Limiting Bettors: MA's Peek into Sportsbook Limits Process

The practice of sportsbooks “limiting” bettors is a longstanding issue, but it has gained heightened attention in Massachusetts recently. Limiting generally entails instituting a maximum wager amount for bets before they are placed. As more states embrace sports betting, sharp bettors often find their wager amounts restricted, sparking debates about fairness and transparency in the industry. 

While sportsbooks maintain that these limits are a necessary part of risk-management processes, others see them as an unfair practice aimed at stifling skilled bettors, or even preventing bettors who have lost from being able to try to recoup losses. With the latter, there’s a Responsible Gaming consideration at play as well, as attempts to recoup what was lost by betting more can be viewed as simply “chasing losses,” which is a sign of a potential gambling problem. Massachusetts, a state relatively new to legalized sports betting, has found itself at the center of this complex, hotly debated issue.

Sportsbooks and the Limitation Dilemma

The concept of sportsbooks limiting bettors is not new. Bettors who frequently win or bet on odds that exploit discrepancies or mispriced lines are often seen as a risk by operators. To protect their profits, many sportsbooks have been known to impose restrictions, such as reducing the maximum bet a player can place. These limitations generally target a small percentage of bettors but have raised questions about the fairness of such practices, particularly when it comes to transparency and the reasons behind these restrictions.

In response to growing concerns, the Massachusetts Gaming Commission (MGC) has begun to focus on the issue, recognizing the need for clarity and potentially oversight or change. The challenge lies in balancing the interests of both operators and bettors while ensuring a fair betting environment.

Takeaways from Massachusetts Gaming Commission roundtable with operators about limiting bettors

On September 11, 2024, the MGC held a roundtable to discuss the practice of limiting bettors, following a failed attempt earlier in the year when almost all operators declined to participate. This time, key players in the sports betting industry, including Fanatics, BetMGM, DraftKings, and FanDuel, attended the meeting to share their perspectives.

BetMGM's senior director of compliance, Sarah Brennan, revealed that only about 1% of their Massachusetts customers had limits imposed. Similarly, FanDuel's Cory Fox noted that an “extraordinarily small” percentage of bets – just 0.043% – were subject to maximum limits. According to operators, these restrictions affect only a small portion of bettors and are necessary to prevent certain behaviors, such as taking advantage of inaccurate odds, betting in low-liquidity markets or “syndicate” betting in which groups of skilled bettors all target a bet at the same time.

Operators also pointed to “courtsiding,” a practice in which bettors at live sporting events place bets before odds can be adjusted to reflect real-time occurrences, as a significant reason for limiting wagers. While courtsiding is technically legal, it presents a real challenge for operators trying to maintain fairness and manage risk with in-game betting markets. Despite the operators’ justifications, which included the latency of third-party data feeds, the roundtable brought forth concerns about whether these limitations were being applied fairly or if they disproportionately targeted winning players.

Background in MA: Operator no-shows

The September roundtable marked a significant shift from a previous (attempted) meeting in May, where the large majority of sportsbooks declined to participate. At the time, operators were concerned about revealing proprietary information regarding their trading and risk-management practices, leading to a no-show that frustrated MGC officials. The refusal to engage raised questions about transparency and the willingness of operators to address the concerns openly.

In contrast, the September discussion saw operators take a more cooperative stance, though issues of transparency remained. One key point of contention was whether bettors are adequately informed when their accounts are limited. Operators, including Fanatics, acknowledged that notifying players often results in negative feedback. As a result, many sportsbooks avoid directly informing bettors when restrictions are placed, leaving them to figure it out on their own.

MGC Commissioner Eileen O’Brien expressed concern over this lack of transparency, suggesting that clear communication with bettors would not only improve the customer experience but also foster a more responsible betting environment. Research supports this notion, indicating that bettors who are provided with upfront information about their limits are more likely to gamble responsibly.

Is limiting winning bettors legal? Fair? 

The legality of limiting winning bettors is not in question, but the fairness of the practice is up for debate. Operators argue that these limits are necessary for risk management, particularly in preventing certain betting patterns that could result in significant losses. 

However, critics of the practice, such as Joe Brennan of Prime Sports, argue that limiting bettors under the guise of responsible gambling is misleading. He contends that the issue is less about responsible gambling and more about profit protection. Sharp bettors, who often identify favorable odds through skill and research, pose a threat to sportsbooks' profitability, and limits are imposed to prevent them from capitalizing on their advantage.

One major concern is that bettors are not treated equally. VIP bettors, who wager large amounts but may not be as skilled, often receive preferential treatment and are not subjected to the same limitations. Meanwhile, sharp bettors who win consistently find themselves limited despite often being responsible gamblers.

The Path Forward

The MGC’s roundtable discussion ended without a clear resolution, but it set the stage for further debate and potential regulation. One area that gained traction was the possibility of requiring sportsbooks to notify bettors when their accounts are restricted. This would address transparency concerns and provide bettors with the information they need to make informed decisions.

Another topic for future discussion is the issue of in-game betting and the latency problems that allow courtsiders to gain an advantage. Commissioner O’Brien suggested that if operators cannot address the latency issue, they should reconsider offering in-game markets.

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Sources:

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