Opinion: Pricing Is Not The Be-All End-All Of Sports Betting

Steve Ruddock September 12, 2018 1092 Reads
Sports betting

There’s been a lot of chatter on social media about the uncompetitive lines being offered at the new, legal sportsbooks in New Jersey, Delaware, and several other states.

“Sports Betting Twitter” (yes, that’s a thing, and a corner of the internet one should avoid) is convinced the sportsbooks are shooting themselves in the foot and will rue the day they “price-gouged” customers.

The theory is, once the newness of the industry wears off, or when customer awareness increases, people will shift their business to illegal, offshore books with better pricing. Or, when these sportsbooks go down in flames, other legal books will wise up and offer better, customer-friendly pricing, as well as welcome sharp action.

That line of thinking is nothing new in the gaming universe.

We’ve seen this movie before

Whether it’s triple-zero-roulette tables, 6/5 blackjack, resort fees, paid parking, disappearing video poker machines, or reduced online rewards, the sky has been falling on the gaming industry for several years.

Fact: The sky has not fallen.

In fact, a similar uproar occurred a few years back in the online poker world.

In 2015, PokerStars embarked upon a multi-year journey that fundamentally changed the way it rewarded players.

Not surprisingly, the players most affected were not happy campers. They took to social media, blogs, and forums to demonize PokerStars and tout other “better” operators.

Their doomsday predictions proved as accurate as the Millerites. And in the process, they were exposed for grossly overstating their value and influence within the larger poker community.

Three years later, pro sports bettors are regurgitating these same talking points.

  • Poker players in 2015: PokerStars doesn’t want any winning players.
  • Sports bettors in 2018: William Hill et al. are banning all winning players.

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  • Poker players in 2015: PokerStars is nickel and diming us with diminished rewards and higher rake.
  • Sports bettors in 2018: Sportsbooks are nickel and diming us with high vig and betting/deposit caps.

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  • Poker players in 2015: Even though we’re net withdrawing players, we’re valuable because we start games and are aspirational.
  • Sports bettors in 2018: Yeah we win, but we help books set better lines and having winners makes sports betting more appealing.

This is nothing more than a case of a small, but very vocal group voicing their displeasure with something that is largely a non-issue with the masses, but negatively impacts them.

Yes, everyone would like lower prices and fees, but there’s a difference between “that would be nice” and “I’m taking my business elsewhere.”

Price isn’t the only factor

There are a number of factors that determine where a person will place a sports bet.

  • Convenience
  • Familiarity
  • Brand loyalty
  • Interface
  • Payment methods accepted
  • Pricing/Lines
  • Legality

Further, different people will prioritize these things in different ways.

Even if customers are price aware, choosing an online sportsbook is a lot like choosing between two gas stations located across the street from one another with different prices.

Like sportsbooks, gas stations are essentially the same product, just in a different wrapper.

Some people will head straight to the station with the best price. However, plenty of people will choose the higher priced station for any number of reasons:

  • They prefer one brand over the other
  • It’s easier to pull into and out of the station
  • One is pay at the pump, the other is pay inside
  • They have a rewards card and get a discount
  • They prefer the service, or had a good/bad experience at one of the stations
  • There’s an attached store and they want a water
  • There’s a bathroom
  • There’s a line at the cheaper station

If pricing was the only factor these price discrepancies wouldn’t exist.

But this time it will be different!

Sports bettors aren’t wired fundamentally different than the vast majority of poker players, or even most gamblers.

The idea that of all the gamblers in the world, sports bettors are the most price-sensitive doesn’t have any basis in fact.

Fact: Some of the biggest European operators offer the worst pricing.

The pricing-above-all-else-theory is being put forth by avid sports bettors who are price-sensitive. But to the masses, it’s about as important as a poker tournament structure sheet being “Kessler-approved.

The average sports bettor isn’t going to have 12 betting apps downloaded and line shop before they place bets.

Most sports bettors are going to find an app (or two) they like, and place their bets with that book. Even if it means they don’t maximize their EV or have to pay a bit more.

That’s exactly what New Jersey online gamblers have been doing since 2013, according to research conducted by Rutgers University on behalf of the New Jersey Division of Gambling Enforcement.

The report — The Prevalence of Online and Land‐Based Gambling in New Jersey, by Nower, L., Caler, K. & Peters, E. (2017) — notes that despite having more than a dozen sites to choose from 72 percent of NJ online gamblers had registered only a single account in 2015. An additional 14 percent possessed two accounts.

Legal trumps illegal

Legal sports betting has another advantage, too: It’s legal.

A Nielsen survey commissioned by the American Gaming Association indicates 71 percent of bettors currently wagering illegally will move some or all of their betting to the regulated market.

Why? Because it’s legal!

Legal markets will also bring in new bettors who shied away from illegal markets.

Bottom line, as long as prices aren’t egregious, pricing will only play a small role in how the market shapes up.