In a scathing monologue for the news program, Breaking Points, co-host Saagar Enjeti lays bare the business model of online sports betting companies such as DraftKings and FanDuel. Their model is to locate problem gamblers and lure them back with nonstop freebies and promotions until they bankrupt them.

Enjeti, one of the top public policy journalists in the country, holds a degree in economics from George Washington University and a Master’s degree in U.S. National Security Policy from Georgetown University. Enjeti was a White House correspondent for The Daily Caller, co-host of The Hill’s video news program, Rising, and co-founder and co-host of Breaking Points.

Enjeti’s analysis of online sports betting in the United States relies on the work of Charles Fain Lehman for The Atlantic. In an article published three months ago, Lehman consolidated three studies examining online sports betting behavior into the following shocking statistics:

– In a study of 700,000 gamblers, fewer than 5% withdrew more money than they deposited.

– The bottom 3% of losers accounted for nearly half of all the money bet

– A 25% increase in bankruptcies in states legalizing online sports betting

– A 9% increase in intimate-partner violence in states legalizing online sports betting

Nearly half a trillion dollars has been wagered using online sports betting apps in the six years since betting started to be legalized by a 2018 U.S. Supreme Court decision. According to Enjeti, a select group of companies has cut deals with the 38 states that allow online sports betting, giving them cartel-like licenses that freeze out competitors while facing few limitations on their predatory behavior toward customers. 

Here’s Enjeti from the show’s transcript on YouTube:

A few mega companies like DraftKings, FanDuel, PrizePicks and others, have effectively rolled up the legal sports betting market by getting separate states to grant them preferential licenses to run action in their state. This is important because the quasi-monopolistic way that sports gambling runs on a state-by-state basis means that it is not a fair marketplace.

The predatory-behavior online sports betting companies display is illustrated in the Breaking Points piece with evidence presented at trial about the ways companies identify and pounce upon problem gamblers. Instead of cutting them off, as they are required to do, they encourage, pester, and reward them daily to get them back.

On the other end of the spectrum, for the 5% of gamblers who do show a net gain over time, the online sports betting companies cut them off. Here’s a transcript of Enjeti explaining how that’s done:

Once you start to win consistently these gambling companies are fully within their rights to limit your bet size to amounts less than $10 or even $1 meaning that if you’re any good they are allowed to restrict your action and their potential exposure.

Online sports betting companies know that half their profits are coming from 3% of the suckers who can’t stop betting no matter how much they lose. According to Enjeti, the companies identify these highly lucrative players and target them with enticing promotions. “The statistics show us that the profit margins and the very business model of these companies rely on so-called problem gamblers,” Enjeti says.

With winning gamblers cut off, and losing gamblers encouraged, the cartel-like online sports betting firms — including DraftKings, FanDuel, BetMGM, and PrizePicks — have a license to steal. Their plans are not to offer an unbiased chance of winning, while cutting off problem gamblers and covering their own expenses with a modest percentage of revenues. Their plans are to restrict opportunities to win by cutting off winners, not losers, and encouraging problem gamblers to keep it up.

Enjeti concludes his monologue with several suggestions for improving online sports betting without banning it. First, restrict the ability of online sports betting companies to advertise. Enjeti, supposedly a free-market advocate, likens it to cigarette advertising, and feels both should be restricted “for the societal benefit of all citizens.” 

Second, Enjeti would prohibit online sports betting companies from sponsoring sports teams or sporting events. The potential for mischief when sports teams are being funded by online sports betting apps is too great to allow the overlapping interests, according to Enjeti.

Finally, Enjeti thinks it would not be a bad idea to regulate sports betting the way they do in the United Kingdom, and only allow wagers placed in person, at licensed gaming establishments, and prohibit online sports betting entirely.

If you know someone who has a gambling problem, the best place to start is the phone number +1-800-GAMBLER where you can get information on the nearest facilities that offer gambling addiction treatment. You’ll also find several more articles on gambling addiction and gaming addiction here at AddictionNews.

Written by Steve O’Keefe. First published December 16, 2024.

Sources:

“Why Online Gambling Is The Next Opioid Crisis,” Breaking Points, December 11, 2024.

“Legalizing Sports Gambling Was a Huge Mistake,” The Atlantic, September 23, 2024.

“The Financial Consequences of Legalized Sports Gambling,” SPPN, August 2024.

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