Sports gambling has exploded in America. You can’t watch a game today without being bombarded by ads from betting companies, often co-branded with the major sports leagues themselves. It’s a dramatic shift from just seven years ago, when these same leagues were unified in their opposition to legalized sports betting.
Michael Lewis, the bestselling author of Moneyball, The Big Short, and The Blind Side, has been exploring this transformation in the latest season of his podcast Against the Rules. Today on the show, Michael explains how we went from prohibition to proliferation, unpacking how a 2018 Supreme Court decision opened the floodgates for an industry that’s now seeing over $100 billion in annual bets. We discuss how betting companies use data and psychology to nudge people into making increasingly complex and unfavorable wagers, why young men are particularly susceptible to gambling addiction, and what the rise of “prop bets” means for the integrity of sports. We also get into the concerning public health implications of widespread sports betting and what past addictive epidemics might tell us about where this is all heading.
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Brett McKay: Brett McKay here and welcome to another edition of The Art of Manliness podcast. Sports gambling has exploded in America. You can’t watch a game today without being bombarded by ads from betting companies often co-branded with the major sports leagues themselves. It’s a dramatic shift from just seven years ago when these same leagues were unified in their opposition to legalize sports betting. Michael Lewis, the bestselling author of Moneyball, the Big Short and The Blind Side, has been exploring this transformation in the latest season of his podcast Against The Rules. TAL in the show, Michael explains how he went from prohibition to proliferation, unpacking how a 2018 Supreme Court decision opened the floodgates for an industry that’s now seen over $100 billion in annual bets. We discuss how betting companies use data and psychology to nudge people into making increasingly complex and unfavorable wagers, why young men are particularly susceptible to gambling addiction and what the rise of prop bets means for the integrity of sports. We also get into the concerning public health implications of widespread sports betting and what past addictive epidemics might tell us about where this is all heading. After the show’s over, check at our show notes at awhim.is/sportsgambling.
All right, Michael Lewis, welcome to the show.
Michael Lewis: Thanks for having me.
Brett McKay: So I’m sure a lot of our listeners familiar with your work, the Blind Side, Moneyball, the Big Short. Throughout your career, you’ve used your background in economics and finances to help narrate these things so people can understand it just, and they’re really compelling stories, but then also see how ideas of risk financialization, how it touches on different aspects of our culture, particularly sports. And in the new season of your podcast, you got Against The Rules, you explore the world of sports gambling in America today. And this is something I’m sure a lot of our listeners have also noticed in the past five to 10 years. It’s just blown up. You can’t watch a game on ESPN without seeing a FanDuel’s ad often co-branded with the NFL, which is weird and we hope we can talk about that. So was there a moment that you had where you decided, I got to dig deep into this whole sports gambling thing?
Michael Lewis: So what caught my eye, what I find so interesting about it is, yes, like you, like everybody, you can’t turn on a game without being bombarded by DraftKings and FanDuel with ads. But what I found so interesting was that we had this prohibition in the culture that just flipped. It didn’t just like, it wasn’t like the end of alcohol prohibition where either the need for state tax revenues or just people getting weary of people drinking illegally. They sort of ended with a whimper. In this case, like there was a taboo in the sports world against gambling, all the professional sports leagues and the NCAA seven years ago were legally unified trying to prevent sports gambling from happening. And the Supreme Court repeals a federal, what was basically a federal ban on sports gambling that had existed for 25 years in 2018.
And everybody flips and not only just concedes it, the point, but embraces it. And it becomes like the future of sports is going to be gambling, it’s gonna be baseball fans gambling on every pitch and basketball fans betting on every free throw. And the leagues just say, this is great. And these two companies that were positioned ideally for the legal change and accidentally they had no idea it was coming. But these daily fantasy sports companies, FanDuel and DraftKings and had lots of data on young Americans, particularly young American males who were playing daily fantasy sports, were positioned to go and essentially mine the gamblers, and it was like if at the end of prohibition you had really sophisticated analytical alcohol companies who had a sense of who might be susceptible to alcohol problems and they could run around the country and wave bottles of bourbon under their noses. It was just so extreme that I thought like, this is just social experiment unlike any I can think of. And I just kind of wanna see how this is playing out. And it obviously has all kinds of dimensions to it. It’s a business story, it’s a gambling story and it’s a sports story. And so it intersected with some of my previous interests too.
Brett McKay: So what’s the state of sports gambling today in America? Like how big is the industry?
Michael Lewis: Well, there are different ways to measure it, but my favorite way is you had these two companies at the center of it. I know there are like dozens of sports gambling apps and every Vegas casino has one now, but two companies are really dominating the business with like 60% to 70% of market share and its FanDuel and DraftKings. And these companies are respectively a $25 and a $45 billion company. And they were basically running on fumes before sports gambling was legalized. It was some question whether they would even survive. So you’ve got $70 billion plus of market cap there. It’s hard to measure how much sports betting has increased ’cause so much of it was and is illegal, like, so it’s hard to know what the black markets look like, but in the legal markets, it’s gone from a few billion dollars a year to over a $100 billion a year and it’s just getting started.
What the Supreme Court did was throw it to the states to decide whether on a state by state basis, states wanted to legalize this. And 39 states so far have but to some big populations, California, Texas, Florida, restricts sports gambling to the Seminole Tribe app, the Hard Rock app. So there, like a third of the country still doesn’t have legal online sports betting. Almost certainly that’s gonna change. So I think we’re just seeing the very beginning of it. It’s very hard to know exactly how big it will be. One little measure. Like there’s some countries that are ahead of us here, especially Great Britain and Australia, and I just saw a stat that Australians last year, 27 million Australians lost $30 billion gambling. And so if you kinda like project that onto a fully developed American market, sort of like $400 billion in gambling losses a year, it’s a big deal it feels like. Back away from it, and don’t worry about the public health effects, it’s really interesting, like the effects it’s having on sports and fandom and all the rest. But the public health effects I think are gonna be pretty shocking. It’s like the next opioid crisis.
Brett McKay: Yeah. I hope we can talk about some of the potential downstream effects of this. What I love about your podcast is you went through the history of sports gambling in America to help people understand how we got to where we are today. And people have been gambling on sports since the days of ancient Greece. They’d bet on chariot races. But I wanna talk about in America in particular, what were the origins of sports bet in the United States?
Michael Lewis: So I’m not the world’s authority on this, but it’s like George Washington bet on cock fights. It was always done outside of Vegas, Nevada, largely illegal. There were active mob run markets in the ’40s and ’50s and ’60s and RFK, the original RFK got on a hobby horse about this. He was sure that the mafia was intruding itself into American politics. And the source of the mafia’s revenues was sports gambling. And he went on a jag to drive the bookies out of the country. But the modern history is Bill Bradley, when he came out of professional basketball and became a senator, had had enough experience with Sports Betts making life a little unpleasant. And he thought of sports betting as antithetical to sports, like the values of sports, the values that he appreciated in the game that when he became a senator, he wrote this legislation, it was in 1992 and the law, it was a little bit of a curious law because he couldn’t just ban sports gambling because Nevada already had it.
And Harry Reid, the senator from Nevada, was the leader of the Senate. So he had to carve out an exception for Nevada and anybody else who had any form of legal sports betting. But he basically said, “Unless you have it already, the states aren’t allowed to pass laws legalizing it.” And that was law of the land until 2017. And then what happened was New Jersey started to agitate for various reasons, but the big reason is, in New Jersey, anyway, and I’m not sure how much out of New Jersey, but in that part of the country, sports betting was so woven in the fabric of life. Like we interviewed a whole bunch of people who were involved in this story who happened to have grown up in New Jersey and they all went to like Catholic schools with a bookie and everybody, every, like, it seems like every New Jersey kid had a bookie.
So I didn’t feel that way in New Orleans growing up. I don’t think this was true elsewhere in the country, but in that part of the country it was like kids starting at a pretty young age. People were betting on sports and it seemed ridiculous that there were laws against this. Plus they had casino gambling, plus the casino gambling was kind of on its heels and they looked to sports gambling as possibly or both a jobs and state tax revenue creator. And so New Jersey politicians, Chris Christie in particular funded lawsuits to attack the legality of Bill Bradley’s ban and eventually got a Supreme court that was open to hearing the case in 2017 and they won. So there’s a long history of these shadow markets. There was an argument that people made for a long time that like it’s in the shadows, we might as well bring it into the light. Everybody’s doing it. I think that argument’s like partly true, it was true that lots of people were betting on sports. But it’s also true that once you legalize it, you normalize it. And once you normalize it, like a lot more people start doing it. So it’s not like we just moved what was in the darkness into the light. It was like we moved some of what was in the darkness into the light and multiplied it by 50 times.
Brett McKay: Yeah, it’s like the legalization of marijuana.
Michael Lewis: Yeah. Yep, that’s right. It’s a similar sort of thing. There’s this curious dance between laws and norms. When you change the law, you don’t just change the law, you’re kind of telling people it’s not just legal to do this, it’s kinda like approved. And in the case of sports betting, well, in the case of marijuana too, but I don’t know that industry. But there was just a huge industry waiting to be born. And this industry, it’s not quite like the casino industry, in fact, it’s very not like the casino industry. It’s much more lucrative and it’s premised on getting as many people as possible to make as many stupid sports bets as possible. It isn’t just a, when you think of a bookie, just matching bets together and taking no risks themselves, that’s not what they’re doing. What they’re doing is trying to tease you into making bets that they’d really like to have the other side of. And for whatever reason, and I have some theories about this, but for whatever reason, Americans are really susceptible to being nudged into making stupid sports bets. And it’s just an amazing business that has been created.
Brett McKay: One of the things you did, one of the episodes you talked to some of the early sports bettors who were starting to use statistics and analytics to basically beat the house. And I thought this was really fascinating ’cause these guys changed the game in a lot of ways. So what were they doing say in the 1970s, 1980s that Turk sports betting from something that, yeah, okay, I’m gonna do a bracket or I’ll bet on a game who whoever wins, lose it with my buddies to something that’s looks a little bit more like these guys are like wall Street analysts.
Michael Lewis: Yeah, no, this intersects with Moneyball. My book about baseball where you have a front office looking at data and acquiring new data and looking at it differently to get, making different judgements about baseball players and baseball strategies. A similar sort of thing was happening at roughly the same time, maybe a little earlier in the sports gambling markets where gamblers, at some point you get sick of losing the house always has an advantage, but unlike, say roulette, but like blackjack, you can get an edge on the house, you can beat the market with sports betting and you can beat the market because the odds of any game, the point spread or whatever it is, has a lot of information in it but doesn’t have everything. And you can learn things that Le Bookies and no one else in the market knows and get systematic edges.
So there was a character named Roxy Roxborough who is a legend in the sports betting world who does things like, well this is, he had one big trick, he was betting baseball and his one big trick was to bet run totals. So Vegas would make lines on how many runs would be scored in a given game. And Roxy realized that when they were making these lines, they were not taking into account weather or size of ballparks, which seems crazy now. This is something that everybody understands, but in the ’70s and early ’80s he traveled around the country and literally met, checked the dimensions of the ballpark, got the better weather reports and was able to make sharp bets on how many runs would be scored, based on whether the wind was blowing in or whether the left field porch was short.
And so that is the kind of thing that starts to happen, why it starts to happen when you can get the information, but it starts to really happen once you have computers. And in fact, I can’t remember exact name, the big Vegas group, I think it called self, The Computer Group in the ’80s, was betting football and they were building models, try models that would try to establish causal relationships between data you could acquire and find data that was predictive and about games. So there’s this kind of interplay between what gamblers are doing and what people who are managing sports teams are doing. ‘Cause what are they doing? They’re trying to find stuff that’s predictive too. They wanna predict player performance, for example. And the intelligence, the edge of like understanding sports from the kind of, I don’t know, ’90s through to 2017s probably inside of sports franchises.
That’s where it paid the most to know stuff about sports. But now that these markets have been created and legalized and they will be that like the smart, the best sports analytics people, do better gambling rather than running sports teams. If you can find stuff that gives you this edge, if you can figure out that, I don’t know, home field advantage matters much more in the first half than the second half. So is you gonna bet on the, you can make mid game bets that exploit the bookie’s ignorance of this or that players more likely to miss his first free throw than his second or whatever, you know what I mean? That it is the way to get an edge. Of course the other way to get an edge is actual inside information. But that’s a whole other subject.
Brett McKay: Yeah. And in a lot of ways what it’s done, it’s made sports abstract, completely abstract. There’s some people who are involved in sports gambling, they’re not even really sports fans, but they just see just the data and they just bet on the data. That’s it.
Michael Lewis: My jungle guide for the current sports betting markets, the modern iteration where it is all model driven and nobody’s trusting their eyeballs. It is a character named Rufus Peabody and Rufus came out of Yale in like 2009. He’s the kind of person who might well have gone to work for a high frequency trading firm, but he was obsessed with sports analytics even when he was in high school and focused his college education on the subject. And so he goes to Vegas and he becomes a sports bettor and Rufus has told me a story that sort of like captures the spirit in which the modern Sports bettor operates. The first time he really got a bankroll to bet big from other people, it was like Super Bowl’s like 2011, that vintage. And he places like, I don’t know, $50,000 in bets and then goes off after he is placed the bet, and it’s not on the game, none of it’s on the game.
It’s all props, it’s all, who’s gonna score the first touchdown? How many yards will this receiver have? That kind of thing. And it goes on and plays golf during the game. And to this day, he’s never watched the game and he won, he won a whole bunch of money and he said that like he doesn’t even, he doesn’t enjoy watching the games when he has money on it. And the kind of pleasure he used to get from sports, from like watching his Baltimore Orioles, he can only recreate if he doesn’t bet. So there’s this like, you’re right, it is abstracted from the sport and it’s beyond that. It’s beyond like, I don’t even wanna watch the game, I just wanna bet on the numbers. It’s deconstructing the game. So it’s not even a game anymore, it’s all these pieces of the game, it’s derivatives of a game.
You don’t care what the final score is, you care how many points someone scored or if someone missed their first free throw or who scored the first touchdown or little or derivatives like that. So it’s changing, I think it’s changing the fan experience. The fan experience historically is a pretty collective experience. Everybody who’s going to the arena is rooting for their Knicks or their giants to win. But now you got arenas where there’ll be a lot of weird cheers where everybody’s got a kind of a different incentive or a different interest in the game and it’s less of a collective experience.
Brett McKay: Yeah. Bill Bradley, one of the things he noted when he was playing basketball for the NBA, I think it was a game where he scored an extra two points and then his, like some fans started booing him.
Michael Lewis: Yeah. Yes. He didn’t understand it.
Brett McKay: And he’s like, “Why are they booing me?”
Michael Lewis: He just came back from his Rhode scholarship and he is playing for the Knicks. The Knicks are up by like six points with like five seconds left. And he hits a shot and he gets booed by the Knicks fans, not just a few. And he says like, “Why are they booing me?” And someone tells him that guy had money on the game and you just screwed up the line and you just screwed up his bet. Now it bothered him because he sensed, he smelled that it’s just gonna change fan interest and it becomes a selfish and money oriented thing rather than what it was. And he liked what it was, it really bothers him. We talked if you heard this, but we talked to him for the podcast and he’s still like workeded up about it.
Like can’t quite believe that his home state of New Jersey, by the way, is responsible for overturning his sports betting band, which he just seemed, he said when he created the law in 1992, there was not a peep of objection. Like it didn’t occur to anybody that this was anything but, yeah, this is sensible. Like no senator said you shouldn’t be doing this. Nevada wanted to keep what it had, but everybody else just like, it was wholly uncontroversial. You asked me in the beginning like, what drew me to the story. Stories like this are stories that describe our culture. It’s how the culture is changing and it’s so dramatic. It just leads you to all sorts of questions. Really big questions like, are we taking care of our population? And really little ones like, will players play the game the same way if fans are incentivizing them to do different things? It’s, I don’t know, I find it a riveting subject.
Brett McKay: I think so too. So you mentioned with all this data that these companies have on their customers or the bettors, that they’re able to nudge people to make dumb bets. That’s the business they’re in. So what are they doing to increase the odds for the house and how do people make just stupid, stupid bets?
Michael Lewis: So when you turn on an NBA game or an NFL game today, you see the announcers talking about the bets they’re making, and you see Kevin Hart then come on and add and talk about the bet he’s making and what are they all talking about? They’re all talking about their parlays. They’re not talking about, oh, I’ll take the chiefs and give you three points. They’re talking about, I’ll take the Chiefs and Patrick Mahomes for throw more than 300 yards and Travis Kelsey to catch seven passes or whatever. It’s the parlay, the combination of bets and the combination of bets, the more you string these things together and they all have to come true for you to win. But the more these things you string together, the longer the shot it is. And so the payout is instead of it, two to one, it’s 10 to one.
Now what happens, two things happen, is the parlays get more complicated. One is, the house, the bookie, DraftKings, FanDuel, is more likely to win because they’re giving you, essentially they’re giving you, they’re mispriced odds. It’s easier for them to misprice the odds as the bet gets more complicated. Historically, in all casino games, including sports gambling, the vig with the house assumed it was gonna win was four or 5%. It has been like a stable statistic throughout time. The vig on a parlay when it’s a two legged parlay as opposed to just a straight bet on the chiefs, it goes from 5% to 10%. When it’s a three legged parlay, it goes from 10 to 15%, four legged parlay 20%. So the more complicated the bet, the more legs there are to the bet, the more the house is gonna win. And what they’re doing when they push these bets on people is effectively exploiting a pretty common cognitive mistake people make.
And it’s like being insensitive to long odds. If you give someone 20 to one odds, they’ll go, “Oh, that’s great. I bet one to get 20,” they won’t stop and think it really should be a 100 to one odds, that it’s easier to misprice those bets. They’re more complicated than they’re also long shot bets. So a footnote to this is, in FanDuel’s recent earnings call, they suggested that Americans were, especially, susceptible to being nudged into more and more complicated parlay bets. That this same strategy didn’t work, seemed to work as well in Australia or Great Britain. That there’s something about our betting population that leaves it more vulnerable to this nudge. And this nudge is extremely profitable for the gambling companies. And it’s why the announcers and the ads and all that are trying to get you to do that as opposed to just bet on the game. So that’s why you hear people talking about their parlay bets because that’s what the industry wants you to do.
Brett McKay: Why do you think Americans are more susceptible to those complicated parlay bets?
Michael Lewis: I think we have a greater appetite for risk. I think that we are not inoculated. So I think there’s a kind of inoculation that goes on when a culture has had sports gambling for a while and those other societies have had it for 20 years. I think like we don’t have dads teaching sons. You don’t make the parlay bet. We do right now. In fact, right now I have just taught my son what the dumber bets are so that if he ends up in this market, he’s not making the dumber bets. So I think that’s, it’s sort of like never been exposed to smallpox. You’re more likely to die from smallpox. I think that that there’s a little bit of that going on. Those would be the two things. But there’s a broader thing. There’s no reason Americans would be more susceptible to what I’m about to say, but what a parlay bet is exploiting is the narrative you have in your head. It’s really easy to start telling yourself a story about how this game is gonna go. And Patrick Mahomes is gonna do this and Travis Kelsey’s gonna do this. They’re salient. You’re seeing the game before it happens kind of thing. So it doesn’t seem, once you start with chief’s win, it’s not hard to start kind of imagining the rest and telling yourself the story about the game. This is the appeal of these bets is that like everybody has their own narrative and this enables you to put money on your narrative.
Brett McKay: We’re gonna take a quick break for you word from our sponsors. And now back to the show. So you mentioned earlier something you’re gonna explore in the podcast and you got your eye on are the public health consequences of the proliferation of sports gambling. What do we know, what are the statistics we have about sports gambling addiction in the United States now?
Michael Lewis: So there’ve been a handful of widely approved of academic studies that show, and the studies are interesting because it’s, there’s kind of natural experiment going on. ’cause it isn’t, hasn’t been legalized in every state. I don’t know if this is still right, but for example, legal in Mississippi, not legal in Alabama. So you have side by side two states that are kind of similar, but one has a legalized sports betting and one hasn’t. This actually happened with opioids too. So you have these natural experience with opioids and you could see how the effects of legalization, where it’s been legalized, bankruptcies have gone up. Savings rates go down, bankruptcies up quite a bit, savings rates down quite a bit with a lag, which you would expect because it’s happened in Britain and in Australia. Suicides go up. The Lancet, the medical journal, just published a long, it was a global survey of sports gambling, which it regards now as a serious public health problem globally, where they said in their study 26% of the young men who bet sports developed gambling problems, which is a wild number.
I’ve not interviewed the authors of the paper, I wanna poke at them a little bit before I go run around talking about this too much. But what we do know from the NCAA whose new head, Charlie Baker, became incredibly alarmed at what was going on in college campuses. When he took the job and kind of traveled around the country, he commissioned to study to ask how many young people are gambling on sports. And the number came back with 60% of young men on college campuses or more, 60% of young men generally and more on college campuses. And so it’s just like you just see the beginning of what looks like an epidemic and it will be particularly hard to pin down because unlike, say opioids, there are people just dropping dead in front of you. It’s like a little more visible, a little more insidious and it’ll take a while to play itself out.
Other countries that are ahead of us regard these as serious public health crises. Like the government that just got, that was elected recently in Australia was elected partly to curtail the gambling industry. Have not been able to do it, but that was part of their sales pitch to the population. I just got back from a book tour in England and I had a couple of prominent people who interviewed me, tell me after I mentioned I was doing it, they say my son’s life was ruined by this. And it’s just anecdote, but I can see it in my son’s school. They’re all high school, the kids are gambling on sports. We poked around high schools around the country to see kinda what was going on. It’s no longer just New Jersey where you grow up gambling on sports. And so exposure increases the likelihood of gambling problems by seems like quite a bit.
And gambling problems are not trivial problems. They are addictions that can kill you and destroy the lives of the people around you. It isn’t that I think that we just like completely ban all sports gambling because I think that’s probably never gonna happen. But you can ban ads. You can ban targeting young men with special offers. You can make it harder for the companies to nudge people into the stupider bets. You could have really radical price disclosure so you know how much on this bet your odds are actually this when you’re betting this. You could do stuff like that to at least blunt some of the effects. But that’s not how we roll right now. It’s little like we just let this thing run until it becomes a crisis. And I think we’re catching it. I think my podcast will seem maybe slightly premature, like people aren’t quite aware of this as a problem, but I think five years from now they’re gonna be very aware.
Brett McKay: You mentioned the demographic that’s most susceptible to gambling addiction, sports gambling addiction, young men.
Michael Lewis: Yep.
Brett McKay: What is it about young men that makes them more susceptible to sports gambling addictions?
Michael Lewis: Overconfidence. Anybody with a 17-year-old son knows this. Like they know everything. And the endless studies that kind of show that the relative certainty of men versus women at that age, like after a math test, you ask young men how they did and they systematically think they did better than they actually did. And the girls all think they systematically did worse than they actually did. It’s partly that, it’s partly how young men are socialized, gambling has been woven into fraternity life. So it’s become like, you’re not one of the boys if you’re not doing this. But overconfidence is the big thing. It’s like, I know, like I know who’s gonna win the game and that’s charming up to a point. But it’s lethal. When you’re in the hands of this industry and you have a gambling problem, you have that vulnerability. Not everybody does.
I don’t feel it. It’s funny, it’s, I have my vices but I don’t feel the slightest desire to go lose money to FanDuel or DraftKings, just doesn’t interest me. I know when I’m betting that it’s like it’s an efficient mechanism for making me poor. Like for sure if I just keep doing it, I will lose and maybe I’ll win a bet or two. But the tragic inevitability of it does not interest me at all. But some people just need that hit and there’s something chemical. So you asked me the question like what is it about young men? It’s obviously something neurological and what it is? I don’t actually know ’cause we haven’t actually got that far in our podcast. We’re interviewing some neurologists this week.
Brett McKay: I think testosterone has got to play a role ’cause it drives risk taking, it creates that confidence you talked about. And it also has neurological effects on the brain. Like it affects regions like the amygdala and prefrontal cortex so that it tips the brain more towards reward seeking and young men, teenage guys, they’re just surging with testosterone. Speaking of which, don’t you do an experiment with your son, your teenage son to see how he responds to sports gambling?
Michael Lewis: Yeah. I hate to throw away the punchline, but this is what we did two experiments. First we did two things. We hooked up Lydia Jean Cott, my delightful young female producer with a sharp bettor, like a serious professional sports gambler who is making millions of dollars a year and making hundreds of millions of dollars a year in sports bets, who can’t get his bets down anymore because the new sports gambling companies are really good at detecting smart gamblers and throwing them out. So he hires people to be kind of mules for him. So one experiment we did was we let him hire Lydia Jean and she ended up putting down a couple of hundred thousand dollars in sports bets in a nanosecond. It was a really funny experiment. And, but the other experiment was, and I thought in that experiment I assumed we’re gonna make the money that we’re gonna lose with my son’s experiment.
Because I gave my son Walker $5,000 and said do your worst. Like go try to make money. You can keep what you make. 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 betting. And it took him about six minutes to open an account where he could bet sports. And he did it with a friend. And we just recorded their every move and to give him some hope, we gave him lifelines like he could call Rufus Peabody. He could call these famous sports bettors or these statisticians and ask them questions about the bet he wanted to make. And the reason we did this, this is gonna be the final episode and I’m not gonna tell you what happens, but it’s pretty funny what happens. I wanted to see if we could create through Walker’s experience a kind of course, a how not to, but a how not to course for young men, so they could listen to this 35 minute podcast and learn all the kind of mistakes their brains are susceptible to making when they’re making sports bets.
All the basic kind of crude statistical principles like I don’t know, regression to the mean things like that, but in everyday language and in the context of this kid betting sports, that they need to defend themselves against an industry that’s trying to exploit them. The industry’s predatory is trying to get as much of your money as it can and it’s taking advantage of all the weaknesses in your mind. And young males are particularly susceptible to these problems. So give them something to defend themselves. It’s sort of like we’re not gonna get guns banned so I’m gonna give you a gun to defend yourself. And so that was the point of the episode. There’s one other thing that I was hoping he would take out of it, you can wait to listen to it before you decide whether he does take it out of it, is that the industry’s doing something that is really interesting that even the casino industry really doesn’t do.
Yes, the casinos ban card counters at the blackjack table, but this industry, because of the data that they have on their customers and their ability to analyze the bets the customers make has gotten unbelievably efficient at identifying anyone who actually knows what he’s doing. So anybody who’s likely to beat the house might get tossed out after making two bets. So what does that mean? It means that the industry is sort of identifying all the people who shouldn’t be betting on sports, who shouldn’t be risking money and making their money off them. And so in a funny way, it’s a public service. They’re kind of identifying everybody who shouldn’t be managing money. And if I think, I say this kind of jokingly, but I actually think that there’ll come a time when you’re being interviewed as a possible hedge fund manager for some university portfolio.
And one of the questions they ask you is, do you have an account at FanDuel or DraftKings and is it in good standing? And if you say, yeah, I love Berton sports and yeah they love me, I’m a VIP, the university endowment says, no way we’re ever hiring you to manage our money. You’ve just revealed you don’t know what the hell you’re doing. ‘Cause they only want people who don’t know what the hell they’re doing. So I think in a funny way, the downfall of the industry or the weakness at the industry is that they gonna, it’s gonna be embarrassing to be associated with them. It’s gonna reveal something about you you don’t want revealed.
Brett McKay: That’s interesting. I like that take. So I wanna go back to this thing that’s, I’ve always wondered about. It’s baffled me since the rise of sports gambling, these FanDuel and Draftings, is I’m watching a game and I see these ads for sports betting and they’re often co-sponsored by professional sports leagues.
Michael Lewis: Right.
Brett McKay: And which is, it’s just crazy to me. ‘Cause I remember you talked about earlier seven years ago, all the sports leagues were adamant about keeping distance from gambling ’cause and it made sense. Your gambling can affect the integrity of the game. You don’t want another Black Sox scandal, and it was just like you did not mix gambling in sports. Pete Rose is not gonna be in the Hall of Fame because of gambling in sports. But now you see the sports leagues embracing it. So what’s going on? Like what do the sports leagues get out of embracing gambling?
Michael Lewis: This is a really good question. Couple things. They get direct revenues because they have deals with the companies that the companies have to use the official data from the leagues to settle the bets, so they get paid cash. And that cash is super cash from the point of view of the owners. ‘Cause it doesn’t have to be shared with the players. It goes straight into the pockets of the owners. So that’s one thing. But the other thing is across the sports, possible exception of football, but there has been problems with fan engagement. Like our culture is successfully fragmented to the point where it’s very hard to get everybody watching the same thing. And the one exception is live sports. And that has been reflected in the media contracts that the sports leagues have cut, which then of course inflate everybody’s salaries and make the profits of the franchisees more valuable and all the rest.
But they were starting to see softness and the same thing that was coming for normal TV program was coming for sports. And you get a different kind of fan engagement if everybody’s betting on the game. And not only that, you get a, you don’t get ordinary fan engagement, you don’t get, I’m just gonna watch the Saints ’cause I grew up watching them and I love the Saints, but I’m gonna watch every NFL game ’cause I have money on all of them. There is this odd situation, now, apparently, where the University of Hawaii and Hawaii is actually not legalized sports gambling, but the University of Hawaii is one of these very bet upon college football teams because it plays in a time zone when nothing else is playing. And so that you got all these gamblers gravitating to it at the end of the day to sort of like chase their losses.
So it creates eyeballs, it creates fan attention. It tracks fan attention in the same way that a slot machine attracts your attention. It’s a different kind of attention. It’s sort of like, it’s very short term dopamine kind of attention, but it’s attention and that seems to be the attention that people are giving to things. That’s the other thing, is just sort of engagement with the league. But you completely, what you said before about like the original concerns about the integrity of the games, that doesn’t just go away. It’s not like, oh, everybody’s just gonna behave well ’cause they’re gonna give some the players all some seminars about how you shouldn’t gamble on sports. Two things happened to the players and we interviewed players. Larry Nance Jr. Power Forward for the Atlanta Hawks was very eloquent on the subject.
He’s like, he’s basically said, you’re not gonna believe the shit I’m dealing with now. He says, I come off the bench and I score four points and get five rebounds. You wouldn’t think anybody would bet on me, but in fact they’re prop bets to make on me every game. And he said he was in his hotel in Memphis after a game against the Grizzlies. And he gets like a direct message saying, “You cost me a fortune by not getting your six rebounds. Don’t show your face on the street. I’ll slit your throat.” He says, players are getting these messages constantly. College players are getting these messages constantly. They’re not hitting their props and people are getting angry with them. And at the same time they’re seeing all the ads and all the inducements and they’re expected not to have any interest in betting even though they probably have better information than everybody.
But the last little wrinkle to this is what the betting markets are doing, becoming as sophisticated as they are is monetizing all this information that previously was not monetizable. Like back in the old days when the mob ran the bookies, you could bet on the game, maybe you could bet on the total, the points, total points scored. You couldn’t bet on whether Larry Nance Jr was gonna get five rebounds or some point guard at a middling D1 school was gonna make his first three throw, free throw. You can make those bets now. And so all that information is now worth something. So if you are the point guard on the middling D1 basketball team and your frat brothers say, “Hey, just like you guys gonna blow these guys out tonight, just miss your first free throw. We’ll make a fortune.” That’s happening all over the place and it’s just, has not been completely surfaced. But we went to, Lydia Jean, my producer, went with a microphone to the University of Kansas during a football weekend and it was like every kid had someone on the football team telling him what we thought was gonna happen. 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 the game, all you have to do is rig a free throw. You just know this is gonna happen. You heard it here first, you’re gonna get a steady diet of sports gambling scandals.
Brett McKay: Yeah. So we’re gonna have black socks, but like just a whole bunch of them, like a little mini scandals.
Michael Lewis: Yes. And you’re already seeing it.
Brett McKay: Yeah.
Michael Lewis: There were more gambling related stories last year than I remember in my life. It’s just like, it’s Ohtani, it’s Jontay Porter being tossed off the Toronto Raptors for pulling himself out of a game. So he didn’t hit his props. I loved K. Sean Busha, they sort of buried the case, but he was a wide receiver at LSU, I think he’s with the Patriots now, but they revealed after he left LSU that while he was out playing at LSU, he made 8,900 sports bets. You’re telling the whole culture that this is legal, normal and joyful activity and you expect the athletes not to do it? If you start, we interviewed their companies whose job, they’re called sports integrity monitors. Their job is to look for unnatural patterns, disturbing patterns in the markets to, that would suggest a game or a performance is being rigged or fixed in some way. And the guy who ran that, and it’s just one of a dozen of such companies, he said last year that we caught 150 cases of this kind of thing. Players doing something, people having inside information. And you can bet if they, if one company caught 150 cases that they’re like, 10,000 cases that didn’t get caught. And it’s just, it’s just a matter. This is just, but we’re in, it’s a new market. This is just getting going.
Brett McKay: So yeah. Where do you think the future of sports gambling is going?
Michael Lewis: It’s a question of not if but when there is a serious political blowback like legal. It could take a couple of forms. There already are lawsuits that have been brought by gamblers who lies have been ruined by the companies who have nudged them into doing really dumb things. I don’t know whether those lawsuits will ever get traction, but those exist. They’re out there. It’s sort of like the lawsuits that were brought against tobacco companies. What is gonna happen is they’re gonna be some story. They’re just gonna be story after story and they’ll be some high profile case that will trigger national interest. And some senator will introduce legislation that, I don’t know, tries to ban sports gambling ads. I think what’s gonna happen is we’re gonna have enough crises, enough of a crisis that some things will inevitably have to happen.
It will be constraining the advertising power of the companies. It will be making it really dangerous for them to take underage bettors. It will create more transparency in the pricing of the bets that I think that all that kind of thing will happen. But I don’t, do I think that we’ll go back to like a prohibition of on sports gambling? No. I think it will just eventually be made a little bit more sensible, but eventually might mean 20 years. The opioid between the time the Purdue Pharmaceutical created Oxycontin in 1996 and the time it all comes crashing down because 750,000 Americans have died is 20-something years. I mean, we move slowly when business profits are at stake and business profits are at stake. So I assume this is gonna take a while, but we’re gonna get a steady diet of gambling, tragedy, gambling, corrupting the sports, that kind of thing.
Brett McKay: Well Michael, it’s been a great conversation. Where can people go to learn more about the podcast?
Michael Lewis: The podcast Against The Rules. I think it’s season four or five. It’s the purple one. It’s the purple logo but it’s the new season. It’s just out of, you can find it on Apple or Spotify or anywhere.
Brett McKay: Awesome. Well Michael Lewis, thanks for your time. It’s been a pleasure.
Michael Lewis: Yeah, thank you.
Brett McKay: My guest today is Michael Lewis. He’s the host of the Against the Rules podcast, where this season they’re exploring the world of sports gambling. Check it out wherever you get your podcast. Also check out our show notes at awhim.is/sportsgambling where you can find links to resources and we can delve deeper into this topic.
Well, that wraps up another edition of the A Whim podcast. Make sure to check out our website @artofmanliness.com. Find our podcast archives as well as thousands of articles that we’ve written over the years about pretty much anything you think of. And if you haven’t done so already, I’d appreciate it. If you take one minute to give you Apple a podcast or Spotify, it helps out a lot. And if you’ve done that already, thank you. Please consider sharing the show with a friend or family member who think it something out of it. As always, thank you for the continued support. Until next times, Brett McKay, remind title list day when podcast with, put what you’ve heard in into action.
