Remember the Bamboo Lounge scene in Goodfellas when Paulie takes over the joint? He runs up the credit, orders stuff he’ll never pay for, sells it all out the back door, and bleeds the place dry. When there’s nothing left to squeeze, he torches it for the insurance money.
Classic bust out.
That’s what’s happening to the world of legal online sports betting right now. Except instead of Henry Hill and his cohorts doing the busting out, it’s state and federal lawmakers.
Recap of what’s happened just this year alone, even though you know it as well as you know the “How am I funny?” scene: The feds capped gambling-loss deductions at 90%. New Jersey jacked online gambling taxes to 19.75% — because apparently 15% wasn’t enough juice for the legislature in my beloved Sopranos state. Louisiana, up from 15% to 21.5%. Maryland, 15% to 20%. An Ohio lawmaker floated the idea to slap a 2% tax on total handle — not winnings, handle — on top of the state’s existing 20% revenue tax, which started at 10%. North Carolina was looking to double sports betting taxes to fund college football stadiums. Wyoming’s looking to jump from 10% to 20%.
This is the bust out. The government either doesn’t care if the industry survives, or doesn’t understand the stress it’s being put under. Doesn’t care if smaller operators fold (pour one out for Betway, SaharaBets, PointsBet, FoxBet, theScore Bet, Golden Nugget Sportsbook, Unibet, Barstool Sportsbook, Maverick Sports, Sky Ute Sportsbook, TwinSpires, MaximBet, and Fubo Sportsbook).
Just keep the money flowing until there’s nothing left to flow.
And now the operators are being forced to pass the buck on to us. Illinois’ new per-bet surcharge — 25 cents on each of the first 20 million bets, 50 cents after that — have seen DraftKings and FanDuel pass that buck. You want to place a bet in Illinois on the two leading sports betting apps, pony up two bits.
And BetMGM and Hard Rock Bet — not wanting to directly pass the buck — instead raised the minimum bets to $2.50 and $2, respectively. Not because they want to stick it to us. Because they have to. The state has them by the throat, and they’re passing the squeeze down to the guy trying to bet a dollar on a 16-leg same-game parlay on Da Bears.
So not only are the legislatures running a classic bust out, they’re also forcing — at least in Illinois — the neighborhood workaday folks out of the joint.
Thank god PASPA was repealed, right?
Small stakes, and a hot take
Listen: Of all the issues facing the legal sports betting world, forcing bettors into $2 and $2.50 minimums is pretty low on the list of things to get worked up about.
But as a low roller myself, I’m finding myself very worked up about what Hard Rock and BetMGM did. I ain’t mad atcha, Hard Rock and BetMGM. I understand why you did what you did. It cuts the operator’s pain of that 25-cent surcharge without passing the cost of it on to the consumer.
And while there is no data forthcoming on how many bettors routinely bet under the $2.50 amount, I’m guessing it’s a significant enough number.
Why do I think that? Because why else would Hard Rock and BetMGM make this the rule of the land in Illinois?
The closest intel I could find comes from a 2021 CivicScience poll, which showed the average bet for 28% of bettors was under $10.
That led the pack, with “$10 to $25” coming in at 26%. Meaning, among those polled, more than half of all bettors’ average bet size was less than $25.
And now the lowest of these fellow low rollers are being pushed into higher prices.
“We certainly know that higher bet size is associated with higher rates of problems,” Keith Whyte, the founder and president of Safer Gambling Strategies, told InGame. “No one has an algorithm or chart that shows every X increase in bet size is linked to Y increase in risk for problems, but there is a relationship.”
I’m not saying this move by BetMGM and Hard Rock are going to create an Illinois filled with problem gamblers, but if you’re used to betting a buck here and there on longshots — who amongst us, right? — well, now you’re betting $2 or $2.50 for the privilege.
Another ‘Goodfellas’ metaphor
Remember right after the Lufthansa heist? When Jimmy starts getting nervous, with too many people flashing money, drawing attention, buying furs and pink Cadillacs?
What does he do? He starts whacking guys (and gals). Stacks of bodies. Not because he wants to. Because he has to. The heat’s coming down, and he knows the only way to survive is to cut risk.
That’s BetMGM and Hard Rock right now.
I’m stone positive they didn’t want to raise minimum bets. They want your 88-cent same-game parlay with one of the legs being a missed PAT. But they have no choice. Cue “Layla.”
And low stakes bettors in Illinois? Well, they’re not getting whacked, but they’re definitely getting pushed out of the car. Being treated like a bunch of schnooks, if you ask me.
