The Brewing Storm: Is It OK For U.S. Sportsbooks To Refuse Sharp Money?

Posted By Chops on August 24, 2018

David Purdum from ESPN Chalk detailed this week how many U.S. sportsbooks are employing a controversial tactic used in the U.K. of refusing money from sharp bettors.

From limiting max wagers to outright refusing punters, British bookmakers have been doing this for years.

Regulated casinos, both in the U.S. and overseas, have been restricting bettors and customers in various forms for decades. Card counters, Phil Iveys, and other edge seekers are often refused service.

Just because casinos are doing it, should they be allowed?

In short, yeah…

It’s not illegal in the U.K. So it’s implicitly allowed.

It’s already common practice in the U.S. as well.

The U.S. gaming industry is heavily regulated. Taking bets from those deemed as “unsuitable” bettors (particularly ones under questionable legal standing) holds the bookmaker potentially liable for anti-money laundering. Nevada Gaming can impose seven-figure fines for anti-money laundering and KYC (know-your-customer) violations.

And Nevada casinos have the right to refuse business.

So yes, if it’s allowed, well then it’s allowed.

Further, these are businesses. Some are public companies with shareholders. A business has a right to limit its exposure and liability. It’s risk management.

As noted in the article, sportsbooks are a business, not a public service. They exist to make money. If they’re not making money, they don’t exist. This isn’t complicated.

But is it ethical?

It’s irrelevant if it’s ethical or not. If it’s not illegal, and we can agree that businesses, particularly publicly traded ones, should be allowed to maximize their profits, then ethics shouldn’t really be a question.

Sure, in a sports betting utopian world, anyone should be able to bet anything at any size at any time.

Unfortunately, we don’t live in a sports betting utopian world.

Every business has the right to run their business the way they want under the laws that govern them. While some sportsbooks like William Hill are (allegedly) more draconian over what bettors they don’t allow and why, some bookmakers like the Westgate traditionally court more sharp money.

The Westgate may view that sharp money can help them in setting better lines. It’s a business decision, and they do quite well for themselves and are viewed among the gold standard for sportsbooks.

In New Jersey, bookmakers can’t expel punters just because all they do is win, win, win.

While the New Jersey Division of Gaming Enforcement is currently looking into banning bettors, their current policy “is that patrons cannot be barred from wagering based solely on their winnings or skilled play.”

Whether this holds as sports betting expands remains to be seen, but sharp bettors in the Garden State have more protections (for now).

If you’re a winner, what can you do?

There are some answers.

Betfair and other match makers have found success. With these betting exchanges, punters post and accept or “match” bets offered by other bettors. The platform takes a commission without the liability or risk of the bet.

Other peer-to-peer platforms and predictive markets are turning up as well. Sites such as Augur, or in development platforms like DECENT.bet, offer peer-to-peer betting. Here, a bettor can set his/her line and bet size, and if they find someone willing to take the action and enter in a smart contract, the bet is on.

These solutions may not be ideal in the short-term, however. The U.S. market lacks the sophistication and maturity of the U.K. sports betting industry. Whether match makers like Betfair can gain traction in the U.S. remains to be seen, and p2p blockchain solutions are still very much in the future.

Where does this land?

The reality is, unless state laws and regulations change, bookmakers owned by corporations focused on the bottom line are not going to cater to a very small proportion of their clients who can, potentially, take them to the cleaners. They shouldn’t have to, either. Why put business operations at risk for the vast majority of people just to placate a very small, skilled client base?

It may be an unpopular opinion, but that is where this will land. If casinos are allowed to prohibit skilled bettors they view as a liability risk, they should. The odds aren’t going to swing away from what’s good for the bottom line. Even the sharps wouldn’t bet against that.

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Chops

Steve “Chops” Preiss has 15 years of experience in the gaming industry. Chops began writing and producing content for digital media sites during the early poker-boom years. He has twice been voted by his peers as one of the 20 Most Influential People in Poker. Chops has also written and produced segments for a primetime gaming TV show on Versus (now NBC Sports Network) and distributed a poker program to over 160M global households.

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