Friday Four-Pack 8.2.24
A "winning tax" on your sports bets is coming. Bad week at Pats camp. Boston radio hosts mock podcaster. Friday Notes!
Sportsbooks in the United States have already taken steps towards limiting winning players. Now one of them plans on taking a small percentage of every bet you win.
In a stunning development late Thursday, DraftKings Q2 earnings report included the news the company would be instituting an “earning tax surcharge” on bettors in high tax rate states beginning on January 1, 2025.
What does that mean? Simple - if you bet in four states - Illinois, Pennsylvania, New York, or Vermont - starting on 1/1/25 DraftKings will tax you on any bet you win with them. From their presentation on Thursday:
In this example, the fictional winning bet in Illinois on a $10/+100 odds wager would pay out $19.68, rather than the expected $20.00.
There’s a “winning tax” of $0.32 or roughly 1.6% of the potential winnings. DraftKings is doing this in response to high tax rates being imposed on them by certain states. Rather than find other ways to cut costs, they have decided to pass that cost on to you. The consumer. The bettor. The winning bettor.
(Update - It’s actually a winning tax of 3.2%, as I should have only looked at the potential winnings. So $10 potential winnings on that $10 bet would pay $9.68 with the 3.2% tax)
At first glance, this is brutal news for sports bettors and a terrible idea from DraftKings.
Once DraftKings moves forward with this, other major sportsbooks could follow and it could ultimately become an industry norm. If that’s the case, it’s less of an issue for DK since everyone will be doing it. Sucks for the sports bettor, of course.
But what if say FanDuel decides not to follow suit and finds other ways to account for high tax rates? In that scenario, I’d expect DK to lose major market share to their top competitor, especially from high-volume players and/or professionals That 1.6% 3.2% means a lot to them over the course of the year, beyond just the terrible optics of passing a tax cost on to players.
Even for the casual bettor…even if you love DraftKings…would you keep betting there if you’re getting the worst of it every time you win? I think a lot of casuals would move on, too. And I say this as a casual bettor who bets and plays a lot on the DraftKings platforms. I’m a fan.
If you’re a sports bettor in Massachusetts and have gotten this far thinking, “Well, at least it’s not happening in Massachusetts,” I have some bad news for you.
It’s coming.
Maybe not on 1/1/25, but given that 20% tax rate, I’d expect this to impact bettors in The Bay State. DraftKings is the only mobile book in NH, so I think they’d be safe. So it may set up a scenario where you get better odds (no winning tax) betting on DraftKings in NH vs MA. Wild.
Hard to imagine states all of a sudden lowering their tax rates on sports books because of this. If that’s the goal here, I think DK is making a mistake.
DraftKings CEO Jason Robbins spoke Friday morning and confirmed the surcharge.
Yikes. That is not going to play well in the sports betting community.
This is a huge story for the industry that could have major ramifications. It’s likely to be a talker for months. But you can certainly add it to our running series Betting on Sports and Winning is Hard - DraftKings wants to tax you on every bet you win because of the tax rates being imposed on the company by individual states.
Meanwhile, a bad week at Patriots training camp. Radio hosts mock a podcaster. And Barstool Spots is going to the Travers.
All that and soooooo much more in today’s Four-Pack.
TODAY’S FRIDAY FOUR-PACK IS PRESENTED BY THE BROOK CASINO
On a rough start to Patriots training camp…
Forget the fact the offensive line has reportedly looked horrible. Or that some reporters down at Patriots training camp (Ben Volin, Andy Hart) believe that fellow rookie Joe Milton has looked better than the team’s No. 3 overall pick Drake Maye. That’s the football stuff.
I don’t have much confidence the football stuff in Foxboro will be any good this year. The team is in the middle of a rebuild - they didn’t exactly break the bank to bring in high-end talent in the offseason. Most of their cash was spent on retaining their own players. The quarterback will either be a journeyman backup or a rookie. When Jerod Mayo coaches his first game for the Patriots, it will be the first game he has ever been a head coach. If all breaks right, the Pats are a 5 to 7-win team.
So yeah, low expectations. On the football side. My expectations for the folks taking over in the front office were higher. And it’s been a letdown.
There’s the lingering annoyance over Eliot Wolf saying he wanted to “weaponize the offense,” in the offseason and then proceed to follow that up with free agents Antonio Gibson, KJ Osborn and Austin Hooper. I would not categorize those as weapons. Pieces? Sure.
Maybe rookies Ja’Lynn Polk and Javon Baker make an impact. Remains to be seen.
Wolf and the organization have gone out of their way to distance themselves from the way Bill Belichick did business. The same day he made the “weaponize the offense” comment, Wolf offered to reporters in Indianapolis for the NFL Combine that the post-Belichick Patriots would “have less of a hard-ass vibe."
So what has that led to? First, you had defensive tackle Devon Godchaux publically complaining about his deal and then receiving a new one less than a week later, setting a precedent for other players to do the same.
More alarming is the situation with the team’s best defensive player, Matthew Judon. He’s heading into the final year of a four-year deal and is looking for an adjustment. The team has been active extending players, but not Judon. That’s led to -
Judon shows up and participates in the opening week of camp..in unpadded practices.
He openly questions the team’s massive amount of cap space on the Shut Up Marc Podcast.
Once the team goes to padded practices, Judon shows up to sit on a trash can and gets in what looks like an argument with his coach, leaves the field, comes back on the field, makes a beeline for Wolf and Co, and then leaves the field again.
Doesn’t practice the next day - does not speak to the media. Sent home?
A few days later, on the team’s off-day, Dianna Russini reports the team has made a new offer to Judon.
Judon replies via social media, “No they haven’t but it makes me look bad again. Don’t believe the lies.”
Thursday is back on the practice field when the team is once again not in pads.
Coach Jerod Mayo, after saying for months the team was going to be more open with fans in media, claims he wants “to keep as much internal as possible.”
Okay then!
Why would Wolf think that Judon would come in and just play on a deal he’s said does not match his value? Why put the team and the new coach in a position where they look weak? The trash can moment was particularly embarrassing for the team - how does the team let that play out for everyone to see?
It’s something Pats fans would mock the Jets for in previous years. Now it’s happening in Foxboro.
And just a few days later Judon is back at practice … so does that mean you paid him? He stomped his feet and then he gets a contract? Is that what Wolf meant by “have less of a hard-ass vibe." Just a mess - both the way they handled this AND the optics.
These first few weeks and months of the Wolf-led front office will not define his tenure, but it’s been a rocky first impression.
On another attempt by the Massachusetts Gaming Commission to get answers on how and why sportsbooks limit winning sports bettors…
Apologies for the obscenely long subhead, but that’s what the MGC announced they plan on doing at a scheduled meeting on Thursday.
As a quick refresher, when you win a lot at a commercial sportsbook (DraftKings, Fan Duel, etc.), you are eventually going to get limited. Not off one great score, but when you win over and over and over, they take notice. And you get ‘limited.’
As in, you go to place a $100 bet, but the app tells you you can only bet $34, as an example. This happens.
I am a losing sports bettor so I don’t have to worry about it. And no offense, you probably don’t either. Limited players have to switch books, disguise bets, and even buy ‘clean’ accounts to get down their action. A lot of professional players deal with these same issues.
Professional, recreational, whatever - the point remains that sportsbooks are limiting winning/sharp players but letting losing players bet all they want. And the MGC wants to ask why. Because from 30,000 feet, this deal does not seem very fair to the consumer.
The MGC’s first attempt to get answers on this practice was a disaster, with every legal sportsbook in Massachusetts declining an invitation to take part in a public roundtable on the issue back in May. On Thursday, the MGC said they’ll try a revised approach on this for Round 2, with a public hearing replacing the roundtable attempt. The MGC also hinted at new rules on limits that could be implemented in MA. From Bill Speros at Bookies.com:
Thursday, Commissioners offered a "carrot and stick" approach to the state's now 7 online and 3 retail operators during a scheduled discussion on the matter.
"Ultimately there may be some regulations that come out of this. My question to the operators is do they want to be a part of the conversation or just reactive," MGC Interim Commissioner Jordan Maynard said. "We're having a larger policy conversation. Hard for me to believe operators don't have an opinion on this policy decision we may or may not make."
The idea of another roundtable was panned by Commissioners. It's likely once the public meeting is scheduled to discuss player limits, time will be made available for both operators, members of betting public and responsible gaming communities to offer their input.
"We're going to give it another go. I don't love a roundtable at this point. We tried it, they chose not to come. I would like to give this one more shot with both sides but would like to see it in the form of a public meeting with some questions written," Commissioner Eileen O'Brien added.
I love the idea of not only the operators having to explain themselves but also sports betting advocates there to talk about how this affects the casual sports bettor.
This is a big issue and the eyes of the sports betting world are on Massachusetts to see how it plays out. No other state in the U.S. has been this aggressive on the issue of limiting. Expect even more attention after the MGC suggested Thursday there could be new state regulations that would pertain to limiting.
The date for this public discussion will be scheduled at the next MGC’s next agenda meeting.
Hopefully this time the sportsbooks will show up and provide some answers.
On Boston radio hosts mocking podcasters…
I mentioned above that some of the Matthew Judon drama this week can be tied to his appearance on the Shut Up Marc Podcast with Marc Lewis.
Lewis does what a lot of folks on Instagram and TikTok do - he produces quick videos on a bunch of different topics. I’m too old to understand TikTok but his IG stories and videos have popped up in my feed. Until this week, I had no clue he had this podcast.
But to his credit, he did a full hour with Judon where the linebacker talked about the Pats’ salary cap space.
"I love football, I don't love the business of football," Judon said. "I don't want to be the villain. I don't want to be the bad guy. But it's like -- shoot, bro. Like, help me out. You've got the most cap (space) in the league right now, bro. And then with that, they don't even get the money. So, what the hell are y'all doing with it? Like, y'all literally just not using it."
That clip got picked up everywhere and most people gave Marc credit when they played it. Only one show mocked him in the process.
That would be Boston’s Gresh and Fauria on WEEI. Here are the hosts setting up the podcast clip they’re to use as content to play on their show. It’s less than 40 seconds but proves the point well.
The utter disdain of both Gresh and Fauria to have to give this lowly podcaster a mention is palpable. This is the norm for Gresh, who frequently comes across as looking down on those who have not spent 20 years in the business and/or graduated from the Connecticut School of Broadcasting.
Fauria’s response here was somehow worse. “Who is this guy…maybe he’s a family friend..we’ve not giving this guy more love than he deserves.”
If the guy is such a nobody and you don’t want to give him more “love than he deserves,” don’t play the sound and use it as content on your show.
These are two guys hosting a radio show that pulled a 2.1 rating in the latest Boston radio spring book and lost by 7x to their main rivals on 98.5 The Sports Hub. And they’re mocking someone - talking down to him - for getting an interview they’re about to react to on their show? Why? Because he doesn’t work in traditional radio?
“Maybe he’s a family friend.”
To his credit, Lewis called out Gresh and Fauria. Not that they care since Marc didn’t spend 10 years toiling away on AM radio in Des Moines, Iowa.
They think they’re somehow better than Marc. Better than podcasters and content creators that don’t have radio shows.
Traditional radio hosts - like Gresh and Fauria - seem oblivious to the fact that their medium is no longer the preferred way many fans consume their sports. You don’t need a 50k-watt radio station to be relevant. In the case of Gresh and Fauria, their ratings suggest they have that big WEEI signal and are still not that relevant in Boston.
And rather than embrace that, they mock guys who are doing it differently: while still playing their sound for content on their traditional radio show.
Don’t know exactly why this triggered me so much, but it did. Good for Marc for standing up for his podcast and brand and calling out Gresh and Fauria.
Sports radio’s relevancy will continue to wane with the advent of more and more ways content creators and podcasters can get their ‘stuff’ to you, the sports consumer, without some big radio signal. That’s good news for you.
And that reality clearly scares some of the folks who do most of their work behind those traditional radio microphones.
On your Friday MutStack Notes…
We are on to Week 2 at the Summer Olympics. My friend Kirk Minihane chastised me this week on his show when I told him I didn’t have any Olympic media notes - I have not watched more than highlights other than Team USA Men’s Basketball. And I’ll be watching when they play again on Saturday. Noah Eagle and Dwayne Wade have and will be on the call. “There may be a new elite duo in the basketball broadcasting world thanks to the 2024 Paris Olympics,” was The Sporting News review of the duo. Here’s mine - “they’re fine.” It sounded like Eagle was rooting for South Sudan to keep it close on Thursday. And I don’t think he had to remind viewers that Michael Jordan wore No. 9 for Team USA - an awkward joke/story there. But yeah, they’ve been fine.
Speaking of the Summer Games - The anticipation of sitting in the back seat of my mom’s maroon Honda Civic at the McDonald’s drive-thru, wondering which 1992 McDonald’s Dream Team cup you were about to be handed…was a better sweat than anything I’ve ever had betting on sports.
If I remember correctly, you could get two McChickens for $2 in 1992. That was living.
Either a mistake by DraftKings or an oversight/mistake by the State of Massachusetts allowed users to bet on the 72-hole Olympic men’s golf tournament but NOT play in daily fantasy contests built around it. “Olympic golf is not allowed jurisdictionally in the state of Massachusetts” was an answer I received a few times from DK Customer Service. It does not make any sense, considering you could play in contests involving Olympic tennis and basketball. Direct competitor FanDuel offered the contests. Surrounding states, like NH, allowed the contests. Very weird. And annoying.
Barstool Sports’ Dave Portnoy made an unofficial announcement Thursday on The UnNamed Show that he and other major Barstool Sports personalities will be live on track at Saratoga Race Course for the DraftKings Travers Stakes. At a time when touts on TV giving out their picks has become mundane and in many cases unproductive, the Barstool approach of entertainment first appeals to a lot of sports bettors and racing fans on social media. Both Portnoy and his tag-team partner Elio have pushed the DraftKingsADW, DK Horse, almost every day of the Saratoga meet, getting hundreds of thousands of clicks and views.
Bill Belichick joining Underdog Fantasy to produce content for a growing fantasy/betting company does not change my opinion he’ll come back and coach next season. But a good get for Underdog and CEO Jeremy Levine, who is from Boston.
I mean, $2 for 2x McChickens…
We have once again reached the point where we have said it all.
Huge Saturday at Saratoga tomorrow with the running of the Whitney Stakes. Full-card handicapping and some thoughts on racing in tomorrow’s Saratoga Stack. Hope to post that right after we get scratches at 10:30 AM. Subscribe here to make sure you get it emailed you you.
Good luck with all your Olympic bets. And thanks for reading.
Good weekend.
Why would NH be safe from the tax? Wouldn't DK have no problem charging it to the consumer since the consumers have no other option?
The winning tax on DK bets won't effect me much, seeing as I lose most of my bets