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The UK £2 fallout

According to press speculation today, the fallout of the government’s cut in fixed odds betting terminal (FOBTs) stakes, announced yesterday, will hit British bookmakers for more than £200m in profits.

Culture Secretary Matt Hancock described FOBTs as "a social blight." William Hill, the big bookie, has estimated that the decision will hit profits between £70m and £100m. GVC has put the potential loss from its profits at £120m and Paddy Power £22m.

Despite the gloom, shares in both William Hill and GVC rose, by 4.1 per cent and five per cent respectively. The UK Treasury will lose £1bn in taxes from the FOBTs, but is planning to increase the 15 per cent tax on online gambling, possibly to 20 per cent.

There has been no precise date for the imposition of the new £2 stake. In a radio interview Minister Tracey Crouch indicated that it would be "some time next year," but most newspapers are suggesting that it would be in 2020, giving the bookmakers time to run down or reorganise their estates.
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Updated LeBron Odds: Philly coming in behind the Lakers

The newest round of odds for LeBron James’ ‘18-’19 destination have been released.

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The new odds are out and the Sixers remain unchanged at 7-2 which, after adjusting for bookmaker profit, suggests that Philly is around 18-20% likely to be welcoming the King. As we might have guessed, the Cavaliers being swept has massively reduced the forecast chance that leBron stays in Cleveland, as the Cavs are now at +3000, suggesting only a 2-3% chance James stays with his current team. Here are the complete odds:

* Los Angeles Lakers +200
* Philadelphia 76ers +350
* Miami Heat +500
* New York Knicks +750
* Houston Rockets +1000
* San Antonio Spurs +2000
* Cleveland Cavaliers +3000
* Golden State Warriors +5000
* Boston Celtics +5000
* Chicago Bulls +7500
* Oklahoma City Thunder +7500
* Washington Wizards +10000
* Field (Any Other) +1000

The other big loser here is Houston, now showing at 10-1; meanwhile the Lakers have taken over the top spot. A few things happened last week that hurt Houston’s chances while helping LA:

* Chris Paul said he will not take a pay cut to play with LeBron. Of course he could change his mind, but if he doesn’t that cuts off some of the most attractive LeBron-to-Houston scenarios.

* Marc Stein floated the idea that since Paul and James are both free agents, they could both sign with the Los Angeles Lakers, who have room for two max-level additions under the cap.

*Finally, word seems to be spreading that a sign-and-trade from Cleveland to another team is exceptionally unlikely unless a complex three-team deal can be worked out. A sign-and-trade is the only way LeBron could come to Houston if both he and Paul require max salaries, as now seems likely.

Let’s dig into that third point as it helps explain why not only the Houston possibility, but also the LeBron-to-Boston scenario recently floated by Jonathan Tjarks at The Ringer, have such long odds. Backers of these plans make a seemingly-compelling argument. It goes like this:

1. Suppose LeBron really, really wants to go to a specific team — let’s say Boston.
2. And let’s suppose Boston wants to add James and is willing to part with high-quality, high-paid talent in order to make it happen.
3. LeBron approaches Cavs management and says “look, you know I can walk away and you’ll get nothing. But Boston will give you some stuff — say, Gordon Hayward, Marcus Morris, and maybe a valuable draft pick too, if you trade me to them after I agree to another year at/around the max.”
4. Cleveland would rather have something than nothing, and Boston would prefer the superb LeBron to the merely-excellent Hayward, so both teams say yes
5. LeBron then gets to stay in the East and play on a team with Kyrie Irving, Jayson Tatum, Jaylen Brown, Al Horford, plus a fine bench and a terrific coach; an easy path to the Finals and a potential dynasty, so why wouldn’t he do this?
6. If Kyrie objects, either tell him to shut up and play, or trade him for a similar player like Kemba Walker.

Sounds plausible! So why does Vegas think Boston is well below 2% to get James? Part of it is that Brad Stevens and Gordon Hayward have a very close relationship. But Hayward isn’t the only guy who could be included in such a deal. No, the real story, I believe, is that Cleveland’s salary cap/luxury tax situation makes a deal like this insane for them. And the same goes for all the Houston scenarios I’ve seen. Houston and Boston are over the cap. So they can only participate in a two-team sign-and-trade for a max-paid LeBron if they give back $35M or so in salary.

But if Cleveland keeps their current team, or keeps that team except they replace LeBron with players who earn the same amount, they will not only have a $150M payroll, they’ll also owe around $150M in luxury tax due to the dreaded “repeater tax” provision. Here’s an ESPN piece laying it out.

Now, if you’re billionaire Dan Gilbert, and you can keep LeBron, make some trades to upgrade the roster, and probably go to the Finals again, maybe that’s worth it. But for Gordon Hayward and Marcus Morris? Putting those guys together with Kevin Love, Larry Nance, George Hill, etc. — you’re not going to make it out of the second round. Just a few years ago the Sixers were purchased for less than $300M; is Dan Gilbert going to spend that much to buy an early playoff exit? I don’t know Dan Gilbert, but I say there’s no way he will make that choice. And that’s why the bookmakers see it as so unlikely James will end up on an over-the-cap team like the Rockets or Celts.

Now, there is, I believe, a workaround. I say “I believe” because the salary cap is plenty complicated and I don’t pretend to understand all its vagaries. So maybe what I’m about to suggest can work, maybe for some reason it can’t. And maybe there’s some other way that Daryl Morey or Mike Zaren can cook up that I am not aware of. With those disclaimers in place: a third team could probably make a deal possible. Let’s use the Sixers as the third team, just because we all know the Sixers’ cap situation. Suppose LeBron says his first choice is the Rockets, second choice the Lakers, and we are, sadly, out of the running. Houston calls and says: “Look, Brett, you can’t get LeBron, but you can still win here. Let’s do a three-way deal where We, Houston, get LeBron, Cleveland gets some Houston draft picks, and Philly gets Eric Gordon and PJ Tucker.” I’m oversimplifying; maybe Houston needs to dump a third player to make the numbers work, maybe Philly needs to give Cleveland a second-round pick so it’s not something-for-nothing, maybe Cleveland demands more. But basically, we’d be getting a terrific and underpaid shooting guard in his prime in Gordon and a fine, arguably underpaid 3-and-D forward in Tucker, and giving up nothing but cap space. Would we do that? Perhaps not, it’s an interesting question as it probably takes us out of the superstar-signing market. But if we wouldn’t, perhaps some other team with cap space would. It only takes one!

So it’s not impossible. But, three-way deals are awfully hard to put together. So that’s why Boston and Houston are such unlikely destinations.

It’s understandable that the Lakers are considered the most likely team. LeBron has two houses in the LA area. He has long-term interest in the entertainment industry. LeBron says his family’s needs will be central; reports were that his wife liked the Miami move and didn’t want to return to Cleveland; if that’s true one might imagine she’d prefer LA to Philly on lifestyle/weather grounds.

From a basketball perspective Philly seems preferable, at least to a Sixers believer like me. But Chris Paul is really an exceptional player; if you believe on-off statistics, as I do, he’s worth perhaps double what a normal excellent player like Paul George is. So while I viewed a Laker team with LBJ and PG added as probably too weak to compete in the West, with Paul it might — might! — be a different story. And remember, the Lakers can trade young talent for veterans. What if they could trade Brandon Ingram, Kyle Kuzma and the Cleveland pick they got in the Jordan Crawford deal, plus cap stuff, for Kawhi Leonard; then you have LeBron, Kawhi, and CP3 together with Lonzo Ball, Julius Randle, Josh Hart and more. Or maybe Kawhi is out of reach, but, look, despite his shooting woes Lonzo still has significant trade value and, together with the Cleveland pick, could easily fetch a quality vet or two to flesh out the roster.

So, yeah, LA has a real shot. As to the relatively high probabilities associated with the Knicks and Heat, I don’t have any great insights to share. Obviously LeBron knows Miami, knows the coach, etc., but that seems like a completely hopeless situation; they aren’t anywhere near good enough to compete and their cap status leaves them very few options. And the Knicks would seem to have little to offer other than being a famous team in New York; the owner is bad, the players are bad except for the good-but-overrated Porzingis... presumably there are some rumors or something that make this scenario more plausible but I don’t yet see how James to the Knicks could make sense.

I do think the Sixers are looking awfully attractive at this point, attractive enough that I was surprised and disappointed to see us at only 20% or so. Perhaps Philly is being underestimated in the way we are all so used to! Or perhaps the Colangelo mess has hurt our chances. Or maybe Vegas has the inside word on LeBron’s thinking and it’s not as pro-Philly as I’d have expected. We shall see. But for now, this is the information we have.
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DraftKings seeks + $150m funding round to drive new betting vision

US news source Axios has reported that DFS operator DraftKings targets a further $150-200 million funding round, seeking to accelerate its US sports betting proposition.

The news of DraftKings’ planned funding round, comes as the Boston-based enterprise, today confirms that it has officially filed its application for a New Jersey state sports betting license.

Furthermore, this June saw DraftKings announce its first betting-centric partnership with New Jersey-based Resorts Atlantic City Casino.

Following the Supreme Court’s repeal of federal PASPA laws, DraftKings has made no secret of expanding its enterprise through sports betting.

Targeting New Jersey as its entry point, DraftKings governance believes that it will clear state licensing requirements by the start of the NFL season 2018/19 (regular season begins 7 September).

To date, DraftKings has secured circa $700 million in venture funding. Led by Eldrige Industries, DraftKings last VC round was undertaken in March 2017 raising $120 million.

Jason Robins CEO and Co-founder of DraftKings enterprise, has previously detailed that his firm will diversify its product base, beyond fantasy sports, accommodating new consumer trends in US sports.

Furthermore, the repeal of PASPA laws has seen a shake-up in DraftKings market, as its main DFS rival FanDuel has agreed to merge its business with FTSE-listed Paddy Power Betfair’s US subsidiary Betfair US.

Robins and corporate stakeholders actively seek to establish DraftKings early US betting footprint against potential US betting incumbents.
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World Cup online bookmakers are set to make record $36B this year

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Sports betting is worth up to £625 billion per year, with 70% of that trade reckoned to come from football. During big sporting competitions, such as the World Cup, even more money is spent gambling than usual.

Over the 2018 World Cup, bookmakers are estimated to make a profit of US$36.4 billion (£41.3 billion). And in the UK, the amount of money spent on gambling during the World Cup is expected to more than double from £1 billion in 2014 to £2.5 billion this year.

Sports gambling is being driven by the unlimited availability of online betting and the fact that no physical money is exchanged, making financial transactions seem less real. The vast amount of data that online gambling sites collect also enables them to personalize offers to individual gamblers. Instead, this data should be used to help people gamble responsibly by warning users in real-time that they are exhibiting problematic gambling behaviors.

For many people, gambling isn’t just a fun novelty every four years. About 430,000 citizens in the UK can be identified as problem gamblers. These individuals have lost hundreds of thousands of pounds online, which has impacted not only the gamblers but also their families.

High profile but infrequent betting events such as the Word Cup exacerbate the issues that problem gamblers face. Seeing others engage in betting, coupled with the advertisements from betting firms, leads problem gamblers to attempt to convince themselves that they do not have a problem. Environmental cues can also trigger the urge to gamble in those who have a gambling problem.

So, the intensive advertising used by betting firms during the World Cup, along with media coverage of the World Cup in general, may further push problem gamblers towards making harmful decisions.

Watching your habit

Online gambling sites have an infinite memory for bets – when made, for how much, regarding what, and so on. This data is a rich source that websites use for tailoring offers and marketing material to fit a gambler’s potential interests. But this personalization exploits cognitive biases in gamblers and encourages them to increase risk-taking and by extension, gambling.

There is only a fine line between the legitimate marketing and personalization of content and offers on the one hand and exploitation and manipulation on the other. For example, the tracking of a gambler’s betting pattern means the gambler can be targeted with offers following heavy losses, encouraging them to chase losses even further.

But this same data could also be used to support reductions in problem gambling, either led by gamblers themselves or with the support of a counselor or software. Such transparency could enhance the image of the gambling industry and make responsible gambling a shared responsibility between gamblers and bookmakers.

A chance for change

In our EROGamb project, funded by GambleAware and Bournemouth University, we advocate a policy change where gambling sites provide gambling behavioral data to gamblers and their surrogates in real-time.

This data would provide an unprecedented opportunity to tackle problem gambling. For example, the data could lead to the app informing gamblers that they are exhibiting problematic gambling patterns. The real-time collection of information such as “the gambler has reached the monthly spending limit” could trigger a message visualizing their past betting behavior and a reminder of a commitment already made.

In our studies, digital addicts, including online gambling addicts, have indicated that having access to such data would act as a wake-up call, raising awareness. Digital media users, in general, like to be in control of their usage through labels and awareness tools.

Similar facilities have started to exist in mainstream digital media. For example, on Google, it is now possible to download your data and on Facebook to download your profile data history of interaction, but not currently as real-time streaming of data as actions happen.

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Challenges

We understand the barriers to implementing this vision. Gambling operators may not have such data readily available and may even rely on third parties to offer certain games. Some also fear that gamblers might share the data with competitor gambling sites, giving away information about marketing practices. But the General Data Protection Regulation(GDPR) right to data portability holds that gamblers shall not be prevented from accessing and sharing their data.

Given the advantages, and also the increased demand for transparency, this would eventually become the recommended practice for demonstrating advanced corporate social responsibility and inspiring the trust of the public and clients in the gambling industry. We are preparing a charter for the gambling industry towards a commitment for that.

The rise of online gambling, combined with the record amount of money being spent on gambling at this year’s World Cup makes this the perfect time to discuss what we can do to prevent and combat gambling addiction. Simply by using data to help people be better aware of their gambling habits, rather than hooking them back into their next bet, gambling sites could make a massive difference.

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