative Dina Titus in Nevada has been the champion of this. A representative from Pennsylvania as well behind this. Again, getting anything through Congress is fraught with peril. But this one’s one, whether it should be gone or not, they don’t even know where this money goes, which is the bigger problem to me. It just goes, I guess, into the big pile of money. It would be great if this money did something for the gambling industry.
If we’re going to tax the gambling industry, do something about that. Responsible gambling. Put it towards that. Do it towards cracking down on illegal bookmaking. I don’t know, do something with it instead of this is just we’re just doing this tax for no apparent reason. It was done in an era where not a lot of money comes in, and it wasn’t really affecting. It was only affecting Nevada sportsbooks at the time. But yeah, let’s either get rid of it or, probably even better, is do something with that money that is valuable to … again, problem gambling would be a great use for that. I don’t know exactly how that would work. But it would be great to see this money go somewhere other than just into the giant pile of money and get lost in the giant pile of money our country collects every year in taxes.
Matt Brown (16:05):
Yeah. So Adam, I would love to say, best-case scenario, that they actually find a use case for this money and that we would feel good about what they were going to use the money for. So that’d be great. I don’t think that’s going to happen. I think we know how all things work. I would rather it just get wiped off the board here because I have no trust in the fact that they’re actually going to take this money and do something positive with it and do something that we would think would be good use for all of this money. So I think the easier path here would just be to eliminate it and then down the line maybe we can figure out some sort of way to make sure that each gambling company is putting X amount of money towards some sort of mandate to put some sort of money towards responsible gaming, whatever, down the line. But I think our easiest path here is just to get rid of it. And again, the money’s just evaporating. We don’t even know where the money’s going. This is absurd.
Adam Candee (16:55):
The next time that anyone accuses either of you of being bleeding-heart liberals, just point them right to this podcast and the fact that we’re saying, “We don’t trust you with our money, and we’re going to tell these companies to regulate themselves.” So I ultimately feel like what we’re doing with this bill is something that has to be done with these fairly obscure issues, which is just banging the drum over and over and over again until you can get someone to pay attention to the issue. And whatever comes of the issue, whatever comes of the solution will be better than the current situation, which is money being taxed, thrown into a general fund and essentially being lost. And we just kind of shrug as to what’s going on.
Now, if tax were to continue and it were to be directed to responsible gambling, that would be great. If it would be just directed toward a national help line. If it would be directed toward some sort of grant funding that states could apply for. All of those things would be a lot better than what we’re dealing with right now. However, if it’s going to be there and it’s going to be just thrown away, then yeah. Then I can understand why we would say, “Just eliminate it if you’re going to be taxing someone with no apparent purpose.”
Gray market is still thriving in Canada
Matt Brown (18:08):
Onto Canada. And we’re going to head up to Ontario. Now Adam, we’ve spent a lot of time talking about the big boys in the industry. We’ve spent a lot of time talking about the big boys that have yet to come in the industry and what we can expect from some of the people that are going to be entering the sports betting realm here pretty soon. We haven’t spent a lot of time talking about Coolbet, but guess what? Here we go.
Adam Candee (18:32):
Do it while you can, Matthew, because this is going to mark basically the one-year anniversary of Coolbet launching in Ontario, which was April 4th. And as of April 3rd of this year, Coolbet will no longer be operating in the legal market in Ontario. To give you a little background, Coolbet was purchased by GAN back in 2020 for $177 million. GAN, largely a B2B supplier in the sports betting industry, but of course there was a platform there with Coolbet as a business-to-customer option.
And they tried to launch in Ontario and they ultimately said, “This is not making financial sense for us. We are not pulling the market share that we thought we were going to. The marketing promotional costs are way higher than we expected.” But what I thought was really interesting and I think is the huge takeaway of this story: Coolbet said, “But we’re still going to keep operating in Canada in the other provinces where it’s gray.”
Y’all, this is why regulation works. They’re essentially showing you that the regulated market is paying costs that the gray market is not, and that those costs are going toward ultimately having these legal, regulated options that give consumers recourse if things do not go their way, that take responsible gambling more seriously, and can enforce standards around it like having the free bet and risk-free language being eliminated, as we’ve seen in a lot of states in the US. And the fact that you have this sportsbook essentially saying, “Eh, we just can’t play in this regulated market. But over here where it’s gray in the rest of the country, yeah, we’re good. We’re going to keep going.” Just kind of proves the point that has been made all along throughout this process.
Matt Brown (20:16):
Dustin, just to take a little bit of a tangent here on all of this, most of the states that have launched here, we have been fairly pleased with the numbers that have come out. And some we’ve even been surprised at how big the numbers are. And it’s certainly initially, right out of the gate with some of these states that have launched. Have you … and maybe it’s just me. And maybe I’m just because I had such incredible expectations or whatever. But has Canada kind of disappointed, at least in your eyes, from what we’ve gotten out of them in the short time that they’ve been going?
Dustin Gouker (20:48):
I didn’t tell you to set this one up for me because this is one of the … Adam was talking about banging drums. Man, I bang this drum every chance I get, that Ontario, with the numbers we have seen, I don’t have them in front of me, is punching way below its weight versus the regulated markets in the United States that have both online casino and sports betting. The latest numbers we saw from the end of their fiscal year, they still badly trail basically the three biggest iGaming markets that have both forms, Michigan, Pennsylvania and New Jersey.
And you say give it time, but this was supposed to happen really quickly. Ontario says, “We’re going to take the gray market. We’re going to put them all in the market. We’ll just have a flat start. Everybody gets in.” Not a flat start, but there’s lots of people regulated as time went on. But right now there’s not really this path to growth. Again, we’ve seen this growth in the United States markets, but this was supposed to be, “OK, we’re just taking all these operators who are already here and do really well.” So again, all we always hear Ontario, how well they think they’ve done.
I’m here to tell them, still they have not done well. They are still well behind. And whether that’s cultural or how they regulated it, they are not realizing the potential of the market. Whether Coolbet’s a great example of this or not, but the brands in the United States that were planning on going into Ontario, because of the environment there, have pulled back and are just kind of existing there. They’re not really … it’s hard for them to promote themselves. It’s hard for them to battle against the existing gray markets who already had a database of customers. So it’s an interesting one.
And we’ll see. We continue to get more numbers out of Ontario, but I don’t think it’s been an overwhelming success, especially when we judge it against everything we’ve seen here in the United States. You can even compare it against New York. New York handles a lot of money in sports betting versus Ontario, which we know they renounced their handle for both casino and sports betting. New York’s a competitive market with them, even with all of that, at least in terms of how much money is flowing through the ecosystem. So yeah, a lot more to come on Ontario. There’s more coming on other provinces as well, I think, here in the not-too-distant future around this issue in what Ontario has done, and looking at what they’ve done. And I would say don’t just look at Ontario and say, “Man, they really got it right. We’re going to rubber stamp that.”
Adam Candee (23:07):
No. No, no, no. Not at all. And I think we need to add a couple of things to this. You talk about how Ontario was regulated. Let’s be very clear about how Ontario determined that customers could be marketed to. There’s an opt-in system in Ontario where you can’t push a promo offer to someone. You can’t push an offer that tells someone about an opportunity in the legal market without their consent. They have to opt in to that marketing.
And I can understand it from a responsible gambling perspective. That does make sense from ensuring that people are not bombarded with all of these things and that it’s done in a responsible way. However, when we’re talking about combating an entrenched gray market the way that Canada has, the way that the US didn’t once all of the offshores had to pull out in a meaningful way because of the threat of enforcement from the federal government here, well, they didn’t have that in Canada. The gray market was operating, is operating everywhere except Ontario.
And so when you’re trying to bring people over from the gray market, that is not a strategy that is going to work. And add to that three numbers: 3-6-5. You’re talking about one of the largest gaming operators in the world that was and is thriving throughout Canada. And that’s why we talk about 365 and its US potential so much. Now, obviously, it’s a completely different situation, where they haven’t had the ability to entrench in the market in the same way in the US. But it does show … and we get these numbers largely anecdotally, talking to people and having to glean them from earnings calls because the Ontario regulator has been the single worst. And I want to make clear to anyone listening to this podcast about regulated gaming: the single least-transparent regulator in all of North America.
We get the fewest numbers and the least amount of information out of Ontario that we have out of anything. Any state in the U… Arizona reports like 9.5 months behind. OK, maybe that’s an exaggeration, but they report way behind, like two months behind everyone else. And they still report every month, which is more transparent than in Ontario. And that’s also, I think, in part because Ontario doesn’t have as much to yell about. But we hear anecdotally from these operators that, yeah, 365 in particular, among the operators that were already in the gray market, is probably still pulling more than just about everybody.
Matt Brown (25:31):
Cold takes exposed for me here, for sure, if we went back before the Canada launch. I was super excited about that. I thought that it was going to be crushing it for sure, just from the culture that I knew from a bunch of professional gamblers living there, a bunch of poker players living there, a bunch of professional DFS players living there. I was positive that it was going to really come out of the gates firing. And that certainly has not been the case.
7-year-olds about brackets in 2023?
And finally, Adam, let’s take this home. And listen, we want to hit on all the stories that are in the industry. And this is one that certainly came up over the last couple of days. I sent you a tweet that came from one of the operators. And for me, I guess I wasn’t following close enough because I didn’t get it. It seemed out of context to me. And then you were able to come through and let me know what it was actually in response to. And I’ll let you go ahead and explain to everybody out there.
Adam Candee (26:29):
Alright. So over the weekend you sent me this tweet from SuperBook that said, “In light of recent events,” that they needed to reaffirm their commitment to responsible gambling. And that’s all it said. We didn’t know any more than that at the time. And I sent you a completely joking response asking if one of the executives at SuperBook might be selling picks to middle schoolers. Turns out I wasn’t entirely off base. What actually happened was that one of the paid representatives of (SuperBook), a woman by the name of Taylor Mathis, was talking to a class of second graders taught by her sister. And they were talking about math. And the conversation went around to talking about brackets.
Now, according to the story from one of our competitors, according to what this woman has said in her own social media, this was something where they weren’t discussing gambling, per se. I think we all understand the implication of talking about brackets for March Madness, of talking about office pools for March Madness, of talking about gambling on basketball. And ultimately SuperBook chose to end its relationship with Mathis. And of course there’s some discussion of the timing, that she might’ve been leaving in the first place. But anyway, regardless, SuperBook took the step of letting her go.
And there have been others in the industry who have taken to the hilltops to say how unfair this is, and how this is overreaction to responsible gambling. And we are here on this podcast to say you’re full of it. That this is absolutely the right decision. And whether it’s an overreaction or not, let’s just take it back to what we talk about all the time: optics. This is about optics. This is not about whether something nefarious happened inside a classroom full of second graders.
This is a paid representative of a legally regulated sportsbook discussing one of the largest gambling events of the year with a class of second graders. Just talk about the optics of that and tell me how that works. Tell me how that’s OK. It isn’t. You can’t because, again, what we have highlighted for years on this podcast, that I feel like people just don’t take seriously enough, especially others within this industry, is that this is an industry that deals with headwinds from the start.
This industry deals with cultural resistance right from the jump. It has to be leaning toward the side of caution and leaning toward the side of taking care of optics. And if a regulator were to make this decision instead of a private company making this decision, maybe we’d be having a different discussion. But this is private business. This was SuperBook choosing to do something on its own. It found out about this in part because the woman chose to post a picture of it on social media, and someone reported that picture to SuperBook. And SuperBook ultimately took the steps that it did.
So you guys might have different opinions than me. I don’t mean to speak for the entire podcast on this, but I do feel the need to say out loud that those of you in particular who are crying, saying that this is overreaction … I think one place said that regulators are foaming at the mouth. Just stop it. Stop it. Get ahold of yourself and just take a look from one step back, even, at the optics of what this could have been if it got to the level of regulators as opposed to a company doing the right thing and regulating for itself and saying, “Hey, we just don’t want to be associated with this.”
Matt Brown (30:18):
So Dustin, I want to get your opinion for sure. And one thing I do want to clear up with this too is the story that we got is her account of the deal. And I’m not saying that it is altered at all. That is not what I’m … I’m just saying sometimes things like this, you get the rosiest picture of everything when you’re given your own account of what happened to you and things like that. Because listen, on the very, very surface, could it be looked at, I get, from someone on the outside looking in as an overreaction? Absolutely. I fully understand that.
From people who have dealt with all of these various hearings and all of these things that … again, politicians who unfortunately do decide yes and no on a lot of these things, who have no grasp of the industry whatsoever. And then they just get handed something, that they go in and just parrot and read off a piece of paper, “And it says here we had a representative from blah, blah, blah who was talking to second graders about betting and gambling,” which whether betting was actually discussed or not, it doesn’t matter because, like Adam said, the perception is the reality.
It’s the view of … and he’s going to say it just like that. “Talking to a group of second graders about betting. What do you say about that?” It is. It’s all the way that it can be framed and how it can be looked at, and how it can be manipulated even a little bit. That’s the other thing. Because perception is reality, this can get manipulated. This story could snowball, as we know, in a case of telephone. And next thing you know, she was talking about the betting odds with them. Or she was saying that she had a three-game parlay. You know how it goes. Things just get wildly out of hand when it comes to all these things.
Yes, on the very, very surface could it be looked at as a little bit extreme? I guess. But at the same time, it’s a slippery slope. And I think that these books, understanding what they’re up against, like Adam said, starting basically behind the eight ball to begin with, it’s something that they’ve got to be proactive on, unfortunately for this young lady in this circumstance.
Dustin Gouker (32:23):
Yeah, I agree 100% with Adam that now everybody’s taking a step back. Even I thought it was a pretty big overreaction at the time, but Adam’s right. The optics are so bad. I would not want to be … in the current environment … again, this has dominated this podcast and the words of LSR for the last four months, is the optics of the industry and things that are going on. Yes, brackets are not inherently a gambling product, but it always is wink, wink. Office pools. Things going on.
Again, I think the problem here, you go talk to the second grade class? Fine. Do it. Who’s going to find out about that? Is taking it to social media, I think. And then yes, you’re a paid representative. I don’t know. Pick somebody out of a hat in the gambling industry. Say Jason Robbins goes to a class and starts talking about brackets. How do you think that’s going to look? That doesn’t look good either.
Just take the person out of it and just replace it with somebody anywhere in the gambling industry. I think it’s definitely bad optics. Did she have to be fired? Maybe not, but it could’ve just been like, “Hey, SuperBook doesn’t want to do this. We don’t want to be involved with anything, even any involvement of kids and talking about gambling.” 100%. And I’ll put a little bit of aside here: I did brackets for free when I was a kid. I love brackets so much I put them on my … after the tournament was done, I bought the posters, which is so nerdy.
I just loved college basketball. And I loved all of it. And I didn’t gamble on it, but there’s room for that. But there’s plenty of room for that content without … keep it out of the gambling industry. Again, as soon as you put anybody in our space … March Madness is a gambling event. The NCAA knows this, too. Yes, it’s a competition that we all love to watch, but it is driven by office pools. It’s now driven by wagering on those games, except here in Oregon where I can’t bet on college basketball. But yeah, when you step back it’s like I can see why somebody would look at this and it’s bad optics for the industry. We don’t need to go on social media saying, “Hey, we’re talking about brackets with second graders.” Yeah. When you step back and take a minute to think about it, it’s not great.
Matt Brown (34:28):
Adam, if you think about it … listen, I’m a nobody, but if I went and did that, people would look sideways at that. And I think it’s just one of those things where if it was a firefighter who had come in and they were talking about math and then he started talking about brackets, that’s one thing. But the association of the gambling aspect to it by a paid representative is really the crux of the whole issue here, is the crux of the matter. We’re saying that the conversation inherently in general is not malicious and it’s not … like Dustin just said, kids make brackets. My little niece is 5 years old, and she made a bracket. We get that. But it’s the association with the gambling side of it is the crux of the matter here. And that’s what I think people are not really grasping onto. They’re looking at it completely on the surface level, which we have at least all laid out that on the surface level, yes, it doesn’t look malicious. But you have to look a little bit deeper into it.
Adam Candee (35:29):
Agreed. And I’ll put this right back on myself. As someone who works for a company that is owned by a company that has to be registered in certain places to do its business, with regulators, if I went and talked to a second grade class about brackets, I would absolutely expect that my company would discipline me. I don’t know what that discipline would be. It might be all the way up to termination. I don’t know. But if I were disciplined as someone from Legal Sports Report who went and talked to a second grade class about brackets, I would not be surprised. I could feel however I feel about whatever the discipline might be, but the idea that I was going to be disciplined would not at all surprise me just because I would understand that my parent company is not going to risk its status with regulators over me, another nobody, going and doing something that is optically going to look terrible. And that’s what SuperBook ultimately did.
Dustin Gouker (36:31):
Yeah. And it’s again … go ahead, Matt.
Matt Brown (36:33):
Unfortunate situation. Dustin, I’ll let you … unfortunate situation. But I think, too, one of those things. You hire representatives, you pay people. You want them to use best judgment, best decision practices, best all the things like that. That’s part of the gig as well. And that also probably plays into the decision as well.
Dustin Gouker (36:53):
Yeah. Again, saying everything’s gone off the rails on RG or what have you. Have people not been … again, banging this drum, but have you not been watching what happened in the last three to four months in Ohio and Massachusetts, and the level of scrutiny that this industry has gotten? That is the point. Barstool got fined for just saying something about that it has a sportsbook while it was on a college campus. Is that really any different? I’m not here to defend Barstool, but it’s not that different. He just mentioned … yes, it’s actual sports betting versus a bracket, but that’s the level to which the scrutiny has happened. Again, I don’t want anything to do with anything that looks at all bad. And it’s not that hard to not do that. And there’s been worse examples of using kids as props in our industry. Again, this is not using kids as props, but just keep kids out of it, right?
Matt Brown (37:49):
Dustin Gouker (37:49):
As soon as it’s that bulletin board material, that slide you see in front of Congress or a legislature when you see … that’s the stuff you have to avoid. And it can be and probably is an overreaction, what we saw, but that is the environment in which we live in, where everything’s under assault. There’s the possibility of a federal ban in the short term, long term on advertising. If you don’t think these are real threats and you don’t think that we should be absolutely as careful as we can be, again, go look overseas at what’s happened in the UK. We’re not playing games here. Everything we do is under a microscope in the sports betting industry. And ignore that at your own peril.
Matt Brown (38:32):
Guys, everything we do here on the podcast, absolutely free, so we do appreciate your support, which is also free, by going ahead and hitting that subscribe button or going into the review section. Going ahead and leaving us a five star, and then even a few nice words would be great as well. If you want to follow Dustin on the Twitter machine, @DustinGouker. You want to follow, @AdamCandee. That is two E’s, no Y. Apple, Spotify, Google, all of the different places that you get your podcasts, we do appreciate your support there as well. For Adam, for Dustin, I’m Matt. Talk to you guys next week.