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Businessweek
The Big Take


100 MILLION AMERICANS CAN LEGALLY BET ON THE SUPER BOWL. SPORTS WILL NEVER BE
THE SAME

The first Super Bowl of the online betting era is upon us, and it’s going to be
wild.

By

Peter Robison

and Ira Boudway

+Follow
February 9, 2022, 5:01 AM GMTUpdated onFebruary 9, 2022, 1:27 PM GMT


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A decade ago, one knowledgeable authority had deep reservations about the idea
of the National Football League ever embracing legalized gambling. It would
create a corrosive atmosphere in which every penalty or dropped pass—the normal
ebbs and flows of games—“inevitably will fuel speculation, distrust, and
accusations of point-shaving or game-fixing.” The moralist was none other than
NFL Commissioner Roger Goodell, declaring the league’s opposition to expanding
sports bookmaking outside of Nevada.

The position was born, in part, out of experience. In 1946 the league learned
just before the championship game that two players from the New York Giants had
been offered bribes to throw the game to the Chicago Bears. (One of them was
benched for the game, and both were later suspended; the Bears won, 24-14.)
Since then the league had periodically been forced to suspend players whose
associations with gamblers raised the existential issue of the game’s integrity.
“We should not gamble with our children’s heroes,” Goodell’s predecessor, Paul
Tagliabue, told Congress in 1991.



Listen to this story

If all that sounds starchy or quaint, perhaps it’s because the league today
isn’t just gambling with those heroes—it’s turning them into a kind of human
inventory for an ever-expanding array of bets hyped in commercials and pumped to
smartphones during every game. Since May 2018, when the U.S. Supreme Court
overturned the ban Goodell once favored, sports betting has been legalized in
more than two dozen states, plus Washington, D.C. More than 100 million
Americans now live in places where they can legally wager on the Feb. 13 Super
Bowl. What’s on offer isn’t just the usual bets about who will win or by how
many points. Heavily marketed apps such as DraftKings and FanDuel will let Super
Bowl viewers bet, during the game, on a nacho platter of options—things like
whether Cincinnati Bengals quarterback Joe Burrow’s first pass will be complete
or incomplete, which player will commit the first turnover, and what color of
Gatorade will be poured on the winning coach’s head.



The speed with which the NFL—along with every major American professional league
and the National Collegiate Athletic Association—has embraced activities it
previously shunned has been breathtaking. Major League Baseball, an early
investor in DraftKings Inc., is talking up the potential for in-game bets to
drive fan engagement. Major colleges are entering into marketing partnerships
with sportsbooks. An email last month from the Louisiana State University
athletics department to supporters, including students, urged them to download
the Caesars Sportsbook app. “Your App is Ready, Louisiana,” the email said,
providing a link to a promotional code that offered a $300 one-time bonus after
an initial bet of $20.

Whatever Goodell’s initial skepticism, the NFL is now all in. Dallas Cowboys
owner Jerry Jones and New England Patriots owner Robert Kraft both invested in
DraftKings. Celebrities like Ben Affleck and Jamie Foxx headline betting ads
shown during games. At a half-dozen NFL stadiums, fans can watch the action—and
bet on their phones—from lounges sponsored by the apps. Alas, in California,
where the Los Angeles Rams will meet the Bengals at SoFi Stadium in Inglewood in
Super Bowl LVI, a November ballot fight looms and online sports betting has yet
to be legalized.


Split cover: Rams vs. Bengals. Featured in Bloomberg Businessweek, Feb. 14,
2022. Subscribe now.
Photographers (from left): Allen J. Schaben/Los Angeles Times via Getty Images;
Matt Patterson via AP

The league says it’s taken strong measures to counter any corruption or threats
to the game’s integrity. That includes the monitoring of betting lines, player
education efforts, and the hiring of law enforcement officers as security
consultants. Alongside the ads from betting companies promising quick riches,
the NFL airs “bet responsibly” ads developed with the National Council on
Problem Gambling. The league gave the NCPG the largest donation in its history,
$6.2 million.

In an era that’s seen states across the U.S. abandon their qualms over other
vice industries, such as marijuana and casino gambling, in exchange for
desperately needed tax revenue, sports betting has broad support from government
and the public alike. Within weeks of the Jan. 8 introduction of gambling apps
in New York, the companies had signed up 1.5 million accounts from 1.1 million
customers, almost 90% of them new to regulated sports betting. For people who
don’t lose their shirts, it’s fun and fast-paced, just like the games they
watch.


GROSS U.S. GAMING REVENUE

From online sports betting brands



Data: Eilers & Krejcik Gaming



On any given Sunday, as the saying goes around the NFL, any team has a chance to
win. Should fans begin to doubt that, and the league be perceived as merely a
vehicle for gambling, the game will lose fans, says Declan Hill, author of The
Fix: Soccer and Organized Crime. The NFL’s core audience is especially
susceptible to the risks of betting. “Sports gambling is the crack cocaine for
young males between the ages of 14 and 35,” Hill says. “We’re going to have a
dramatic and exponential rise in the number of gambling addicts. Gambling is as
addictive as alcohol and narcotics.”



Hill’s book presented evidence of international gambling syndicates that had
infiltrated sports across the world. At the 2006 World Cup, he reported,
gamblers bribed members of the Ghana team to lose a match to Brazil by more than
two goals. (Brazil won, 3-0; Ghana’s soccer authorities denied the allegations.)
Since then, match-fixing scandals have rocked leagues in countries including
China, Germany, and Turkey. Surely that can’t happen in American professional
leagues, with their relatively highly paid players? Perhaps not yet, Hill says,
but with the nexus of sports and gambling, it’s possible to imagine the
interests of owners, bookmakers, and players meeting in new ways. In Italy
there’s even a term for it—Il Sistema, the exchange of favors among soccer teams
over the course of a season.

The NFL has been knocked around a lot lately—by the crisis of concussions and
brain injuries, which drove down participation in youth football; the handling
of Colin Kaepernick’s protest, which split the game’s fans into opposing camps;
and the falloff in attendance because of the pandemic. Yet most fans say the
play on the field, particularly this postseason, has been great. And then last
week came the bombshell from former Miami Dolphins head coach Brian Flores, who
filed a lawsuit claiming discrimination in the league’s hiring practices. The
suit included the explosive claim that the team’s billionaire owner, Stephen
Ross, had offered him a $100,000 bonus for each game he lost. Ross called the
allegations “false and malicious.” The news raised the possibility that the NFL,
the Dolphins, and Ross himself will be sued—by gamblers who claim they lost
money in the belief the team was playing to win.

“Fantasy was the wedge that drove the media companies and the league to get
comfortable with it. And the motivation for getting comfortable with it was
money, of course”

Well before the Supreme Court’s ruling, Goodell and other league executives saw
where the ball (and the money) was headed. In 2017, Jonathan Kraft, the son of
Robert Kraft and the co-chair of the NFL’s digital media committee, invited
Goodell to a Boston suburb for a daylong session with Jason Robins, a co-founder
of DraftKings. The Krafts had taken an equity stake in the company in 2013. The
son of a schoolteacher and an economics professor, Robins grew up in South
Florida, a sports fan who often played in fantasy leagues, season-long contests
in which groups of friends pick imaginary teams comprising real players.
DraftKings, founded in 2011, turned the contests into quick-moving daily games
in which participants could compete for pots of money based on athletes’
performances.

The fantasy sites proved enormously popular with fans. With huge advertising
buys on television and radio, they seeded the market in a kind of soft launch
for gambling. “Fantasy was the wedge that drove the media companies and the
leagues to get comfortable with it,” says John Skipper, the former president of
ESPN. “And the motivation for getting comfortable with it was money, of course.”



The NFL began to see gambling as an opportunity to lure younger fans. “All these
leagues have been skewing older,” says Andrew Brandt, a former Green Bay Packers
vice president who’s now executive director of the Jeffrey S. Moorad Center for
the Study of Sports Law at Villanova University. “And what do younger audiences
want? They want mobile, they want data, and they seem to like gambling.”

The NFL has said it expects to reap $1 billion a year from its deals with sports
betting companies by the end of the decade. That’s a significant shot in the arm
for a league that, according to multiple reports, saw revenue decline $4 billion
in 2020, to $12 billion, mostly because of attendance declines in the pandemic.
Last year, analysts at Goldman Sachs Group Inc., which advises the NFL on its
media properties, said the online betting apps could even upend the traditional
broadcast and pay-cable markets and become the primary way people watch games.


It’s not just the NFL: This FanDuel sportsbook is in Footprint Center, home of
the NBA’s Phoenix Suns.
Photographer: Matt York/AP

The apps in turn are powered by little-known data providers that weave together
the back-end technology and sell data to the sportsbooks. One of them is Genius
Sports, based in London. Genius pays the NFL for the right to act as a middleman
between the league and the sportsbooks. A six-year distribution deal it signed
last April is worth $120 million a year to the NFL, with half to be paid in
Genius equity, according to Sports Business Journal. As a sign of its ambition,
Genius last year recruited David Levy, former president of Turner Broadcasting
System Inc., as chairman. The company also handles data for the U.K.’s Premier
League and Nascar.

Genius’s job is to transmit livestreams and statistics from games to sportsbooks
around the world—the NFL-authorized record of every penalty and dropped pass.
It’s also to innovate, giving the house ever more imaginative options to keep
gamblers around the world on their phones during games. In-game wagers are an
increasingly lucrative part of the market, accounting for most of the revenue at
many sportsbooks. One popular variety is the proposition bet, or prop bet—a
wager on a single event that may not directly affect the game’s outcome. Want to
bet that Rams receiver Cooper Kupp will collect at least nine catches? How about
picking the fastest player on the field? Genius is often the wizard behind the
curtain, collecting the data, calculating the odds, and updating them in real
time for customers such as DraftKings and FanDuel, which then blast them out to
customers’ phones.



It may come as a surprise to learn that the outfit doing all this, and paying
for the privilege, is also expected to ferret out suspicious activities.
Genius’s contracts with leagues often include “integrity services” to help spot
tampering with games—whether by gamblers, players, league employees, bookmakers,
or insiders at the betting companies themselves.

Unlike the U.K. and other countries with legalized online sports betting, the
U.S. has no central industry regulator. Oversight is spread among a patchwork of
state and tribal governments—many of them captives of the industry who don’t
understand the new technology, says Keith Whyte, executive director of the NCPG,
the recipient of the big donation from the NFL. Whyte himself is the former
research director of the American Gaming Association, the industry’s main
lobbyist. “If NCPG was an anti-gambling or an abolitionist organization, I
wouldn’t have been a good fit,” he says.

This vacuum of governmental authority demands effective self-regulation by the
NFL and its partners. Genius’s integrity unit is run by Stephen Thurley, a 2014
graduate of the University of Plymouth in the U.K. Before joining Genius in
2016, he spent two years as an analyst at Football Radar, a London company that
tries to forecast the outcome of matches using statistical modeling. He and his
colleagues work from an access-controlled section of Genius’s two-story office
in a brick building in Holborn, West London.

Thurley, whose degree is in psychology, oversees 30 people around the world who
monitor feeds from 100 to 150 bookmakers. They try to spot unusual flows of
money, typically reflected in the odds bookmakers are offering. Some of this is
automated; if the betting line shifts enough that a team moves from, say, a
7.5-point to a 9.5-point favorite, it triggers an alert. If there’s no apparent
reason, such as an injury that’s been publicly announced, someone on Thurley’s
team will investigate further. His department has relationships with bookmakers,
both regulated and unregulated, which provide intelligence about who’s betting
and why.

One analyst is dedicated full-time to the NFL, Arash Daghighian, a former NFL
statistics auditor who monitors games and sends a weekly report to the league
recapping the betting patterns. One of the people at the NFL who gets the
reports is Sabrina Perel, a former attorney for the Kroll corporate
investigations firm in New York who’s been the NFL’s chief compliance officer
since 2013. No one at Genius or the league would discuss what’s in the reports,
though Perel says the league asks to receive a call if the analysts see
“something immediately alarming.” And have they? “We have had calls,” she says.
“We would certainly expect that to happen. It means everybody is doing their
job.”

“That kind of action—high-stakes, high-speed—is a lot more like playing a slot
machine that happens to be based on a sporting event”

Testifying to a congressional commission in 2018, Hill, the author of The Fix,
laid a tape measure across a 12-foot table. He moved his hand to show Las
Vegas’s share of worldwide sports gambling at the time. It went about 5 inches.
Then he swept his hand across the table to suggest the rest of a market worth up
to $1.5 trillion—most of it global bookmakers, legal and illegal, that few
Americans have ever heard of. Over the preceding decades, they’d created a vast
pool of liquidity allowing bets in obscure sports, from caber tossing in small
Scottish towns to second-division women’s Australian basketball.

Along with that has come scandal. In 2012 the former head of China’s soccer
association was sentenced to prison for accepting bribes and fixing matches,
among more than 50 officials, coaches, and players convicted of corruption.
Tampering was so rife in professional baseball in Taiwan that the country has
fielded only five teams recently, down from 11 in 1997. Authorities in South
Korea have investigated and charged players for match-fixing in soccer,
volleyball, baseball, and motorboat racing. The soccer association in Belgium
reported in 2018 that three 15-year-old girls had been offered $50,000 each to
throw matches. Tennis has been marred by repeated match-fixing. “We have a
blueprint, and America is just going through it relatively late in the day,”
Hill says.

Perel, the NFL’s compliance officer, says the league has developed an online
training course laying out the risks of corruption and the new betting markets.
In the most recent season, it was viewed by 15,000 people across the
league—players, referees, coaches, trainers, medical consultants, and office
staff. Workshops for players include presentations by “bad guys” who sought “to
groom folks and bring them into their fold and try to fix games,” she says.
Personnel are also told about the risks of sharing inside information, even
things they might not consider relevant, like the length of the national anthem
at this year’s Super Bowl. (Yes, there’s a bet for that.) Beginning in 2020, the
NFL security unit started hiring what it calls “sports betting integrity
representatives,” with a goal of having them in every city where it has a team.
Some are former law enforcement officers. The role of these representatives is
“to manage mitigation as well as any particular issues or concerns that might
come up,” Perel says.


Betting Apps Want to Hook You With the Super Bowl

It’s hard to fix a game in a team sport without involving a number of players,
or at least a star. But the proliferation of prop bets that pay out on a single
occurrence means that a journeyman player, or a referee, doesn’t even have to
throw a game—it might take only a blown snap or an extra penalty or two. Genius
integrity chief Thurley says the company monitors prop bets, too, but believes
that bookmakers usually set the betting limits low enough on them that it would
be hard for anyone to make a killing. Others in the industry agree. “You would
stick out so aggressively,” says Chris Grove, chief executive officer of
American Affiliate Co. in Las Vegas, which recruits new customers for
sportsbooks. “If we have $2 million in action on a next-drive bet and our total
average market on next-drive is, like, $30,000—Houston, we’ve got a problem.”

Still, the limits aren’t always so small, especially when bets can be placed
across multiple bookmakers. In January the Football Association said it was
investigating a yellow card issued to Arsenal midfielder Granit Xhaka in the
86th minute of a match the previous month against Leeds United. The Sun reported
that a single bettor had staked £65,000 ($88,000) on him getting a yellow card
in the match and the bet had paid out £250,000. Multiple reports have said the
player (who’s carded relatively frequently) isn’t a target of the inquiry.

Whyte, executive director of the national gambling council, says about 2% of the
U.S. population has a gambling problem. That may seem small, but it’s more than
6 million people, most of them with parents, children, spouses, or other family
members whose lives are also affected. Among those who have gambled in the past
12 months, the figure is 5%. That’s due in no small part to the explosion in
apps, optimized like social media to hit the brain’s pleasure centers. “That
kind of action—high-stakes, high-speed—is a lot more like playing a slot machine
that happens to be based on a sporting event than actually a skilled bet,” Whyte
says. 



Despite all that, the NFL’s great experiment is in high gear. In some ways
football is returning full circle, to the 1920s, when the owners of some of the
most storied teams were bookmakers themselves. Tim Mara, who bought the New York
Giants for $500 in 1925, booked bets under a striped umbrella at racetracks,
according to Interference: How Organized Crime Influences Professional Football,
by the journalist Dan Moldea. Art Rooney owned a Pittsburgh tavern where sports
fans booked their bets and remained a gambler himself after purchasing the
Steelers in 1933, Moldea writes. Charles Bidwill, an associate of Al Capone’s
mob who bought the Chicago Cardinals in 1933, was a bootlegger, gambler, and
racetrack owner, according to the author. Next season, Bidwill’s grandson, owner
of the Arizona Cardinals, will open a Vegas-style BetMGM sportsbook outside the
team’s stadium with dozens of TVs, betting kiosks, and indoor-outdoor drinking.

There’s even a gambling story to tell about one of football’s most mythic
figures, George Gipp, a star halfback for the University of Notre Dame Fighting
Irish. His purported deathbed request—likely fictional—to “win just one for the
Gipper” inspired a famed locker room pep talk by his coach, Knute Rockne, and a
Hollywood film starring Ronald Reagan. Moldea recounts that the sportswriter
Grantland Rice often described another event, this one at halftime of a 1920
game. The Irish were losing by three points, and Rockne spotted Gipp with a
casual look, puffing a cigarette.

“Gipp, I suppose you haven’t any interest in this game?” Rockne asked fiercely.

“Listen, Rock,” replied Gipp, “I’ve got five hundred dollars bet on this game; I
don’t aim to blow any five hundred!”

The Irish won. —With Chris Palmeri



 

(Removes an incorrect statement in the 27th paragraph about the percentage of
losers on betting apps.)


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