Apr 2, 2019

Why sportsbooks are refunding bettors who lose

Illustration: Sarah Grillo/Axios

Some New Jersey sportsbooks have begun issuing refunds (in the form of a credit) to losing bettors following bad beats in high-profile games.

Driving the news: When Zion Williamson's shoe exploded against UNC in February, PointsBet, an Australian-based operator with a mobile app in New Jersey, issued $100,000 in refunds to those who bet on losing Duke.

  • DraftKings refunded spread and money line bets (up to $50) to those who bet on Purdue over the weekend after Virginia hit a buzzer-beater to send the game to overtime and then covered the 4.5-point spread.

What's happening: These give backs are, at their core, a marketing ploy designed to generate publicity. Pick a high-profile game, announce the refund and sit back while The Action Network's Darren Rovell and others report on it.

  • In other words, sportsbooks are taking a short-term loss in hopes that news of them doing so generates a long-term gain.
  • Also, the refunds come in the form of credits, not actual cash. So they're giving money back but that money must be used to place a future bet.

The other side: Not all bettors like this idea. After all, how do you decide when money does and doesn't get returned? What's the precedent? Any sportsbook that engages in this too frequently risks looking like they're not legit.

  • Plus, while it may be good business now, that might not be the case in the future. "When sportsbooks are doing this 100 times a year, I'm going to stop tweeting about it, as will others, and there will be diminishing returns," Rovell tells me.

The big picture: "The New Jersey sports betting market is becoming increasingly competitive, and it's a proving ground for anyone who wants to contest the broader U.S. online sports betting market," Chris Grove, managing director of Sports and Emerging Verticals at Eilers & Krejcik Gaming, tells me.

  • "All of that adds up to an environment where we're going to see aggressive marketing tactics, including some that wander into negative ROI territory or ruffle the feathers of some sports betting 'purists.'"

Be smart: To paint this as nothing more than a marketing tactic designed to bring in new customers would be a mistake, as give backs are also designed to keep existing bettors around. Customer loyalty, if you will.

  • "A lot of people are betting for the first time and it's with us. We don't want one of those bets to punch them in the nose and for them not to come back," says Jamie Shea, head of digital sportsbook operations for DraftKings.
  • And by the way... "Vegas did the exact same thing," says Shea. "But instead of giving back money on bets, they kept customers loyal by offering comp rooms or meals or loyalty points. We can't give free rooms."

Go deeper

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Countries where novel coronavirus cases are falling may be hit with a "second peak" if they relax restrictions too soon, World Health Organization emergencies chief Mike Ryan warned during a briefing Monday. "We're still very much in a phase where the disease is actually on the way up," he added.

By the numbers: Almost 5.5 million people have tested positive for the virus as of Monday, and more than 2.2 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 14.6 million tests). The U.K. is reporting over 36,900 deaths from the coronavirus — the most fatalities outside the U.S.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 5,498,849 — Total deaths: 346,306 — Total recoveries — 2,233,180Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,662,768 — Total deaths: 98,223 — Total recoveries: 379,157 — Total tested: 14,604,942Map.
  3. World: Italy reports lowest number of new cases since February — Ireland reports no new coronavirus deaths on Monday for the first time since March 21 — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: New York stock exchange to reopen its floor on Tuesday — White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Charities refocus their efforts to fill gaps left by government.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 50 mins ago - Politics & Policy

LATAM Airlines files for U.S. chapter 11 bankruptcy

A LATAM air attendant aboard one of the company's planes in March. Photo: Kike Calvo/Universal Images Group via Getty Images

LATAM Airlines Group SA said in a statement early Tuesday the firm and its affiliates in in the United States, Chile, Peru, Colombia and Ecuador have filed for Chapter 11 bankruptcy protection in the U.S.

Why it matters: Latam is Latin America's largest airline and its shareholders include Delta Air Lines. CEO Roberto Alvo noted in the statement the coronavirus pandemic has had a huge impact on the airline industry.