EPISODE 220 | LSR Podcast

Shohei, This Might Be A Problem | Sports Betting News


30 min
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Shohei, This Might Be A Problem | Sports Betting News | LSR Podcast 220

An olive branch from sportsbooks to California tribes. When MLB-affiliated reporting indicated Shohei Ohtani was joining the Blue Jays, baseball odds shifted dramatically – and it turned out incorrectly, when he landed with the Dodgers.

Full transcript

Matt Brown (00:09):

Hello and welcome to episode number 220 of the LSR Podcast. My name is Matt Brown, joined each and every week by the brightest minds in all of the gaming industry, and it is our first podcast here of 2024. Matt Brown, Adam Candee. Adam, as always, for 219 previous episodes, this is absolutely free. It will continue to be absolutely free, so if you want to do us a solid and hit that little subscribe button, or if you’re over on the YouTube side of things, you can hit the subscribe button there as well. Hell, a rate or review on the podcast side helps as well. Hope you guys out there had a great holiday season, had a great new year. We’re ready to rock and roll here, Adam. Got a few topics to talk about. Then things will start heating up here over the next six weeks or so and we’ll really get into a whole bunch of interesting things.


We’ll start to figure out what people’s Super Bowl strategy was, what people’s March Madness strategy was. Was that a giant acquisition period for some of these new players in the industry, et cetera. Of course, when we left, ESPN Bet, fairly new, had only been around about a month. I’m sure you paid pretty good attention to ESPN, had a ton of bowl games, ESPN had the national championship stuff, they had all of those going on. ESPN Bet, pretty prominently featured, certainly on odds tickers and commercials and even live read things here and there and stuff like that. So, they’re pushing the hell out of it, which does at least answer one of the questions that we had when the deal was announced, which was just how much would ESPN actually back ESPN Bet? Was it just, hey, slap the brand on something and then we’ll see what happens, or are they going to be at least fully invested? At least early on, that they’re showing that they’re going to be invested in it?

Adam Candee (02:03):

Yeah, I think they’ve stopped short of what some of the regional networks have done with some of the integrations into the broadcast, which are a varying success depending on what you listen to. It really is a matter of how bought in and knowledgeable the talent is when it comes to incorporating those things. On ESPN, I realize you’re going to have it probably more visually than in audio because they don’t want to look like they’re shoving it down people’s throats in the same way.


Now, some things to keep an eye on, there is a little bit of unrest going on in the investor space with Penn right now. You can read about that at legalsportsreport.com. We did hear some reports about the ESPN Bet app having an issue or two along the way technically, but that’s to be expected when you’re working out new technology. So, we shall see, because there is a $4 billion bet out there on ESPN right now, and I include in that the fact that there was essentially a $2 billion bet on Barstool and then another $2 billion bet on ESPN for Penn Entertainment. What they do with that app will obviously determine a whole lot of futures when it comes to that company.

Matt Brown (03:21):

Do we have any comments from Aaron Rodgers on ESPN Bet yet? I’m just kidding. Let’s move on. We’re not going to get into the-

Adam Candee (03:29):

I think we should talk a little bit more about Dr. Fauci. No.

Matt Brown (03:33):

Maybe Aaron Rodgers can weigh in on what’s going on over to ESPN with ESPN Bet. I’m sure if you asked him, he would pretend like he was an expert on it. He would tell you exactly what was going on with all that. Let’s talk some California stuff here.

Olive branch from sportsbooks to California tribes

Adam Candee (03:49):

Let’s talk about California, where we are seeing some interesting movements that is, I would say, in the long term, probably positive for the prospects of there being some form of legal sports betting in California. Our Mike Mazzeo talked to the Sports Betting Alliance, which this group includes a number of sportsbooks including FanDuel and DraftKings in particular, groups who were behind the push in 2022 for a ballot measure. I was going to say two ballot measures, but one of them was pushed by the sportsbooks and another was countered by the tribes. They were behind one that was trying to open up the sports betting market in California to commercial operators. We are all aware of what a spectacular failure that became at the ballot.


Now we saw these new initiatives come from basically nowhere this year, in 2024, the signature gathering efforts are supposed to be beginning right now within California. The Sports Betting Alliance has come out and said, we are not going to support these. We are aligned with the tribes in being opposed to these new sports betting initiatives. Think about just how fractured the relations were between the tribes and the commercial sportsbooks at the end of 2022. This is at least the beginnings of a path toward reconciliation.


Now, does it look like what the commercial sportsbooks would like it to where they are licensees in California and running sports betting the way they do across the rest of the country? I doubt it, considering what we’ve heard from tribal leaders over time in California. This is something where the commercial sportsbooks probably have a much smaller role if the tribes continue to stick to what they’ve said. But this is a goodwill effort here by FanDuel and DraftKings. This is smart on their part to come out and align with the tribes and say, hey, just so it’s really clear to everyone, we’re not behind this. We are not the ones providing the funding. We are not trying to do this through some sort of third party.


They have to do that because of how shrouded the first initiative was, where they were trying to call it about homelessness, and then it really was about sports betting, and it ultimately turned out to be a big failure in front of the voters of California. So I think it’s a very smart move by the major US sportsbooks to be clear about the fact that they are not behind this and that they are at least implicitly seeking alignment with California’s gaming tribes.

Matt Brown (06:27):

Adam, as we sit here at the beginning of 2024, if we’re talking about handicapping states and actual chances of this getting done by, let’s say how many states will we have by 2027? The reason I do the 2027 is because we know Texas needs to get in 2025, whatever, and that gives them another cycle to get that done. Outside of Utah, would it surprise you if California is basically the last man standing when it all comes down to it because of all of the different interests and stuff like that? Maybe they get something done internally with just the tribes. But if we’re talking about a competitive market where people can come in and really give 30 plus million Californians a real choice and a real option, would it surprise you if California is the lone holdout?

Adam Candee (07:19):

It would, only because of the fact that there is such pressure to get this done from the sportsbooks’ perspective in terms of their long-term viability. There aren’t that many places left to add a bunch of customers. Now keep in mind, they’re probably not going to be able to do it the way they would like to do it. Does it end up looking something like Florida where there is Hard Rock Bet and nothing else? Do the tribes have some version of their own online sports betting that they decide to do in the long run in California? Maybe the sportsbooks like FanDuel and DraftKings are getting in some sort of supplier way, some sort of B2B way, some sort of way that allows them to access maybe for their DFS in a way that they haven’t? I don’t know. I’m not really clear on what the end game is going to be because I don’t think anyone has a clear end game right now.


The gaming tribes in California are perfectly happy with the status quo as it is. It is a multibillion-dollar industry in California in terms of tribal gaming. So what can major US sportsbooks, or anyone else, offer to tribes that would be worth it to them when their main concern is twofold. One that people are going to stop coming to tribal casinos and they’re going to stop coming to tribal land and spending on hotels and spending on shows and meals and so on. The second part of it is how do you do it in a way that makes clear to tribes, or at least does not threaten them, that this is not about opening to wider online gaming, which was the real concern about this in the first place.


It wasn’t about sports betting in 2022, let’s be clear about that. This was really about it opening up a door to iGaming and what impact that would have on tribal interests. So, you mentioned Utah; I’m not really hopeful for Utah, Alaska, Idaho, a number of states that really don’t move the needle in terms of total addressable market. In terms of California, if you asked me to handicap by 2027, is there legal sports betting in California? Probably not. But if you asked me by 2029 or 2030, I think that’s a possibility.

Matt Brown (09:25):

I’ll deviate just a tad here from our rundowns since we are talking about states and things getting legalized and things going on. Our speculation of what was going on in Texas is we speculated here on the podcast, Mark Cuban basically all but said here over the last couple of weeks is he’s been interviewed on selling that majority stake over to the Adelson family. He basically said all the stuff that we said. Look, they do better on the real estate and gaming side. I am not a real estate and gaming person. I am a basketball. I want to run this basketball team and I think that I can provide stuff on the other sides of all of this and help things out along the way.


So it was all of the speculation we had. It’s not like we were the only people out there talking about it, but it came true over the last few weeks with Cuban speaking out that this was just the long game of building a new stadium, an entertainment district and a casino right there in Dallas, and trying to make Dallas a new destination for the center of the United States. Because he was saying, hey, there’s New York and hey, there’s Vegas and in between there’s LA and Miami or whatever, but there’s no destination in the middle of the country and he wants Dallas to be that. He has said as much here over the last few weeks.

Adam Candee (10:45):

There are billionaires in this country, or at least those who claim to be billionaires, who have a track record that isn’t all that successful. It won’t take a whole lot of Googling to find that Mark Cuban and the Adelson family are billionaires who have a pretty good track record of succeeding in their business interests. So I don’t think it’s very hard for us to extrapolate out and see that Mark Cuban is playing the longer game here and the Adelson family is more than happy to have a partner who is so prominent in the state of Texas. Not as so rich in the state of Texas, but is so prominent in the state of Texas to be able to help in this shared quest to be able to have some sort of legalized casino gaming in the state.


So again, we’re not really going to be talking about this until 2025 when there’s a chance for the legislature to get behind it again, but it certainly seems like everything that we thought about why these synergies exist. It’s the beginning of a new year, we have to use words like synergies, right? We’re re-upping the corporate goodness here. That’s what we expect to see play out in 2025.

Matt Brown (11:53):

Yeah, I don’t want to speak out of turn, and this is just more trying to read the tea leaves or something like that, but I don’t think Cuban sells the part of the team, which is his baby and the thing that he loves most in this whole world, if this was not a very, very realistic possibility of happening. I’m not going to say that he knows something we don’t. I’m just saying he probably has a very good feeling about this, because again, this was a move made specifically for a reason and not because Cuban had just decided, you know what? I need more billions. Let me go sell part of this team because my multiple billions I have already, I just need more of them. That was not it. This was for a grander plan. Again, I don’t think he does this, Adam, and I’m just speculating here, I don’t think he does this if he doesn’t feel like this is a really, really good chance of coming to fruition.

Adam Candee (12:49):

I’m going to make an analogy here that you’re going to understand as someone who spent the amount of time in the state of Nevada that you have. One of the things when I worked in politics in Nevada that we continually tried to drive home to Washington, DC, consultants, California consultants, people coming in from out-of-state trying to accomplish things in Nevada, and they didn’t get it and they didn’t listen to us and we watched failure after failure because of it. You need to understand that in Nevada, and I think you can say this for Texas as well, there is a wariness of outsiders that is strong. It is palpable and it will kill off the things that you want to do. If you come in with the attitude of we know what’s best for you, then you are probably going to fail in Nevada.


We’ve talked about the ethnocentrism around Texas and the fact that it’s a state that really values its heritage, its history, its identity. But I think beyond that, there’s also this idea of no one from the outside is going to come in and do what they want to do without us doing things the way that we want to do them. So if that was an under-the-table message to Mark Cuban and the Adelson family from powerful interests to say this is the best way to do it, or if it was just Mark Cuban being smart enough to read the tea leaves himself and say, I really want to get this done and I think this is the best way to go about it. They tried in 2023 with forming a PAC that was giving money to legislators and trying to get it done that way. There was more movement on sports betting than we had ever seen in Texas in 2023, but it didn’t get done. This feels like a logical next step in that process.

Baseball odds shifted dramatically

Matt Brown (14:30):

Let’s head to something that we hit on this a couple of different times along the way, and it is something that I fear is not going to go away because it’s just the nature of the beast. It comes down to reporting on things that are “insider information” or “breaking news” or whatever it might be, and that affecting betting markets.


Adam, there are people I guess don’t truly understand that, we saw this to an extent years ago and I’ve been in this 20 years at this point, and news would come out and it would move a point spread or it would move a line. It would be different little things, but not like right now where we’re live in 30-plus states. Everything is so reactionary. We have it on our phones. It’s everything that’s been able to get done. You can just watch the betting odds through the course of a game anywhere. The narrative can change for a player or a coach or whatever.


All you had to do was watch the MVP odds or Coach of the Year odds or Comeback Player of the Year odds or any of those like that, Heisman Trophy odds, throughout the course of the season. These things are moving all over the place based off of what someone either said or a singular game that is happening on the television at the time. We kind of saw that play out yet again here, but this was less about what was happening on the field and more about some insider, again, air quote information.

Adam Candee (16:05):

Matt, I think it’s maybe important to talk about this in a way where we add the context that it’s not just about insider information, it is about the relationships that professional sports leagues have with sportsbooks. Then when those insiders happen to appear on channels that are sponsored by or wholly owned by those sports leagues … Boy did I make a mess of that. When you have these insiders appearing on league channels, you are looking at a situation where there is a perception that is very different. So what are we talking about in specific here?


Let me start by telling you, there’s a great article by Mike Mazzeo at Legal Sports Report right now in which he dives into the situation with Shohei Ohtani’s free agency and the reporting by Jon Morosi and JP Hoornstra that discussed potentially Shohei Ohtani being on a private plane from California to Toronto. Morosi reported this as sources indicate Shohei Ohtani is on his way to Toronto and what happened when that went down? When that news came out? We saw World Series futures odds, AL championship odds shift dramatically. Obviously, if Ohtani goes to the Blue Jays, the Blue Jays become bigger favorites. If the Dodgers don’t get Ohtani, then their numbers go down.


Conversely, well, what ultimately happened, those odds shifted. The report turned out not to be true. Morosi had talked about this on MLB Network. This is wholly owned by Major League Baseball. It is their channel, and it is a person who is essentially in their employ who is saying these things. The perception of someone who works for a league that has partnerships with sportsbooks and is giving out information that turns out to be wrong, that moves the odds in a certain direction and allows certain people to bet odds that would be either more favorable or forces them into bets, I shouldn’t say forces, leads them into bets that are less favorable and then that immediately shifts back when the reporting turns out not to be true, everyone looks at it and says, that doesn’t seem right. It seems like there’s a potential problem here.


Could there be something much more sinister in the long run? Of course there could. We dealt with the Shams situation when it came to the number two pick and the draft not all that long ago. That of course had the issue of Shams being a FanDuel partner. That of course looks completely different when you’ve got someone who’s aligned with a sportsbook. There’s a lot to unpack here. There’s a lot that I think is hard to get around when you talk about how the money that is involved in sports betting is money that leagues are not about to turn down. I’m not sure anyone business wise would ever try to tell them to do that. It would be silly. It’s not going to happen. If that money is there, the leagues are going to take it, the RSNs are going to take it, the journalists are going to take it. Media is a shrinking industry, and so we have to understand that setting up guardrails for this is essential, but it’s also really, really difficult.

Matt Brown (19:20):

I hate to do the throw my hands up and just say it is what it is route, but it is what it is. The reason in that, Adam, is because, yeah, this happened to be on MLB Network, but between Instagram and Twitter and Facebook and TikTok and whatever and all this, anybody can claim anything. Anyone can reach the masses with anything at any given point. So unless we’re trying to tell journalists that they can’t report the news or they can’t try to break the story, it just is what it is. It’s just going to be what it is. This is a very interesting, and almost in my personal opinion, isolated incident because there is almost no player in any sport that is more tied to a team’s future odds than Shohei Ohtani.


Sure, if Mike Trout was a free agent, would it move lines? Yeah, but it’s not a dude that also pitches, also hits, and had the biggest hype around a player in the history of Major League Baseball. So I think this is certainly something that we have to figure out. Maybe is there something that where MLB Network puts a disclaimer at the bottom of the screen that just says like, hey, this is not reported as fact. This is just a rumor, or whatever it may. Maybe there’s some sort of disclaimer to put up there. But I don’t think there’s a fix if we’re going to try to go that route.

Adam Candee (21:04):

Well, as much as the problem is perception, I think the fix is perception as well. ESPN tried to address this with the opening of ESPN Bet. They put out a set of guidelines for their reporters, and more importantly their insiders, because we need to make a really clear distinction here that Adam Schefter is not a journalist. Adrian Wojnarowski is not a journalist, not anymore. They were at one time. They’re insiders in that they’re information merchants. These are folks who are getting information either from agents or from league sources or whoever it is. Those folks in particular are market movers. That’s why when we were having the whole discussion with Adam Schefter’s contract was coming up that would he go work for a sportsbook? That’s when I was really starting to get worried because now you would potentially have one sportsbook that would have information that others wouldn’t, and the perception issues behind that could be massive.


But I do think if Major League Baseball, for its insiders, NBA, et cetera, if they were to put out some sort of guidelines in the vein of ESPN that at least gives their journalists and their insiders something to go back to say, hey, listen, if you are going to post information like this, you need to be aware of X, Y, and Z. That’s as much for them as it is for the public that there is an acknowledgement from inside the leagues in particular, there’s acknowledgement from them that we know this is a problem. Even if it’s a problem that doesn’t have an obvious solution, as you’re saying, even if it’s something that can’t necessarily be “fixed,” there is a way to acknowledge we get it. We understand. We’re trying to deal with it as best we can.

Matt Brown (22:47):

Yeah, it’s one of those things, man, where it’s like, I understand, I don’t know if the word, I’ve seen scandal thrown around that we could be on the potential of a scandal, et cetera. Again, you know as well as I do, because you follow sports as heavily as I do, sure, could there be misinformation that could move a line? Yes. Dramatically? No. It’s basically like a Shohei Ohtani. Seriously, there’s less than five players on the face of the planet in any sport that would be able to significantly move a line enough where it’s like you could honestly go in and take a massive advantage on a position or something like that. So that’s why I’m a little more pump the brakes I think on this than I am on most things because there’s just not a player out there that can do what Ohtani can do to a line.

Adam Candee (23:48):

Well, let’s play it out. Let’s just go with a hypothetical here, and before you listen to this hypothetical, do not think that I’m operating within the bounds of reality here. This is just a complete hypothetical, I don’t think this is going to happen. But let’s just say that there were sharp bettors or a sharp group or someone who thought that they had access to get down a significant amount of money, let’s say, in an offshore market. They had a line to an Adam Schefter or an Ian Rapoport. They developed a relationship with one of these insiders over time and were able to eventually feed some information that Patrick Mahomes is disgruntled in Kansas City and has requested a trade, and here’s his list of five teams that he would like to go to. That of course would immediately move Super Bowl futures. It would move everything.


Is it realistic that this happens? Is it realistic that someone like Schefter who makes millions on his own is going to risk everything he has based on this? Is he not going to cross check it with someone else? No. But I think that’s the sort of thing that we’re talking about is could someone try to co-opt one of these insiders who has deep connections to the league, a league that has money ties to sportsbooks, and have it be so wrong and so very clearly fixed that you could draw a line back to how it happened? I think it’s damn near impossible, to be honest with you. But I want to at least be clear to everybody when we keep saying there could be a scandal, that to me is the kind of thing that could become a scandal if it were to happen.

Matt Brown (25:29):

Yeah, I agree. Yes. I think in the 99.99th percentile of realms of possibility of things that could happen, for sure. And like you said, you painted a picture that you don’t believe it’s honestly realistic. But yes, if that were to happen, then things could be super, super wacky here. All right, let’s close things out with a little bit of a celebration here, Adam. We get word coming through and everybody is getting ready for Vermont to launch on Thursday. Everyone in Vermont is ready for this.

Adam Candee (26:08):

Maple syrup and pancakes for everybody, baby. We’re doing this. Vermont is one of those states, much like it was with Maine, where we were sitting around and waiting because the law had been passed a long time ago. We were saying, so yeah, we’re going to do this. It’s a fairly limited market in terms of the number of operators who can be part of the whole thing. So look, it’s a small state in terms of population. What I think is interesting about the Vermont launch is that now when you look around New England in general, you have the entire region that has become legal. We’re looking at other places, say like South Carolina, which is going to be dealing with this at the legislative level this year, and we’re wondering how much pressure is there from having legal sports betting all around you? North Carolina is about to go online. That is probably going to be sometime in March.


So, what’s the value of it? I don’t know in the long run, but we’re going to find out what it means when an entire region has legal sports betting and what that can do when Vermont launches later today.

Matt Brown (27:17):

Yeah, it will be interesting for sure, because we’re looking at, I think at this point, Adam, and we’ve seen some of these other states, it’s already happened and happened fairly rapidly, but the pressure when all of your neighbors and everyone around and all of that is … At some point the people are going to start going to their representatives and saying, guys, what gives here? Why can’t we get something done? It makes no sense whatsoever. For those of you wondering, Vermont the 49th most populous state in our United States of America. Adam, can you tell me the 50th?

Adam Candee (27:58):

First of all, I want to throw out another shout to geography, Matt, because I love geography, Matt, more than every other Matt. The other least populous state is Wyoming.

Matt Brown (28:07):

Yes. It is. If we want to count DC as its own entity, Vermont would fall to 50th and Wyoming would fall to 51st. So, DC actually more populous.

Adam Candee (28:20):

That’s just the politicians, huh?

Matt Brown (28:23):

Hey. What do you say now? That’s just the people in the pocket of the … Oh, no, I’m not doing that. Oh, hey, not going there. Not doing that.

Adam Candee (28:27):

That’s the LSR Plus-Plus.

Matt Brown (28:34):

No, that’s a different one out there. Guys, we do appreciate you being here with us in 2024. As we said, if you are just finding us, everything’s free. So hit that subscribe button, give us a rating, give us a review. We do appreciate all of that. If you’re finding us over on the YouTube side of things, hello, this is what we look like. You can hit a subscribe there too. Do appreciate that. Take in all the great words for all of these stories and more over at legalsportsreport.com. Adam and team working hard all the time to keep you informed. You’re Adam, I am Matt. Talk to you guys next week.

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