To receive the incoming calls from bettors,
the bookmaker relies on several devices,
which may keep his location, or private phone, secret.
Remember when gambling on sports
was illegal in America?
Gambling was something
that was in the shadows around sports,
and it was considered unseemly.
The primary interest I have
is in the integrity of the game,
so that's why we've opposed sports gambling in the past.
Today, the idea of sports gambling
once being illegal almost seems quaint.
The NFL is finally here,
and I know you're ready to gamble.
This is probably gonna be one
of the most heavily bet props in the game.
What are some strategies for teasers, in your eyes?
Play 'em. Just play 'em.
Once allowed only in Nevada,
betting on sports is now legal in more than 31 states,
with more on the docket.
To say the floodgates have opened is putting it mildly.
This is the largest and fastest growth of gambling
in our nation's history.
Legal sports betting in the US
went from less than $5 billion in bets placed in 2018
to 57 billion in 2021,
and an estimate of 200 billion overall in 2023.
[Jamie] Showtime.
A-list celebrities,
billion-dollar marketing budgets,
partnerships with every major sports league,
today, sports betting is impossible to avoid,
and the top sports gambling companies
work more like Facebook and Google than a Las Vegas casino,
using big data to encourage more bets from users,
while simultaneously keeping down big winners.
What we see with online sports betting
and mobile sports apps
looks a lot more like a slot machine
than traditional sports betting.
We know that there will be some people
for whom this expansion will cause devastating problems.
Sports gambling is a progressive illness.
When you're a compulsive gambler
and they're giving you all these extra propositions,
and they're giving you this live betting,
you have no chance whatsoever.
Unfortunately, the history of legalized gambling
in America
is replete with failures of government,
and failures of operators
to really seriously consider balancing
the social costs with the economic gains.
So while sports
is a multi-billion-dollar industry,
it's possible the costs may outweigh the gains.
Today, FanDuel and DraftKings are the undisputed giants
of sports betting.
Just turn on your TV during any sporting event.
But they didn't start out that way.
They started as daily fantasy companies, or DFCs.
Daily fantasy sports plays by its own rule set.
You have to create your own lineup.
There's a salary cap.
You enter into these tournaments,
you pay your entry fee,
and then you win a prize depending on how you perform
under the rules of that contest.
There were a few others doing it.
FanDuel, DraftStreet,
so it was really just, you know,
daily fantasy sports that we were pitching.
The question at the time,
was it considered gambling?
Fantasy sports was in something of a gray area.
It was viewed by some states as a form of gambling,
and before that Supreme Court ruling that wasn't allowed.
You couldn't gamble on sports.
We didn't really understand the political angle
that potentially ensue.
We just thought fantasy sports is a skill game,
that's kinda settled,
and we went about building it in such a way.
I won over 2 million bucks thanks to DraftKings.com.
In 2015 daily fantasy sports,
there was quite a bit of investment into FanDuel
and into our primary competitor,
and that money fueled a land grab for customers,
which generated a lot of advertising.
That advertising caught the attention of regulators
who wanted to understand better what our product was.
Probably the most high profile
was the New York Attorney General.
Because effective this morning,
DraftKings and FanDuel have both ceased and desisted
from taking bets from New Yorkers.
Daily fantasy sports operators
are free to go to the legislature and the governor
if they wanna change the law.
Which is exactly what they did.
Eventually, DraftKings and FanDuel
ended up paying $6 million each in separate settlements
with the New York Attorney General
over false advertising claims.
That settlement paved the way
for them to be welcomed into the club,
and ended up becoming something of a soft launch
for these companies.
It was a way for the leagues to get comfortable with them.
Once New York broke in our favor,
it was clear that that was the trend
that states were going down.
We could start focusing on the path forward
instead of fighting for our lives and defending ourselves.
Breaking news,
the Supreme Court this morning striking down
the federal ban on sports betting.
Now it leaves it up to the states.
Overnight because the Supreme Court ruling in 2018
allowed states other than Nevada
to legalize gambling on sports,
gambling has become mainstream in America.
It was certainly a happy day in the office,
as we all kind of frantically looked at our laptops,
and scanned through the decision together.
It didn't take long.
Within about a year,
sports betting was already bigger than daily fantasy sport.
After the ruling
the major American professional sports leagues,
who all at one point denounced sports gambling,
started doing a rapid 180.
But I think it's ultimately a positive thing,
and our view is both from an integrity standpoint,
and a regulatory standpoint,
and ultimately for states in federal jurisdictions
to raise tax,
it should be a regulated industry.
First, the NBA partnered
with the sports betting companies,
and then the NFL, MLB, and NHL quickly followed.
And now within four years of legalization,
it's legal in more than 30 states
that covers 35% of the population.
While California overwhelmingly voted
against legalized sports betting,
it's still pending in a number of very big markets.
But for the markets where it is legal,
the race for customer acquisition was on.
Here are tonight's betting odds
brought to you by FanDuel Sportsbook,
the number one-
Over at DraftKings right now
it's free to enter $1,000 in free prizes-
DraftKings and FanDuel
have dominated the market,
boasting between 60 to 70%
of the entire sports betting market,
and they've spent massive amounts to get there.
You know what to do.
You're seeing very expensive celebrities,
Jamie Foxx, Patton Oswalt, advertising sportsbooks,
advertising betting apps,
and you're seeing it
in these partnerships with sports teams,
in just about every major state
that's legalized sports gambling.
I need you all-
Sky high advertising budgets
have kept both companies in the red for years.
DraftKing's revenue was 1.3 billion in 2021.
Its sales and marketing expenses
were almost $1 billion in 2021,
and that was double from the previous year.
We expect our first profitable quarter
on adjusted EBITDA basis to be Q4 of next year.
FanDuel, however,
is the first to actually post a profit.
We were the first sportsbook in the US
to report that we were profitable
in the second quarter of this year,
that we expect to be profitable for the full year in 2023.
The other side of the coin
when it comes to growing the sports betting business
are partnerships with the sports leagues themselves.
These partnerships are hugely lucrative.
Betting apps are partnering
with just about every major sports team they can,
because it's a way for them to get their brands
in front of viewers.
So here at D.C. United in my hometown,
we have a retail sportsbook.
We have retail sportsbooks also
at the Footprint Arena in Phoenix, the home of the Suns.
We will have one coming soon
in the United Center,
home of the Blackhawks and the Bulls in Chicago.
As a partner,
we're not just a category that they're selling,
we're actually something
that really is integrated into their game,
into their fan experience.
We need to be woven into the pregame narratives
when people are discussing the game.
For the leagues,
this is a massive win.
It makes fans more engaged than ever.
Just think about it.
If the Orlando Magic are playing the Charlotte Hornets
on a Monday night,
most people won't care.
But if someone has money on that game,
well now they're invested in every play.
We can help deepen the affinity
that their customers have for the game,
and deepen the engagement that their customers have
with their content.
Looks like you've got a bad case of single game fixation.
Along with the deluge
of media marketing for sports betting
comes seductive signup offers for free money.
Pick a sport, place a bet,
Boom goes the dynamite.
The apps advertise risk-free bets.
They advertise can't-lose parlays.
They advertise all these ways
that they're handing out free money to you,
the lucky bettor.
I found that these offers are actually too good to be true.
I took up DraftKings on an offer of 20% bonus
up to $1,000.
So I put in $200 expecting to get $40 back.
One of the limitations of this offer
was that the bonus is awarded in tranches of $1 per $25 bet.
So that meant that my $200 actually equated
to $8 in bonus money,
but if I kept placing more bets on the app,
I would be able to claim up to that $200.
The hitch was that I needed to place potentially thousands,
tens of thousands of my own dollars at risk
to take that, to capture that money.
I think our promotions
are quite standard in the mechanics,
not just with others in the US, but really,
with promotions that have been run throughout the globe
for decades in more mature gaming markets.
So once these sites acquire these customers
they have to keep them there,
and they have definitely found their hook.
The industry hypes the game within the game.
These are in-game bets,
and in-game bets are seen as a great growth market
because you don't just place one bet
at the beginning of the week and you're done.
In-game betting is one of the great examples
of where the mobile online product really can
be so differentiated from the brick-and-mortar product.
We have seen the adoption of in-play betting, again,
be a bit quicker in the United States
than perhaps we anticipated.
For decades, sports betting was limited
to betting on just the games,
who would win,
how many points the team would score,
who will cover the spread.
In-game betting allows the user to bet throughout the game.
Every pitch of a baseball game,
every point of a tennis match,
every play of an NFL game,
on a free throw,
on you name it, you know,
those are things that I think customers want,
and haven't necessarily been able to get
in the brick-and-mortar setting.
This is advertised at you the whole game long.
It keeps you thinking about betting,
and involved in betting throughout the game.
It really creates engagement at a deeper level,
which, of course, makes people bigger fans,
and makes them tune into the content longer,
and pay more attention to it.
And if your bet loses mid game,
then you're pitched another bet
to try to recoup your losses.
It's dangerous because it does have the potential
to keep you chasing losses.
Chasing losses
is maybe the most dangerous phrase in sports betting.
I think there's an intuitive sense,
if there are more things to bet on
that creates more of an opportunity
for someone who has a compulsive behavior issue.
You look at the structural characteristics
of in-play betting, it is extremely rapid.
While there's an illusion of skill and control,
actually, in many cases, those bets are just,
you know, it's almost like playing a slot machine,
every five seconds you can bet a new one.
Which can make betting on sports
less about heightening the game,
and more about about getting a fix.
When you put sports betting in a mobile or online form,
it no longer is tied or pinned
to the particular sport event.
Not only can you play in-game
on multiple things continuously,
you can also bet on after-game things.
You don't have to stop when the game ends.
You're very hooked in and confirmed in your behavior
because of this constant fast feedback.
And while only 2% of gamblers become addicted
to gambling,
for the ones who do, it has the potential to ruin lives.
The history of legalized gambling in America
has never been driven by concerns about problem gambling.
And so as we enter this unprecedented wave,
we're really concerned
about the increase in gambling problems
that will accompany the massive expansion of gambling.
Gambling really started to get bad for me
when I was in college.
This is Joel Soper, a gambling addict,
and the author of 'Never Enough Zeros,'
a book about his life as an addict.
It got to the point
where I owed a bunch of different bookmakers
over $1 million.
Did you stop gambling after that?
No.
When they came out with these apps,
they had all the proposition bets.
They had the live betting.
So now I'm in action all day, every day.
From the moment I get up,
I'm betting on international soccer,
to the moment I go to bed, I'm betting on Chinese tennis.
With the help of a gambling treatment program,
Joel was eventually able to kick his gambling addiction,
and is now devoted to helping others.
'Cause of my experience
in the sports gambling world for so long,
now I can share my experience, strength, and hope
to help other people caught in the same addiction.
I wanna educate people
that are in positions to talk to people about the risk,
the dangers of this sports gambling.
Hey, it's Craig Carton-
While the risk for addiction is small,
both DraftKings, FanDuel and others say they are dedicated
to what's called responsible gaming.
By and large in the United States,
that responsibility is primarily on the individual,
but those who operate, profit from, and regulate gambling
also have a role in responsible gambling.
Should always be a part of your playbook-
Responsible gaming
is something we wake up every day thinking about.
It's a top priority of our business.
The health and longevity of the industry really depends
on not just us, but everyone getting this right.
I think that their economic future depends
on responsible gambling.
The former employees I spoke to said
that there was always a company-wide message
that responsible gaming is important.
What I also heard from these employees
was that most of these responsible gaming measures
are not proactive.
They're typically reactive.
There's typically only an intervention
after the damage has been done.
They're falling behind in their mortgage,
they've run up a huge credit card bill,
they're feeling suicidal.
For now,
the main requirement in many US states
is that companies provide helpline numbers
and avoid marketing to people
on what's called self-exclusion lists.
There are some companies
that have done some innovative things with their apps.
You know, they collect enormous amounts of data.
They see how their users gamble.
DraftKings and FanDuel collect huge amounts of data
on their customers,
and they're able to track their customers
in ways that casino bosses would've only dreamed of.
While that data is used for simple things
like confirming customers' age and location,
it has other applications as well.
These companies are not simply gambling companies,
they're technology companies,
and they collect and use data in the same way
as other big technology companies.
We're 100% a technology company.
That's the background that, you know,
myself and my co-founders come from.
We do obviously have a lot of information
about what users do on our platform,
so what bets they make, what sports they're interested in.
We use that information to help run our business better.
As you use the app,
you're tracked in ways that we're familiar with
from social media sites and other internet sites.
The companies have a good idea of your net worth
from the other websites you visit,
from Google Analytics data.
State regulators allow the companies
to profile customers based on betting histories,
and limit the size of some wagers expected to win,
much like traditional casinos kicking out sharps
from the blackjack table.
Well, we limit customers for a variety of reasons.
Some of them are because we have particular customers
that we think take advantage of certain weak lines,
and things like that.
Obviously we want people to win,
that's an important part of the experience,
so we've never really shut off a customer for that reason,
but we also have to limit our risk exposure too.
Ultimately, by leaving it up to the states,
and with no federal legislation on the horizon,
these organizations, for the most part,
are left to police themselves.
The vast majority of companies
are taking these apps and they're tuning them.
They're turning up to 100
in terms of maximizing revenue.
They build in little or no responsible gambling features.
The federal government is more focused
on alcohol and opioids than gambling at this point.
The state level expansion of sports betting
has been accompanied by a lot of lobbying,
but rarely has that lobbying included
strong, responsible gambling provisions,
or problem gambling funding.
The gaming industry writ large loves to say
there is no evidence, you know, research-based evidence,
that points to any one intervention,
or any one form of regulation.
The main research that's been done
is funded by the industry itself,
and the industry prefers to focus on research
that looks at individual responsibility,
rather than the potential responsibility
of the industry in marketing, you know, these products.
Bill after bill that we've seen introduced since 2018
has been very specific about tax rates,
and number of licenses,
and every other aspect of sports betting,
but somehow, curiously,
problem gambling and responsible gambling gets left out.
While individuals ultimately bear
the responsibility for their own actions,
many hope the biggest companies in this area
will make safety an ever bigger part of their mandate,
if only to assure this boom doesn't end anytime soon.
I think we can meet this moment.
I think it's gonna take a lotta hard work,
it's gonna take a lot more investment by the industry,
but that's starting to come around.