EPISODE 173 | LSR Podcast

UFC Bans Working With Coach After Betting and Sportsbook App Streams NFL Game

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23 min

UFC Bans Working With Coach After Betting and Sportsbook App Streams NFL Game | LSR 173

A bill filed in New York is the first major fallout from the New York Times series on the legal US sports betting industry. Also, a PR stunt gone terribly wrong.

Full transcript

Adam Candee (00:15):             

Hello, and welcome in to episode number 173 of the LSR Podcast. I’m Adam Candee, sitting in for Matt Brown. Dustin Gouker joins me, as always, as we get you up to speed on the latest and greatest, and sometimes not so greatest, in legal sports betting throughout the United States. This week, we’re going to talk about one sportsbook potentially getting the dream stream going in its app, another operation that might be trying to solve some nightmares, and then I don’t have a good metaphor for where we’re actually going to start. So, we’ll actually just go ahead and begin the podcast by talking a little bit more about The New York Times series, Dustin. And I think we covered it in pretty good depth last week in terms of what we think of the series itself. And you and I both said, listen, this hasn’t been the greatest week for the optics of the legal and regulated US sports betting industry.

New York Times Series

(01:17):

And guess what? We’re not the only ones who noticed that. In fact, our Mike Mazzeo was at a conference and talking to a couple of executives about what’s coming in the industry and noticed something else that is coming in the New York Legislature, where one legislator put forward a bill talking about, and I’m going to put this in air quotes, “predatory” bonuses. And part of the justification for the bill is The New York Times series about legal sports betting in the United States. So, Dustin, I’ll throw it to you on this note. If you think that these things happen in a vacuum, they don’t. And when it’s in The New York Times, that vacuum is particularly loud, and people hear it.

Dustin Gouker (02:01):             

Let’s start here, too. I feel like we’ve been shouting this for a long time that something like this was coming, right? And it may not seem that bad when it starts, and maybe we can dismiss maybe this particular effort. But this New York Times piece has created a little bit of a narrative around sports betting that regulated sports betting isn’t good. And I’ve seen, I don’t know about you, I’ve seen more than a handful of knock-on stories following this story from other outlets. It was apparently on network television, or it was on CNBC coverage, I believe, recently, too. There’s a lot going on that’s come out of this, and people taking this and running with it and taking a harder look at the regulated market. Which isn’t necessarily a bad thing, but the knock on here is that, yes, an actual state legislator, Senator Pete Harckham, introduced a bill that is targeting the sports betting industry.

(02:52):

And as we already know, New York’s not the easiest place to operate for operators, with the high tax rate and everything going on there, again, with the caveat that they agreed to that high tax rate. But this is the outcome. And if you think this bill, which I don’t know that this bill itself has a whole lot of chance of moving anywhere. It’s very vague, as Mike writes in his news story at LSR. But if you think this is the last of this, I’ve got news for you. This is not. We have been saying that all it takes is a little bit of this, and this New York Times piece, some of the knock-on media, legislators are going to start poking around on this stuff, and if you just dismiss this, do it at your own peril, I think, is the message.

(03:33):

I believe there’s going to be more pushback on all of this, and where it goes, I don’t know. And maybe it is just a small groundswell instead of a large one, but maybe we’ve been crying wolf for a long time, but now four years in, almost five, we have the evidence that everything that’s going on, all the advertising, all the bonusing, all of everything is coming to this critical mass of now there’s some action being taken around this. Now, does it stop here? Or does it keep getting bigger? That’s the question that you and I and the writers at LSR will be examining, I’m sure, into the new year.

Adam Candee (04:08):

And you get to the point there, Dustin, that we’ve been talking about an industry that needs to, one, take lessons from other markets, notably in the UK and some in Germany, I think, as well. And two, self-regulate before someone else does it for you. And that’s the idea behind this bill in New York. I’ll read the text from the bill amendment. It “directs the New York State Gaming Commission to promulgate rules and regulations regarding predatory sportsbook bonuses in mobile sports betting.” Now what does that mean? A whole lot of nothing in its current form. Mike Mazzeo, who wrote the story, did try to contact the senator and did not get a response. So, we are not leaving that out there intentionally vague. But the bill goes on and says, “The mobile sports betting industry is utilizing targeted advertising that is personally tailored to lure in new customers from right within their homes.

(05:00):

“This means that following legal sports betting in New York state, multitudes of people who are not formerly presented with these predatory practices will fall susceptible to gambling addiction that could have been otherwise avoided.” Now, you can parse out the logic of that if you want. And I think there are parts of that that don’t make a lot of sense on their face, and there are parts of it that are probably going to spark discussion. But the point that we’re making, ultimately, is this. When you have a piece like The New York Times series out there that, in some ways, is sparking good discussion, right? We talk about promo deductions and whether promo deductions should be allowed for sportsbook operators. That is a discussion that we’ve been having at LSR for the last couple of years. We’ve been having an even longer discussion about whether someone like Dave Portnoy, who just yesterday was joking about one of his employees going to rehab, should be the face of a legal sportsbook. Yeah, that’s also something that should be covered.

(05:53):

But there also was some, I’m going to say, not full information, in kindness, maybe misinformation, about the idea of pushing people into the black market, et cetera, et cetera. Go back to last week’s podcast if you want to get all that information. But what we’re saying is this. When you have the kind of scrutiny that The New York Times piece rightfully or wrongfully brought down on the industry, it just highlights things we’ve already been talking about in terms of self-regulation when it comes to advertising, when it comes to marketing, et cetera, et cetera, that the industry has, it doesn’t really feel like, paid full attention to yet, Dustin, that it could be doing a better job of.

Dustin Gouker (06:35):

Yeah. And again, I’ve said this on Twitter, and we’ve all seen evidence of this there. It’s just been a bad month for us as a sports betting industry, and I mean, us just covering it. Again, we’re not going to be inked to this PointsBet Drew Brees thing that I’m sure most of you have seen, but that’s part of it. Let’s just not bring unwanted attention on ourselves, like faking a lightning strike of a well-known person who’s your ambassador. I know most people didn’t fall for it, but in real time on Twitter, as we all know, this stuff gets circulated, and not everybody saw the video. They’re saying, “Oh, Drew Brees was struck by lightning.” OK, weird. And it’s then done to promote lightning bets at PointsBet. Come on, we just don’t need this attention, the relatively negative attention, I think.

(07:26):

My feed was filled with people who are just dunking on PointsBet for this ham-handed PR effort. Yes, I’m sure lots more people were talking about PointsBet. So, we’re really testing whether there is anything such thing as bad PR because a lot more people know who PointsBet is than they did last week. That’s for sure. So, I don’t know. We’ve been calling for some standards, right? Self-regulation is where it has, because if you don’t, then somebody’s going to regulate it for you, like this New York bill, in a way that you don’t like. The AGA has tried to bring everybody together to have standards on this, but I think, so far, we just don’t have enough of this. Let’s pump the brakes and not do this because you end up with, yeah, I mean, predatory bonuses is the language that they use because of coming out in The New York Times. Now the bonuses are what attract players.

(08:19):

If you’re trying to actually curb or get into the black market, you need to be able to give these kinds of offers. So, there’s a lot of discussion, I think, and a lot of soul searching. Because yeah, I think the knock-on effect of this is going to go into next year, and I’m not sure everyone’s going to like the outcome. Texas is going to address this. People are going to be using these as headlines. It was a talk about whether they should legalize it in Texas or any other state that has not yet. So, yeah, ignore all this at your peril and dismiss it at your peril because I just can’t believe this is going to be the end of this. This is a harbinger, I think, of things to come.

PointsBet PR stunt

Adam Candee (08:59):

I did some soul searching when putting together the rundown for this podcast about whether to give PointsBet any more oxygen on this asinine stunt, but we’ve already crossed that Rubicon. So, we might as well go into it here for a second. This is the single dumbest thing I have seen in the era of legal sports betting in the United States. Taking a Hall of Fame quarterback and making people think he was struck by lightning on a trip to Central America because you want attention is so far beyond the pale of what should qualify as a reasonable PR stunt to try to make your sportsbook more successful that it’s hard to quantify. I put it on Twitter as saying it was tasteless, it was sophomoric, it was insensitive to victims of lightning strikes. I don’t need to say that as someone trying to cross over into some holier-than-thou territory.

(09:59):

The actual organization for the victims of lightning strikes came out and said, “This is not something to joke about.” And I had someone push back on me on Twitter, someone who once did PR for sportsbooks, and say, “Yeah, but when was the last time you were talking about PointsBet Sportsbook?” OK. For a lot of people, this will be their first exposure to PointsBet. And one person on Twitter said it for me and said, “Wow, so you want me to trust you with my money, and you’re lying to me about Drew Brees as the first exposure that I have to you. Cool. Sounds good.” So, if you’re someone who says, “Well, any PR is good PR,” no. This is not good brand exposure. This is not good PR. This is an idea that should have been spiked at I can’t tell you how many points along the process, and it is not to be celebrated in any way.

(10:48):

This was horrible, awful, asinine. I don’t know how many other adjectives I can throw at it to tell you. Bad idea that should not be replicated. And Dustin already gave you his take. I don’t want to give any more oxygen to this than we just did because those are minutes of my life that I’m not getting back. And congratulations. Unless you’ve got us on one and a half speed, those are minutes of your life you’re not getting back either. Let’s move on. There are other integrity concerns beyond what we talk about with the overall industry self-regulating, right? There are some times that the industry is regulating. And in Ontario, what we’re seeing here is that there are some questions about UFC betting. UFC itself has some questions about one of its coaches after some very interesting betting patterns that resulted in an investigation by the Nevada State Athletic Commission. As you mentioned, Dustin, not, overall, the greatest optics month for the legal US industry, and this UFC story continues to add to that.

UFC Betting

Dustin Gouker (11:48):             

But at least it is an example of, OK, the regulated market is catching this and addressing it at the same time. It’s, yeah, really bad. The story about MMA coach James Krause and the betting patterns around a fight. There are terrible optics here that UFC probably should have addressed before. Yeah, Ontario banned UFC betting on the heels of this story, and then Alberta followed suit. We have not seen any US jurisdiction follow, other than New Jersey that said that any fight involving Krause should be off the board. And then, we have the Nevada State Athletic Commission coming in and suspending his license. We have UFC coming in and saying anybody who works with Krause moving forward is not going to be allowed to fight in the UFC while all of this is going on. He’s had his license pulled in Nevada. That is basically a death knell for working in regulated combat sports across the country.

(12:42):

So, yeah, there’s a lot going on here. The UFC, there’s been reporting that there’s a lot of people just sitting around the locker room, hear things, bet small amounts of money. This is not necessarily new, but it should have been stopped and cleaned up because we can talk bad things about other leagues. But they at least say this at the top, don’t bet on your sport. Stop. Stay out of it. And that has not always been the case, but they have at least taken that top line. And UFC, until recently, really didn’t try to take any kind of steps. They put out a memo saying that they should, but we’re really seeing we should be ahead of this instead of being reactive. And we’re getting, again, some pushback on regulated betting because part of this is regulation should catch this and stop this, because we caught this because of the betting patterns we saw in the regulated market.

(13:37):

So, yeah, good and bad optics here, I’d say. But, yeah, right now, UFC, people are calling into question its status as a product that should be being bet at regulated sportsbooks because of all of this around Krause. And we’ll see what the fallout is. Hopefully, at some point, it looks like UFC might have finally nipped this in the bud by basically cutting Krause out. It’s whether all of its fighters then follow suit and say, “I’m not going to work with Krause moving forward.” Basically, they have to, or they’re not going to be into UFC promotion.

Adam Candee (14:08):             

Of course, this is a subject that begs for the expertise of our friend, Matt Brown. We’ll dip back into it with him next week a bit to get his experience. Obviously, he knows UFC inside and out from many years of covering the sport, betting on the sport. In fact, Matt is producing the MMA awards this week, which is why he’s not joining us here on the podcast. So, we’ll get back into that. If you are a cheerier holiday person than Dustin and I, you want to hear something positive, right? You want to hear something good that’s going on. You guys have brought me, let me check the time, nearly 15 minutes of doom and gloom.

Caesars Sportsbook streaming in-app

(14:44):

Well, let’s talk about something very interesting, Dustin, that happened this past week. And it happened very quietly. Caesars Sportsbook, all of a sudden, had the Sunday Night Football game streaming within its app. This seems like major potential news. Obviously, we’re not going to judge all of the technical parts of this quite yet because there are serious questions about how latency of streams work and what the delay is, et cetera, et cetera. But let me just say, empirically, the idea is kind of cool that we might actually be able to pull this off in terms of getting sports that people pay attention to streamed within apps.

Dustin Gouker (15:22):             

Yeah. And I do this a lot. But let’s take a moment to think about the idea that NFL games are streaming on a sportsbook, right? That’s borderline crazy. Go back in time five years and say, “Oh, NFL’s going to be on legal sportsbooks. You can watch it on a sportsbook while you’re betting.” That’s just nuts. Again, I just think about it because I’ve been doing this long enough that it’s still wild to me that these things happen, and we’re just, “Oh, this is another thing that happened.” This one is super interesting, though. Yeah, Genius Sports teams up with Caesars Sportsbook. They have a deal with the NFL, and allow Caesars to stream the Colts-Cowboys game. They have, I guess, a handful of other games that they’re going to be allowed to stream. It’s a low-latency stream. So Pat Evans was, I know, watching it in real time on the Caesars app, and it’s well ahead of any stream that you’re going to get.

(16:11):

Probably not the same as network and cable perhaps, but it’s faster than streaming, which is how a lot of people consume TV content now. So, yeah, I’m not going to say it’s a game-changer. It’s just a small number of games. But man, that’s attractive. The big thing here is always in-game betting. You can’t really effectively bet in game on anything if you’re watching a stream that’s not low-latency in almost real time. It’s almost impossible. Or I mean, you can, but you’re going to be potentially a minute or more behind watching a stream on any of the current streaming services. So it’s super interesting. It’ll be interesting to see if other sportsbooks go to the NFL and Genius and say, “Hey, we want this, too.” How much of that they’re allowed because of, apparently, it’s low-latency and not the same.

(`17:04):

But I’d also wonder how much do people who are spending billions and billions of dollars on NFL. I mean they, they’ve said this could happen, but the more it gets adopted, the more I question like, oh, do they push back on that and say, “Man, maybe we shouldn’t be giving up these rights to all that.” So, there’s a lot to unpack. This is the first step, and we’ll see if there’s more adoption. And then, Caesars gets a pop out of this. It’s a good selling point. Say, you can bet on the game and watch it here on either two mobile devices. You can’t watch the stream on a TV. The Genius Sports deals are only for mobile devices. But to me, interesting. If I could watch a bunch of games on one screen, potentially a mobile device, and bet on another or on the same one, it’s a game-changer to me just as a consumer. I think it’s super interesting. And I’m curious what your thoughts as a regular sports bettor are, as well.

Adam Candee (17:51):             

It brings up a couple of interesting issues. First of all, the latency is, obviously, the primary issue with any of these streaming situations, right? And the wholly unscientific test that Pat Evans did showed that his Caesars Sportsbook stream was running about a minute in front of the Peacock stream from NBC. So, that, obviously, is significant. And when we talk about in-game betting in particular, that becomes very significant. And when we talk about what it means for betting inside that app, it raises the stakes quite significantly for Caesars. Think about it this way. If they have that stream inside the app, essentially what they’re trying to do is they’re trying to get you in there to watch the stream and bet on the game at the same time. Well, earlier this year, there were some product questions around Caesars when they launched in New York. And so, to me, this inherently at least should say that Caesars feels a bit more confident about its product than it did at the beginning of the year.

(18:50):

But what it definitely does say is that if you are going to pitch this as a reason for people to come bet in game with you because you have the stream of the game that they want to watch, and especially if they’re not near their TV, and they want to do this on the run. They’re out somewhere, they’re at the store, they’re in the car, whatever the case might be, I want to see delay and reject get a lot better when it comes to in game. Because, essentially, what they’re telling you is that it’s no longer a matter of, “Oh, well, you are seeing the game at X time, and we are setting the lines at X time. And the natural five- to 10-second delay and reject that’s built into most in-game bets accounts for the fact that not everybody is seeing it at the same time.” There’s an inherent message in the fact that you are streaming the game in-app.

(19:38):

That means that if you have a line that is available in-game on something that you are streaming, you better be able to get down on it what you want to get down on it within a reasonable amount of time. Yes, I realize that if someone’s betting live live, like between plays, then, obviously, there’s still going to be some measure of question about whether a bet will be rejected. But especially if we’re talking about during a timeout, or really even in the NFL where you have a 40-second play clock, if you’re betting at the beginning of the play clock for that next play, then you’d better be sharp on those in-game lines, you’d better be sharp on the product, and you’d better be working toward, at the very least, eliminating delay and reject.

(20:17):

And we know that PointsBet has talked a lot about the fact that they’re trying to get to that 100%. So, it’ll be interesting to see as you have that one sportsbook working on that part of the product, a different sportsbook that now has the ability to do this streaming. I think it brings up a lot of potential, but it brings up a lot of things where you say, “OK, if you’re going to do this, you got to get it right.” Because you’re only going to get so many chances before people say, “Eh, you know what? This isn’t worth it or it doesn’t work,” or et cetera, et cetera.

Dustin Gouker (20:43):             

Yeah. You have to have the UX of live betting dialed in or be on a path to doing that because I agree. If you’re watching it, and then you’re, yeah, you’re trying to bet over here and you get the spinning wheel or a bet rejected that, yeah, maybe you can still watch it, but that whole UX, then, just falls apart. So hopefully, yeah, you’re right. There’s a lot of proof in the pudding here of all this has to work together for it to really be a successful product. But we know from overseas that this is a game-changer, and if it gets widely adopted and other leagues and other things, yeah, sky’s the limit, for sure.

Adam Candee (21:19):             

No slight to our friends at IMG Arena who’ve had some tennis rights and some UFC rights and some golf rights and tried to work those around in-game products. But those aren’t the NFL. And the NFL will always be king when it comes to betting, especially when it comes to in-game betting when you have people engaged with that product that is the only thing that a lot of people are watching on a Sunday evening, in particular with relation to this.

A lot more over at legalsportsreport.com, on Twitter @LSPReport, on Twitter Dustin @DustinGouker. You can find me @AdamCandee, as Matt would say, two E’s, no Y. Subscribe, rate and review. I know we say it, but we really mean it. Those reviews help people find us. Those ratings help bring us up the charts when it comes to getting your news about the legal US sports betting industry. For Matt, for Dustin, I’m Adam. See you next week.

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