Today, Explained - Beware the Madness of March

Episode Date: March 14, 2022

Americans bet more than $50 billion on sports last year, and that record will likely be broken in 2022 as more states legalize the practice. A professional named Captain Jack and a novice named Emily Stewart explain the perils and glory of betting on the game. This episode was produced by Hady Mawajdeh, engineered by Efim Shapiro, fact-checked by Laura Bullard, and hosted by Sean Rameswaram, who also edited. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

It's the middle of March, which means it's time for madness. But this year will be madder than ever because of sports betting. You wanna make every game interesting? Step one, open the BetMGM Sportsbook. Step two, put some skin in the game. And step three, showtime. More and more of the country is legally betting on sports as more and more states legalize sports betting.

Last year broke all previous betting records more than 50 billion wagered and then something like 30 million Americans bet something like 8 billion dollars on the Super Bowl alone last month. It's peak legalized gambling, and on the show today, we're going to ask a pro and a novice how we got here and what it's costing us. I'm Sean Ramos for them. It's Today Explained. Get groceries delivered across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings.

Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. Okay, sports betting is exploding. We want to figure out why and what it means for us. We're going to start with a pro. My name is Jack Andrews. I'm with unabated.com. Jack's gambling buddies know him as Captain Jack. I'm Captain Jack Sparrow.

Not that one. I was a fictitious captain. It was the Billy Joel song, Captain Jack, is where I took that from. So you used to play cards, and now where does most of your gambling happen? Now it's mostly sports betting. I've made a living at sports betting for the past 10 years or so. I've been a professional gambler for about 20 years. It's pretty much a 24-7 job.

And right now, it's a bit of a gold rush. $250 bonus, $1,000 free bet, $3,000 deposit match. As more sportsbooks go live in more markets, they're competing for your money. The best way to get it? To give you some of theirs. Just the proliferation of legalized sports books in the U.S. has created a ton of opportunity for professional gamblers. Most player bonuses are one-times playthrough, which means you only have to bet that bonus money once to withdraw it. And that opens a loophole for anyone with a little scratch who wants to exploit the over-competitiveness of a new marketplace. And as a result, they're willing to operate at a negative in order to gain the market share. So

that's why I'm able to take advantage of a lot of that and kind of boost my bankroll as we move into the next phase of sports betting. If Captain Jack from 20 years ago went to sleep 20 years ago and woke up today in 2022, March Madness, United States, and like pulled up, you know, a gambling app or something, what would he think of what sports betting in the United States has become? I think my first reaction would be this is too good to be true. There's no way this is now legal in the U.S. There's no way they're giving money away to people. This can't be.

There's got to be a catch. But it actually is true. And the proliferation of betting is something that was unheard of 20 years ago, not just in the sense of the scope of the states that allow sports betting. This is not just a friendly office pool. This is commercial online sports gambling, now legal in 31 states and expected to bring in more than $39 billion annually within 10 years. That's just amazing. 20 years ago, you could bet on the side of a game who was going to win, or you could bet on the total. You couldn't bet on how many rebounds Anthony Davis would have. You couldn't bet on how many points LeBron was going to score in a game. And now it's very

acceptable to bet on the most minute parts of a game, right down to what the outcome of the next drive will be. Not to mention, like, who's down to what the outcome of the next drive will be. Not to mention, like, who's going to sing the national anthem? You can bet on the length of the national anthem, which is kind of unheard of, right? Because isn't the national anthem just the same length all the time? It's the same song. But certain people sing it differently. And yes, betting on the length of the national anthem has become very popular. I want to understand how this has happened, how we basically went from betting on who's going to win the game

to betting on how long the national anthem's going to be. Where does that story begin? Sean, I think it really comes down to the casinos and sportsbooks that operate sports betting said, okay, this is great for you to bet on the outcome of a match. It's a three-hour match. We want to have you betting on more things. In the mid-'80s, there was a player for the Chicago Bears, a defensive tackle named William the Refrigerator Perry.

How can you forget number 72 of the refrigerator? When you talk about a guy who's an inspiration to all us big guys, that guy has to be in this show. And occasionally the Bears would put him in at fullback and he could plow through the line. The Bears make it to the Super Bowl and a casino in Las Vegas put up a prop bet of, will the Refrigerator Perry score a touchdown in the game? And it became widely popular because everybody was like, yeah, of course he's going to score. You know, it's going to happen. And it did happen. Another Super Bowl record, the first Refrigerator to score. And the largest running back ever to score a touchdown. And some people got paid out at 40 to 1 because that's what the odds opened at.

And it became very popular. And that was when Super Bowl props were born. Was it legal at the time to open up betting on something like that? Yes. At the time, Nevada had legalized sports betting. They still do. And they could make a line on that happening in the game. As long as the betting event would be decided within the frame of the game, they could have a betting line on it. And that exploded from there on out. Now the Super Bowl, there's tens of thousands of prop bets offered on the game.

Everything from, will a defensive tackle or an offensive tackle score a touchdown, to the color of the Gatorade that'll be poured on the game. Everything from will a defensive tackle or an offensive tackle score a touchdown to the color of the Gatorade that'll be poured on the winning coach. That's taking Gatorade shower to a different level there. But now one of the big differences, I guess, is that this isn't just a thing that happens in Nevada, right? It's happening everywhere. Right. So now we have over 30 states that have legalized betting. And in a lot of them, you can make your bets online or through your phone or from the comfort of your home.

And what does that system look like? The market for legalized sports betting in the U.S. is beginning to explode. In the past year, we had $52 billion wagered on sports in the U.S., and it's expected that that number is going to continue to grow in 2022. We now have New York State. Wagers totaled nearly $2 billion during the first month of legal mobile sports betting in New York, and that doesn't include figures from the Super Bowl. And we've got other states, California, Texas, and Florida. And if they come online, Sean, it's really going to explode in terms of the amount that's being wagered on these games. And this has sort of changed who is gambling, who is betting, and how much they're spending, right? Right.

It used to be that gambling was done on sports, but it wasn't done out in the open. It was either you go through a local bookie or maybe you were just sitting at the bar and you bet your friend on who's going to win this match. But people have always wanted to put their money where their mouth is when it comes to sports. And as a result, people were always betting on sports. But it wasn't until 2018 that the law that basically prohibited sports betting in the U.S. except in certain states was overturned. The Supreme Court voted to give states permission to allow legal betting on sports, striking down a 1992 law which banned sports gambling in most states. And that's where we've come today. Four years later, more than half of the country has access to sports betting or they're

within a short driving distance to a betting or they're within a short driving distance to a state where they can place a bet. And to put that in perspective, I live in a state, New Jersey, where we have roughly 9 million people. Now, sports betting is largely a demographic of males between the ages of 21 and 65. And in New Jersey, that would constitute about one-third of the population. Well, they're wagering a billion dollars a month. So, nine million people, one-third of that population, they still wager over a billion dollars a month. That's quite impressive. And do we have any data on how much they win or lose? So, sports betting is largely a low-margin industry. Huh. Now, in a lot of cases, what the sportsbooks are needing to do is to find ways to increase that margin

so that the deck is stacked a little bit further against the sports bettor. And to do that, they've been introducing gimmicky plays where the sports bettor has the worst of it. The popular one these days is the same game parlay. First of all, a parlay bet is when you have multiple events that you tie together in one wager. And as one event wins, both the wager and the winnings get rolled over. So the outcome is kind of a multiple payout. But all of these events have to win in order for you to win the wager. If just one out of, say, three events loses, you lose the entire stake. A same

game parlay is when you can wager on things that'll happen within the same game. Now, this appeals to a lot of bettors because they say, well, look, I think the Lakers are going to win this game. However, I know that for the Lakers to win, LeBron has to have a good game. So I'm going to wager the Lakers to win and LeBron to score more than 25 points. And I also believe that when the Lakers do well, it's because Anthony Davis plays well. So I'm going to wager Anthony Davis to have over 10 rebounds. So now I have three wagers there. I have the Lakers.

I have LeBron over 25 points. I have Anthony Davis over 10 rebounds. And I can combine them into one wager that has a payout that's extremely larger than would be if I would have bet them all separately. And they're all kind of correlated. The problem with that is the sports book understands the correlation between those events and they price it properly so that the player does not have an edge. So the better feels like they're getting the best of it. But in reality, the sports book is getting the best of it. You know, hearing you talk about, like, Jack 20 years ago versus Jack now, it kind of reminds me of what's going on in this country around marijuana,

where 20 years ago, you couldn't imagine flying with weed. And now, you know, you can fly from a state where weed's legal to a state where weed's legal and bring a bunch of joints that you bought in a store and no one even cares. It's kind of this unimaginable fantasy land when you think about what policies were 20 years ago in this country. And of course, a lot of people are really happy about it and a lot of people are really angry about it. Is it similar on the gambling side of things? Are people really stoked about this and also terrified of what this might do to us? Absolutely. The legalization of sports betting and the proliferation of gambling in the U.S. follows a lot of the same path of the legalization of marijuana. It's definitely

passing faster in progressive states. It's something that people have been doing all along. Why not bring it into the light and allow it to be regulated and allow it to be taxed and allow it to be certain guardrails put in place to make sure that it's being done properly? Here's the problem is gambling is a negative expectation event for the gambler. In other words, in the long run, you will likely lose. And a lot of these operators sell the idea of winning. You watch commercials and it's largely, you can turn a little money into a lot of money. They say fortune is fickle.

Wrong. I just know what I like. And it ain't settling for three. So let's make it interesting. I put a million bucks in up to five DraftKings sportsbook accounts. Lay it all on tonight's game or kiss it goodbye. Hello, fortune. And for the most part, that's true in theory, but in practicality, it's almost impossible. So there's many people that get duped into thinking that gambling is a way to make easy money. It's not. It's a nice recreational activity for those which have discretionary income to spend on it, but it shouldn't be viewed as an

income source unless you're willing to put in the time and effort to become a professional gambler. And as a professional gambler, I would strongly advise you that it's much easier to make a professional gambler. And as a professional gambler, I would strongly advise you that it's much easier to make a lot more money in a lot of different other ways than professional gambling. So as a professional gambler, you would not recommend people become a professional gambler?

It's a certain lifestyle and personality that you need to have in order to succeed. And I don't think many people do. It's a lot harder than it looks. Ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket. Ramp says they give finance teams unprecedented control and insight into company spend. You're able to issue cards to every employee with limits and restrictions and automate expense reporting so you can stop wasting time at the end of every month. And now you can get $250 when you join Ramp. You can go to ramp.com slash explained. Ramp.com slash explained.

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If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Okay, we just spoke to Captain Jack. He's a professional sports better, but we wanted to find out what this world is like to a novice. So we reached out to Vox's Emily Stewart, who writes about the economy,

but also recently dove into this world of sports betting. Emily, what did you find when you gave it a try? So I think kind of the big takeaway for me is that as much as this is fun, it's also kind of bad, right? Like, it's not great that I'm sitting at home on a Thursday night betting on sports games that I have no plans to watch. And the way I kind of think about it is that this is a sort of that's how they get you frame. And I got got a little bit. Okay, well, let's hear a little bit about how you got got.

So where does this begin for you? Well, I live in New York where sports betting became legal in January. And the ads are truly everywhere. I see more sports betting ads than I do for any other thing. And it got exciting. And so I decided to give it a try. For me, it was pretty confusing. I didn't entirely understand what I was doing most of the time. But it is pretty fun. And for a while, I thought I was really good at it. I got into a thing where at night I would place two tiny bets.

Then in the morning, I'd wake up and see if I won. It is really easy to see how you can get sucked in. It's over. The Bucs have done it. The long wait has ended. After a half century, the Milwaukee Bucs are NBA champions once again. So basically on like a Thursday night in January, I bet that the Milwaukee Bucs would win and that Giannis, star player for them, would get a triple-double. I still don't know what a triple-double is. Is it double digits, points, rebounds, and assists? Is that right? Sure. No idea. But I

won anyway, and I turned $11 into $130, basically at random. Hey! What was the feeling you had? Was it the dopamine? Did you feel the release? It was exciting. I did feel good about it. Thought I was a sports gambling genius for about a week, but also just realized how random things were. So what did you do with your winnings? Did you cash out and buy some I-bonds? No, I cashed out and I think I had a vacation coming up. And so I pretended like that was my vacation money. But wait, listener, this wasn't the last bet Emily placed. I won a few things and then I started to lose.

And, you know, there's a reason that they say the house always wins. And there's a reason all these companies are spending all of this money to get customers, to get new people into the pipeline, because it's a moneymaker for them, right? Like, they don't want me to win overall. How much money are these companies spending on drawing people like you, who have no real interest in sports or sports betting into this world? Do we know? I mean, they're really spending billions of dollars with a B. Companies like FanDuel, DraftKings, Caesars, and MGM are putting a ton of money in to establish themselves as leaders in this space. There's sort of this

understanding that not everybody's going to be the winner here. And so they're really spending money on advertising, on bonusing to try and acquire customers and kind of engage in this sort of land grab situation. They're also offering a lot of bonuses. Caesars at one point was offering to match up to $3,000, which is a lot of money. So like if I place a $3,000 bet, they'll give me a free extra $3,000? Exactly. And make it a $6,000 bet? Right. Well, how can it be so worth it to a company like Caesars to just be giving away thousands of dollars for free? When does that math start to work out in their favor? Well, for Caesars specifically, you know, they own a bunch of casinos. And so when I talked to them, they said, you know, this isn't just about getting people to bet on sports.

It's about getting people into our pipeline, getting their email address, their information, getting them to become a member of whatever their club is. And so this is a way to get people into that. And for a Caesars as well that runs casinos, you know, their demographic tends to be older. It can skew a little bit more female, especially their database. And so this gives them a way to get young men into the pipeline and get them into the system. And so maybe I start sports betting through Caesars

and then they're like, hey, next time you're in Las Vegas, come to my casino. . Or on the flip side is maybe I'm already in the Caesars database because I do like their casino and they can say, hey, have you tried sports betting? And so it's a way for them to sell different products and services. You know, I have personal experience with this, Emily. Really? I recently went to a wedding in Las Vegas.

And afterwards, I kept getting emails from MGM because I stayed at an MGM hotel. But the emails weren't like, come stay at an MGM hotel. These emails, which I never signed up for, were all about gambling. And every time I hit unsubscribe and it did not work. They're trying to get you hooked. I had to like write back pretty firmly. And I think it maybe worked, but I'm still not convinced. They love sending me emails about gambling. Yeah, well, see, that's the thing. That's how they get you. I mean, it sounds like if these ads are all over New York City on the subways, at the buses, in your social media feeds, it's probably good business for the state of New York. Like there's a lot of money to be made.

I mean, they think it will be. I think plenty of states think it will be. So in New York specifically, there is a 51% tax on sports betting revenue. 51? Yes. It's a lot. Holy smokes. But if you think about it, people are betting a lot. So New York specifically surpassed $1 billion in total bets in just over two weeks of sports gambling being legal here. And it hit $2 billion over the first 30 days.

And the governor said that generated about $70 million in tax revenue. So it's money for the state. That actually sounds like a positive thing. Maybe they can fix their trains. Ladies and gentlemen, because of construction, this is the last stop. I mean, is it positive? I don't know. New York says that the money is going to go towards schools and towards sports programs. construction. This is the last stop. I mean, is it positive? I don't know. You know,

New York says that the money is going to go towards schools and towards sports programs. But some of that money is also going to go towards gambling addiction treatment. Really? Yes. It's the circle of life. Right. You know, I mean, I think you have probably seen in some of the ads or heard in the ads, you know, they say, hey, come bet on this game tonight or why don't you do a parlay or whatever. And then pretty immediately below, they say, hey, do you have a gambling addiction? Here's a hotline. So there is kind of a tacit or very explicit, I guess, acknowledgement in all of this that there's a dark side to this and that addiction is a problem. I mean, so you might know if you've ever watched

any movie about gambling. Let's go again. Yeah. Let's go again. Gary, call it a night. Oh, come on. Give me a... Just give me $1,000. Dennis, tell her I'm good for $1,000.

It's a bad beat, Jerry. Throw in the towel, man. Has there been a correlation between, you know, all of these states legalizing gambling and gambling addiction? Do we know? I mean, it is a little bit early to tell because this has become, this sort of all started to be legal in 2018 and after um but we're already seeing stories i had bet over four hundred thousand dollars in the past

six years with my phone i could play 24 7 i could bet on swedish basketball i was betting at three in the morning on russian ping pong the National Council on Problem Gambling says that its call centers have never been busier. We know that gambling is addictive and sports gambling specifically is fun and also addictive. And people are getting into the pipeline very early. We've also seen that sportsbooks are targeting younger bettors, maybe people who aren't even allowed to legally bet yet because they get them signing up for a fantasy sports account. And so then once they hit 18 or 21, whatever the legal age is for gambling, then they can start betting on sports and other things. We know that this isn't all just fun and games. But we also know that people bet on sports whether it's legal or it isn't all just fun and games. But we also know that people bet on sports, whether it's legal

or it isn't, right? Right. That's the thing. And that's a lot of people that I talked to for this story that I just worked on. That's what most of them said. Like, listen, at the very least, we can see what's going on. These sports books and companies say that they're supposed to be tracking activity. They know when somebody's probably betting too much. And this is also kind of good, I guess, like if you care about the integrity of sporting events and you are worried about players kind of maybe hedging points or making changes to their play in order to swing a game one way or the other because of betting. It also makes that easier to pick up if this is all kind of happening above board.

At the same time, again, sure, could I have illegally bet on sports in November? Fine. But it was a lot harder for me to do than it is right now happening on my cell phone. It's still on your cell phone, Emily? Yeah, I didn't delete the app. Maybe I'll go back. Be careful. I will try.

Emily Stewart, you can read part one of her dalliance with sports betting at Vox.com. Not sure if there'll be a part two yet. Earlier, you heard from Captain Jack Andrews. Captain Jack will get you by tonight. Just a little push and you'll be smiling. Our show today was produced by Hadi Mawagdi, fact-checked by Laura Bullard, engineered by Afim Shapiro, and edited by me. That wedding in Las Vegas I went to, it was mine. Today explained as part of the Vox Media Podcast Network. The rest of the team includes Noelle King, Matthew Collette, Halima Shah, Victoria Chamberlain, Will Reed, and Miles Bryan.

Our supervising producer is Amina Alsadi. Our VP of audio is Liz Kelly Nelson. We use music from Breakmaster Cylinder and Noam Hassenfeld. And just this once, Billy Joel. Well now Captain Jack We'll get you by tonight Just a little push And you'll be smiling Oh Captain Jack We'll get you by tonight

Take you to your special life. Las pegas