My underrated-but-sneaky way to drive gambling companies out of business:
Right now they're allowed to ban winners- successful gamblers who regularly beat the house. That means that consumers can literally only lose and never win. Once you factor that in, the line between 'gaming' and 'straight up kind of a fraud' gets pretty blurry. What's the distinction then between gaming and a pyramid scheme? It's not a game of chance if, again, by company policy you can literally never win. What's the 'chance' part of a game that's stacked against you? How is that different from already-illegal frauds like a Ponzi scheme?
Solution- make it illegal for gaming companies to ban winners. Will a very small percent of regular winners put DraftKings et al out of business then? The quants, the Wall Street guys & gals, the MIT professors, and so on. Gosh it would be a shame if the market happened to work out that way
Doesn't this only apply where there's an element of skill, like in blackjack?
Nobody ever gets banned from slot machines, because there's no way to beat the house. But there's still plenty of addiction to pure games of chance, and something needs to be done about that.
Much of the rise in gambling is sports wagering. There's definitely an element of skill, and if you keep winning they'll either ban you from the app or more often they'll reduce your maximum bet size to a miniscule amount, that way they can take that data (a frequent winner likes this bet) and add it to their model while not letting you really profit. That's not a hypothetical they literally do that. Honestly the whole system is so stacked against the average person it's pretty astounding this is legal.
I think I heard about this on an OddLots podcast? There's arbitrage opportunities in the sports gambling market, e.g. betting lines are set up by running smaller pools and then extending the odds once information is extracted, and it's not perfectly efficient. So a "professional sports gambler" would work more like a finance arb would: survey a huge number of betting lines, and bet for and against based on their different set points and pocket the spread. It's free money for the arb if it can be done in size.
If it weren't for people trying to game the system, I would still be able to play 3:2 blackjack everywhere. All this would do is make the odds worse for people who *aren't* trying to game the system or make money.
This is problematic—they already do this—the issue is that if you have a particularly bad losing streak the quants with their algorithms can and do cut you off determining that they’ve got you for what you’re worth and there’s only downside to letting you possibly win some of that back. Turns out that statistics is actually more complex than every hand has an equal chance of winning or losing…
Is there anything resembling a consensus on what non-addictive gambling looks like? My experience has been that people seem to either have addictive behaviors around gambling (eg sports betting and loot boxes) or almost no interest at all.
This is an interesting question, and I think it relates to the idea that there are really different forms of gambling. Some you derive entertainment value from, others you do not.
Poker night with friends, buy in is 30 bucks. That can be fun! Betting 10 dollars on a longshot parlay to make a basketball game a bit more interesting, also fun! Sitting on the couch for 8 hours ripping the mobile casino slots, not fun. Taking money out of an index fund investment so you can pay off your credit card after you maxed it out on FanDuel, super sad and also probably not fun.
I bet every week (actually mostly daily fantasy). I'll play as little 10 cents and it makes watching the sport so much more interesting. The first couple years I grew the account from $500 to $10,000, but I've been stuck at that level for the last few years, betting $100-200 a week, typically.
You could make an argument I'm "addicted" in the same way people waste time on twitter or posting on SB. It's mostly just fun for me and if my account started dipping I'd just quit or pull bet sizes down to $10-20 just to give me a reason to enjoy certain sports.
Yeah. And I would agree or assume that my experience isn't common. People who have fun losing amounts they can easily afford might be common. People who make money or even break even must be exceedingly rare.
And the once a year superbowl and march madness types don't need a betting app.
Indeed, a big part of this seems like a selection problem: no one either was or was interested in going after the office betting pool or the weekly kitchen table poker night. All the least problematic ways to gamble were already de facto legal anyway, so legalization really has mostly evil applications.
I'm not sure daily fantasy is particularly evil. It's not addicting in the same way that sports betting seems to be, which is why draftkings and fanduel have steadily shifted to sports book betting
Sometimes it’s true though. About fifteen years ago I was drinking too much. Not because I was unhappy or trying to escape from anything but because feeling a buzz from alcohol felt great. And then I realized I’d gained a lot of weight, cut way back literally overnight, and it wasn’t any harder than cutting way back on ice cream or soda pop or whatever.
Sure, haha. And I was thinking that when I typed it.
But if you're at all curious that really does seem to be deep in my own psychology makeup. I've never been tempted to gamble in a casino, for instance and I've never chased losses. When it started becoming clear that I no longer had an edge in MMA betting, I stopped betting on it. If my NASCAR edge goes negative I'll likely quit entirely or experiment with their NFL "bestball format". But the latter is unlikely because I just don't have the time or interest that I once did. And there's no other sports I'm into so that would be that.
Yeah, I wondered about that too. There's a negative expected value on every bet, so I'm not sure purely chance-based gambling ever qualifies as rational. It's just less intensely irrational if it's not a full-fledged addiction. (Economists sometimes argue that people derive utility from the act of gambling itself, independently of their expectations about the outcome. But that seems like a desperate argument.)
Maybe there should be mandatory advertisements on these sites, telling people that Ozempic treats gambling addiction?
We've derived $2 worth of enjoyment from thinking about what we'd do with our >$1B Powerball winnings. But these purchases represent my entire $4 worth of lifetime gambling spending, so this is obviously only important on the margins.
Buying insurance on your house or car is negative expected value (the fact that State Farm is able to apply a portion of underwriting profit (or in bookie terms, their vig) to buying TV ads and paying commissions to their agents is incontrovertible proof in aggregate); would you say that buying homeowners or car insurance ever qualifies as rational (most of the ways in which one could make it less purely chance-based are illegal or make it even more negative EV).
Part of “Flanderization,” in which the character of the too-perfect neighbor (who was so responsible he put Homer to shame) got turned into an absurd Christian fanatic caricature.
Insurance is negative EV in dollars but not in utility, since money has decreasing marginal utility.
To get a positive EV of utility from (most types of) gambling you either need to posit really weird utility functions, or you need to ascribe utility to the act of gambling itself. Which is plausible enough for filling out a March Madness bracket with your buddies, but less plausible for sitting slack-jawed in front of the slots for hours.
Odds are that whatever you insure against is not going to happen, otherwise they wouldn’t sell you the policy. Insurance is only rational when you can’t afford the loss - so you insure your house, car etc. But skip the “protection plan” when you buy a gadget at Best Buy. If your new monitor craps out you won’t like it but replacing it won’t bankrupt you.
Those are all possible in theory. As I said: economists have constructed coherent models in which gambling isn't necessarily irrational, so that the neoclassical assumption of perfect agent rationality can still hold.
Those models may describe the real preferences of some actual people, but I think a simpler explanation is that a lot of human behavior is obviously irrational and you don't need elaborate models just to avoid acknowledging that
You don’t need anything complicated. Here’s a simple question. Suppose there’s technological innovation, and a new good becomes available. As a consequence, people save less and consume more of the good. Are they harmed?
Obviously they might be harmed. Ever hear of "children of thalidomide"?
Or how about all those peletons and exercise bikes people buy and don't actually use. At least some segment of the population buys that kind of thing and it just takes up space and turns up on craigslist or curbside.
A very curious definition of harm, this. What would propose to solve it? Taxing exercise bikes? Or perhaps a propaganda campaign against Christmas presents?
“Almost no interest” is probably what non addictive gambling looks like.
I visit Vegas every couple of years (usually for a concert) and while I’m there I might play a few rounds of blackjack, losing $100 but getting a “free” drink or two. I’ll do it for the novelty when it’s placed in front of me, but I have no desire to engage in it any other time.
Supposedly there are people who feel the same way about alcohol or salty snacks, and I’m envious of them.
There's gambling with small amounts of money for entertainment and socialization, as others have said.
And there's also something very different: the gambling of the Wall Street quant (and the modern professional poker player, and perhaps the best sports-gambling sabermetricians). This is quite interesting psychologically, combining the limbic-system-thrill of the degenerate with a hyperrational focus on reasoning under uncertainty.
There's also betting with an edge. If you know more than the public that set the odds, then you can make money.
Sometimes that's sabermetrics or whatever Nate Silver does with politics. Other times, it's inside information. If you know the resource deployment plan for an election for the Lib Dems, you can predict which seats they are more or less likely to win. Doesn't tell you which they will win, but you can see which are more likely than the odds and which less.
The NFL playoffs were a lot more interesting when I did a couple of those "bet $5 in cash, get $100 in free bets" offers. Make the small deposit, use it on the safest bet possible, bet both sides of the moneyline with the bonus bets, and root for the underdog! I came out like $200 ahead, pulled all the winnings out and closed the accounts.
Betting both sides might ensure you a profit, but it dramatically lowers your expected winnings (assuming the free bets don't return the principal). Here it's worth placing 20 bets at the longest odds you're comfortable with.
Purely social regularly scheduled event with nominal stakes in a game with a substantial skill component. Say a weekly $5 or $10 buy-in poker game at Alice / Bob’s.
You can maybe extend this as far as low but more than nominal stakes for scheduled events (eg $50 or $100 buy in poker tourney for the interns of $Company) but beyond that it’s hard to think of anything whose capacity for mischief doesn’t outshine its non-problematic character.
Also for games of pure chance, no threshold - all problematic.
Lottery tickets are stupid and almost certainly net-welfare-negative. But yes, slots are much worse for the reasons you state, and also involve less tax revenue to the extent that lotteries are state run (no need to account for private shareholder overhead) instead of privately run.
To the extent there are reasons to abstractly support the regressive character of lotteries they’re ones that everyone on SV professes to hate and I’m not especially inclined to think they’re very efficient even by their own lights.
This is the main way I "gambled". Fixed stake buy-in to a friendly tournament with no re-buys. At that point my chip stack was my points, not my money. The goal was to get all the chips, cashing out early wasn't a thing.
I can't handle actual gambling. I lost about $2 on Penny ante poker and loathed it.
Did you guys look into state deposit limits? I think MA has one. Have always thought a simple rule that says you can only be depositing $500 a month into a gambling app (bigger deposits must be made in person) would be a good idea. I like online sports gambling from time to time, but like you say, there’s clearly people hurting themselves in a real way
Gambling has pretty much ruined all sports for me. I no longer listen to any sports talk or podcasts. 90% of the content is about gambling, and I'm just left wondering if anyone actually cares about the games or the sport. It's wild and makes me feel old, only a couple years ago TV announcers wouldn't even acknowledge spreads existed. Total societal shift
I'm not sure how much of it is gambling, and how much of it is the complete surrender to the idea that major-sport college athletes are actually students too. But I, too, have basically given up on following sports in the sort of way I did in my twenties and early thirties.
I think as you get older and have more responsibilities and less time, it just becomes harder to follow sports as closely. In my 20s and 30s, spending hours on a Saturday
and Sunday at a bar or on my couch or at friends house watching football was something I did regularly.
Now, we all have kids activities, house projects, or work catch up to do on weekends. I’m lucky to catch the Sunday Night game.*The guys who still watch the most? The ones who gamble.
This a big part of why gambling is so big, the leagues and networks know it drives viewership. The men who are spending their savings on parlays are also probably neglecting their families or wasting time in front of the TV or on their phones watching the games they bet on.
FWIW, I don’t love how college sports has changed but I’m also glad it did? It just a giant unsustainable hypocrisy in its prior form. The TV money ruined it.
*I love European soccer now in part because 6am on a Saturday is still free!
Some of us in the former Pac-10 footprint (not to so date myself) MAY be a little fucking furious at The Worldwide Leader in Sports for helping implode that organization.
I legitimately think the prior system - betting is legal in a few places if you really want to do it, and illegal but seen as OK and suffers no legal penalties if basically limited to relatively small amounts (aka, Super Bowl or March Madness pools) was a much better system.
Feels like advertising bans and bans on promotions would be the easiest way. They have to continually draw in fresh customers. Limiting or banning parlays would also be an easy way to hit straight at profits drawn from suckers. Those bets heavily favor the house so heavily that there's almost no way to get an edge.
On the final 3 bullets, I believe Draftkings does numbers 3. I remember being on their site and seeing stats on losses. Requiring customers to state incomes and then limiting bet size or loss amount would be more intrusive, but it's similar to what brokerages already do.
Another one that makes sense to me would be to ban sportsbooks from banning or limiting winners. Or at least force them to disclose that they do it. Seems like few people know that they actually won't let you continue to be profitable over time.
It should be a disclaimer at the end of every ad, like potential pharmaceutical side effects, so we can laugh at everyone who plays in spite of the disclaimer. “Warning: you’re a sucker who will never really be allowed to win.”
They do this in Australia. After every gambling commercial, a black screen appears and a serious voice reads the message written in plain white text (they rotate between these few):
Chances are you’re about to lose.
Think. Is this a bet you really want to place?
What’s gambling really costing you?
What are you prepared to lose today? Set a deposit limit.
Thumbs up to everything you said. The information asymmetry is huge and deeply unfair from even a libertarian perspective. People know that the house has an advantage, but no one tells them that they have profiles on them and use algorithms to cut them off if they win too much or go on a losing streak. It’s one thing to do something risky like drugs, it’s another thing for the dealer to spike it with industrial solvents.
IIRC, Alcohol ad restrictions are because of a gentleman's agreement and tobacco ad restrictions are because of a civil judgement. They are, prima facie unconstitutional if done as government regulation. To get gambling ads banned they'd need to get a civil suit done.
Full disclosure: I worked (and before then consulted) for a Daily Fantasy Sports-Online Betting media/analytics company.
Daily Fantasy was a great compromise. It required some work, and while you had big fish and little fish, you were playing against other people with the “house” just a management fee. When Draftkings and FanDuel started raising their takes, you had a lot of startups with creative game play.
The “marketplace” was/is relatively healthy and competitive, some of them actively managed the big fish by limiting the number of lines you can bet and kept the ecosystem somewhat fair.
With Sports Betting, your ability to get the edge applying some sports knowledge or mathematical skill is basically nil. Game play is too easy and feeds into the dopamine rush.
Since you’re now playing against the house—on the internet—the algorithmic tricks are truly predatory. If you go on a winning streak, they ban you or limit your bets, which you might argue is what the casinos do if they think you’re counting cards, but what’s really egregious, is that after a big losing streak (backed by those income, personality, and psychological profiles gathered on you by the web ad KGB) they might suddenly cut you off, preventing you from winning back / building back your bankroll.
They’ve literally determined that they’ve shaken you down for what you’re worth.
I’m pretty downbeat when it comes to legislative remedies or regulations. We didn’t have to legalize online sports betting, we don’t lift a finger when it comes to online privacy or algorithmic manipulation or the dopamine- fueled platforms.
The best playbook is the anti-tobacco campaign. But no or restricted advertising is tough since you have so many non-traditional media, influencers, YouTube, social media. There needs to be an independent body that takes a no-holds barred approach to not only abstracting educating or informing about the risks but making it socially lame, stupid and uncool.
"I would rather shoot myself rather than listen to you talk about your fantasy football team" is a mindset with substantial market penetration, and I'm not just talking about dreary losers who unironically use the word "sportsball".
“With Sports Betting, your ability to get the edge applying some sports knowledge or mathematical skill is basically nil.”
Why is this? Is it that you’re against professionals with teams of scouts and statisticians? Or is it something more fundamental to how the betting structure is designed?
Great comment, and it also seems like the difference is not "between games of chance like slots and games of skill like poker", but between games where you're trying to win other player's money or games where you're trying to win the house's money.
Question from the peanut gallery: what do we think the situation would look like if this were all happening twenty years ago, when rather than casually reaching into your pocket, to place an online sports bet you'd need to get up from your single TV and go over to the "computer room"? (Milan and Ben don't remember the "computer room"--sad!)
Fun fact: in 200X, I was recruited to the US Naval Academy Summer Seminar, when potential HS-junior applicants figure out whether they want to go through the rigamarole of getting their Congressman or whoever to sponsor their admission.
Anyhoo, you had to put in your SSN. And even at that ripe tender age, I was like, "Dad, this seems very bad! Can/should I do this?" And he said, "Is it HTTPS?" I don't even remember how browsers indicated HTTPS back then, but it was as secure as things were back in the day, and I went to Annapolis and learned for a week how to march and how to eat like an officer. It wasn't a super match (I would have been successful, but I would have taken a more earnest midshipman's spot) but it was a fabulous and truly formative experience.
20 years ago, the computer and the TV were in the same room at my house, and we had a swivel chair in front of the computer to turn around to face the TV.
I worked on casino gambling a few decades ago. It turned me against the gambling industry for good. The big finding was that profitability depends on the minority of heavy gamblers who mostly end up ruining their lives and their families.
This, in conjunction with someone else's earlier thread (sorry to whoever wrote it that I can't recall!) about casinos and apps banning or curtailing the betting abilities of high, regular winners, really does paint a picture that:
a) it's predatory, and
b) barring casinos and apps from barring high winners would likely equalize some portion of these predatory practices.
Sports aside, there are elements of financial markets that are tantamount to legalized gambling. For instance, even if you can't bet on a favorite sports team winning tonight, you can still bet on a favorite stock (or cryptocurrency) going up or down within the next 10 minutes.
Like it or not, online gambling, in one form of another, is always going to be there, and is essentially impossible to stamp out.
I think the bigger commonality is the way brokerages and sportsbooks market themselves. They both sell you on the idea of "winning" and money falling from the sky from bets or trades.
In the case of sports that's just very unlikely. In the case of brokerages you're better of just buying an index fund and not selling until you need to money. Trading, as its promoted on TV, is almost as much of a suckers bet as betting, and imho much less fun.
The expectations generated by broker ads also led to that whole GameStop saga.
There's ultimately a big difference. The main financial markets - bonds and stocks - are not zero-sum games like sports betting. Sure, you can make it zero sum with various derivatives, but those are markets for the addicts, whoops, I meant pros.
If this is a big problem then it might be worth of it for some of us to ask if they are supporting or funding this "big problem" even as non-addicted gamblers for whom the money lost isn't really a problem.
If you were wondering this or turning it over in your own mind or silently judging us (I qualify as a non-addicted "it's fun and I break even type"), here's how I see it:
Sportsbooks and Daily Fantasy Sports (DFS) are actually very different in this respect.
In the Sportsbooks, you bet against the house, so if you are losing, you are "funding the big problem" in exchange for entertainment. If you are winning, you are, I suppose, actually "fighting the big problem" and making money and being entertained. Or you will be, until they limit your bets.
DFS is entirely different. In that case you bet against other players and they are take 20% of the entire pot. So whether you win or lose, you're contributing to the funds.
But they differ in another respect, also, which is that DFS isn't nearly as addicting for the casual player. Any random sucker will win a 50/50 bet half the time in a sportsbook and experience that dopamine rush. But in DFS a random sucker will almost never win because winning is many times more complicated. It would be like showing up at the world series of poker and winning after playing a few house games with your friends. So my guess is far fewer people get addicted to DFS.
As someone who enjoys mild bets from time to time this article deeply annoys me. Like yes, okay, 5% of gamblers are stupid and have a serious problem, but you can make the argument about people who drink alcohol. *Almost* everyone who drinks does so responsibly and has a good time, but there are a few people who are chronically alcoholic. Yet nobody goes around saying "legal alcohol consumption hurts consumers". If you did this seriously and persistently, most people would find you deeply annoying.
I guess I'm unique because I don't really drink and I somewhat enjoy betting, but it's bothersome that this arrangement of preferences incurs a legislative ban while the inverse set of preferences encounters basically no regulatory resistance. This sort of thing really strongly turns me off of the whole concept of consumer protection.
1. Precisely because alcohol has negative effects there are restrictions on it—you can't drive under the influence, you can't drink under 21, there are self-imposed restrictions on advertising by the industry.
1. Alcohol has negative effects and so there are restrictions on it but they aren't "make the industry illegal". You're allowed to take your alcohol home with you and get as drunk as you want, and you can't gamble under 21 as-is anyways. I'm not sure what to analogize to "no drinking and driving"... "no gambling and driving" doesn't occur to me as a thing anyone would do. If this post were discussing measures on the level of alcohol countermeasures I'd be fine with that. It doesn't.
2. Yes, as a country we decided to go for a laxer standard, because we all noticed that despite the reduced negative effects actually living that way kind of sucked. I don't really see why gambling should be treated differently from alcohol here. (or for an even more mild example, sugary beverages.) The entire point I'm trying to make is that it's normal to be able to do things which might harm you if they also have upsides.
If you read carefully you will note than none of the proposals we advance include “make the gambling industry illegal.” If you have issues or disagreements with the specific proposals we lay out, feel free to share.
I don’t think the alcohol consumption argument is necessarily good comparison. The problem with online sports betting is that, even in terms gambling it’s really shitty and everyone gets a raw deal because of the algorithmic manipulation of their user base. It’s also really easy to target the “losers” and is remarkably predatory that way. Its always sad to see liquor stores in depressed neighborhoods, but it’s legitimately harder to discriminate between someone who wants a nice bottle of wine for dinner vs someone who is going to drink themselves into a stupor.
The catch is that a lot of people think something is "easily observed reality" when the reality is more complicated. So a study that actually measures something rather than just going with gut-level intuition or conventional wisdom is helpful.
I think most of the time it just satisfies the crowd that isn’t experiencing that world themselves, or are in denial for some reason. Walk into any bar and this study will be met with “No shit, genius.”
My underrated-but-sneaky way to drive gambling companies out of business:
Right now they're allowed to ban winners- successful gamblers who regularly beat the house. That means that consumers can literally only lose and never win. Once you factor that in, the line between 'gaming' and 'straight up kind of a fraud' gets pretty blurry. What's the distinction then between gaming and a pyramid scheme? It's not a game of chance if, again, by company policy you can literally never win. What's the 'chance' part of a game that's stacked against you? How is that different from already-illegal frauds like a Ponzi scheme?
Solution- make it illegal for gaming companies to ban winners. Will a very small percent of regular winners put DraftKings et al out of business then? The quants, the Wall Street guys & gals, the MIT professors, and so on. Gosh it would be a shame if the market happened to work out that way
¯\_(ツ)_/¯
Doesn't this only apply where there's an element of skill, like in blackjack?
Nobody ever gets banned from slot machines, because there's no way to beat the house. But there's still plenty of addiction to pure games of chance, and something needs to be done about that.
Much of the rise in gambling is sports wagering. There's definitely an element of skill, and if you keep winning they'll either ban you from the app or more often they'll reduce your maximum bet size to a miniscule amount, that way they can take that data (a frequent winner likes this bet) and add it to their model while not letting you really profit. That's not a hypothetical they literally do that. Honestly the whole system is so stacked against the average person it's pretty astounding this is legal.
I think I heard about this on an OddLots podcast? There's arbitrage opportunities in the sports gambling market, e.g. betting lines are set up by running smaller pools and then extending the odds once information is extracted, and it's not perfectly efficient. So a "professional sports gambler" would work more like a finance arb would: survey a huge number of betting lines, and bet for and against based on their different set points and pocket the spread. It's free money for the arb if it can be done in size.
TLDR: Regulate gambling so that if they want Joe Schmoe’s money they have to pay Nate Silver.
I like it! I am fine with just a straight ban but this would be funny.
All this would do is make the odds really wide.
If it weren't for people trying to game the system, I would still be able to play 3:2 blackjack everywhere. All this would do is make the odds worse for people who *aren't* trying to game the system or make money.
I think another obvious solution is to ban making a profit on wagering activity and charge at the door instead
Yeah, seems sketchy on the face of it. I thought people were mostly betting against each other and the house was just taking off the top
This is problematic—they already do this—the issue is that if you have a particularly bad losing streak the quants with their algorithms can and do cut you off determining that they’ve got you for what you’re worth and there’s only downside to letting you possibly win some of that back. Turns out that statistics is actually more complex than every hand has an equal chance of winning or losing…
Is there anything resembling a consensus on what non-addictive gambling looks like? My experience has been that people seem to either have addictive behaviors around gambling (eg sports betting and loot boxes) or almost no interest at all.
This is an interesting question, and I think it relates to the idea that there are really different forms of gambling. Some you derive entertainment value from, others you do not.
Poker night with friends, buy in is 30 bucks. That can be fun! Betting 10 dollars on a longshot parlay to make a basketball game a bit more interesting, also fun! Sitting on the couch for 8 hours ripping the mobile casino slots, not fun. Taking money out of an index fund investment so you can pay off your credit card after you maxed it out on FanDuel, super sad and also probably not fun.
I bet every week (actually mostly daily fantasy). I'll play as little 10 cents and it makes watching the sport so much more interesting. The first couple years I grew the account from $500 to $10,000, but I've been stuck at that level for the last few years, betting $100-200 a week, typically.
You could make an argument I'm "addicted" in the same way people waste time on twitter or posting on SB. It's mostly just fun for me and if my account started dipping I'd just quit or pull bet sizes down to $10-20 just to give me a reason to enjoy certain sports.
Seems like you're having fun also made an incredible amount of money. Good on ya!
Yeah. And I would agree or assume that my experience isn't common. People who have fun losing amounts they can easily afford might be common. People who make money or even break even must be exceedingly rare.
And the once a year superbowl and march madness types don't need a betting app.
Indeed, a big part of this seems like a selection problem: no one either was or was interested in going after the office betting pool or the weekly kitchen table poker night. All the least problematic ways to gamble were already de facto legal anyway, so legalization really has mostly evil applications.
I'm not sure daily fantasy is particularly evil. It's not addicting in the same way that sports betting seems to be, which is why draftkings and fanduel have steadily shifted to sports book betting
“ …if my account started dipping I'd just quit or pull bet sizes down”
That’s probably fine but it does sound a bit like “I can stop any time I want”
Sometimes it’s true though. About fifteen years ago I was drinking too much. Not because I was unhappy or trying to escape from anything but because feeling a buzz from alcohol felt great. And then I realized I’d gained a lot of weight, cut way back literally overnight, and it wasn’t any harder than cutting way back on ice cream or soda pop or whatever.
Sure, haha. And I was thinking that when I typed it.
But if you're at all curious that really does seem to be deep in my own psychology makeup. I've never been tempted to gamble in a casino, for instance and I've never chased losses. When it started becoming clear that I no longer had an edge in MMA betting, I stopped betting on it. If my NASCAR edge goes negative I'll likely quit entirely or experiment with their NFL "bestball format". But the latter is unlikely because I just don't have the time or interest that I once did. And there's no other sports I'm into so that would be that.
Same. I don't bet on my phone (illegal on WA), but I'm definitely up on my entire lifetime of poker and sports betting.
There are people who bet around certain events (March Madness say) but don’t bet compulsively.
Shoot, you just blew up my $4/life gambling claim. Buy-in in the work tournament is five bucks a year.
(but it puts me in the black! won the whole damn thing a few years ago)
Yeah, I wondered about that too. There's a negative expected value on every bet, so I'm not sure purely chance-based gambling ever qualifies as rational. It's just less intensely irrational if it's not a full-fledged addiction. (Economists sometimes argue that people derive utility from the act of gambling itself, independently of their expectations about the outcome. But that seems like a desperate argument.)
Maybe there should be mandatory advertisements on these sites, telling people that Ozempic treats gambling addiction?
We've derived $2 worth of enjoyment from thinking about what we'd do with our >$1B Powerball winnings. But these purchases represent my entire $4 worth of lifetime gambling spending, so this is obviously only important on the margins.
So you're still down $2?
Down $4! Tragic.
But you got $2 worth of utility from fantasizing about the money you didn't win. So only down $2 on net, right?
Buying insurance on your house or car is negative expected value (the fact that State Farm is able to apply a portion of underwriting profit (or in bookie terms, their vig) to buying TV ads and paying commissions to their agents is incontrovertible proof in aggregate); would you say that buying homeowners or car insurance ever qualifies as rational (most of the ways in which one could make it less purely chance-based are illegal or make it even more negative EV).
SIMPSONS DID IT
(at some point in the late 90s, the Flanders family lost their whole house--uninsured, because Ned considered it a form of gambling)
Part of “Flanderization,” in which the character of the too-perfect neighbor (who was so responsible he put Homer to shame) got turned into an absurd Christian fanatic caricature.
Insurance is negative EV in dollars but not in utility, since money has decreasing marginal utility.
To get a positive EV of utility from (most types of) gambling you either need to posit really weird utility functions, or you need to ascribe utility to the act of gambling itself. Which is plausible enough for filling out a March Madness bracket with your buddies, but less plausible for sitting slack-jawed in front of the slots for hours.
Odds are that whatever you insure against is not going to happen, otherwise they wouldn’t sell you the policy. Insurance is only rational when you can’t afford the loss - so you insure your house, car etc. But skip the “protection plan” when you buy a gadget at Best Buy. If your new monitor craps out you won’t like it but replacing it won’t bankrupt you.
Perhaps, but insurance is a risk-reducing investment, whereas gambling or speculating is a risk-increasing investment.
Is going to Disneyland irrational? Not a lot of EV upside there!
If you have ever been. Yes.
Aww, I like it! But then I like Vegas too.
Do you deny the existence of non-linear utility functions? Of risk-averse and risk-preferring agents?
Those are all possible in theory. As I said: economists have constructed coherent models in which gambling isn't necessarily irrational, so that the neoclassical assumption of perfect agent rationality can still hold.
Those models may describe the real preferences of some actual people, but I think a simpler explanation is that a lot of human behavior is obviously irrational and you don't need elaborate models just to avoid acknowledging that
I think describing spending money on pleasure as “irrational” is as disconnected from reality as anything economists say.
This! It’s as if describing going to a store as bad, because you have less money at the end of it.
You don’t need anything complicated. Here’s a simple question. Suppose there’s technological innovation, and a new good becomes available. As a consequence, people save less and consume more of the good. Are they harmed?
Obviously they might be harmed. Ever hear of "children of thalidomide"?
Or how about all those peletons and exercise bikes people buy and don't actually use. At least some segment of the population buys that kind of thing and it just takes up space and turns up on craigslist or curbside.
A very curious definition of harm, this. What would propose to solve it? Taxing exercise bikes? Or perhaps a propaganda campaign against Christmas presents?
“Almost no interest” is probably what non addictive gambling looks like.
I visit Vegas every couple of years (usually for a concert) and while I’m there I might play a few rounds of blackjack, losing $100 but getting a “free” drink or two. I’ll do it for the novelty when it’s placed in front of me, but I have no desire to engage in it any other time.
Supposedly there are people who feel the same way about alcohol or salty snacks, and I’m envious of them.
There's gambling with small amounts of money for entertainment and socialization, as others have said.
And there's also something very different: the gambling of the Wall Street quant (and the modern professional poker player, and perhaps the best sports-gambling sabermetricians). This is quite interesting psychologically, combining the limbic-system-thrill of the degenerate with a hyperrational focus on reasoning under uncertainty.
There's also betting with an edge. If you know more than the public that set the odds, then you can make money.
Sometimes that's sabermetrics or whatever Nate Silver does with politics. Other times, it's inside information. If you know the resource deployment plan for an election for the Lib Dems, you can predict which seats they are more or less likely to win. Doesn't tell you which they will win, but you can see which are more likely than the odds and which less.
The NFL playoffs were a lot more interesting when I did a couple of those "bet $5 in cash, get $100 in free bets" offers. Make the small deposit, use it on the safest bet possible, bet both sides of the moneyline with the bonus bets, and root for the underdog! I came out like $200 ahead, pulled all the winnings out and closed the accounts.
Betting both sides might ensure you a profit, but it dramatically lowers your expected winnings (assuming the free bets don't return the principal). Here it's worth placing 20 bets at the longest odds you're comfortable with.
Purely social regularly scheduled event with nominal stakes in a game with a substantial skill component. Say a weekly $5 or $10 buy-in poker game at Alice / Bob’s.
You can maybe extend this as far as low but more than nominal stakes for scheduled events (eg $50 or $100 buy in poker tourney for the interns of $Company) but beyond that it’s hard to think of anything whose capacity for mischief doesn’t outshine its non-problematic character.
Also for games of pure chance, no threshold - all problematic.
Is this the same as lottery tickets, in your mind?
Or are the slots significantly/categorically worse because of the ability to sit down and do it for hours?
Lottery tickets are stupid and almost certainly net-welfare-negative. But yes, slots are much worse for the reasons you state, and also involve less tax revenue to the extent that lotteries are state run (no need to account for private shareholder overhead) instead of privately run.
To the extent there are reasons to abstractly support the regressive character of lotteries they’re ones that everyone on SV professes to hate and I’m not especially inclined to think they’re very efficient even by their own lights.
This is the main way I "gambled". Fixed stake buy-in to a friendly tournament with no re-buys. At that point my chip stack was my points, not my money. The goal was to get all the chips, cashing out early wasn't a thing.
I can't handle actual gambling. I lost about $2 on Penny ante poker and loathed it.
Did you guys look into state deposit limits? I think MA has one. Have always thought a simple rule that says you can only be depositing $500 a month into a gambling app (bigger deposits must be made in person) would be a good idea. I like online sports gambling from time to time, but like you say, there’s clearly people hurting themselves in a real way
I like this, but you need a central dB to stop that being $500 per app or $500 per credit card.
Gambling ads have ruined sports for me. Is it actually possible to ban ads while keeping gambling itself legal?
Gambling has pretty much ruined all sports for me. I no longer listen to any sports talk or podcasts. 90% of the content is about gambling, and I'm just left wondering if anyone actually cares about the games or the sport. It's wild and makes me feel old, only a couple years ago TV announcers wouldn't even acknowledge spreads existed. Total societal shift
I'm not sure how much of it is gambling, and how much of it is the complete surrender to the idea that major-sport college athletes are actually students too. But I, too, have basically given up on following sports in the sort of way I did in my twenties and early thirties.
I think as you get older and have more responsibilities and less time, it just becomes harder to follow sports as closely. In my 20s and 30s, spending hours on a Saturday
and Sunday at a bar or on my couch or at friends house watching football was something I did regularly.
Now, we all have kids activities, house projects, or work catch up to do on weekends. I’m lucky to catch the Sunday Night game.*The guys who still watch the most? The ones who gamble.
This a big part of why gambling is so big, the leagues and networks know it drives viewership. The men who are spending their savings on parlays are also probably neglecting their families or wasting time in front of the TV or on their phones watching the games they bet on.
FWIW, I don’t love how college sports has changed but I’m also glad it did? It just a giant unsustainable hypocrisy in its prior form. The TV money ruined it.
*I love European soccer now in part because 6am on a Saturday is still free!
Add in cord cutting for streaming and I haven't consumed ESPN content in 5 maybe 10 years....
Some of us in the former Pac-10 footprint (not to so date myself) MAY be a little fucking furious at The Worldwide Leader in Sports for helping implode that organization.
No. This is by far the biggest downside of the 1st amendment!
Cigarette ads are not on TV and hard alcohol wasn't for a long time. Was that voluntary? (honest question)
Lawsuit settlement (that hasn’t been challenged for decades) and broadcast TV is special, I think
Love the Krauss-Singh tag team effort!
I legitimately think the prior system - betting is legal in a few places if you really want to do it, and illegal but seen as OK and suffers no legal penalties if basically limited to relatively small amounts (aka, Super Bowl or March Madness pools) was a much better system.
Feels like advertising bans and bans on promotions would be the easiest way. They have to continually draw in fresh customers. Limiting or banning parlays would also be an easy way to hit straight at profits drawn from suckers. Those bets heavily favor the house so heavily that there's almost no way to get an edge.
On the final 3 bullets, I believe Draftkings does numbers 3. I remember being on their site and seeing stats on losses. Requiring customers to state incomes and then limiting bet size or loss amount would be more intrusive, but it's similar to what brokerages already do.
Another one that makes sense to me would be to ban sportsbooks from banning or limiting winners. Or at least force them to disclose that they do it. Seems like few people know that they actually won't let you continue to be profitable over time.
It should be a disclaimer at the end of every ad, like potential pharmaceutical side effects, so we can laugh at everyone who plays in spite of the disclaimer. “Warning: you’re a sucker who will never really be allowed to win.”
They do this in Australia. After every gambling commercial, a black screen appears and a serious voice reads the message written in plain white text (they rotate between these few):
Chances are you’re about to lose.
Think. Is this a bet you really want to place?
What’s gambling really costing you?
What are you prepared to lose today? Set a deposit limit.
Imagine what you could be buying instead.
You win some. You lose more.
What are you really gambling with?
Thumbs up to everything you said. The information asymmetry is huge and deeply unfair from even a libertarian perspective. People know that the house has an advantage, but no one tells them that they have profiles on them and use algorithms to cut them off if they win too much or go on a losing streak. It’s one thing to do something risky like drugs, it’s another thing for the dealer to spike it with industrial solvents.
SCOTUS has long held that commercial speech is a different class of speech with fewer protections.
I thought cigarette and alcohol and med mj ads were some sort of precedent that could be followed. I could be wrong.
Have not read the cases but yes I think SCOTUS has ok'd some types of advertising restrictions for alcohol and tobacco
IIRC, Alcohol ad restrictions are because of a gentleman's agreement and tobacco ad restrictions are because of a civil judgement. They are, prima facie unconstitutional if done as government regulation. To get gambling ads banned they'd need to get a civil suit done.
Full disclosure: I worked (and before then consulted) for a Daily Fantasy Sports-Online Betting media/analytics company.
Daily Fantasy was a great compromise. It required some work, and while you had big fish and little fish, you were playing against other people with the “house” just a management fee. When Draftkings and FanDuel started raising their takes, you had a lot of startups with creative game play.
The “marketplace” was/is relatively healthy and competitive, some of them actively managed the big fish by limiting the number of lines you can bet and kept the ecosystem somewhat fair.
With Sports Betting, your ability to get the edge applying some sports knowledge or mathematical skill is basically nil. Game play is too easy and feeds into the dopamine rush.
Since you’re now playing against the house—on the internet—the algorithmic tricks are truly predatory. If you go on a winning streak, they ban you or limit your bets, which you might argue is what the casinos do if they think you’re counting cards, but what’s really egregious, is that after a big losing streak (backed by those income, personality, and psychological profiles gathered on you by the web ad KGB) they might suddenly cut you off, preventing you from winning back / building back your bankroll.
They’ve literally determined that they’ve shaken you down for what you’re worth.
I’m pretty downbeat when it comes to legislative remedies or regulations. We didn’t have to legalize online sports betting, we don’t lift a finger when it comes to online privacy or algorithmic manipulation or the dopamine- fueled platforms.
The best playbook is the anti-tobacco campaign. But no or restricted advertising is tough since you have so many non-traditional media, influencers, YouTube, social media. There needs to be an independent body that takes a no-holds barred approach to not only abstracting educating or informing about the risks but making it socially lame, stupid and uncool.
> making it socially lame, stupid and uncool
"I would rather shoot myself rather than listen to you talk about your fantasy football team" is a mindset with substantial market penetration, and I'm not just talking about dreary losers who unironically use the word "sportsball".
But what’s really egregious...they might suddenly cut you off
Why is that egregious, isn't that what we would want them to do if probably gambling is a problem?
“With Sports Betting, your ability to get the edge applying some sports knowledge or mathematical skill is basically nil.”
Why is this? Is it that you’re against professionals with teams of scouts and statisticians? Or is it something more fundamental to how the betting structure is designed?
Great comment, and it also seems like the difference is not "between games of chance like slots and games of skill like poker", but between games where you're trying to win other player's money or games where you're trying to win the house's money.
Wowza. Thanks for sharing your experience.
Question from the peanut gallery: what do we think the situation would look like if this were all happening twenty years ago, when rather than casually reaching into your pocket, to place an online sports bet you'd need to get up from your single TV and go over to the "computer room"? (Milan and Ben don't remember the "computer room"--sad!)
You'd put your credit card number into the World Wide Web? What are you, crazy?
Fun fact: in 200X, I was recruited to the US Naval Academy Summer Seminar, when potential HS-junior applicants figure out whether they want to go through the rigamarole of getting their Congressman or whoever to sponsor their admission.
Anyhoo, you had to put in your SSN. And even at that ripe tender age, I was like, "Dad, this seems very bad! Can/should I do this?" And he said, "Is it HTTPS?" I don't even remember how browsers indicated HTTPS back then, but it was as secure as things were back in the day, and I went to Annapolis and learned for a week how to march and how to eat like an officer. It wasn't a super match (I would have been successful, but I would have taken a more earnest midshipman's spot) but it was a fabulous and truly formative experience.
Not even just having to go to the computer room, but can you imagine trying to do sports gambling with a dial-up connection?
I can imagine placing *a* bet, but I cannot imagine being a doomscrolling degenerate addict.
20 years ago, the computer and the TV were in the same room at my house, and we had a swivel chair in front of the computer to turn around to face the TV.
I worked on casino gambling a few decades ago. It turned me against the gambling industry for good. The big finding was that profitability depends on the minority of heavy gamblers who mostly end up ruining their lives and their families.
This, in conjunction with someone else's earlier thread (sorry to whoever wrote it that I can't recall!) about casinos and apps banning or curtailing the betting abilities of high, regular winners, really does paint a picture that:
a) it's predatory, and
b) barring casinos and apps from barring high winners would likely equalize some portion of these predatory practices.
I did a comprehensive twitter thread on this awhile back- my last several tweets in the thread were about things Congress could mandate.
https://x.com/dilanesper/status/1670403977719042049
Great piece, so informative! Love the team effort too
Sports aside, there are elements of financial markets that are tantamount to legalized gambling. For instance, even if you can't bet on a favorite sports team winning tonight, you can still bet on a favorite stock (or cryptocurrency) going up or down within the next 10 minutes.
Like it or not, online gambling, in one form of another, is always going to be there, and is essentially impossible to stamp out.
I think the bigger commonality is the way brokerages and sportsbooks market themselves. They both sell you on the idea of "winning" and money falling from the sky from bets or trades.
In the case of sports that's just very unlikely. In the case of brokerages you're better of just buying an index fund and not selling until you need to money. Trading, as its promoted on TV, is almost as much of a suckers bet as betting, and imho much less fun.
The expectations generated by broker ads also led to that whole GameStop saga.
There's ultimately a big difference. The main financial markets - bonds and stocks - are not zero-sum games like sports betting. Sure, you can make it zero sum with various derivatives, but those are markets for the addicts, whoops, I meant pros.
If this is a big problem then it might be worth of it for some of us to ask if they are supporting or funding this "big problem" even as non-addicted gamblers for whom the money lost isn't really a problem.
If you were wondering this or turning it over in your own mind or silently judging us (I qualify as a non-addicted "it's fun and I break even type"), here's how I see it:
Sportsbooks and Daily Fantasy Sports (DFS) are actually very different in this respect.
In the Sportsbooks, you bet against the house, so if you are losing, you are "funding the big problem" in exchange for entertainment. If you are winning, you are, I suppose, actually "fighting the big problem" and making money and being entertained. Or you will be, until they limit your bets.
DFS is entirely different. In that case you bet against other players and they are take 20% of the entire pot. So whether you win or lose, you're contributing to the funds.
But they differ in another respect, also, which is that DFS isn't nearly as addicting for the casual player. Any random sucker will win a 50/50 bet half the time in a sportsbook and experience that dopamine rush. But in DFS a random sucker will almost never win because winning is many times more complicated. It would be like showing up at the world series of poker and winning after playing a few house games with your friends. So my guess is far fewer people get addicted to DFS.
As someone who enjoys mild bets from time to time this article deeply annoys me. Like yes, okay, 5% of gamblers are stupid and have a serious problem, but you can make the argument about people who drink alcohol. *Almost* everyone who drinks does so responsibly and has a good time, but there are a few people who are chronically alcoholic. Yet nobody goes around saying "legal alcohol consumption hurts consumers". If you did this seriously and persistently, most people would find you deeply annoying.
I guess I'm unique because I don't really drink and I somewhat enjoy betting, but it's bothersome that this arrangement of preferences incurs a legislative ban while the inverse set of preferences encounters basically no regulatory resistance. This sort of thing really strongly turns me off of the whole concept of consumer protection.
1. Precisely because alcohol has negative effects there are restrictions on it—you can't drive under the influence, you can't drink under 21, there are self-imposed restrictions on advertising by the industry.
2. As I am sure you know, there was a time where alcohol regulation was stricter than it is today. As a country we decided to go for the laxer standard, but there is evidence that Prohibition reduced the negative effects of alcohol: https://www.vox.com/the-highlight/2019/6/5/18518005/prohibition-alcohol-public-health-crime-benefits
1. Alcohol has negative effects and so there are restrictions on it but they aren't "make the industry illegal". You're allowed to take your alcohol home with you and get as drunk as you want, and you can't gamble under 21 as-is anyways. I'm not sure what to analogize to "no drinking and driving"... "no gambling and driving" doesn't occur to me as a thing anyone would do. If this post were discussing measures on the level of alcohol countermeasures I'd be fine with that. It doesn't.
2. Yes, as a country we decided to go for a laxer standard, because we all noticed that despite the reduced negative effects actually living that way kind of sucked. I don't really see why gambling should be treated differently from alcohol here. (or for an even more mild example, sugary beverages.) The entire point I'm trying to make is that it's normal to be able to do things which might harm you if they also have upsides.
If you read carefully you will note than none of the proposals we advance include “make the gambling industry illegal.” If you have issues or disagreements with the specific proposals we lay out, feel free to share.
I don’t think the alcohol consumption argument is necessarily good comparison. The problem with online sports betting is that, even in terms gambling it’s really shitty and everyone gets a raw deal because of the algorithmic manipulation of their user base. It’s also really easy to target the “losers” and is remarkably predatory that way. Its always sad to see liquor stores in depressed neighborhoods, but it’s legitimately harder to discriminate between someone who wants a nice bottle of wine for dinner vs someone who is going to drink themselves into a stupor.
I love when research studies “prove” easily observed reality.
Gotta prove it so you can hold the gambling industry's feet to the fire!
Unironically agree! Because “where’s the evidence” is used to deny that the harms are self-evident.
The catch is that a lot of people think something is "easily observed reality" when the reality is more complicated. So a study that actually measures something rather than just going with gut-level intuition or conventional wisdom is helpful.
I think most of the time it just satisfies the crowd that isn’t experiencing that world themselves, or are in denial for some reason. Walk into any bar and this study will be met with “No shit, genius.”
Yeah, but you can walk into a bar and say a lot of things that will be met with “No shit, genius,” and not all those things will be true.
But barrooms are especially knowledgeable about the horrors of sports gambling. That's why I used that as an example.
It's useful to quantify even common-sense stuff.