DraftKings Sportsbook makes a misstep of its own in New Jersey

Sports Betting National Championship Ends With False Start On DraftKings

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The DraftKings Sports Betting National Championship (SBNC) was an ambitious, innovative attempt to disrupt the sports betting status quo.

After a controversial finish, though, the first DraftKings Sportsbook live event will likely be remembered as another misstep for the nascent US industry.

What should operators, lawmakers and regulators be learning from these incidents?

Quick recap of the #SBNC fiasco

Troubles began late on Day 3 as the Patriots/Chargers game began running longer than expected. The first of two NFL playoff battles ended just four minutes before the start of the Eagles/Saints game.

As the last bet-able option, pretty much everyone still left in the contest was targeting the late game. The problem: Many of them had much — or all — of their bankroll locked up in the result of the early game.

Because of the tight betting window, only some contestants had their tickets settled in time to wager on Eagles/Saints. You can read a blow-by-blow account of the event at Legal Sports Report.

DraftKings quickly issued a statement:

“The first-ever Sports Betting National Championship was an incredibly thrilling event. We recognize that in the rules, the scheduled end of betting coincided very closely to the finish of the of Patriots/Chargers game.

While we must follow our contest rules, we sincerely apologize for the experience several customers had where their bets were not graded in time to allow wagering on the Saints/Eagles game. We will learn from this experience and improve upon the rules and experience for future events.”

Sports betting: a regulatory stress test

Stakeholders in New Jersey (the location of the event) and elsewhere are quickly learning that sports betting isn’t a fire-and-forget product.

IGT executive Charles Cohen is doing what he can to warn regulators and lawmakers. At the recent National Council of Legislators from Gaming States conference in New Orleans, Cohen underscored how difficult sports betting is to implement:

“It is the most complicated form of gambling that it is possible to offer.

“From a technical point of view, from an operational point of view, from administration — everything about it is much, much harder because there’s almost nothing in it which is predictable. […]

“The difficulties which both regulators and operators have in sports betting are extraordinary… It’s like quantum mechanics but slightly more complicated.”

The expanding US industry is learning this firsthand.

Early NJ sports betting hiccups

In its six-month existence, NJ sports betting has caused regulators an inordinate number of headaches:

  • FanDuel Sportsbook was the first operator to court controversy last July. Staff at Meadowlands told bettors that they could cash tickets for a weather-delayed baseball game despite the sportsbook being closed for the night. The book only had enough cash to cover some of the bets. And because it was closed, so was the vault. Regulators ultimately chalked it up to an employee training issue.
  • Meadowlands was also the scene of the biggest controversy to date, a gross pricing error that resulted in some customers receiving astronomical odds (+75,000 instead of -600 as intended). The “palp” issue has sparked vigorous debate, and regulators have yet to publish a comprehensive policy to deal with them moving forward.
  • More recently, regulators issued fines to multiple operators for offering lines on games involving NJ colleges. That is against state law.

These sports betting issues are hard to ignore when compared to the five-year track record of NJ online gambling.

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Online gambling: more revenue, fewer headaches

The current infatuation with sports betting is maddening to supporters of legal online gambling. The latter is a bigger revenue generator and a more straightforward product from a regulatory perspective.

In five-plus years, online gambling’s biggest controversies in New Jersey are a few instances of marketing material being sent to self-excluded players and the occasional cancellation of a poker tournament.

Yes, they’re different industries. But as industry analyst Chris Grove puts it, you can expect more issues like this to crop up “as a multibillion-dollar industry is created from the ether in a relatively brief period of time.”

Some of these growing pains may have been avoidable with a slower, more measured approach to legislation, regulation and rollout. That’s why many support a retail-only rollout, with online added to the mix down the road.

That group includes Art Manteris, the vice president of race and sports operations for Station Casinos. Here’s Manteris, speaking at the US Sports Betting Policy Summit in Washington, D.C. back in November:

“I would advocate for a retail market first, and then taking steps toward remote gambling. It is easier to operate and protect those issues in-person, on-site at the casino location. And then, as the market develops, then reach out and make the market broader as the need arises.”

Everybody, please remain calm

Going back to online gambling — and considering the problems surrounding the SBNC — that approach makes sense. From law to launch, NJ online gambling was a nine-month process. And most considered that to be quite fast.

By comparison, the first retail sportsbook appeared a week after the passing of the law, and NJ online betting was up and running within two months.

New operators — namely FanDuel and DraftKings — are pushing the envelope and taking chances in a highly competitive market. And unfortunately, no one seems to be asking, “What if?”

  • What if there is a game delay or it goes into extra innings, and the sportsbook closes?
  • Should winning tickets be honored when a sportsbook posts an obviously incorrect line?
  • What if the early game runs up against the late game, and some entrants can’t get their final bets down?

If the process had moved slower, these questions might have been answered before they became publicly problematic.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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