In the original Animaniacs series, there was a recurring segment called “Good Idea, Bad Idea.” You can add an official data mandate for online sportsbooks to the latter category for many reasons.
Recently, regulators in New York doubled down on the poor quality of that exact concept. They added an amendment to the existing rules that could make the practice of the flawed theory somehow worse. In that upside-down way, it’s really quite an accomplishment.
The new official data mandate for NY online sportsbooks
It’s important to understand what the term official data mandate means first. Sportsbooks like the nine that will be available for use in NY someday don’t employ an army of reporters to communicate how the thousands of events they offer action on are going.
Instead, they buy that information from vendors. So, that’s the data part. What makes the data official? Well, that’s part of what makes these mandates such poor policy. Few people if any actually know for certain.
A bettor would like to think that leagues like the NBA and NFL have done some thorough vetting of the service providers to ensure they will actually deliver a quality product to sportsbooks and bettors before handing over their seals of approval. At the same time, we’re talking about a group that includes a league that used two different types of balls and told no one.
What seems to be a sure bet as far as what makes a data feed official is money. Parties haven’t confirmed how much exchanges hands in these deals. Unconfirmed reports suggest that Genius Sports paid nine figures for the stamp of approval from the NFL, for example.
The idea is that official data has some form of superior quality to it. For that reason, not only sportsbooks but bettors can trust its accuracy. That’s where the Emperor’s New Clothes start to vanish, though.
Just a pricey selling point
The fact is that there’s no evidence which even suggests data feeds with the official tag are to any extent more accurate, faster, or more reliable than their counterparts that don’t have leagues’ blessings. It’s true that there isn’t much available literature on discrepancies.
The reality is that the data collection methods that official and unofficial services use are identical. In many cases, the data travels over the exact same systems. To the naked eye, the only discernible difference is that one company paid a king’s ransom to the leagues while others didn’t.
That points out the only parties who are actually benefitting from legal requirements like New York now has. Those are the leagues that are already making and profiting off the product in other ways.
There is no regulation of how much leagues can charge for the official provider label. Thus, the slew of potential providers is at their mercy. Additionally, those providers bear all the costs of the production of the data feeds.
The base product, sporting events in this case, is already being produced anyway. For the leagues, this is just another way to monetize it. Under the banner of “integrity,” they’ve convinced governments to force data providers and sportsbooks into a corner.
New York is the latest to do so. There are some unique twists to the wording of the new regulatory language. None of it makes the situation any better.
Vague, problematic language in amendment
A new amendment to Section 5329.8 of the regulations, Internal Controls, requires official data from a sports wagering governing body be used to determine all sports wagers, unless the licensee demonstrates to the satisfaction of the [New York State Gaming] Commission that wagers for a wager type may be determined objectively, reliably, accurately, and timely by an alternative data source.
While that seems to give licensees an out, it isn’t that simple. There are no objective criteria in the regs as far as what would satisfy the Commission in this regard. A NY sportsbook wanting to challenge this requirement would go into a hearing with the Commission blind as to what level of accuracy, objectivity, reliability, and timeliness it would take to convince those regulators.
Additionally, because it’s completely subjective, individual regulators might have different standards. Then, they’d have to repeat that process for every market they’d like to offer apart from official data services. Furthermore, the responsibility is completely misplaced here.
Nothing but a handout to sports leagues
The mandate makes the leagues the arbiters of the official data tags but then assigns zero responsibility to them for ensuring the viability of the product. Instead, that’s left for the customers, in this case NY sportsbooks, to act as watchdogs around.
So the question becomes if the market is capable of deciphering whether data services are conforming to expectations and then presenting requests for exemptions to this mandate, why is the mandate even necessary? Won’t buyers naturally stray from slow and untrustworthy providers?
Such a mandate simply assumes that the leagues will select the best providers instead of just the ones offering the most money. In that way, this rule could actually force operators to pay more for an inferior product.
Another context makes clear how ridiculous this approach is. Imagine if the state told all NY sportsbooks they could only get their IT services from one firm that the cable companies in the state would choose. Then if that service proved substandard, the sportsbooks would have to ask for an exemption for each incident that arose to employ another service.
The truth is that this official data mandate employs regulatory powers only to make sure that leagues get free money for something they’re already selling and then takes a complete laissez-faire approach to the facets of the situation that actually affect the quality of the experience for sports bettors. They’ve managed to take a bad idea and magically make the execution of it even worse.