The Massachusetts Gaming Commission held a meeting today where part of the agenda was Betr and WynnBET leaving the state’s online sportsbook market. Both hope to cease operations in the state later in February. Neither company was able to compete with big names like Caesars, DraftKings, and FanDuel.
WynnBet struggled to book online wagers in a state where it was the first retail sportsbook operator and its parent company owns the state’s largest casino resort. The retail sportsbook at Encore Boston Harbor will remain open.
The meeting included bad news for those holding NBA, NCAA basketball, and NHL futures that are favorites:
This allows closing sportsbooks to freeroll futures bets
This presents a problem that should never occur in regulated sports betting. Two sportsbooks decide to voluntarily leave the market, yet are allowed to cancel bets. The action appears to be innocent. The companies probably determined there is no path to profitability. However, it leaves the door open to abuse.
If a sportsbook ends up with lopsided futures action, it is clear that there is a way to get out of that liability. The company can close its doors before the championship game and get out of its problem. Bettors holding tickets get their wagers returned when they have massive expected value compared to the current market.
The same thing happened in Colorado
Colorado had too many online sportsbooks for its market size. Small operators related to local brands like Elite, Sky Ute, and Maverick could not compete with major national companies. Elite and Sky Ute closed and canceled all pending online bets. Retail bets remained good for a year.
Maverick tried to keep its retail sportsbook open. A few weeks later, it changed its mind and closed that. Maverick honored all its futures bets, even after closing its retail operations.
Elite Sportsbook left the Iowa market. Instead of getting out of paying its futures tickets, the operations were merged with Betfred.
Why can’t WynnBet do the same as Maverick?
Maverick moved its pending bets to its retail operations. The company paid all winners. WynnBet has retail operations at Encore Boston Harbor. Betr remains in the daily fantasy sports business. If player protection is a goal of regulation, something could have been done to prevent this.
The best solution is requiring sportsbooks to hold money aside for this scenario. This can be done through the approval process or as bets are booked. If a company does not want to post a guarantee that it can cover its futures liabilities, don’t allow the company to book that type of action.
There is a precedent of a gaming commission requiring an exiting company to play futures bets. When PlayUp was shut down in 2023, the company had to post funds to cover most pending bets, according to a New Jersey Division of Gaming Enforcement memo.
The closing sportsbooks seem all related to low market share
None of the sportsbooks that have closed or will appear to be up to anything nefarious. All got crushed by the likes of DraftKings and FanDuel and are trying to cut their losses. However, many unethical behaviors in the industry make it clear it could happen.
BetMGM tried to stiff a $214,000 winner last year. After significant media coverage, the company paid the player. So-called daily fantasy sports sites that book parlays as a skill game limit or ban winners. This has also been a problem in the traditional sportsbook space.
An industry where this is the norm needs regulation. There is no reason to leave a door open for their exit when they end up on the wrong side of a futures market.
Regulation was supposed to prevent this scenario. Hopefully, that door closes for the sake of player safety.
