Purple Insider - a Minnesota Vikings and NFL podcast - The Mule from Against the Rules with Michael Lewis

Episode Date: November 28, 2024

We’re bringing you an episode of Against the Rules with author Michael Lewis (The Big Short, Moneyball). This season, Michael is examining the rise of sports betting in the U.S. This episode is exploring a role in sports betting which has many names: “Runner,” “mover,” “betting partner,” and “mule.” As skilled sports gamblers find themselves limited on apps, they turn to these affiliates to place their bets in return for a piece of the proceeds. Against the Rules decides to explore this murky world by signing up for mule-dom with one of the world’s most skilled sports bettors. Learn more about your ad choices. Visit megaphone.fm/adchoices

🎵 Hey, everybody. Hope you're having a nice Thanksgiving week. Today, we are bringing you something a little bit different from our normal Purple Insider episodes. Earlier this week, the author of Moneyball, Michael Lewis, reached out about possibly posting an episode from his new podcast on my Purple Insider feed because we've got some crossover audience in the analytics world. I'm sure you guys know by now that I wrote the book Football is a Numbers Game. Get that for holiday gift, please. So, of course, I was excited to be able to include the author of Moneyball on my feed. Michael Lewis, obviously someone that I really, really admire and Moneyball, pretty darn influential, I would say,

in how I approach my job. So I have listened to the episode. It's really, really great. I wanted to bring it to you guys as well. So from our friends at Pushkin Industries, Michael's podcast, Against the Rules, currently looking at the fast rise of sports betting in the U.S. and how it's changed fans and players alike.

So this episode looks at skilled sports gamblers who are limited in how much they can bet by some of the sports book apps. And if you enjoy it, listen to Against the Rules wherever you're listening now. Thanks, everybody, so much much and happy Thanksgiving. We'll talk to you soon. A few months ago, I asked my executive producer to download a bunch of online sports betting apps and open up accounts with them. Partly because I live in California where sports betting isn't yet legal. And Lydia Jean Cott, my producer lives in New York where it is legal. And partly because, well, I just thought it would be kind of fun to see what would happen when you thrust someone like LJ

into the sports gambling jungle. Someone with exactly zero interest in sports and even less interest in gambling. Someone who just hates the idea of putting money at risk. LJ is not a fan, and she's really not a gambler. So, you know, once I log in, I see on my screen, it's honestly a really overwhelming view of things.

It's all blue. It says FanDuel Sportsbook, and there's a ton of different options. So there's NFL, MLB. Let's take an example. Let's click on NCAA football. There's banners everywhere that are like, refer a friend, give $50, get $50.

And then if you scroll down, it has different bets that you can do. So it says, for instance, college football odds. And then there's a list of NCAA football games. And then it allows you to bet on different games and in different ways. Do you find yourself being nudged in any direction by the app? Does the way the information is presented to you lead you to some action? Yeah, yeah. So, like, if I were to just open it and have no plan, it says, like, popular same-game parlay bets is what I'm being nudged to do.

Or bet on the Battle of the Birds on Monday Night Football. It's a kind of mission to enter this new world and look around without spooking the natives. LJ is perfect for it. I've sent her to interview people who should be extremely wary of any journalist. They're basically never wary of her. They just hand her everything she asks for and more. Do you know who's playing?

I guess the ATL Falcons and Philadelphia Eagles. So I'm being nudged to bet on that. Do you know where the ATL Falcons and Philadelphia Eagles. So I'm being nudged to bet on that. Do you know where the ATL Falcons are based? Atlanta. Okay. You're trying to send me an answer. I do know my state abbreviation. Atlanta's not a state.

Okay. That's okay. That's a low blow, Michael. That's a bridge too far. We can make fun of my lack of sports knowledge. We cannot just go into make fun of Lydia Jean for everything on this podcast. Before she'd even placed a single bet, FanDuel and DraftKings and all the lesser apps were spamming her so incessantly that her Gmail account became unusable. All these people she didn't know wanted her to begin her new life as a sports gambler as soon as possible.

And they're so helpful, so kind, so relentless with their special offers. But LJ has been coy, reluctant, waiting for her jungle guide. Which books do you have set up, LJ? I have FanDuel, DraftKings, and Flush. Rufus Peabody, sports gambler, whom we met last episode in Las Vegas. Do you have, um, not, like, BetRivers or whatever? I mean, I can get whatever. What are the other ones in New York?

BetMGM.? Bet MGM. Get Bet MGM. Okay. They'll limit us very quickly, but they'll be very easy to win at first. Okay, great. I'll download Bet MGM. Rufus has a problem. Both FanDuel and DraftKings heavily limit the amount he can bet.

Because Rufus actually knows what he's doing. And Rufus's bets tend to win. So Rufus will be the brains in most of the money. LJ will be, well, her role has had many names. Runner. Mover. Betting partner. Also, mule.

I like mule. Mule sort of creates a picture in your head. Rufus loads the backs of his mules with cash and whacks them on their fannies and they saunter off into the marketplace. And then returned to him, weighted down with even more cash. And how much do you imagine you'd be wiring to her? So I would say I'd probably be wiring her maybe 50 grand or sending 50 grand her way. So I don't want to be greedy and I don't want to be foolish, but I think it is a fun idea for me to have a little piece of it. So Michael, you want downside? Yeah. Okay. Totally. So LJ has the best deal, but, but she also

at the end of this probably won't be able to bet her in her own name for very much money, more than maybe $17 for the rest of her life. Yes. That's the cost here. I'm willing. That's it. Yeah, I'm okay with that. Okay. Deal.

I'll be a simple investor. I'll win or lose with Rufus. LJ will have big upside and a tiny bit of money at stake. Mostly, she'll be putting her reputation as a sports gambler at risk. By the time we're done, no sports bookie will ever take any real action from her ever again. Or so says Rufus. How long do you think we're going to last? I really don't know. This will be interesting to see. What if we last forever and I just make like a lot of money?

That would be the best case scenario. Yes, it would. But the truth is, we just want to see how this market works. I'm Michael Lewis, and this is Against the Rules. We're all about characters and situations here. This season, the fan is our character and sports gambling is our situation. Back when sports gambling was against the law, it was fairly easy to play sports bets. I know that sounds odd, but if you ask any serious gambler,

they tell you the challenge wasn't getting your bets down. It was finding smart bets to make. Now sports gambling is legal in 38 states. And very weirdly, it's easier to find smart bets than to actually place those bets. Because the new system doesn't want to maximize the number of sports bets that Americans make. It wants to maximize their stupid bets. The bets, as they say, with negative expected value. The bets that if you make enough of them, you're certain eventually

to lose. And so any smart sports gambler obviously needs to adapt. And we at Pushkin Industries are here to help. Our jungle guide, Rufus Peabody, smart sports gambler, now basically can't bet under his own name. Or at least not very much.

The DraftKings and FanDuelz don't want to take the other side of his action. So Rufus and other sharps have built these teams of people who do nothing but place their bets. The smart gamblers can't really afford to be too picky about their new teammates, because the hours are long and the money's uncertain. In truth, it's hard to find people who are both broke enough and reliable enough for the job. And once Rufus has hired you, the relationship can become pretty impersonal. To Rufus, these mules are just names on a spreadsheet, a PayPal address on his phone.

Some he's never met. Most of them bet sports on their own, usually badly. A few even think they know almost as much as Rufus, which is never a good sign. So LJ will be a different kind of mule. For a start, she'll need a lot more breaking in than most. Okay, let's open the FanDuel app and kind of lookule. For a start, she'll need a lot more breaking in than most. Okay, let's open the FanDuel app

and kind of look at the navigation there. Their first sit-down is just a dry run. The FanDuel app can be harder to navigate. It's considered the best app. There's live scoring on it.

I mean, I guess there is on FanDuel as well. I'm in. Or DraftKings as well. I have $10. You have $10? Mm-hmm. Amazing.

LJ has $10 in her account. Rufus fixes that issue with a few clicks. He moves a few thousand more dollars into LJ's bank account. It's crazy how quickly you can, like, disassociate from, like, what these numbers mean. Oh, yeah. They're numbers in a spreadsheet. That's basically all it is. Rufus wants to start by checking out the lines on Adam

Scott. LJ has never heard of Adam Scott. He's a golfer. Okay, so Adam Scott to win the tournament. Adam Scott, tournament winner, plus 175. Oh, wow. So I say we bet that. But let's see, do we know

how much we can bet it for? Okay, so I'm in the right place, right? I'm going to click on this. Click on the plus 175. Worst case scenario, we're priming the account here. Priming the account. It's what Rufus calls it when he intentionally places dumb bets. He usually does this with his new mules.

It makes the gambling companies even more eager to take his future bets. Lose a bet up front to win much more later. And let's, it says add stakes. So what if we tried it? We put it, how much did we deposit? 5,000? Yeah. What if we tried to put it for $3,000?

We'll see if they take it. Can we do that? You okay with that? Yeah, I mean, it's not. I don't know why. It's not my choice. What did they say? They said, oh, well, they'll give you $2,225.58.

Yeah, go for it. Processing bet. Okay, my bet has been accepted. Good luck. Yay, done. That's how we do it. And then when do we know? Well, we'll know on Sunday if that bet won.

We'll have many more bets before then. All of this is currently legal, by the way. Rufus can still partner up with other gamblers, but it's massively irritating to the gambling companies, who treat Rufus as a kind of cheater, a card counter at the blackjack table. But I don't think of him that way. He's actually figured out stuff about sports,

about why things happen in sports that other people don't know. He's more like a smart stock market investor. He knows better than the market knows the right price for some bet. What kind of market refuses to let the smartest people in? This market, as it turns out. And so here we are. LJ is actually useful to Rufus. It's mostly trust is kind of one of the biggest things.

That's Tom Peabody, Rufus's younger brother, who runs the mule teams and so spends lots of time looking for new mules to replace the ones who've been worn out. It's like wife, girlfriend, mother. Like, we've gone through my mom and dad's accounts. But generally friends and family. And then when you get past that, it's kind of other people that you trust. People like LJ, who, as I say, is a bit different as mules go. Because we asked Rufus and Tom to supply her with nothing but smart bets,

and that's not what they would normally do. If LJ were starting for us and we wanted to keep that account, we would probably bet 10 to 20 bets right at post on NFL, college football, tennis, anything. We're happy to lose money in the short term to have some more account longevity. That's actually not how LJ plans to roll. She's going to just place these smart bets and see how the bookies respond. Her first bet was that two grand or so on Adam Scott. Adam Scott for birdie at 18.

That one flew over the flag. Adam Scott loses and we're a couple of thousand dollars poorer. But our experiment is on. Hey. So tell me what's happened. What's going on?

Okay, so when I was in Rufus's apartment, all fine, great time. What I found difficult is then I left Rufus's apartment. I came back to the office and I was by myself and it's like literally gibberish. He just texted me gibberish. Read it to me. Sungjae M, top 10, plus 190. This is in the top finished heading. Also, Sung Jae Im, ties pay in full, plus 160.

Those are draft kings. Also, same bet, Sung Jae Im, top 10, plus 190 at FanDuel. Sorry, about to take off. Turns out Rufus is doing all this from a plane. He just wired her these tens of thousands of dollars to use to bet. Now he's up in the sky somewhere, completely out of touch.

Sungjae, I am top five. Ties pay in full, plus 550 DraftKings. Sungjae, I am top five. Under top finish heading, plus 700 DraftKings. Sungjae, I'm top five, plus 700 FanDuel. So, I don't even know what sport this is. Is this golf? I think it's golf, yeah.

I believe it's golf. Do you have any interest in golf? No, I've never watched golf. Do you know how many holes there are? Nine. Okay. Actually, 18, but that's okay. I thought I got that right.

You can kind of see why I thought she'd be perfect, right? She's impossible to suspect of anything. A kind of baby-faced assassin. The Steph Curry of podcasting. The bullet you never see coming until it's too late. But she does need to learn how to press the right buttons on her gambling app. Like after we get off the phone, I'm going to be placing one, two, three, four, five, six, seven bets. And the fun thing about it also is that I don't understand at all what they are as of now. I'll probably be placing like another $10,000 after we get off the phone and I'll be sweating.

One bet takes me about half an hour. It's genuinely really scary. I get really scared. I hyperventilate. I pace around for a little bit and pretend I haven't seen it. But aren't you kind of in a hurry to get the bets down in case the line moves? So I talked about this with Rufus like a lot and he said that I'll always have at least a few hours. Ashley Rufus has told her she had a few minutes to get the bets down, but never mind.

I almost cried this morning because I was like, did I just lose $5,000? And I realized I had just done the accounting line. I like could not be worse for this job. You're the perfect mule. They're going to call you up to see if you were actually a sharp and they're going to talk to you for like six seconds and go, there's no way she knows anything.

I'm about to realize my first mistake. I sort of imagined that if the gambling companies got suspicious about LJ's bets, some human from DraftKings or FanDuel would call her up. Then LJ would do what LJ does and lull them to sleep. But it turns out that first she has to get past the algorithms, the programs that the sports gambling companies use to detect smart bettors. And one of the things they scan for are people with the talent for placing bets

where the odds then move in their favor. People who seem to be ahead of the market. Another thing they do is check to make sure you're a guy. At least that's what Rufus says. There are not a lot of female sports gamblers, and basically none who are laying obscure $5,000 bets on golf. I had imagined LJ as an ideal mule, in part because she so obviously didn't know what she was doing.

And second because, even when she knows exactly what she's doing, she's really good at allowing you to think that she doesn't. But this isn't how you fool the gambling companies. You fool them by finding mules who can play a role. People like Beckett. You basically want to find a way to portray yourself as close to being a problem gambler as possible. You know, I've been everything from an incredibly rich, entitled, trust fund guy to a sort of a maniac commenting on every point scored in every basketball game, bemoaning his losses in the morning

and begging for a redeposit as well. That's Beckett. It's not his real name. He uses his real name to make his bets, and so he doesn't want anyone to know it. We're also disguising his voice. And we promise to say nothing about him, except that he's been a highly successful sports gambler almost as long as Rufus Peabody. But Beckett's got a slightly different angle than Rufus.

Rufus has been limited on the apps, so he gets other people to place his bets. Beckett becomes other people in order to place his own bets on the apps, so he gets other people to place his bets. Beckett becomes other people in order to place his own bets on the apps. You know, they're classified as recreational bug makers. They're not sitting there trying to figure out what the optimal line should be for each game. They're basically marketing and technology companies which happen to be in the business of gambling. And their strategy is to find players who they believe will not beat the house edge and then just get them to play as much as possible. So what they end up doing is something called stake factoring.

Stake factoring is the apps figuring out just how smart you are and assigning limits. These limits change as the algos watch what you do. Once they realize that you are competent, they might give you a stake factor of 10%. And they might say, okay, you are only allowed to bet $500. Once they realize or believe that you are incompetent, they might give you a stake factor of up to 10 times the amount. So you might be able to bet $50,000 on something, but a new customer might only be able to bet $5,000 on, and then a professional might only be able to bet $500 on. They sort of,

you know, open the faucet once they realize that you're not good. And apart from raising limits on the incompetent, what else might they do to encourage the incompetent to practice their incompetency? They would perhaps assign a VIP host to that person. And that host would offer them a series of inducements to continue betting, to continue depositing, to continue playing. Beckett's goal is to get those inducements and to get those really high limits, to get past the velvet ropes, to get himself into the same rooms with the dumb bettors. Well, give me examples of how a professional gambler, an edge player, would induce one of these companies

to invite you into the VIP room and up your limits. Essentially, you would be creating bets that you know the sportsbook wants to see. And you would do them at a volume that is high enough that you grab their attention and you get contacted. And then once you're in the inside, you know, good things happen. But once you're in the inside, wouldn't they spot that your behavior changed? You don't want to continue to play stupid bets. So how long, or do they just, do they, do they tag you as dumb and then don't pay to continue to play stupid bets. Right. So how long, or do they just, do they tag you as dumb

and then don't pay attention for a while? You know, it's a fine line. Some people are not very nuanced at it and will expose themselves very quickly. But in general, you have quite a lot of leeway once you're in those programs. And, you know, there are things that you can do to not make your behavior as an advantage player as obvious.

Once you're in the VIP programs, you get to meet actual human beings at the gambling companies. They invite you to the next game. They tempt you with special offers to bet. Sometimes they even give you money to bet. Like actually let you make bets for free. In theory, these new companies are required to flag people with gambling problems and limit them, guide them to shrinks who can help them, and end the cycle of misery caused by gambling addiction.

In practice, it seems, not so much. I was developing my character as a very frustrated, losing gambler who'd keep throwing money in. One day, I sent this host a flurry of messages after some really heavy losses over the previous few days. I sent message after message, and the host called me absolutely exasperated and said, hey, man, look, look, look, I know you're really frustrated. I'm sorry you lost. Don't worry, I'm going to take care of you. But please, please do not put messages like that in writing. Compliance might see it. They might get worried. They might have to close your account. And you know, we don't want that to happen. So just call me next time. Don't put it in,

don't put it in writing. And hey, I'll give you 40% on your next deposit. It's unbelievable. It's disgusting. It's absolutely disgusting. How important to those companies do you think the addict is? Incredibly important. I should say that we've reached out to the major sports betting companies, FanDuel and DraftKings, for comment on this alleged practice, and they've declined our requests or just haven't responded. But it seems clear from talking with bettors themselves that in this world, the problem gambler

isn't the guy using his life savings to chase his losses. The problem gambler is a person like Beckett and Rufus and maybe even LJ. I believe I'm down. LJ was maybe not the perfect mule, I was learning that, but I had thought that at least she might be a happy mule. She's not a happy mule. She's a mule that every time Rufus tries to spur to action, keeps circling back towards the barn. At one point,

Rufus said we were up and I believe we're down. I'm not confident, but I got sent an Excel spreadsheet that I'm supposed to start filling out, which I think will help because I think my accounting system that I made up seems to be flawed. Do you have any sense of how much more he's betting on these same golfers elsewhere at the same time? No idea. I mean, he did show me like a huge spreadsheet of like, he has, I think he has currently 30 mules. And it kind of seems like he has like a dashboard of how up everyone is overall. And I think it's like 5 million, but I don't know what other people are doing. Do you have a sense that he's pleased with you as a mule?

Um, no, I don't think he could possibly be pleased with me as a mule, which is really why this feels so bad. And then she went dark on a perfectly beautiful weekend, a day when she could have been laying tens of thousands of dollars on professional golf. She just up and went to the beach, spent hours without so much as glancing at her phone. And I think, LJ, the rule is that mules really don't go to the beach. You've got to be available when they are ready to bed. Poor LJ. It's just, if you want to be an eagle, if you want to fly, you don't go to the beach. You got to be there when they need to make a bed. We can be better about some advance notice, too. We can give LJ a couple beach hours here and there.

Tom Peabody again, Rufus's brother, mule runner. Yet I don't know how smart it is for Rufus to send her essentially a page full of Greek instructions and then get on a plane and say, I'm not available for the next four hours. Just do it. Yeah. I thought that was like a test. It's like learning a different language. Yeah. Okay. I'm going to stop the recording. She had a lot of things working against her, obviously, including her day job producing this podcast. But in spite of that,

in just the first two days, she'd managed to get some bets down. $20,000 at least, maybe $30,000. Chicken feed to Rufus Peabody, but kind of a shocking sum to a podcaster these days. Are you surprised she's been able to get the bets down that she's gotten down? No, because in the beginning, they don't limit you super, super quickly. They need to see enough where they're pretty confident that you're not going to lose that money back. Bigger events, they're more likely to think, okay, you're just sort of, you're watching the big golf events. Just four days after becoming a mule, LJ saw the first sign of trouble. She's placed the bets Rufus wanted to make with four different sports bookies.

FanDuel, DraftKings, BetRivers, and BetMGM. Most of the bets have lost. But she placed two bets, of $4,000 each, on golf at DraftKings. And both of these bets won. Inside of her DraftKings account, $8,000 has grown to more than $16,000. But then inside that same account,

she tried to make another bet. And DraftKings wouldn't let her. Okay, it is Tuesday, August 27th. So I emailed DraftKings to get back in because there's no number that I can call. And I got a response this morning. And it says, there appears to have been a pattern of unusual activity on your account.

And as a result, we have placed temporary restrictions on your account as a precautionary safety measure. You will notice that although you can still log in, you may not be able to deposit or withdraw. We will be more than happy to reinstate your account pending verification. You heard that right. Not only can she not bet, they're saying she might not be able to get the money out. Please upload an image of you holding your current driver's license next to your face by clicking the upload now button below.

We appreciate you helping us keep your account secure. Roughly a nanosecond later, she got another email from some other part of DraftKings. In order to remove the current restrictions on my account, I have to upload a self-certified ID and also uploading my PayPal confirming ownership and showing transactions to DraftKings. That's from someone who is called a DraftKing player advocate, which is cool. I didn't know I had an advocate. As it turns out, this is all just a day in the life of a mule. A few days later, FanDuel followed DraftKings and cut LJ's limits by 80%. They never say anything.

They just stop taking all but the smallest bets. Which sounds sad. But then LJ calls me. And she sounds different. She sounds happy. Okay, so here's what I am dying to tell you. Okay, tell me. This morning, I woke up to a text message that says the following from a number that's

not in my contacts. Hi, Lydia. This is Courtney from BetMGM. I wanted to reach out and introduce myself as your VIP account representative slash host. I saw you had some great play. Yes, great play. At BetMGM, LJ had lost $8,000. That was the great play. Congratulations. Please let me know if you have any questions or if there's anything I can do to help out.

So I didn't answer because I wasn't sure what to do. And then she texted, would love to get you out to one of our events as my guest, if you are we have charlie xcx coming to msg on the 23rd and megan trainer at msg as well that's madison square garden on the 25th which is like the concert of the summer charlie xcx would either of those be something you'd be interested in um well so yeah are you are you interested yes i'm interested. So I said, you know, great. Like, how's this work? Is it discounted? And she said, the tickets are on me.

They're my personal tickets and our BetMGM suite at MSG. Both food and beverages are included for the night as well. And then, Michael, I asked for a plus one. And she said, absolutely. Which concert do you want to go to? And I asked for Charli XCX. And she said she got me two tickets. And she said, I'll actually be hosting that event as well. So I'm very excited to meet and be able to see you in person. The tickets will be sent to your email 48 hours prior to the concert. The life of a mule. Clearly, it has its ups and downs.

LJ is now basically unwelcomed to bet large sums of money for the rest of her life with the two sportsbooks that now control the new market. DraftKings froze her account after she won $8,000. FanDuel saw something they didn't like and stopped taking her big bets, even though she was actually down $5,000. But this market, this jungle, is obviously complicated. And this mule is not like other mules. This mule is special.

This mule is now a VIP. Against the Rules is written and hosted by me, Michael Lewis, and produced by Lydia Jean Cott, Catherine Gerardot, and Ariella Markowitz. Our editor is Julia Barton. Our engineer is Jake Gorski. Our music was composed by Matthias Bossi and John Evans of Stellwagen Symphonette. Our fact checker is Lauren Vespoli. Against the Rules is a production of Pushkin Industries.

To find more Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts. And if you'd like to listen ad-free and learn about other exclusive offerings, don't forget to sign up for a Pushkin Plus subscription at pushkin.fm slash plus or on our Apple show page. I'm just going to text my boyfriend that I can't come with him to take the dog out because I'm sports betting. I'm going to DraftKings. I'm choosing Davis Thompson, two-way, minus 145.

And I'm entering my wager amount for $4,000. And I'm going to say place bet. I'm going to be honest. I kind of find this to be a little scary. I'm going to share that with Rufus. Oh, it got placed. I'll tell them. It got placed.

Hopefully I did that right.