The FanDuel Sportsbook is now live in New Jersey. Visit the FanDuel Sportsbook mobile app here for full details.
UPDATE: FanDuel has agreed to pay the bettors.
Last weekend, a sports bettor at the Meadowlands Racetrack in New Jersey placed an in-game bet that the Denver Broncos would beat the Oakland Raiders.
Anthony Prince was given a ticket at the FanDuel Sportsbook betting window stating that the odds were 750 to 1. There was only a minute left in the match, and the Broncos were losing.
A field goal in the last six seconds of the game produced an unexpected victory, but FanDuel refused to pay Prince his big winnings.
According to FanDuel, the extreme odds were a result of a “glitch” in the system. They refused to honor the ticket, which would have paid out a whopping $82,000 on the $110 bet. Instead, they offered Prince $500 and tickets to some New York Giants games as compensation.
“A small number of bets were made at the erroneous price over an 18 second period. We honored all such bets on the Broncos to win the game at the accurate market price in accordance with our house rules and industry practice, which specifically address such obvious pricing errors.”
State-regulated sports betting is beginning its gradual rollout across many parts of the country. This particular incident raises questions about fairness and regulation that will worry many potential sports bettors.
What happens next?
In New Jersey, the Division of Gaming Enforcement (DGE) has launched an investigation into whether FanDuel is required to pay out on the bet. More significantly, Director David Rebuck said the DGE was looking into:
“just as importantly how it occurred given internal controls exist to prevent such an error. Those findings might also result in the need for further action.”
Prince himself said he is consulting a lawyer as to how to proceed.
Was the error really obvious?
FanDuel’s statement on the incident began with the opinion:
“The wager in question involved an obvious pricing error inadvertently generated by our in-game pricing system.”
Fair enough. New Jersey sports betting technology is new, so maybe there will be “glitches.” But if there are, does the operator have an obligation to pay for its own mistakes?
Bear in mind that several things must have gone wrong. The member of staff issuing the ticket failed to notice the error. He or she also failed to do anything about it if the odds seemed wrong.
If the issuer didn’t check the ticket, then presumably he or she should have. If the ticket was checked and the checker didn’t notice the extreme odds, then how should it be assumed to be “obvious” to the bettor that there was a pricing error?
Is it the case that FanDuel is exploiting the bettor’s ignorance of what the true odds should be by passing on some responsibility to him for not knowing that there was an obvious pricing error?
Other bettors have come forward saying that they were equally affected while using FanDuel’s online sports betting application.
One of the big selling points of sports betting regulation is that it protects bettors from unscrupulous street corner bookies or unlicensed offshore operators.
While FanDuel may technically be in the right according to its published terms and conditions (and the DGE investigation may find that FanDuel has done nothing wrong), there is a wider court of public opinion.
Outside of Nevada, US sports bettors have been giving their action to black market operators for years. For regulated sports betting to succeed these bettors have to be attracted back to the regulated environment.
Stories like this one don’t exactly encourage such bettors to leave their offshore sites for the improved protection of the regulated sector. And especially when the regulated sector may not be offering the same odds as offshore operators. It’s also important to note that offshore books would probably take the same path as FanDuel and not paid out the bet–but without any possible regulatory repercussions.
Regulated sports betting operators have the extra costs of state gambling taxes and compliance. Pennsylvania, with its 36 percent sports betting tax, is a place where it will be tough for operators to turn a profit at all, especially if they have to compete with a black market that offers better odds.
Are sports bettors expecting too much?
The US is world-renowned for its standards of customer service. Consumers have more power legally and culturally than in any other country. Perhaps this level of customer expectation is unfair to the sports betting operator.
Imagine that you go to buy a new car. A sticker price has been wrongly posted on the car window as $35,000 instead of $53,000. You would not expect to be able to force the dealer to sell you the car at the mistaken sticker price.
But what if it wasn’t a new car, but a used car. Then the issue becomes slightly more nuanced. The advertised price is much less obviously wrong.
And in this betting ticket case, the sale has already occurred.
So what if you bought a second-hand car for $10,000 instead of $20,000. How would you react if the dealer came back and complained that there was an “obvious” pricing error and no, he wouldn’t be delivering the car to you tomorrow?
Sports betting has a reliance on technology. There’s a widespread use of internet sports betting where no human being is checking any bets. This puts instances like this into a gray area. And gray areas are not good for consumer confidence.
In more established jurisdictions around the world, it is common for sports betting operators to ban or impose low betting limits to bettors who win “too much.”
This issue hasn’t really been tested in the new US regulated markets, but it is coming soon.
How will the regulators deal with this one? On a state-by-state basis, there will be a patchwork of different responses. However, that will not be good for consumers or the industry.
What should FanDuel have done?
Hindsight is a beautiful thing, but anticipation is more useful. This situation is one that FanDuel should have planned for, not just technically, but from a public relations perspective.
Casting an eye over the coverage and Twitter reactions, maybe it would have been better just to suck up the loss and pay out the bets.
On the other hand, strategically I may be very wrong and FanDuel has judged correctly that they shouldn’t set a precedent by paying out on such glitches. The danger of setting a bad precedent may outweigh any short-term PR hit the incident will have caused.