EPISODE 167 | LSR Podcast

No, DraftKings didn’t Fix an NFL Game

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28 min

No, DraftKings didn’t fix an NFL game | LSR 167

Welcome back to the Legal Sports Report Podcast, Ep. #167! A DraftKings odds boost involving Justin Herbert on Monday Night Football turns into a heaven for conspiracy theorists (1:09). We also talk about Fubo calling it quits in sports betting (10:29), Fanatics has thoughts about NY sports betting (16:44) and the latest numbers from Ontario for online gambling (20:18).

Full transcript

Matt Brown (00:06):

Hello, and welcome to episode number 167 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 Dustin Gouker, I have Adam Candee. You can follow them on the Twitter machine for free, and you should, @dustingouker, @adamcandee. If you hate yourself, you can follow me @mattbrownm2. Everything we do is absolutely free, so please subscribe, rate, review, do appreciate that. If you’re watching us on YouTube, hit that subscribe button down below. Hello, this is what we look like.

(00:33):

We will talk Ontario, we will talk what’s going on with Fanatics in New York, Fubo, how did that turn out. And, we’ll also talk a little bit of Entain, to close things out. But, Adam, I do want to start here, because there’s just some interesting stuff. I don’t even know if you threw this in here because you saw that I had responded to this or not, but I did. I had made some comments on this, as well. A media member, someone actually doing content within the space, throwing out some pretty, let’s just say “out there” accusations.

Tweet from media member about Justin Herbert, Monday Night Football

Adam Candee (01:09):

I think that, independent of each other, all three of us responded to this on social. Now, it comes into the podcast world, where we can have this discussion together. A man by the name of Blaine Grisak, sorry if I’m saying your name wrong Blaine, but by putting out this ridiculous take, you left that possibility out there.

Dustin Gouker (01:09):

Sorry.

Adam Candee (01:30):

Sorry. He’s not Canadian, but sorry. Here’s what he had to say: “Justin Herbert has thrown a touchdown in 26 straight regular season games. Tonight, DraftKings boosted Herbert one passing touchdown, from minus 800 to even money. He has yet to throw a TD. Sports leagues and sportsbooks are in cahoots with each other. Change my mind.”

Dustin Gouker (01:51):

All right, Blaine. It’s not possible.

Adam Candee (01:54):

For me to change your mind. I’m just going to let you know, it’s not going to be possible because you are too thick for me to change your mind if you are putting this take out there in the first place, that Justin Herbert, because one sportsbook that has a partnership with the NFL, did not throw a touchdown pass, that clearly he was instructed, coerced, in some way cajoled to not throw a touchdown pass against the Denver Broncos, because DraftKings offered a boost that some people took. This is one of the most insane things that anybody working inside the space has ever said.

Matt Brown (02:29):

Ever.

Adam Candee (02:31):

Ever, and Matt, you and I, and Dustin probably too, we all have bad beat stories that we all know what people say, bad beats like that are one part of the human anatomy, everyone’s got one, that we could tell you about sure thing bets that didn’t come home. That’s one of these things that just sort of happens. So, I’ll leave the floor there. You guys have all commented and have thoughts about it, and I know I’d like to hear what you have to say.

Matt Brown (02:59):

It just is to me, Dustin, I saw it, and I just responded, I was like, “I’d like to think that this was put out in jest, because if this is an honest take, then I just don’t want to believe that anybody is this dense.” Again, we’ve talked about this time and time again. Guys, the reason where we talk about the integrity of sports betting and all this, that’s why, when this stuff gets brought up in these meetings by these people who are against sports betting, they talk about our throwing games, and fixing games and this, that and the other, and all the stuff like that. Justin Herbert, his next contract, is going to be for $300 plus million when he signs his new contract. Him not throwing a touchdown pass in a game, there is no amount of money any human being could pay him to risk this contract that he is going to get, in order to make him get this little short payday once in his life.

(03:55):

I don’t know why people cannot process in their head that the amount of money for these professional athletes that they make today, that they could be coerced to do anything to alter a game. Now, if you want to talk to me about college athletes, especially low-level college athletes, or low-level tennis players, or something like that, that’s a completely different discussion. But if you start talking to me about the NFL, or the NBA, or Major League Baseball, or the NHL, or whatever, I’m going to cut you off immediately, because you are paying no attention.

Dustin Gouker (04:24):

We could talk about this for an hour, this subject. This is all wild to me, and it all started with this pretty innocuous DraftKings boost. Here’s the other thing: DraftKings wants you to win this. DraftKings is probably pissed that this didn’t happen. They didn’t refund it, nor should they, but they were really trying to give away free money. This is the reason they do this. They are not doing this to be like, “Oh, we’re going to boost the odds and get people on this side of it.” That’s not what they’re doing at all. So yeah, the really crazy part is this guy had this take, he got a blue check mark on the Twitter machine. He does content. I think forget it. Does he write about the Rams or the Chargers? I don’t know. I’ve spent way more time thinking about this guy than I should.

(05:05):

But this thing has, this tweet, and they’re not ironic likes, there are 19,000 people who like this tweet on Twitter. You search for DraftKings that night and the morning after that, there are tons and tons of people that share this opinion that believe this is a thing that happened that DraftKings and the NFL and Herbert all got together and like, “Oh, you threw the ball 57 times, none of them for a touchdown.” Do you know how insane that … I guess we shouldn’t be wowed by this idea that people are this stupid and want to buy into a conspiracy theory. It’s like obviously beyond the remit of the show, but conspiracy theories have taken hold in a lot of realms of our lives. And this is one. People, rather than looking at the absolute simplest thing that, look, he threw the ball 57 times, none of them happened to be a touchdown. This is just life. This is sports.

(05:58):

He wasn’t not trying to throw a touchdown; it just happened. Something that was very likely to happen, didn’t happen. That’s not me. Occam’s razor said, “That’s variance.” That is all this is that there is not some vast conspiracy to get people betting $25 max on a fricking prop bet that DraftKings boosted to stop this. But the scary thing is this guy is not on an island. There are people who are saying they’re deleting their DraftKings account. I don’t know what DraftKings has. We’re probably testing the “no PR is bad PR, any PR is good PR” because they’re taking, there’s people who are out there just believe with their hearts and souls that DraftKings did this.

(06:38):

And I’m here to tell you, not true and you’re an idiot if you think that, and I have a tweet with a lot of engagement too where my mentions are full of people who are like, you’re living in a fantasy world if you don’t think all these NFL games are fixed and these vets aren’t fixed. And I think Dave Perham from ESPN put this really well and I’ll stop talking for a little while. If you think all this stuff is fixed, stop betting on it. Go away. That’s the baseline.

Matt Brown (07:10):

Adam, not to get too big on our high horse here or whatever and shift this in a different direction. But look, there’s at least a little bit of journalistic integrity stuff going on here, as well. If you are in the media and you are a guy with a platform and you are a person with following and stuff, throwing out asinine accusations like this, throwing out stuff where you are, I mean again, you are basically using your platform to influence some people who don’t even know what’s going on. I mean here’s the thing is this boost, Herbert not throwing a touchdown, all this stuff like that, to 90% of his followers wouldn’t have even been a thing. No one even knows that it existed.

(07:48):

But now you’ve made it a thing and you’ve put it out there and it’s made it into this issue where all of these people are reading what you say believing you, because again, you have a platform, you’re the dude with the blue check mark, you’re the dude that has a journalist and all that. And it just, that’s the other thing that kind of pisses me off about stuff like this, it’s just like, “Hey man, have a little bit,” I mean I know we’ve gotten away from journalistic integrity a lot in different forms and stuff. Like there’s got to be just some have a little bit, right?

Adam Candee (08:18):

Yeah. He writes for SB Nation. I can’t say I’ve ever thought to myself: Washington Post, LA Times … SB Nation, I’m not going to …

Matt Brown (08:29):

I got you, but you know what I’m saying.

Adam Candee (08:30):

I know where you’re going with this and I know that in the end it’s an insane take. We can all agree on that. But I’ll repeat what I said on social media. When sportsbooks partner with leagues, when the ties are this close, when you went from “this will kill our game” to “give us all the money” within a span of five years, you leave yourself open to this kind of insanity. And so this is what the NFL and the sportsbooks need to be aware of, the closer that they draw these ties together. Because someday there could be something that is less insane than this that happens that makes it look much, much worse. Calvin Ridley could be playing and not out at a time that he’s betting. That story could have ended very differently than it did. So, again, this take is nuts, but the perception risks are real.

UFC tells fighters no more betting on matches

Matt Brown (09:29):

A side note here, just as we’re talking about sports and leagues and things with betting and whatnot, a memo last week from the UFC out to all of their fighters that now fighters are no longer allowed to bet on UFC fights. And whether you obviously if you participating you were never allowed to do that, but you cannot bet on fights just in general in the UFC. I think a good policy, again, there are a lot of these people who are training partners and whatnot and all that. You know if a guy’s going into a fight hurt, or not at a hundred percent and all the different things like that. And so I’m glad that they actually got out in front of this and made this a policy because I know there was a lot of people saying, “What’s the problem?” And it’s kind of like, well again, we always talk slippery slope stuff.

(10:15):

And what it comes down to is a lot of these guys know each other. A lot of these guys train together. You have the inner workings of a lot of these people, and it’s like, “oh man did you know Homeboy, he separated his shoulder in training camp last week” and all that. I mean there’s a lot of that that could go on and whatnot. So I think a good policy overall by the UFC.

Adam Candee (10:33):

Yeah, story coming at LSR by the way.

Fubo must go: Streaming service Shutters sports betting platform

Matt Brown (10:39):

Dustin, let’s talk about Fubo. And this was always an interesting one. We knew that there was going to be some people who threw some stuff against the wall and see if it was going to stick. And I think Fubo kind of fit into that category when it came to the sports betting side of things. Where do we sit now with Fubo and sports betting?

Dustin Gouker (10:56):

Wither Fubo sports betting, wither Fubo sportsbook. It announced Monday they would shut down sportsbook operations. Not a large player in any regard, was only operating in three states, is a rounding error in the overall sports betting market. What Fubo thought it had that was special is being able to tie obviously a streaming platform at core that they would be able to sign up people to its sportsbook that way. We never really even tested that to any, because we are basically three states, Arizona, Iowa and New Jersey. So they never really got to the point where they even tested it, but they got to the point where I think the cost of this to, and they saw the future of competing in this market. We say this all the time, they did not have that will to continue on, more access, marketing beyond just themselves and their platform to get people on the sportsbook app.

(11:50):

They cut their losses, and the losses were a lot. The company pre-announced that it’s reporting an EBITDA loss of a hundred million for the third quarter alone. So for them, this is like “we tried, this was a failure, we’re out” and you’re arguably going to see more of this probably and/or consolidation. Again, we said that the market is not ripe for consolidation in terms of people getting acquired because of the overall economy, but we’re going to see people drop out because the cash to compete with any of these companies at this point is just hard. And you have to have, we’re going to see Fanatics eventually, apparently come in and have that bankroll. And if you’re smaller, if you don’t have something special or niche or unique where you think you can turn a profit like Fubo determined, yeah this is it we’re spending, we’re not going to get there. Even if we continue to spend money and already spend a lot of money and said this is it for us, we’re going to, we’re out.

Matt Brown (12:50):

And Adam, we look at that. It probably also speaks a little bit to just how little market share, just how little they had from a tech side, how little whatever. Because again, they weren’t acquired. They probably could have been acquired for pennies on the dollar by any of these people and instead it’s just, they’re just shutting down operations. And we’ve seen just from the DFS world, if you had any sort of reach, any sort of market share, any sort of anything, someone will pay you something for your product. But that wasn’t the case here. So I think that kind of really does speak to just how little of an impact they ended up making overall.

Adam Candee (13:24):

And I think it’s worth considering also that this is not a standalone that went and tried to do this. This was essentially a subsidiary of a much larger, more successful company. And so it might be more worth it to them financially to write this down than it is to try to take a bad deal and go into something where frankly this product was not going to be ready for primetime in the time that it would take for it to be profitable. Let’s put it another way, I like the show “Family Guy.” “Family Guy” started years and years ago and was canceled. It wasn’t the right time. And then “Family Guy” got rebooted, it came back and all of a sudden it’s the only thing you can ever find on TNT or TBS once a game is over. And so, it just needed the right time.

(14:11):

The idea for what Fubo wants to do and go single stream or I should say single screen with streaming when it comes to sports betting to essentially have the odds for whatever you’re watching pop up on the screen. It’s an idea that everyone is working toward. The problem is the tech isn’t there. We’ve talked over and over again about how the latency with streaming still makes it next to impossible to have a really good streaming product that goes along with betting. You can see this is where Amazon is going. Thursday Night Football is going to be a betting product, but it’s not there yet. It’s just not ready.

(14:43):

And so it will get there eventually. And Fubo was out there at a time when it is impossible to compete in this market with the kind of cash that’s being thrown around with a good idea but an inferior product. You talk about the DFS days, they bought Vigtory Sportsbook, “ah, see what you did there.” They didn’t really make any sort of impact when it came to the tech stack, which doesn’t get bought up. So anyway, long story short, I think Fubo has the right idea; it’s just not the right time. The tech challenges are too big, and someone’s going to do this successfully when they figure out the streaming latency issues.

Matt Brown (15:17):

And Dustin to kind of put a bow on that, I mean, it’s one of those things too is I think we live in a bubble because we work on the internet and we do so much live streaming stuff like this and recording a video and all that. It’s like we all have high speed internet, we all have boosted high speed internet, all the things like that. That’s just not the case for actually the majority of the country. It’s like, it’s crazy when you see the actual stats itself, what’s crazy is you see how many people still have AOL, when you see how many people still have dial up and stuff and whatever. And so we just assume everyone’s got high speed internet and everyone’s streaming and everyone’s got the internet that’s fast enough that would be able to even do this type of project where that you’re getting the stuff in real time. It’s not coming at this super big delay. So it’s again, kind of like Adam said, it’s a decent idea before it’s time. But also we’re just, as a country, the infrastructure really isn’t even here yet.

Dustin Gouker (16:05):

And the infrastructure on both sides, again the latency is not just from on the user side but from getting that feed to anyone, you cannot have, you’re not going to have a great product yet. That needs to be worked out before all this grandeur in the sports betting industry of streaming and second screen experience for betting. It’s rough if you’re not on cable or at the arena, if you’re streaming this stuff, you’re behind. So yeah, Adam’s absolutely right. Amazon’s going to figure this out. Somebody’s going to figure this out, and it’s just not today, it’s five, 10, who knows how long down the road. But it’ll come, but we’re not there yet.

CEO Rubin: Fanatics will launch sports betting in January

Matt Brown (16:44):

Adam, Dustin mentioned Fanatics just a second ago. What do we have going on Fanatics and New York?

Adam Candee (16:51):

We have a very rich man talking about how he doesn’t think he can get more rich even though he tried to get into the activity which he says would not make him rich. Last week, Michael Rubin, the CEO of Fanatics, was talking at a sports business journal conference and saying that the Fanatics sportsbook, which is expected to launch everywhere in 2023, would be in every state where they could be, except New York, where, “you can’t make money.” OK, well that’s interesting to hear in October of 2022 because in January of 2022, Fanatics submitted a bid along with Barstool Sportsbook to have a New York sports betting license, and they were turned down.

(17:33):

So it seems interesting to talk now about how “oh, you can’t make money doing it” when less than a year ago you were pretty committed to not only doing it but to the tax rate that every operator who submitted a final application had to agree to. The operators proposed the tax rate, the operators agreed to the tax rate, Fanatics agreed to the tax rate. But here’s the problem. Fanatics tried to go into the New York market with no proof of concept and alongside Barstool, which not only is a bit player but also has the clown prince of sports betting on its side. And you had a lot of things working against that application. So it just seems a little weird now to be talking about how you can’t make any money in New York when you were plenty ready to go out there and not make any money in New York with your own sportsbook that, again, nobody has seen yet.

Matt Brown (18:22):

Dustin, Adam said a very rich man, and so I took the time while Adam was talking to look up just how rich Michael Rubin is. I knew he was rich, I did not know $10.2 billion rich. He’s like, he’s real rich. He is that 0.2 is $200 million. I’d just take the 0.2. Just give us 0.1 of the 0.2, man, what’s going on?

Dustin Gouker (18:46):

Yeah, yeah. I mean Fanatics sees dollar signs. That’s why we’re, we’re still talking about this and why, yeah, they’re planning on being in more than a dozen states next year. They think they are going to come in and be the end boss in sports betting. Remains to be seen. But yeah, they make a lot of money from selling us T-shirts and hats. But they’re, we’re going to see more of, we’re going to see whether they come and compete. I’ll be very interested because it’s like, we’ve heard a lot of great stories. Is that person who, I don’t know, I just bought some and I’ll just very, very random anecdote story.

(19:23):

I just bought something from MLB shop because my Phillies obviously very good. You get these offers from Fanatics and you’re just like delete, delete, delete. Is that what they’re doing with sports betting? I don’t know. I’d be curious how Fanatics is trying to serve as a sportsbook because just saying, “Oh you bought a T-shirt, go sign up at Fanatics sportsbook,” that’s, that’s not great. I assume it’s a little more sophisticated than that, but they try to get me onto partners and I’m like it’s a spam, right? So we’ll see.

Matt Brown (19:49):

$10.2 billion, ugh I tell you, that’d be nice. That would be nice. I’d share with you guys. I would, I promise.

Dustin Gouker (19:57):

Thanks.

Adam Candee (19:57):

Let’s not make it sound like you’re not close to that, Matt. You’re working on it.

Matt Brown (20:02):

Yeah, yeah. I’m just, you know, of that 10.2, I don’t have the 10 or the point or the two or the other zeros and all, but yeah, it’s fine.

Adam Candee (20:10):

I can’t believe everything I read on the internet. OK.

Matt Brown (20:14):

Dustin, we like numbers. Ontario gave us numbers.

Pinnacle set to launch licensed sportsbook in Ontario next week

Dustin Gouker (20:18):

Ontario numbers, which are arguably the least valuable numbers that we see in terms of what the data they actually give us. Here’s what we got. We got igaming operators. So this is everything in Ontario — sports betting, online casino, poker — $6 billion in handle, that’s USD 4.4 billion with current exchange rates, presuming since we did this, that sounds like a lot of money. It is not. I’m here to tell you it is not a lot of money if you’re counting casino and poker. This counts every dollar that’s going through these that’s being handled by this. So in this count, this is the fiscal year, quarter two, July through September. So it starts, includes their CFL season, it includes the start of the NFL season, which we think was pretty big in Canada as well, despite the fact that we don’t have a Canadian team, but that’s the baseline.

(21:06):

We got that number plus operators generated $267 million Canadian, that’s 192 million USD. This is not a lot of money, and people keep taking victory laps on how successful Ontario has been in converting the gray market and starting this all up. I’m here to tell you it’s not successful, at least from how I sit here and see it. We don’t have numbers from the lottery. They also run online casino and Proline+, the sports betting property there. So we don’t know what that is. That can make up some of this. But here are some comps that we ran through, and there’s lots of comps you can run through. New York, obviously more people in New York than Ontario, handled $3 billion in the same timeframe just for sports betting. Now, handle and turnover is very high in casino and poker. Like any dollar that’s wagered or put in a slot machine or a blackjack hand, that’s handle, right? You’re handling that money, you give it back or you keep it.

(22:02):

So to me that’s the baseline. You have New York with just sports betting, and New Jersey is making 130 million USD just from online casino before the variance in sports betting, and New Jersey, much smaller. So for Ontario to be sitting here telling us, oh this is a wild success, I’m not buying that. They keep saying, “Oh we haven’t had all the operators onboarded, there’s more. We have this hard deadline of the end of the month for all operators to be onboarded.” So we’re then told Q4. This is what the market really looks like. But this is not a typical launch. They’ve migrated gray market operators and this is a running start, not a standing start from nothing.

(22:42):

So I’m here to say, I don’t think Ontario, it’s punching under its weight. You could look at this against any other casino and/or sports betting state, and Ontario is punching below its weight in terms of what’s happening there. Now with the caveats that we get lottery numbers plus more operators, maybe it starts being a little bit more impressive. But I am not impressed with what Ontario has done, and other than it’s just found money, this is new money that has come into the province because they just started regulating and taxing all this. It is not a win in terms of a launch in North America, I’d say.

Matt Brown (23:16):

However, we just started hockey season, eh? We just started hockey season, eh? We’re going to see what’s going on with all that as they get going with hockey up there. Adam, take us home talking about some Entain news or maybe just a little bit of a teaser,

Entain CEO: taking BetMGM public in play after hitting profitability

Adam Candee (23:32):

Little bit of a teaser. And just to put a wrap on the Ontario thing with one thought, if everything were going well, they wouldn’t be putting an end-of-the-month deadline on unregulated operators working in Ontario. If everything were going swimmingly, they could just say, look how well everything’s gone bringing the gray market slash black market ops in. Congrats on 365 and Pinnacle, but obviously there are a lot of people who are not making the switch over from the gray market in Canada. Now, BetMGM is of course part of the joint venture or is the joint venture with Entain and MGM Resorts, and on the most recent earnings call for Entain, talk of that joint venture potentially becoming profitable as early as 2023 even despite the upcoming failure in California of the sports betting proposition. But their CEO had an interesting comment talking about how it’s not out of the realm of possibility that BetMGM could be taken public at some point.

(24:33):

Again, don’t call your broker right now. She went out of her way to make clear this is not an imminent sort of thing, but it is interesting to hear any sort of news about the idea of BetMGM going public when Entain itself has been an acquisition target here multiple times. We saw MGM try to purchase it whole. We saw DraftKings get involved and obviously those were both at times where M&A evaluations were through the stratosphere. So it’s just interesting, I’m not trying to draw parallel necessarily between the two to think about a potential BetMGM listing and not necessarily saying to keep an eye out for it this year, but certainly something to keep an eye out for in future years.

Matt Brown (25:18):

And Dustin, I know you are a Phillies fan as you mentioned at the top of the show. I did want to bring this up, and it’s funny I didn’t know that you were going to, I didn’t know you were going to bring up that you were a Phillies fan, but it’s something I wanted to end the show with. I want us to earmark what October 2022 numbers might look like for Pennsylvania, right? Because we’re getting a whole bunch of extra Phillies baseball, we have a good Sixers team that is just starting in the middle of the month as well. And of course we have the NFL season where the Eagles are also the last undefeated team in the NFL.

(25:49):

I imagine sentiment around Philadelphia sports is very, very high right now, and I wonder if Pennsylvania as a whole actually sees some rise there from all of that because again, one you just have extra baseball to bet on, extra interest in betting the Phillies because they have played a lot more games in the month of October. And again, you’re going to bet on your good football team, and you’re going to bet on your good basketball team and all that. And I’m just wondering if we actually see at least some sort of incremental tick here in October of 2022. So I want you all to just put a little markdown so that we can take a look at that.

Dustin Gouker (26:23):

Well, what about Adam’s Giants and Yankees too? New York and New Jersey, it’s banner days.

Adam Candee (26:29):

And the Jets. Let’s be nice to the Jets. They don’t get to have nice things very often. So be kind to the Jets.

Matt Brown (26:35):

It’s true, the Jets down to just one-point underdogs this week. The Jets might pull off another crazy, insane upset. So yeah, there’s lots of cool stuff going on over there. I do want to look at these October numbers for Pennsylvania, though, like getting that extra baseball, getting all that out. I do wonder if we see anything from over there. Guys, as always, everything we do, you can find over at legalsportsreport.com. Take in the good words Adam and his team are putting together over there. If you’re listening to the audio version, subscribe, rate, review, do appreciate that. And on the video side, hit that subscribe button.

(27:06): Let us know in the comments section if there’s anything you’d like us to talk about. Because if there is, we will try to include it on a future podcast here. If you want to follow Adam on the Twitter machine, @adamcandee, two E’s, no Y. You want to follow Dustin, @dustingouker. For Adam, for Dustin, I’m Matt. Talk to you guys next week.

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