Economics of Sportsbooks and Why They Ban the Best Bettors

I wholeheartedly agree with you, they need to ban advertising, as they did with tobacco. The amount of commercials and adverts is nauseating, the industry is predatory, and I’m having serious thoughts about stopping because of that.

Would you agree that as a guiding principle for good government no one should be forced to associate with anyone they don't want to or disallowed from associating with anyone they do want to? That's the fundamental right that's in conflict with the idea of not being allowed to ban successful bettors. In the US we've decided that the insidiousness of class-based discrimination merits an exception to that idea, but overall free association rules the day. You as a business or a consumer are free to do business or not with anyone you want to or don't, and that's how it should be afaic.

However aside from this, the data is over abundantly clear. Legalized betting significantly hurts the financial health of the places where it’s allowed; because of the rollout in the US, there’s so much data we can derive a definitive causative effect that bankruptcies are up and savings go down in places that legalize it. You can have a liberal view of “that’s their problem” but from a societal perspective this is a net societal harm that has no to minimal beneficial impact.

Worse, it’s actively trying to exploit their customers through deception.

> All-you-can-eat restaurants will ban customers who eat/take absurd amounts of food, which is unprofitable.

I like this example. It is simply not wanting to make a deal with the person. It seems pretty close to the betting situation.

> Landlords don't rent to prospective tenants who have a history of not paying rent, which is unprofitable.

This is different because the renter is specifically reneging on their side of the contract. It isn’t a matter of not wanting to do business with them because the deal has bad terms, but because the landlord has good reason to suspect they’ll actually be ripped off instead.

> Every major retailer will ban you if you return too many items too often, which is unprofitable.

This… I dunno. Making too many returns is not necessarily illegitimate or anything (somebody could just get unlucky and end up with a lot of bad products). But, it is a bad vibe, it feels like maybe the person is running some kind of scam or fraud that you just haven’t worked out the details of.

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Another example we could add: if you have a some pickup or beer-league sports and for some reason a professional player shows up, and starts playing really competitively and flattening all the other players, you might ask them to not come back, simply to maintain a reasonable competitive landscape for everybody.

I suspect most people aren't interested in gambling this way though. Banning winners allows you to turn our gambling into something much closer to this alternate form, while keeping all the marketing benefits of a game people actually want to play. That certainly feels deceptive in ways that a transactional purchase is not.

the most lucrative (sports) bets are complex and highly unlikely parley bets, betters here naturally tend to all take one side

They want to offer bets on many sports, matches, and specific events that don't get a lot of bets, so they have to take the risk

If we start decrying every industry whose business model is based on information asymmetry we are going to have a lot of uncomfortable folk on this forum

Asian books (not a geographical distinction but a business model) are not exchanges and they effectively pay sharps to bet with them. This is why betting syndicates exist, they set prices, and the business model of Asian books is to make it back on volume from having the best prices (and before legalisation, these were the biggest books in the world, they did billions every week in handle).

But the business model is different: retail-facing bookies have to win their customer base back every week so they need to spend more marketing. Asian books also do promos but they tend to be one-time (which are cheaper to run), they don't have a non-sportsbook business typically, and they don't comply with regulators.

Exchanges do not drive away sharps either. Their business model is largely about providing an environment for sharps. The only times were that hasn't been true is when a syndicate has owned an exchange (this happened with Matchbook). The exchange provides an incentive to invest for people to invest in price discovery, which happens. There is no way for the business to run without someone being incentivized to discover prices. People randomly gambling against each other isn't a business model.

Anyone whose name sounds like a Harry Potter spell is bound to be an interesting person. I'll have to dig into him some more

Given Kalshi a year to figure out how to wash it through a token and then you'll be able to buy calls/puts as futures.

It is admittedly not that much different than any other addict looking for their next fix. Yet, if feels lot uglier when it is a billion dollar corporation on the other side optimizing for the human tragedy.