In response to yesterday’s Massachusetts Gaming Commission hearing that was marred by coordinated no-shows, half-truths and obfuscations, here’s a quick follow-up to my longer 2021 article on the topic. I’m going to give simple, clear answers where the operators won’t. Maybe someone who knows someone at the MGC can pass this along.
Simple truth #1: YES, limiting of individual players occurs at almost every sports book in the world, including 100% of those currently licensed in Massachusetts. By “limiting” I am NOT referring to limits imposed for responsible gaming reasons, or for players who attempt to cheat or manipulate the system. Limiting for those reasons also occurs, but that’s not what’s at issue here. I am referring to limiting an individual player for the sole reason that the book has profiled the player and believes that taking the player’s bets would be an unprofitable proposition for the book.
Simple truth #2: The specific mechanics of how that profiling is done varies from book to book and uses systems, methods and algorithms that are proprietary to the book and are not made public. This is what the books are refusing to disclose, but I don’t think it’s necessary for them to do so – the details of how the algorithms work are not what’s at issue here. Generally, there is more to these algorithms than the player’s win/loss record alone, although that certainly plays a part. This is because the purpose is to PREDICT the player’s propensity to win in the FUTURE. Players who have won but their betting patterns suggest that they did so by getting lucky will not get limited. Players who have lost but their betting patterns suggest they are skilled but lost due to bad luck may be limited anyway, there are many documented cases of this happening. So, when operators say things like “we don’t limit players because they have won”, such a statement is technically true but false in spirit.
Simple truth #3: Individual customer limiting impacts a small minority of the overall betting population. The exact size of that minority is unknown because books do not disclose those figures to the public. Those who are limited are usually “advantage players”, players who wager not necessarily as a recreational activity but in pursuit of long-term profit. Advantage players don’t necessarily violate any laws, regulations or terms of service – but they are a nuisance to operators because the advantage players’ winnings are depletive to the operators’ profits. Because advantage players don’t self-identify, the operators need to infer who they are based on their betting patterns. Sometimes this process results in false positives, whereby members of the recreational betting public are incorrectly profiled as advantage players and limited accordingly.
Simple truth #4: For a betting operator, defending against advantage players is extremely difficult. As an analogy (remember, they aren’t breaking any rules), advantage players can launch “attacks” from any angle, at any time day or night, aided by technology that is ever-improving. They can respond to breaking news (injuries, lineup changes, etc) in a way that can cause significant financial exposure to operators who are even a minute or two behind in adjusting their odds. Their most powerful weapon is adverse selection – the optionality afforded to them by the power to decide what to bet, when to bet, how much to bet and whether to bet at all. This is in contrast to operators who are required to offer every bet on every game, every day, all the time. Operators who accept bets are not financially sustainable unless they have some kind of defense mechanism to protect them from these “attacks” from advantage players, and profiling them for the purpose of limiting is not the only such mechanism but it is arguably the most common one in use around the world.
Hopefully this can provide a clear, unbiased fact base from which the real issues can be debated. Is limiting of individual players “fair” (whatever that means) to the betting public? What alternatives exist, and how viable are they? How can the interests of the various stakeholder groups (operators, players, government) be balanced? That’s the discussion I look forward to, and there are no simple answers there.
Plus EV Analytics 