Controversy At FanDuel Sportsbook Is A Good Test For The Regulated Market

Written By Steve Ruddock on September 19, 2018

The FanDuel Sportsbook at Meadowlands Racetrack has the dubious distinction of being the home of the two biggest sports betting controversies in the nascent New Jersey market.

The FanDuel Sportsbook’s first controversy in the nascent NJ sports betting market was the result of miscommunication between employees and customers about its ability to payout winning betting slips after it officially closed for the night.

After an investigation, the DGE concluded it was a training issue and not a regulatory issue.

In an interview with Legal Sports Report, New Jersey Division of Gaming Enforcement Director David Rebuck said the sportsbook would be wise to better educate its staff and use it as a learning experience.

Lesson not learned

Two months later, the FanDuel Sportsbook finds itself embroiled in another controversy.

Its latest kerfuffle had to do with an out-of-whack line in the late stages of the Sunday afternoon game between the Raiders and Broncos.

Somehow, the FanDuel sportsbook mis-set the line, and instead of Denver being a -600 favorite, it was listed as a 750/1 underdog. The line was only up for seconds, but that was enough time for at least one bettor to get a bet in.

FanDuel responds

FanDuel issued a statement Tuesday evening addressing the situation:

“The wager in question involved an obvious pricing error inadvertently generated by our in-game pricing system.  Specifically, near the end of the Sunday afternoon game between the Denver Broncos and the Oakland Raiders, the odds for the Broncos (who had the ball and were trailing by two points at the time) to win were +340 (bet $100 to win $340). The next play, the Broncos completed a 26 yard pass to position themselves to attempt a 36 yard field goal to take the lead in the final seconds of the fourth quarter, clearly positioning the Broncos as the favorite to win.

“At that moment in the game, our system updated the odds and erroneously posted a price of +75,000 on the Broncos to win the game (bet $100 to win $75,000) when the correct odds for the Broncos to win the game at that point in time were -600 (i.e., bet $600 to win $100). 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. We have reached out to all impacted customers and apologized for the error.”

Without getting into the nitty-gritty details of the story, I would be quite surprised if the DGE forced FanDuel to honor the wager. The books’ House Rules (which were approved by the DGE) cover precisely this type of situation:

“FanDuel Sportsbook reserves the right to correct any obvious errors and to void any bets placed where such errors have occurred.”

This is an uncommon, but known issue

If you expect regulated markets to be perfect, lower your expectations. With any technology, there are going to be issues.

Slot machines have been known to spit out incorrect tickets, or incorrectly sound the jackpot alarm. In these cases, courts have ruled the casino doesn’t have to pay.

It’s also an issue beyond the four walls of casinos.

Bottom line: In none of these cases are you allowed to keep the money. When you find money that doesn’t belong to you or take advantage of an obvious error, you don’t get to keep it.

No, sports betting isn’t different

Social media is full of people finding fault in all of the above analogies and claiming “sports betting is different.”

As Scott Van Pelt pointed out last night, the bettor won his bet, but his winning bet is supposed to be for $18.35, not $82,000.

Let’s get one thing straight, no offshore book is paying out that betting slip when there was an obvious glitch in the system. And most regulated markets allow books to void or adjust bets when there is an obvious error, or as they’re known in the industry palpable errors, or simply palps.

Even in the most consumer-friendly sports betting markets, there are limitations on bettors profiting from palps.

When a palp occurs, France limits payouts to a max of 85 percent.

In Italy, palps have a hard cap of $10,000.

This is what regulated markets are for

Don’t read any of this as a defense of FanDuel, or feel I’m letting FanDuel off the hook.

FanDuel Sportsbook messed up.

But the proper recourse isn’t to make them pay out a bogus bet.

If an underage player hits a jackpot on a slot, the casino isn’t forced to let them keep it as punishment. The underage player receives nothing and the casino is fined by the state gaming control.

NJ sports betting and accountability

Regulated markets don’t function better than illegal markets because they make fewer mistakes. The reason they function better lies in how those mistakes are handled.

The difference is accountability.

No one is holding an offshore sportsbook accountable for a palp that results in the canceling of a bet.

FanDuel will be held accountable.

The DGE will investigate what happened, and FanDuel is likely to receive a stiff fine. FanDuel will also be put on notice. And considering this isn’t its first issue, the NJ sportsbook is looking at escalating punishments on any future transgression(s).

That’s the regulated difference.

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Steve Ruddock

Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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