The Art of Manliness - What Sports Betting Is Really Doing to Players, Games, and Fans

00:00:00.000 brett mckay here and welcome to another edition of the art of manliness podcast

00:00:11.040 sports gambling has exploded in america you can't watch a game today without being bombarded by ads

00:00:16.760 from betting companies often co-branded with the major sports leagues themselves it's a dramatic

00:00:21.600 shift from just seven years ago when these same leagues were unified in their opposition to

00:00:25.800 legalized sports betting michael lewis the best-selling author of moneyball the big short

00:00:30.500 and the blind side has been exploring this transformation in the latest season of his

00:00:34.160 podcast against the rules today on the show michael explains how we went from prohibition

00:00:38.600 to proliferation unpacking how a 2018 supreme court decision opened the floodgates for an

00:00:44.240 industry that's now seeing over 100 billion dollars in annual bets we discuss how betting

00:00:48.440 companies use data and psychology to nudge people into making increasingly complex and unfavorable

00:00:52.980 wagers why young men are particularly susceptible to gambling addiction and what the rise of prop

00:00:58.020 bets means for the integrity of sports we also get into the concerning public health implications of

00:01:02.720 widespread sports betting and what past addictive epidemics might tell us about where this is all

00:01:07.240 heading after the show's over check out our show notes at awim.is sports gambling

00:01:22.980 all right michael lewis welcome the show thanks for having me so i'm sure a lot of our listeners

00:01:28.220 familiar with your work the blind side moneyball the big short throughout your career you've used

00:01:33.960 your background in economics and finances to help you narrate these things so people can understand

00:01:40.300 it just in their really compelling stories but then also see how ideas of risk financialization

00:01:46.240 how it touches on different aspects of our culture particularly sports and in the new season of your

00:01:52.080 podcast you got against the rules you explore the world of sports gambling in america today and this

00:01:59.040 is something i'm sure a lot of our listeners have also noticed in the past five to ten years it's just

00:02:04.860 blown up you can't watch a game on espn without seeing a fan duels ad often co-branded with the nfl which

00:02:12.740 is weird and we hope we can talk about that so was there a moment that you had where you decided

00:02:18.000 i gotta dig deep into this whole sports gambling thing so what caught my eye what i find so

00:02:24.760 interesting about it is yes like you like everybody you can't turn on a game without being bombarded

00:02:30.740 by draft kings and fan duel with ads but what i found so interesting was that we had this prohibition

00:02:37.820 in the culture that just flipped it didn't just like it wasn't like the end of alcohol prohibition

00:02:42.900 where you know either the need for state tax revenues or or just people getting weary of people

00:02:49.560 drinking illegally they sort of ended with a whimper in this case like there was a taboo in the sports

00:02:56.920 world against gambling you know that all the professional sports leagues and the ncaa seven years ago

00:03:04.100 were legally unified trying to prevent sports gambling from happening and the supreme court

00:03:11.260 repeals a federal but what was basically a federal ban on sports gambling that had existed for

00:03:17.460 25 years in 2018 and everybody flips and not only just concedes it the point but embraces it and it

00:03:26.700 becomes like the future of sports is going to be gambling it's going to be you know baseball fans

00:03:32.840 gambling on every pitch and basketball fans betting on every free throw and the leagues just say this is

00:03:38.620 great and these two companies that were positioned ideally for the legal change and accidentally they

00:03:46.680 had no idea it was coming but these daily fantasy sports companies fan duel and draft kings and had

00:03:52.440 lots of data on young americans particularly young american males who were playing daily fantasy sports

00:03:58.060 were positioned to go and essentially mine the gamblers it was like if at the end of prohibition

00:04:04.520 you had really sophisticated analytical alcohol companies who had a sense of who might be susceptible

00:04:12.400 to alcohol problems and they could run around the country and wave bottles of bourbon under their

00:04:17.240 noses it was just so extreme that i thought like this is a social experiment unlike any i can think of

00:04:24.440 and i just kind of want to see how this is playing out and it obviously has all kinds of dimensions to it

00:04:31.100 it's it's a business story it's a gambling story and it's a sports story and so it intersected with

00:04:36.560 some of my previous interests too so what's the state of sports gambling today in america like how big is

00:04:41.840 the industry well there are different ways to measure it but my favorite way is you had these two

00:04:47.040 companies at the center of it i mean i know there are like dozens of sports gambling apps and every

00:04:51.380 vegas casino has one now but two companies are really dominating the business with like 60 to 70 percent

00:04:56.380 market share and it's fan duel and draft kings and these companies are respectively a 25 and a 45

00:05:02.400 billion dollar company and they they were basically running on fumes before sports gambling was legalized

00:05:07.820 it was some question whether they would even survive so you've got 70 billion dollars plus of market cap

00:05:12.980 there you know it's hard to measure how much sports betting has increased because so much of it was and is

00:05:19.880 illegal like so it's hard to know what the black markets look like but the in the legal markets it's gone

00:05:25.820 from a few billion dollars a year to over 100 billion dollars a year and it's just getting

00:05:30.380 started you know what the supreme court did was throw it to the states to decide whether it on a

00:05:34.940 state-by-state basis states wanted to legalize this and 39 states so far have but there's some big

00:05:42.240 populations california texas florida restricts sports gambling to the seminal tribe app the hard rock app

00:05:50.380 so they're you know like like a third of the country still doesn't have legal online sports

00:05:55.380 betting almost certainly that's going to change so i think we're just seeing the very beginning of it

00:05:59.860 you know it's it's it's very hard to know exactly how big it will be one little measure like there's

00:06:06.180 some countries that are ahead of us here especially great britain and australia and i just saw a stat

00:06:12.060 that australians last year 27 million australians lost 30 billion dollars gambling and so if you kind

00:06:20.640 of like project that onto a a fully developed american market sort of like 400 billion dollars

00:06:25.980 in gambling losses a year i mean it's a big deal it feels like i mean you know back away from and don't

00:06:31.880 worry about the public health effects it's really interesting like the effects it's having on sports

00:06:36.020 and fandom and all the rest but the public health effects i think are gonna be pretty shocking

00:06:39.820 it's like the next opioid crisis yeah i hope we can talk about some of the potential downstream

00:06:44.280 effects of this what i love about your podcast is you you went through the history of sports gambling

00:06:49.240 in america to help people understand how we got to where we are today and you know people have been

00:06:54.600 gambling on sports since the days of ancient greece they've been on chariot races but i want to talk

00:06:59.160 about in america particular what were the origins of sports betting in the united states so i'm not the

00:07:04.920 world's authority on this but it's like george washington bet on cockfights it was it was

00:07:09.640 it was always done outside of vegas or nevada largely illegal there were active mob run markets

00:07:21.720 in the 40s and 50s and 60s and rfk the original rfk got on a hobby horse about this he was sure that

00:07:29.180 the mafia was intruding its way itself into american politics and the source of the mafia's revenues was

00:07:34.280 sports gambling and he went on a jag to drive the the bookies out of the country but the modern history

00:07:40.480 is bill bradley when he came out of professional basketball and became a senator had had enough

00:07:48.460 experience with sports bettors making life a little unpleasant and he thought of sports betting

00:07:54.000 as antithetical to to sports like the values of sports the values that he appreciated in the game

00:08:01.020 that when he became a senator he he wrote this legislation it was in 1992 and the the law it was

00:08:08.560 a little bit of a curious law because he couldn't just ban sports gambling because nevada already had

00:08:15.000 it and harry reid the senator from nevada was the leader of the senate so he had to carve out an

00:08:21.640 exception for nevada and anybody else who had any form of legal sports betting but he basically said

00:08:26.300 unless you have it already the states aren't allowed to pass laws legalizing it and that was

00:08:32.200 law of the land until 2017 and then what happened was new jersey started to agitate for various reasons

00:08:39.640 but the big reason is in new jersey anyway and i'm not sure how much out of new jersey but in that part

00:08:46.440 of the country sports betting was so woven in the fabric of life like we interviewed a whole bunch of

00:08:52.460 people who are involved in this story who happened to have grown up in new jersey and they all went to

00:08:55.940 like catholic schools with a bookie and everybody every like it seems like every new jersey kid had

00:09:01.520 a bookie so i didn't feel that way in new orleans growing up i don't think this was true elsewhere in

00:09:06.260 the country but in that part of the country it was like kids you're starting at a pretty young age

00:09:11.600 people were betting on sports and it seemed ridiculous that there were laws against this plus

00:09:17.040 they had casino gambling plus the casino gambling was kind of on its heels and they looked to sports

00:09:23.040 gambling as possibly both a jobs and state tax revenue creator and so new jersey politicians

00:09:29.360 chris christie in particular funded lawsuits to attack the legality of bill bradley's ban and

00:09:36.860 eventually got a supreme court that was open to hearing the case in 2017 and they won so there's a

00:09:43.340 long history of these shadow markets there was an argument that people made for a long time that like

00:09:48.700 it's in the shadows we might as well bring it into the light everybody's doing it i think that argument

00:09:52.840 is like partly true that it was true that lots of people were betting on sports but it's also true

00:09:57.420 that once you legalize it you normalize it and once you normalize it like a lot more people start doing

00:10:01.780 it so it's not like we just moved what was in the darkness into the light it was like we moved some of

00:10:06.860 what was in the darkness into the light and multiplied it by 50 times it's like the legalization of

00:10:11.640 marijuana yeah yep that's right it's a similar sort of thing there's this curious dance between

00:10:17.560 laws and norms when you change the law you don't just change the law you're kind of telling people

00:10:23.180 it's it's not just legal to do this it's kind of like approved and in the case of sports betting

00:10:28.580 well in the case of marijuana too but i don't know that industry but there was just a a huge industry

00:10:34.780 waiting to be born and this industry it's not quite like the casino industry it's in fact it's

00:10:42.080 very not like the casino industry it's much more lucrative and it's premised on getting as many

00:10:46.740 people as possible to make as many stupid sports bets as possible it isn't just uh when you think of

00:10:52.640 a bookie just matching bettors together and taking no risk themselves that's not what they're doing

00:10:56.580 what they're doing is trying to tease you into making bets that they'd really like to have the other

00:11:01.460 side of and for whatever reason and i have some theories about this but for whatever reason

00:11:06.780 americans are really susceptible to being nudged into making stupid sports bets and it's just an

00:11:13.300 amazing business that that has been created one of the things you did one of the episodes you talked

00:11:18.020 to some of the early sports bettors who were starting to use statistics and analytics to basically beat

00:11:25.120 the house i thought this was really fascinating because these guys changed the game in a lot of ways

00:11:30.560 so what were they doing say in the 1970s 1980s that took sports betting from something that okay

00:11:38.480 i'm gonna do a bracket or i'll bet on a game who wins loses my buddies to something that looks a

00:11:44.720 little bit more like these guys are like wall street analysts yeah no so this is this intersects with

00:11:50.820 moneyball right my book about baseball where you have a front office looking at data and acquiring new

00:11:57.100 data and looking at it differently to get making different judgments about about baseball players

00:12:01.100 and baseball strategies a similar sort of thing was happening at roughly the same time maybe a little

00:12:06.620 earlier in the sports gambling markets where gamblers you know at some point you get sick of losing

00:12:11.980 the house always has an advantage but unlike say roulette but like blackjack you can get an edge on the house you

00:12:21.080 can beat the market with sports betting and you can beat the market because you know the odds of any

00:12:26.140 game the point spread or whatever it is has a lot of information in it but doesn't have everything and

00:12:32.100 you can learn things that the bookies and no one else in the market knows and get systematic edges so there

00:12:38.140 was a character named roxy roxborough who is a legend in the sports betting world who does things like

00:12:44.340 well this is he had one big trick he was betting baseball and his one big trick was to bet run totals

00:12:50.300 so vegas would make lines on how many runs would be scored in a given game and roxy realized that

00:12:56.960 when they were making these lines they were not taking into account weather or size of ballparks

00:13:02.120 which seems crazy now i mean this is something that everybody understands but in the 70s and early 80s

00:13:09.640 he traveled around the country and literally met you know checked the dimensions of the ballpark

00:13:14.420 got the better weather reports and was able to make sharp bets uh on how many runs would be scored you

00:13:20.420 know based on whether the wind was blowing in or where the left field porch was short and so that is

00:13:26.220 that kind of thing that starts to happen why it starts to happen when you can get the information but

00:13:30.940 it starts to really happen once you have computers and in fact i can't remember exact name the big vegas group

00:13:37.780 i think he called himself the computer group in the 80s was betting football and they were building

00:13:42.540 models you know trying models that would try to establish causal relationships between data you

00:13:48.980 could acquire and find data that was predictive and about games so there's this kind of interplay

00:13:56.280 between what gamblers are doing and what people who are managing sports teams are doing because what

00:14:01.760 are they doing they're trying to find stuff that's predictive too they want to predict player performance

00:14:05.560 for example and the intelligence the edge of like understanding sports from the kind of i don't know

00:14:15.460 90s through to 2017 is probably inside of sports sports franchises that's where it paid the most to

00:14:24.240 know stuff about sports but now that these markets have been created and legalized they will be like the

00:14:30.380 smart the best sports analytics people do better gambling rather than running sports teams if you can

00:14:35.520 find stuff that gives you this edge you know if you can figure out that i don't know home field

00:14:41.540 advantage matters much more in the first half than the second half so you're going to bet on the

00:14:45.140 you can make mid-game bets that exploit the bookie's ignorance of this or that players more likely to

00:14:51.880 miss his first free throw than in second or whatever you know i mean that that it is the way to get an

00:14:58.060 edge of course the other way to get an edge is actual inside information and and that's a whole but

00:15:02.180 that's a whole other subject yeah and in a lot of ways what it's done it's made sports abstract

00:15:07.520 completely abstract there's some people who are involved in sports gambling they're not even really

00:15:12.000 sports fans but they just see just the data and they just bet on the data that's it so my jungle guide

00:15:19.620 for the current sports betting markets the modern iteration where it is all model driven and you know

00:15:29.860 nobody's trusting their eyeballs it is a character named rufus peabody and rufus came out of yale in

00:15:37.420 like 2009 he's the kind of person who might well have gone to work for a high frequency trading firm

00:15:41.920 but he was obsessed with sports analytics even when he was in high school and focused his college

00:15:46.740 education on the subject and so he goes to vegas and he becomes a sports better and rufus told me a

00:15:52.180 story that sort of like captures the spirit which the modern sports better operates the first time he

00:15:58.880 really got a bankroll to bet big from other people it was like super bowl like 2011 that vintage and

00:16:05.800 he places like i don't know fifty thousand dollars in bets and then goes off after he's placed the and

00:16:12.040 it's not on the game none of it's on the game it's all props it's all who's going to score the first

00:16:16.420 touchdown how many yards will this receiver have that kind of thing and he goes on plays golf during

00:16:22.360 the game and to this day he's never watched the game and he won he won a whole bunch of money

00:16:27.320 and he said that like he doesn't even he doesn't enjoy watching the games when he has money on it

00:16:32.740 and the kind of pleasure he used to get from sports from like watching his baltimore orioles

00:16:38.000 he can only recreate if he doesn't bet so that there's this like you're right it is abstracted

00:16:44.300 from the sport and it's beyond that it's beyond like i don't even want to watch the game i just want

00:16:47.800 to bet on the numbers it's deconstructing the game so it's not even a game anymore it's all these

00:16:53.980 pieces of the game it's derivatives of a game you don't care what the final score is you care how

00:16:58.400 many points someone scored or if someone missed their first free throw or who scored the first

00:17:02.140 touchdown or little derivatives like that so it's changing i think it's changing the fan experience

00:17:08.500 i mean you know the fan experience historically is a pretty collective experience everybody who's

00:17:12.360 going to the arena is is rooting for their knicks or or their giants to to win but now you you

00:17:19.600 got arenas where i don't know there'll be a lot of weird cheers where like everybody's got a kind

00:17:25.480 of a different a different incentive or a different interest in the game and it's less of a collective

00:17:31.420 experience yeah bill bradley one of these he noted when he was playing basketball for the nba i think

00:17:37.520 it was a game where he scored an extra two points and then it's like some fans started booing him

00:17:42.640 yeah yes he didn't understand it and he's like why are they booing me he just came back from his

00:17:47.520 road scholarship and he's playing for the knicks the knicks are up by like six points with like five

00:17:52.380 seconds left and he hits a shot and he gets booed by the knicks fans not just a few and he says like

00:17:58.760 why are they booing me and someone tells him that guy had money on the game and you just screwed up the

00:18:03.060 line and you just screwed up his bet now it bothered him because he sensed he smelled it like

00:18:10.320 it's just going to change fan interest and it becomes a selfish and money-oriented thing rather

00:18:19.680 than what it was and he liked what it was really bothers him you know we talked if you heard this

00:18:25.780 but we talked to him for the podcast and he still like worked up about it like can't quite believe

00:18:32.340 that his home state of new jersey by the way is responsible for overturning his sports betting ban

00:18:37.820 which he just seemed he said when he created the law in 1992 there was not a peep of objection

00:18:43.780 like it didn't occur to anybody that this was anything but yeah this this is sensible like no

00:18:49.080 senator said you shouldn't be doing this nevada wanted to keep what it had but everybody else just

00:18:54.160 like it was wholly uncontroversial and just you know you asked me in the beginning like what drew me to

00:19:00.540 the story stories like this are stories that describe our culture like it's how the culture is changing

00:19:07.120 and it's so dramatic it just leads you to all sorts of questions really big questions like are we

00:19:13.940 taking care of our population and really little ones like will players play the game the same way

00:19:19.600 if fans are incentivizing them to do different things you know it's it's i don't know i find it a

00:19:25.940 riveting subject i think so too and so you mentioned with all this data that these companies have on

00:19:31.720 their customers or the bettors that they're able to nudge people to make dumb bets that's the business

00:19:37.920 they're in so what are they doing to increase the odds for the house and how do people make just

00:19:42.980 stupid stupid bets so when you turn on an nba game or an nfl game today you see the announcers

00:19:49.760 talking about the bets they're making and you see kevin hart then come on and add and talk about the bet

00:19:54.560 he's making and what are they all talking about they're all talking about their parlays

00:19:58.980 they're not talking about oh i'll take the chiefs and give you three points they're talking about

00:20:03.920 i'll take the chiefs and patrick mahomes for throw more than 300 yards and travis kelsey to catch seven

00:20:09.860 passes or whatever it's it's the parlay the combination of bets and the combination of bets

00:20:15.660 the more you string these things together and they all have to they all have to come true for you to win

00:20:20.460 but the more these things you string together the longer the shot it is and so the payout is instead of

00:20:27.640 you know two to one it's ten to one now what happens two things happen is the parlays get more

00:20:34.960 complicated one is the house the bookie draft kings fan duel is more likely to win because they're

00:20:44.460 giving you essentially they're giving you their mispriced odds it's easier for them to misprice the

00:20:49.420 odds as the bet gets more complicated historically in all casino games including sports gambling the vig

00:20:56.640 with the house assumed it was going to win was four or five percent it's been like a stable statistic

00:21:01.980 throughout time the vig on a parlay when it when it's a two-legged parlay as opposed to just a

00:21:08.240 straight bet on the chiefs it goes from five percent to ten percent when it's a three-legged parlay

00:21:13.180 it goes from 10 to 15 percent four-legged parlay 20 percent so the the more complicated the bet

00:21:18.780 the more legs there are to the bet the more the house is going to win and what they're doing when

00:21:25.280 they push these bets on people is effectively exploiting a pretty common cognitive mistake

00:21:31.900 people make and it's it's like being insensitive to long odds if you give someone 20 to one odds

00:21:40.580 they'll go oh that's great i bet one to get 20 they won't stop and think it really should be 100 to

00:21:46.200 one odds that it's easier to misprice those bets they're more complicated than they're also long

00:21:51.140 shot bets so a footnote to this is in fanduel's recent earnings call they suggested that americans

00:22:01.180 were especially susceptible to being nudged into more and more complicated parlay bets that this same

00:22:08.680 strategy didn't work seem to work as well in australia or great britain that there's something

00:22:14.520 about our betting population that leaves it more vulnerable to this nudge and this nudge is extremely

00:22:23.280 profitable for the gambling companies and it's why you know the announcers and the ads and all that are

00:22:29.940 trying to get you to do that as opposed to just bet on the game so that's why you hear about people

00:22:35.520 talking about their parlay bets because that's what the industry wants you to do why do you think

00:22:40.680 americans are more susceptible to those complicated parlay bets i think we have a greater appetite for

00:22:46.020 risk i think that we're not inoculated so i think there's a kind of inoculation that goes on when a

00:22:50.940 culture has had sports gambling for a while and those other societies have had it for 20 years i think like

00:22:56.860 we don't have dads teaching sons you don't make the parlay bet we we do right now in fact right now i've

00:23:04.260 just taught my son you know what the dumber bets are so that if he ends up in this market he's not

00:23:09.660 making the dumber bets so i think that's it's sort of like never been exposed to smallpox you're more

00:23:14.300 likely to die from smallpox i think that that there's a little bit of that going on those would

00:23:19.140 be the two things but there's a broader thing there's no reason americans would be more susceptible

00:23:23.780 to what i'm about to say but what a parlay bet is exploiting is the narrative you have in your head

00:23:29.400 it's really easy to start telling yourself a story about how this game is going to go

00:23:34.020 and patrick mahomes is going to do this and travis kelsey is going to do this they're salient

00:23:38.340 you're seeing the game before it happens kind of thing so it doesn't seem once you start with

00:23:43.820 chiefs win it's not hard to start kind of imagining the rest and and telling yourself the story about

00:23:50.520 the game this is the appeal of these bets is that like everybody has their own narrative and this

00:23:55.380 enables you to put money on your narrative we're gonna take a quick break for your words from our

00:24:00.120 sponsors and now back to the show so you mentioned earlier something you're going to explore in the

00:24:08.160 podcast and you got your eye on are the public health consequences of the proliferation of sports

00:24:13.740 gambling what do we know what what are the statistics we have about sports gambling addiction in the

00:24:18.500 united states now so they've been a handful of widely approved of academic studies that show

00:24:23.860 and the studies are interesting because it's there's kind of natural experiment going on right

00:24:28.500 because it isn't hasn't been legalized in every state like i don't know if this is still right but

00:24:33.260 for example legal in mississippi not legal in alabama so you have side by side two states that

00:24:38.900 are kind of similar but one has a legalized sports betting and one hasn't this actually happened with

00:24:42.800 opioids too so you could you have these natural experience with opioids and you could see how

00:24:46.520 the effects of legalization where it's been legalized bankruptcies have gone up savings rates

00:24:53.400 go down bankruptcies up quite a bit savings rates down quite a bit with a lag which you would expect

00:25:00.360 because it's happened in britain and in australia suicides go up the lancet the medical journal just

00:25:06.280 published a long was a global survey of sports gambling which it regards now as a serious public

00:25:12.340 health problem globally where they said in their study 26 percent of the young men who bet sports

00:25:21.360 develop gambling problems which is a wild number i've not interviewed the authors of the paper

00:25:26.680 i want to poke at them a little bit before i like go run around talking about this too much

00:25:31.080 but what we do know from the ncaa whose new head charlie baker became incredibly alarmed at what was

00:25:39.920 going on college campuses when he took the job and kind of traveled around the country he commissioned

00:25:43.900 a study to ask how many people are gambling young people are gambling on sports and the number he came

00:25:49.520 back with 60 percent of young men on college campuses or more and 60 percent of young men generally and

00:25:55.320 more on college campuses and so it's just like you just see the beginning of what looks like an

00:26:00.840 epidemic and it will be particularly hard to pin down because unlike say opioids there are people

00:26:07.620 just dropping dead in front of you it's it's it's like a little more invisible a little more insidious

00:26:12.460 and it'll take a while to play itself out other countries that are ahead of us regard these as

00:26:17.200 serious public health crises like the government that just got that was elected recently in australia

00:26:21.180 was elected partly to curtail the gambling industry have not been able to do it but that was part of

00:26:27.140 their sales pitch to the population i mean i just got back from a book tour in england and i had a couple

00:26:33.220 of prominent people who interviewed me tell me after i mentioned i was doing this say my son's life was

00:26:37.900 ruined by this and you know it's just anecdote but i can see it in my son's school they are all high

00:26:45.120 school you know the kids are gambling on sports we poked around high schools around the country to see

00:26:50.400 kind of what was going on it's no longer just new jersey where you grow up gambling on sports and so

00:26:55.580 exposure increases the likelihood of gambling problems by seems like quite a bit and gambling

00:27:01.420 problems are not trivial problems you know they are addictions that can kill you and destroy the lives

00:27:07.000 of the people around you it isn't that i think that we just like completely ban all sports gambling

00:27:11.860 because i think that's probably never going to happen but you can ban ads ads you can ban you know

00:27:17.400 targeting young young men with special offers you can make it harder for the companies to nudge

00:27:23.680 people into the stupider bets you could have really radical price disclosure so you know how much

00:27:30.300 you know on this bet your odds are actually this when you're betting this you could do stuff like that

00:27:36.380 to at least blunt some of the effects but that's not how we roll right now it's a little like we just

00:27:41.620 let this thing run until it becomes a crisis and i think we're catching it i think my podcast will seem

00:27:47.220 maybe slightly premature like people aren't quite aware of this as a problem but i think five

00:27:53.960 years from now they're going to be very aware you mentioned the demographic that's most susceptible

00:27:58.720 to gambling addiction sports gambling addiction young men yep what is it about young men that makes

00:28:03.820 them more susceptible to sports gambling addictions overconfidence anybody with a 17 year old son

00:28:09.820 knows this like they know everything and and they're the endless studies to kind of show that

00:28:15.720 the relative certainty of men versus women at that age like after a math test you ask young men how they

00:28:24.320 did and they systematically think they did better than they actually did and the girls all think they

00:28:28.380 systematically did worse than they actually did it's partly that it's partly um how young men

00:28:35.100 are socialized gambling has been woven into fraternity life so it's become like you're not

00:28:42.060 one of the boys if you're not doing this but overconfidence is the big thing it's like i know

00:28:46.780 like i know who's going to win the game and and that's charming up to a point but it's lethal when

00:28:53.680 you're in the hands of this industry and you have a gambling problem you have that vulnerability not

00:28:57.820 everybody does i don't feel it i it's funny it's you know i have my vices but i don't feel the

00:29:02.840 slightest desire to go lose money to fan duel or draft kings just doesn't interest me i know when

00:29:08.680 i'm betting that it's like it's an efficient mechanism for making me poor like for sure if i

00:29:14.100 just keep doing it i will lose and maybe i'll win a bet or two but the tragic inevitability of it does

00:29:20.840 not interest me at all but some people just need that hit and there's something chemical so you

00:29:26.780 asked me the question like what is it about young men it's obviously something neurological

00:29:29.920 and what it is i don't actually know because we haven't actually got that far in our podcast

00:29:34.400 we're interviewing some neurologists this week i mean i think testosterone has got to play a role

00:29:40.040 because i mean it drives risk taking it creates that confidence you talked about and it also has

00:29:45.700 neurological effects on the brain like it affects regions like the amygdala and prefrontal cortex so

00:29:53.140 that it you know tips the brain more towards reward seeking and young men you know teenage guys like

00:29:58.840 they're just surging with testosterone speaking of which don't you do an experiment with your son

00:30:04.080 your teenage son to see how he responds to sports gambling i hate to throw i hate to throw away the

00:30:09.220 punchline but this is what we did two experiments first we did two things we hooked up lydia jean

00:30:15.180 caught my delightful young female producer with a sharp better like a serious professional sports

00:30:23.060 gambler who is making millions of dollars a year and making you know hundreds of millions of dollars

00:30:28.040 a year in sports bets who can't get his bets down anymore because the the new sports gambling

00:30:33.820 companies are really good at detecting smart gamblers and throwing them out so he hires people to be kind

00:30:39.640 of mules for him so one experiment we did was we let him hire lydia jean and she ended up

00:30:45.120 putting down a couple of hundred thousand dollars in sports bets in a nanosecond it was a really funny

00:30:49.340 experiment and but the other experiment was and i thought in that experiment i assumed we're going

00:30:54.380 to make the money that we're going to lose with my son's experiment because i gave my son walker

00:31:00.180 five thousand dollars and said do your worst like go go try to make money you can keep what you make

00:31:06.280 and now he's 17 he lives in california so he's underage and he's in a state where there's no legal sports

00:31:12.960 betting and it took him about six minutes to open an account where he could bet sports and he did it

00:31:20.040 with a friend and we just recorded their every move and to give him some hope we gave him lifelines

00:31:27.040 like he could call rufus peabody he could call these famous sports bettors or these statisticians

00:31:32.900 and ask them questions about the bet he wanted to make and the reason we did this this is going to be

00:31:39.660 the final episode i'm not going to tell you what happens but it's pretty funny what happens i wanted

00:31:44.000 to see if we could create through walker's experience a kind of course a how not to but a

00:31:51.920 how not to course for young men so they can listen to this 35 minute podcast and learn all the kind of

00:31:58.740 mistakes their brain or brains are are perceptible to making when they're making sports bets all the

00:32:04.540 basic kind of crude statistical principles like i know regression to the mean things like that that

00:32:10.040 but in everyday language and in the context of this kid betting sports that they need to defend

00:32:15.420 themselves against an industry that's trying to exploit them the industry's predatory it's trying

00:32:21.040 to get get as much of your money as it can and it's taking advantage of all the weaknesses in your

00:32:26.160 mind and young males are particularly susceptible to these problems so give them something to defend

00:32:33.160 themselves it's sort of like we're not going to get guns banned so i'm going to give you a gun to

00:32:37.340 defend yourself and so that was the point of the episode there's one other thing that was hoping he

00:32:43.120 would take out of it you wait to listen to it before you decide whether he does take it out of it

00:32:47.480 is it the industry is doing something that is really interesting that even the casino industry

00:32:52.600 really doesn't do yes the casinos ban card counters at the blackjack table but this industry

00:32:58.520 because of their the data that they have on their customers and their ability to analyze the bets the

00:33:06.740 customers make has gotten unbelievably efficient at identifying anyone who actually knows what he's

00:33:13.540 doing so anybody who's likely to beat the house might get tossed out after making two bets so what does

00:33:20.600 that mean it means that they that the industry is sort of identifying all the people who shouldn't be

00:33:26.640 betting on sports who shouldn't be risking money and making their money off them and so in a funny way

00:33:34.080 it's a public service they're kind of identifying everybody who shouldn't be managing money and you

00:33:39.540 know if i think i say this kind of jokingly but i actually think that there'll come a time when you're

00:33:46.280 being interviewed as a possible hedge fund manager for some university portfolio and one of the questions

00:33:52.980 they ask you is do you have an account at fan duel draft kings and is it in good standing and if you

00:33:57.580 say yeah i love betting sports and yeah they love me i'm a vip the the university endowment says no way

00:34:02.940 we're ever hiring you to manage our money you've just revealed you don't know what the hell you're

00:34:07.920 doing because they only want people who don't know what the hell they're doing so i think in a funny

00:34:13.040 way the downfall of the industry or the weakness at the at the industry is that they're gonna it's

00:34:18.760 gonna be embarrassing to be associated with them it's gonna reveal something about you you don't

00:34:22.720 want revealed that's interesting i like that take so i want to go back to this thing that's i've always

00:34:28.660 wondered about it's baffled me since the rise of sports gambling these you know fan duel and draft

00:34:33.600 kings is i'm watching a game and i see these ads for sports betting and they're often co-sponsored

00:34:40.780 by professional sports leagues right and which is just crazy to me because i remember you know

00:34:45.880 you talked about earlier seven years ago all the sports leagues were adamant about keeping distance

00:34:51.920 from getting from gambling because and it made sense right gambling can affect the integrity of

00:34:55.900 the game you don't want another black socks scandal you know and it was just like you did not mix

00:35:01.620 gambling and sports i mean pete rose is not going to be in the hall of fame because of gambling and

00:35:07.420 sports but now you see the sports leagues embracing it so what's going on like what do the sports

00:35:14.220 leagues get out of embracing gambling it's a really good question a couple things they get direct

00:35:20.520 revenues because they have deals with the companies that the companies have to use the official data

00:35:25.560 from the leagues to settle the bets so they get paid cash and that cash is super cash from the point of

00:35:32.740 view the owners because it doesn't have to be shared with the players it's it goes straight into the

00:35:36.680 pockets of the of the owners so that's one thing but the other thing is across the sports with possible

00:35:44.220 exception of football but there has been problems with fan engagement like our culture is successfully

00:35:50.480 fragmented to the point where it's very hard to get everybody watching the same thing and the one

00:35:55.400 exception is live sports and that has been reflected in the media contracts that the sports leagues have

00:36:00.860 cut which then of course inflate everybody's salaries and make the profits of the franchise is more

00:36:06.080 valuable than all the rest but they were starting to see softness and the same thing that was coming

00:36:12.060 for normal tv program was coming for sports and you get a different kind of fan engagement if

00:36:19.820 everybody's betting on the game and not only that you get a you don't get ordinary fan engagement you

00:36:24.920 don't get i'm just going to watch the saints because i grew up watching them and i love the saints

00:36:28.620 but i'm going to watch every nfl game because i have money on all of them there is this odd situation

00:36:33.540 now apparently where the university of hawaii and hawaii is actually not legalized sports gambling

00:36:39.860 but the university of hawaii is one of these very bet upon college football teams because it's it plays

00:36:47.200 in a time zone when nothing else is playing and so that you got all these big gamblers gravitating to

00:36:52.960 it at the end of the day to sort of like chase their losses so it creates eyeballs it creates fan

00:36:59.060 attention it tracks fan attention in the same way that a slot machine attracts your attention

00:37:04.500 it's a different kind of attention it's sort of like it's very short-term dopamine kind of attention

00:37:11.700 but it's attention and that seems to be the attention that people are giving to things so it's that's the

00:37:18.180 other thing is just sort of like a league engagement with the league but you completely what you said

00:37:22.620 before about like the original concerns about the integrity of the games that doesn't just go away

00:37:28.260 right it's not like oh everybody's just going to behave well because they're going to give some the

00:37:32.840 players all some seminars about how you shouldn't gamble on sports two things happened to the players

00:37:37.800 and we interviewed players larry nance jr power forward for the atlanta hawks was very eloquent on

00:37:42.800 the subject he's like he's basically said you're not gonna believe the i'm dealing with now he says i come

00:37:47.340 off the bench and i score four points and get five rebounds you wouldn't think anybody would bet on me

00:37:51.140 but but in fact they're prop bets to make on me every game and he said he was in his he was in

00:37:56.180 his hotel in memphis after a game against the grizzlies and he gets like a direct message saying

00:38:00.740 you cost me a fortune by not getting your six rebounds don't show your face on the street i'll

00:38:05.180 slit your throat he says the players are getting these messages constantly college players are getting

00:38:10.220 these messages constantly they're not hitting their props and people are getting angry with them

00:38:15.740 and at the same time they're seeing all the ads and all the inducements and they're expected

00:38:20.440 not to have any interest in betting even though they probably have better information than everybody

00:38:24.680 but the last little wrinkle to this is what the betting markets are doing becoming as sophisticated

00:38:30.960 as they are is monetizing all this information that previously was not monetizable like back in the old

00:38:37.860 days when the mob ran the books you could bet on the game maybe you could bet on the total the points

00:38:41.620 total points scored you couldn't bet on whether larry nance jr was going to get five rebounds

00:38:46.120 or you know some point guard at a middling d1 school was going to make his first free throw

00:38:51.880 free throw you can make those bets now and so all that information is now worth something so if you

00:38:58.100 are the point guard on the middling d1 basketball team and your frat brothers say hey just like you

00:39:05.020 guys gonna blow these guys out tonight just miss your first free throw we'll make a fortune that's

00:39:09.920 happening all over the place and it's just has not been completely surfaced but we went to lydia

00:39:16.240 gene my producer went with a microphone to the university of kansas during a football weekend and it was

00:39:21.480 like every kid had someone on the football team telling him what we thought was going to happen

00:39:26.680 and some of that's a lot of it's nonsense but some of it's valuable and since you don't have to rig

00:39:31.900 the game all you have to do is rig a free throw you just know this is going to happen i mean you heard

00:39:37.040 it here first you're going to get a steady diet of sports gambling scandals yeah so we're gonna

00:39:41.880 have black socks but like just a whole bunch of them like a little mini mini scandals yes and we're

00:39:46.820 already you know you're already seeing it yeah you know there were more gambling related stories last

00:39:51.100 year than i remember in my life it's just like it's otani it's jonte porter being tossed off the

00:39:56.940 toronto raptors for pulling himself out of a game so he didn't hit his props i loved kayshaun buday

00:40:02.540 they sort of buried the case but he was a wide receiver at lsu i think he's with the patriots

00:40:06.820 now but they revealed after he left lsu that while he was out playing at lsu he made 8 900 sports bets

00:40:14.220 i mean people you're you're telling the whole culture that this is legal normal and joyful

00:40:21.060 activity and you expect the athletes not to do it i mean just if you start i we interviewed their

00:40:27.500 companies whose job they're called sports integrity monitors their job is to look for

00:40:31.900 unnatural patterns disturbing patterns in the markets that would suggest the game or a performance

00:40:37.780 is being rigged or fixed in some way and the guy who ran that and it's just one of a you know dozen

00:40:43.220 of such companies he said last year there we caught 150 cases of this of this kind of thing players doing

00:40:49.640 something bet people having inside information and you can bet if they if one company caught 150 cases

00:40:56.900 that they're like you know 10 000 cases that didn't get caught and it's just it's just amount

00:41:02.480 this is just but we're it's a new market this is just getting going so yeah where do you think the

00:41:07.060 future of sports gambling is going it's a question of not if but when there is a serious

00:41:13.640 political blowback like legal so there and there it could take a couple of forms

00:41:20.060 there already are lawsuits that have been brought by gamblers whose lives have been ruined by the

00:41:27.500 companies who have nudged them into doing really dumb things i don't know whether those lawsuits

00:41:32.520 will ever get traction but those exist they're out there it's sort of like the lawsuits that were

00:41:37.120 brought against tobacco companies what is going to happen is they're going to be some story they're

00:41:42.400 just going to be story after story and there'll be some high profile case that will trigger national

00:41:47.300 interest and some senator will introduce legislation that i don't know tries to ban sports gambling ads

00:41:54.600 i mean i think what's going to happen is we're going to have enough crises enough of a crisis that

00:41:59.160 some things will inevitably have to happen it will be constraining the advertising power of the companies

00:42:03.820 it will be making it really dangerous for them to take underage bettors it will create more

00:42:10.840 transparency in the pricing of the bets that i think that all that kind of thing will happen do it but i

00:42:16.860 don't do i think that we'll go back to like a prohibition of on sports gambling no i think it will just

00:42:23.720 eventually be eventually be made a little bit more sensible but eventually might mean 20 years

00:42:30.780 i mean the opioid between the time the purdue pharmaceutical created oxycontin in 1996 and the

00:42:39.160 time it all comes crashing down because 750 000 americans have died is 20 something years i mean we move

00:42:46.680 slowly when business profits are at stake and business profits are at stake so i i assume this is going

00:42:52.000 to take a while but we're going to get a steady diet of gambling tragedy gambling corrupting the sports

00:42:59.420 that kind of thing well michael it's been a great conversation where can people go to learn more about

00:43:03.460 the podcast the podcast against the rules i think it's season four or five it's the purple one

00:43:10.000 it's it's the it's the purple logo but it's the new season it's just out it's like you know you can

00:43:15.040 find it on apple or spotify or anywhere awesome well michael lewis thanks for your time it's been a

00:43:18.620 pleasure yeah thank you my guest it was michael lewis he's the host of the against the rules podcast

00:43:24.260 where this season they're exploring the world of sports gambling check it out wherever you get your

00:43:27.840 podcast also check out our show notes at aom.is sports gambling where you find links to resources

00:43:32.280 we delve deeper into this topic well that wraps up another edition of the a1 podcast make sure to

00:43:43.880 check out our website at artofmanliness.com where you find our podcast archives as well as thousands

00:43:47.560 of articles that we've written over the years about pretty much anything you think of and if

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00:44:00.920 continued support until next time i'm brett mckay reminding you how to list they went podcast

00:44:04.220 but put what you've heard into action

The Art of Manliness - December 04, 2024

What Sports Betting Is Really Doing to Players, Games, and Fans

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