iGaming Daily

Jessica Welman (00:03.276)
Within the gaming industry, we hear success stories of the regulated market. There's record handles. It cracks down on black market activity. And the rapid proliferation of sports betting across the majority of states suggests that this is something everyone in the nation wants. But a growing pile of stories from mainstream media question if this is all too fast and too soon, including a segment on last week tonight, earlier this month. There's a new book dropping this week, Losing Big, that explores how we went from sports betting in Simply, Nevada

to sports betting basically everywhere in five short years and questions whether or not that is a good thing. We're going to speak with the author today on iGaming Daily. iGaming Daily is brought to you by OptiMove, the number one CRM marketing solution for the iGaming market. I am Jessica Wellman, managing editor of SBC Media, joined by Losing Bigs author John Cohen. John, you have a lot of credentials that I'll have to be honest. don't know if I could rattle them all off off the top of my head that I will just

kind of turn to you to give people some context on who you are and why you wrote this book.

Jon Cohen (01:08.844)
Yeah, my credentials are I ran a high school picks pool in 2007 at Gann Academy in Waltham, Massachusetts. I didn't win. I didn't win, best for the record. But yes, and of course, Massachusetts. Yeah, I have a PhD in history. my dissertation that became my last book is on the American state lottery system. And that is sort of how I fell into gambling as a topic and then sort of was through the press tour for that book.

Jessica Welman (01:11.672)
of course, mass. Yeah, that makes sense.

Jon Cohen (01:37.934)
sort of after the Murphy decision was how I came to sports betting and I felt like someone needed to write a book about it and might as well be me.

Jessica Welman (01:47.18)
Yeah, and it drops April 1st is.

Jon Cohen (01:49.792)
April 1st.

Jessica Welman (01:52.28)
Somebody got an advanced copy, thank you very much, that I have marked up and highlighted. You know, we're an industry podcast, and I've just gotta say, like, I was telling John, I was reading this book in a casino on breaks in poker tournaments, and everyone's like, God, how tilted are you that you're gonna read a book called Losing Big, America's Reckless Bet on Sports Gambling? The title sounds...

very kind of anti-gambling and I think there are plenty of parts of your thesis that suggest that the particular situation we are in with sports gambling is not ideal but it's not an anti-gambling book.

Jon Cohen (02:35.138)
Yeah, I mean, I'm personally pro-gamely. don't like, I haven't done a lot of sports betting recently, but like I definitely watch sports with like a, I think the Celtics line is too high or whatever. Like I definitely am, I would not have written this book. I would not be interested enough in the topic purely as like a diatribe against an industry because I hate it and think it's evil and stupid. To your point about the title, I think the key word there is reckless. I think.

It was worthwhile to take a bet on sports gambling. think sports betting should be legal, but I think sort of as you were alluding to the particular ways in which it was unfurled and how fast it was unfurled and the protections or lack thereof that came with it, that's sort of the problem. And that's the result of that's the cause of the problem where it not the sports betting in and of itself.

Jessica Welman (03:20.79)
Yeah, it was kind of that perfect storm. You had the Murphy decision. You then have a pandemic. And then we just accelerated so quickly. And as someone who has to write nothing but legislative stories at the beginning of the year, it is just crazy how quickly things came about. The chapter for me that I just learned so much about

an area that I love kind of hearing about, which is kind of how the sausage gets made in state legislatures. You do a chapter that kind of focuses specifically on Colorado and how Colorado's sports betting came to be. Just as a writer, I'm curious, like, did you just say, want to do a specific state or were you researching and people just kept bringing up Colorado? Like, how did the chapter even kind of come about?

Jon Cohen (04:06.838)
Yeah, yeah, that's interesting. mean, so talking to my editor, we really had, we decided on two options. It was either gonna be like one state and just like a deep dive on one state. And sort of, you know, as you'll know, but no one else will know, it is sort of unique in the book that there's like one state that's sort of at the focus of one chapter. This is the only one that does that. So it was either like, let's just pick one state and do a deep dive or let's pick one company.

presumably would have been Fandora Draft Kings and look at their work in a bunch of different states, but it's sort of basically the one story, one company. And I think the state one just was more resonant and just felt better and work better. And Colorado I picked because I talked to a couple of people who independently of, you probably know all of them, but independently of one another, a bunch of people, I was asking like, okay, what's an interesting state that might be...

It's interesting in that it reveals the degree to which the industry played a part in the crafting of both legislation and regulations that guided the in that that brought sports betting to life and again independently of one another multiple people multiple people recommended Colorado and I think it was ended up being fortuitous in part because it was the other than California and Missouri I think it's the only state that had a ballot referendum in addition to a legislative fight So there were like basically three steps to the process that it has to pass legislation

then it needs a referendum, which is obviously a public facing campaign, and then it needs the regulation. So there's sort of three parts of the story, each of which, as I tried to show, the industry really got its talons into the process.

Jessica Welman (05:39.457)
Well, and I remember

very vividly writing about the early goings of Colorado and I had kind of the same reaction you did when we started seeing revenue reports for the first time, which is for those who are unfamiliar, Colorado has a very favorable situation for sports betting. It's a 10 % tax rate. You up until a couple years ago could fully deduct your promotional credit. They have since realized and gone back and adopted a tiered system, but

Jon Cohen (06:07.726)
Yeah, it was a 10 % tax rate that was effectively a 4.7 % tax rate because of the deduction. Yeah.

Jessica Welman (06:12.83)
Exactly. And it was this whole, we're going to do this for water.

the water project in Colorado. And then the first numbers started coming in. We had seen it in Pennsylvania with the promo credit. I knew that this was like a huge deduction that people could take, but you were still talking about 26 % versus 10%. But yeah, seeing the numbers that were coming in terms of the taxes, I was like, well, you could probably feel like a swimming pool or something like that with the amount of money that went through there.

Jon Cohen (06:40.302)
Right.

Jessica Welman (06:47.096)
I thought it was so interesting too that it's just kind of indicative of everything else. We were talking about this on a previous pod just last week.

Is there kind of a balance though that you do want the industry's feedback in any industry that you're gonna build legislation around? But how do you balance that and make sure that it's not, there was a Texas bill two years ago that was, I mean it was truly like 5 % tax, full promo deductions, 10%, I was like pay us to come offer sports betting in your state.

And we've seen a lot of states kind of revisit tax rates and revisit things. Do you think this comeuppance is happening legislatively where they're like, OK, maybe we need to go back and rethink some things?

Jon Cohen (07:29.548)
Yeah, maybe comeuppance is too strong of a word, but certainly a revisiting and you alluded to the pandemic and the swimming pool money that Colorado got was like literally all on Russian ping pong because they launched in May of 2020. so the degree to which they that I mean the framing and again, this goes back to this sort of idea of recklessness, right? That legislators were in many ways and legislatures and legislators were sort of caught flat footed.

Jessica Welman (07:42.113)
Yes.

Jon Cohen (07:58.54)
by the rise of sports betting and by these lobbyists. And again, Colorado is like a part-time legislator and then all of a sudden like a fan duel lobbyist or whoever shows up at your door or at your office and is like trying to ram through sports betting and you don't even know what sports betting is. You're only allowed to even propose only so many bills per year.

Jessica Welman (08:15.674)
yeah, that was strange to me too. was like, that's a fun wrinkle.

Jon Cohen (08:18.828)
Yeah, and this is, mean, what was weird about Colorado, it's like at this point, it's a blue state until very recently it was a purple state. And it's like very clearly has these deep libertarian inclinations that sort of helps sports betting get over the line and overcome a lot of the religious groups that are in the state that might have opposed sports betting, but sort of didn't say anything. And as a result, it sort of steamrolled through. So yeah, think it's, I think they,

The industry, whether the legislator was asleep at the wheel, I don't want to be too unkind. But yeah, in many ways, it was typical of what you'd expect from a bill with a lot of relevancy for the private sector in that you'd get the stakeholders who are going to have to actually offer the games involved. frankly, there was a lot less. The bills and the regulations that came before

Jessica Welman (08:54.391)
Yeah.

Jon Cohen (09:16.322)
the companies for their review were actually already so favorable to them and sort of already designed with their things in mind that the companies didn't have to do a lot of the shady stuff that I was expecting to find. Like in the New York Times reporting, the cigar giveaway for Kansas legislators. They didn't have to do any of that because Alec Garnett, who was at the time a speaker of the, or at the time a member of the...

Jessica Welman (09:27.341)
Yeah.

Jon Cohen (09:36.91)
Colorado house later the speaker speaker of the house and then even later the chief of staff to the governor like generally loves betting on sports and was like really really excited and like goes on a Colorado sports talk radio station the day of the Murphy decision be like we got to do this we got to do this we got to do this so they didn't have to because their vision For sports betting. Yeah that Alconet know it should be a 10 % tax rate We want temporary licenses and licenses should be really really inexpensive. No, but Spiritually he was already in line with what the companies wanted

Jessica Welman (10:07.286)
Yeah, so we've seen a lot of people kind of revisiting and rethinking how they regulate sports. Largely, it's been tax rate. You make a lot of recommendations in the book that I think all of us have kind of been those who are critical, shouting from the rooftops for a long time.

If you had to, you know, we're not gonna get everything. If you had to pick one thing that you'd really like to see change in, what would the one area be?

Jon Cohen (10:39.776)
Okay, so I have like a bigger framework and then two very specific things if I can cheat and like pick one thing but really pick two things. So the one big thing is basically the way that my understanding of you know gambling addiction and problem gambling or at-risk gambling works it like really is like a slippery slope in that you can start betting totally casually, totally easily and like have a bad loss, chase your losses.

Jessica Welman (10:44.864)
Okay, yes.

Jon Cohen (11:05.55)
Chase your losses again, and then all of a sudden you're sort of you're going from the bunny hill like on your way towards the black diamond so the sort of the big change overall is like anything that would stop you at the end of the bunny hill and like doesn't let you sort of Accelerate down the mountain and start going faster and faster so the two very specific things that I would do with that would be like first of all a Not I don't know what you call like a cooling off period like when you deposit money into your account

There's got to be a waiting period. don't know how long it should be, but it's not like you can lose your bet, lose your entire bankroll and then double it in five minutes because you want to bet on minor league British darts in the middle of the night because that's the only thing that's available at this point. It's like when Homer Simpson goes to buy a gun and they tell him it's a five day waiting period and he's like, five days, but I'm angry now. It's like, no, maybe there's a point to that delay. that's sort of, again, something that I think would stop people before they sort of pick up too much steam going downhill.

sort of version of that is something for young people specifically like and again a representative of a major sports book that I talked to said they've been batting this around and Flutter has this in the UK of a limit on people who are under the age of 25 and just like they start their account with

with limits and only through safe betting practices over however many months or years do they unlock higher limits, longer time limits and such and such. So that's again, for people whose prefrontal cortex are not quite developed yet, maybe like a way to like they need an even like shallower buddy hill and a way to sort of stop them even lower. So again, I'm picking two, but like it's really all of the same spirit. And I hope that's, you're not gonna kick me off the podcast for cheating.

Jessica Welman (12:44.788)
No, no, I was thinking you were in the area of, my guess was gonna be something VIP, but you're still in the same kind of area where I thought we'd land. You did discuss VIP a lot. I was shocked to learn that this person was hired by a sports book who was convicted for gambling related charges, right?

Jon Cohen (12:51.15)
Mmm.

Right.

Jon Cohen (13:09.266)
I don't think he was convicted, but he told me he made a point in his interview. He was like, I'm going into my interview for this VIP. became the VIP host for the state of Connecticut for FanDuel. And he was a bookie for a long time or a runner, effectively, for a bookmaking operation in New York. And he told me he was like, I basically decided I was going to go in and tell them, rather than try to hide it and try to pretend that I wasn't. And it seemed like they didn't care. Or maybe even it was an asset because he got hired.

Jessica Welman (13:23.007)
Mm-hmm.

Jessica Welman (13:31.618)
Yeah.

Jessica Welman (13:37.08)
Yeah, I mean, we've seen the data indicates that the vast majority of profits come from a very small population of people who bet an enormous amount. So that just, again, to the two things you want to fix, kind of runs counter to how you pad the bottom line. But then how do you find the balance?

Jon Cohen (13:58.386)
And just to take your point on the VIP the reason it's not like my number one thing is like that feel god, I haven't been skiing in a long time But like the that feels like a blue circle or like a green square like kind of thing You know, I mean, it's like you're off that's like you have to get past the bunny hill to get onto the VIP slope and then maybe even maybe it's even like a black diamond thing like the mountains already really steep and I think we could stop people before they start betting so much Unless they're really rich went exactly exactly exactly

Jessica Welman (14:07.8)
Ha ha ha ha ha!

Jessica Welman (14:22.648)
before they like parasail down into skis onto a thorny rocky mountain and yeah. skiing and snowboarding terrify me. I had snowboarded once and I was like this is easily the top five most miserable thing I've ever done in my life. Yeah.

Jon Cohen (14:27.882)
Sure, you've been skiing, sounds like more recently than I have, yeah.

Jon Cohen (14:38.178)
Well, you can delve into the metaphor that I have been skiing but don't really understand it as well as I probably should.

Jessica Welman (14:44.992)
I'm kind of, curious, you know, we've talked about guardrails in the regulated space. I feel like I don't go a day without writing about unregulated markets right now, like sweeps and event contracts. I'm just curious, because you are a researcher, have you kind of looked into the event contract space in particular and, and seeing, you know, is this kind of creating the same dopamine hit and same

even if it's technically not sports betting, is just financial trading in general and all those things, we see a lot of crossover in it. So have you looked at that space at all?

Jon Cohen (15:16.718)
Yeah.

Jon Cohen (15:24.226)
Now, I'm starting to now, and I love Dustin Goukher's, one of his recent newsletter headlines was like, what's even the point of sports betting laws anymore? Or I'm butchering it. But it was like basically some version of that. I would say like this is actually not specific to sweeps or prediction markets, but this was part of the context of the book and of sports betting is even starting the book and talking to some folks, was sort of clear that I was.

Already like behind the times and like iGaming was the next thing and like I guess now it's like iGaming you would throw sweepstakes in there and maybe prediction markets too and like sports betting is kind of old hat and is like Sort of what the companies are using is sort of their Trojan horse to get to to iGaming in many ways So even as I was writing this and even as I'm now doing press and be like, sports betting There are all these problems. We should fix it blah blah, but I'm like is this actually Just like the molehill and like there's this other mountain out there that like we're not even thinking about not to

Jessica Welman (16:20.12)
to just continue our geographic mountain metaphors.

Jon Cohen (16:23.318)
Yeah, yeah, god, this is like a mixing of metaphors. I haven't dug into like sweepstakes and prediction markets specifically, but it does seem to me like sports betting has always been just part of this bigger story of like the American, let's call it the normalization of gambling and I'll throw crypto and Robinhood and day trading and other sort of risky behavior sort of onto that pile. And it just seems like a natural continuation that we would have.

sweeps whether this should be whether this should be legal is another thing prediction markets whether they should be legal in all 50 states apparently without any state regulation like Sort of a question aside. It's more of like a cultural question about how much gambling is okay And are we just is this just where we are now?

Jessica Welman (17:02.55)
Yeah, you know, I my background is in poker and I was like very deep in the poker tournament scene for a long time. And I have such a large group of friends that Black Friday happened. So they went from poker. Then they discovered DFS. Then they went and did, you know, crypto and NFTs. Now they're doing sports betting. Now they're doing prediction markets. And it does seem like there is just kind of this funnel that they all are proceeding through. And it's a bit.

interesting to just note that there does seem to be amongst people under the age of 40 a belief that these are all things that I have enough control of that I should be able to profit if I do it correctly.

Jon Cohen (17:47.566)
Yeah, and my question is like the market has to burst at some point like there are like Again, I know there's some cannibalization involved in some just people like pivoting from one type of gambling to another but at some point we as a society have to I don't know what the dollar number is. don't know what the percentage is, but it seems like that's some point It's too much. I don't know I'm not gonna say when it is and everyone of course has their different line and maybe someone say there is no line like bring it on but it feels like

we're approaching a tipping point, again, either politically or culturally.

Jessica Welman (18:18.988)
Yeah, I think kind of my last question for you, you mentioned iGaming. As someone who has watched all these hearings, it seems like lawmakers at least are getting kind of...

hip to the idea that they kind of let sports betting in without questioning it too much. And so with iGaming, we've seen increased scrutiny around responsible gambling practices. How much economically is this actually going to help? You know, it's not enough to just have tax dollars. It's are you creating jobs? Are you leaving the money in the state and they're being a little tougher on them?

But on the sports betting side, we continue to just, as an industry, seemingly feel very insular about, well, we know that we're doing it right, and we know that we're succeeding, you know, ignore that John Oliver bit and that SNL skit and that 60-minute story and those New York Times. I could go on and on and on.

Jon Cohen (19:13.868)
my book. Please ignore my book. Yeah. Yeah.

Jessica Welman (19:16.46)
Yes, and your book. what do you think the industry ever, you know, is the wake up call coming? What is it going to take?

Jon Cohen (19:27.918)
This was really frustrating. Part of my reporting and conversations with folks at the AGA or at Fandl and these companies was like even presenting the studies that you've seen that get cited all the time about financial insecurity and the correlation between a state's legalization of online sports betting and the effect on low income communities in particular. And it's just.

There's some wall there and there's some refusal to acknowledge or understand. it seems like no amount of evidence will ever be good enough to convince people in the industry that they could be doing better and that RG isn't enough.

And that really, truly, there are problems that are happening. know people tell me all the time they don't want to be like tobacco. They don't want to be like tobacco going back to the 80s and 90s and just denying the association between lung cancer and cigarettes. And they don't deny the existence of problem gambling or the fact that problem gambling exists. But.

And yet conveniently whenever evidence of harm, whether it's problem gambling or not, presented to them, there's always some backdoor. There's always some, oh, issue with the reporting, issue with the study, issue with the poll, issue with the this, that just makes them fundamentally incapable. whether they, like, personally, I don't know if they're ever gonna sort of come to that realization.

themselves. I would love for them to self-regulate. I would love to not have to go through government. Government can't do anything anymore. Like why should we count on Congress to like legislate and like pass the Safe Bank Act or any other version of it? Like we should not come to that. These companies should be able to self-regulate and I would way prefer that they do so, but it just seems from my conversations with them unlikely that they will.

Jessica Welman (21:10.55)
I mean, the grit act is a great example of one where I was like, guys, this is such a layup.

You know, you're paying this tax anyways. Dina Titus has tried to repeal it for 15 odd years and never gotten out of the gate. Just say, yes, we'll take the federal excise tax and put it towards sports betting, or put it towards RG. And you could take this huge PR win, you can create a meaningful amount of money for RG, and it's just like, no, we're not losing this battle.

Jon Cohen (21:41.23)
I think we, yeah, it's all RG. It's all, sorry, PR wins. I think all they want is PR wins on RG. It seems like not actual, like, wins. Like the My Stat Sheet thing from the NFL, like, DraftKings, like, like, half of our players, or maybe it's FanDolls, like, half of our players use their, like, My Stat Sheet to look at how much time they spend on the app and how much they bet. It's like, it's like Apple boasting about their screen time thing, which has never limited anyone's actual screen time in any meaningful way. So I'm, again, I would love for them to be more,

Jessica Welman (22:02.808)
You

Jon Cohen (22:11.222)
involved and more accepting and more sort of clear-eyed about the evidence and it just from my conversations with them I'm curious from yours as well, but it seems like there's not there yet

Jessica Welman (22:20.376)
Yeah, same conversations, but don't forget my favorite. But look, the black market. Yes, but yeah, you don't get to get up on a pedestal and say you're a lot better when you don't hold yourself to it as high a standard as you arguably could.

Jon Cohen (22:26.328)
I mean the black market is real and they're right about it and I recommend, you know what mean? But, it doesn't excuse, yeah.

Jon Cohen (22:39.16)
Well, if I could put a bow on this a little bit, like when you brought up prediction markets and sweepstakes, there's a chance we're going to look back in five years and look at the current, look at Fandool, DraftKings and these companies as like benevolent and benign compared to these unregulated or claiming to be unregulated operators that might like take over the industry.

Jessica Welman (22:54.892)
Yeah.

Jessica Welman (22:58.44)
Losing Bigger coming soon to a Barnes and Noble near you. So, okay guys, it's called Losing Big. I am not joking. I have bought copies for three of my editors and sent it to them to say.

Jon Cohen (23:00.188)
yeah, coming in 2028, yeah.

Jessica Welman (23:14.442)
You need to read this. It's incredibly useful. Even if you're in the industry, I learned so much from this that I didn't know before. So check it out. It's Amazon, those sorts of places, John. And it's not crazy long.

Jon Cohen (23:28.321)
Everywhere, I hope.

Jessica Welman (23:31.882)
So for those of you who are not big readers, it's very doable. So check it out. Thank you so much for joining us. I look forward to reading more of your research as you go forward. again, I'll have you back here for losing bigger whenever it drops.

Jon Cohen (23:46.636)
in three years about the sweepstakes or iGaming or something, I can't wait. Thanks.

Jessica Welman (23:50.346)
Alright, thanks everyone, thanks John, and we'll see you next time on iGaming Daily.