Screw the Gamblers Series - Part 1 - DraftKings CEO Details Master Plan

Written by:
Alejandro Botticelli
Published on:

In this newly launched series, details ways in which gambling firms routinely try to screw over their own customers.  Witness in Part 1 of this series, DraftKings CEO, Jason Robins, speaking at the recent Moffett Nathanson's Technology, Media, and Telecom Conference.  His focus: The pursuit of higher hold the expense of customers.

Sure, we get it, a sportsbook's goal is to maintain the highest hold possible...but at what cost to the customer?

DraftKings likes to push its sucker bets like parlays.  Robins likes his parlays on steroids, the Same Game Parlay, referred to here at as "The Devil's Bet".

Often referred to by their initials, SGPs, these involved wagering multiple outcomes on a single game or contest. When combined into a parlay, every aspect of the bet must win.  If any outcome does not come to fruition, the entire SGP is a loser.

Consider parlays like cocaine and Same Game Parlays equivalent to crack.

Spreadapedia said it best via his Twitter account:

"The people selling SGPs to you are the same people who would have sold cigarettes to children before it was outlawed. They have zero shame."

Ben Cary of Capwize noticed that DraftKings will only "shove these SGPs" down our throats when it suits them, not when they know there is even the slightest chance they (DraftKings) might lose.

They did not make the SGP available for one game on April 30.

"Gotta love how a certain book shoves SGPs down your throats day after day. But then they don’t allow you to bet an SGP in the Padres/Giants game today when they’re aware there’s a good chance it won’t work in their favor. Actually hilarious tbh."

They did offer SGPs on this game earlier in the day, we should note.

At the recent Moffett Nathanson's Technology, Media, and Telecom Conference, Robins said the quiet part out loud after first discussing how DraftKings customers love betting parlays because they believe "they can turn $5 into $50,000, or something like that".


No, We Are Really Out to Screw You

It's possible your dreams can come true betting that $5 parlay and turning it into $50,000.  It's also possible you'll win the lottery. 

Robins doesn't think you stand a chance.

"And economically, it's not worse for the customers.  It's basically like they are making multiple bets at once.  So it sounds like we're making the odds worse or anything like that.  Same odds they could get if they bet one thing, one and then roll their money back into the second thing, literally the same odds.  It's just allowing it to happen at the same time, which gives them both, the opportunity for a big payday and gives us a higher margin."

Industry professional Alfonso Straffon explains the concept:

"The genesis of the tweet is this... +1200 on a SGP as packaged... vs +1335 if you bet them straight and rolled 'em. Or for those that like to see the 'compounding' math: 1.50 x 2.90 x 3.30 x 100 = 1435.50 less the $100= $1,335 The economics do change is the point.

Spotzbettor believes Straffon is perhaps putting it mildly.

"Honestly it’s even worse than just this - even the internal “fair” accounting for the correlation usually has added margin on a per leg / price basis too on top of charging the basic correlation tax."

Steve Brubaker writes:

"Oh math. So if I deconstruct every SGP offered and bet the legs individually, over time, I should make more money. I should go back and look at my 1-50 SGP test and see how many legs I won vs lost. Actually way to much work for me. But maybe I’ll bet them both ways on a DK test."

"Many 21st-century sportsbooks stopped letting you parlay two bets from the same game," Steven Petrella of the Action Network explains, "like a point spread and the over together, because those bets are correlated. If one happens, the other is more likely, so they didn't want you to get the full multiplier a parlay offers."

The Master Plan

Jason Robins: "We talked about a 200-and-something basis point increase in hold rate, which means for every dollar bet, we're making 200 basis points more.  And obviously, over time, there's some probably ceiling there, but we've seen both, domestically with our chief competitor, FanDuel, and then overseas, that higher hold rates can be managed without jeopardizing demand.  And so far, we've seen no decline in demand as we've increased hold rates.  So I mean the important thing is we're not increasing it by making odds any worse for customers.  It's just by pushing more parlay in the mix and things like that."

Mike Ruffing of Maverick, a company that helps Americans prevent problems from sports betting through strategic consultation and proactive education, offered his translation of what Robins is attempting to convey.

"Our existing customers are losing more money now that we aggressively market and normalize a lottery product within sports betting."

- Alejandro Botticelli,

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