For Part I of this two-part series, focusing on players, click here.
In the first installment with FanDuel Sportsbook director John Sheeran, we focused on issues central to the sportsbook user’s experience. This time, it’s down to the business of bookmaking.
Below, FanDuel’s top oddsmaker discusses the challenges of rolling out its sportsbook online to yet another population of five-plus million, addresses a misconception about bookmaking fundamentals, goals for micro markets and more.
This interview was edited lightly for clarity and brevity.
Bookmaking, branding, and Jordan’s Bulls
"Will you be watching football for 12 straight hours today?"
— FanDuel Sportsbook (@FDSportsbook) November 15, 2020
Sports Handle (SH): Having recently gone live in Tennessee — now the eighth state where FanDuel Sportsbook is live online — from a technological standpoint, what kind of challenge is that? Do you need people on the ground in each state, are you constantly hiring developers?
John Sheeran (JS): Not really. The product build and rollout is effectively the same. We obviously have internal roadmaps that we work through from a tech perspective. It will take time to get to the end stage and I think we’re all aware of those. So not really that big of an incremental workload in terms of new states, because effectively, we just clone the instances of the platform and deliver them.
And there’s some nuance around regulation that needs to be tailored to each state individually. But overall, it’s not a massive increase. The guys who’ve done it have done it already 10 times. So they’re getting better at it and more efficient at it and kind of doing a better job of delivering what we need when we need it, with each new experience.
SH: Using Tennessee again as a reference point, and its population of roughly 7 million: Each time a new state is added to the menu, are you guys having to re-evaluate the overall sportsbook risk profile?
JS: That’s a good question. I think from a risk perspective, obviously, it grows incrementally with every state. The saving grace to some degree is that you see a spread of biases, right? So in New Jersey, you’ve got a lot of Giants money every year. We’ve got a lot of Yankees money, but as our footprint kind of increases already in Pennsylvania, established over a year and a half now, we have started to take more money on the Steelers and on the Eagles. And now we have other states like Tennessee and Colorado with the Broncos where we, overall, it’s not just that massive kind of steep curve and overall liabilities. It’s kind of more spread out. That said, the overall number will obviously get bigger as we go, as we run through the whole season.
But it’s something that we’re all comfortable with. I think the brand is big enough, not just in the U.S. under FanDuel, but also under the wider umbrella of Flutter, that we’re used to seeing big, big events like the Melbourne Cup in Australia, the Champions League Finals, and the soccer in Europe that this isn’t really that new. It’s probably going to be on a bigger scale down the road, but for now, we’re kind of happy with that kind of exposure and volatility that leads to increased risk that comes with that.
SH: Last time we talked a bit about in-game betting and some of the challenges around that, particularly latency, however small, in the data and television feeds. From a league perspective, Adam Silver and Rob Manfred have suggested that people will be able to bet on every possession or basket, or every pitch and at-bat… but for now it doesn’t seem feasible to have that level of a micro market.
JS: Well, we have delivered plate appearances for MLB. I think baseball lends itself better to it. There are some delays between pitches and taking the signs from the catcher and from people walking out to the mound. So I do think we will have a pretty good micro-market level offering for baseball next season at the start of next year.
I think basketball is much more difficult because of the nature of the game. You’ve got turnovers, and possessions within six, seven seconds, depending on how fast the teams are playing. And obviously, a 24-second shot clock as well. Adam Silver has been brilliant in terms of our interactions with him. He understands, and the league entirely understands, that the big area of opportunity here is to reduce that latency that we spoke about.
So I know they’re working hard, but there are significant core issues with the game and the way that it’s played to try and get us to where we would ideally like to get it. And I’m not sure how we can circumvent some of those issues, but I do definitely see a world where micro markets, like they have become in baseball, particularly in football, and definitely an opportunity to do something with basketball, although what that is exactly, I’m not entirely sure.
SH: You reminded me of the Steve Nash-led, Phoenix Suns era 7-seconds-or-less offense. Not exactly making life easy on your end.
JS: No, it’s really difficult, but it’s a challenge and I think the onus is on us to deliver a product that works for customers. And we pride ourselves in doing a lot of work in that space and giving customers more choice than any other operators, quicker and faster. And I think you’ve seen that with the same-game parlays this year. And I think that we definitely want to challenge it head on, and we’ll make some ground, but like I said, where it gets to the end, I’m just not sure.
SH: I’d like some help clearing up what I think is a common misconception about bookmaking — that sportsbooks are always looking to balance the action 50/50. How often is that actually the case? How often do you guys take a position or shade your exposure based on your information or handicaps?
JS: Yeah. Good question. Look, my view on balancing the books is that fundamentally, it’s bad bookmaking. I understand why some smaller operators do it, because they want to reduce the volatility. And I don’t actually have any problem with it, but I think fundamentally, our job is to set the most accurate lines as quickly as we can, to the closing number effectively. And that’s realistically what our job is, simplified. If you give me the opportunity to take 90% of a market on a line that I believe is an efficient line, and we would call it expected margin. So the difference between the true probability and juice. I would take the 95% on one side with 5% on the other rather than have a negative expected margin just to move the line, just to attract money and reduce my exposure.
Like I said, to start, I have the luxury of being part of an operator in a wider group that has the capability and the financial power to kind of deal with that volatility. A lot of smaller books don’t have that and I can understand why they would do it, but at the core, and fundamentally, it’s pretty bad bookmaking to try and move the line that you understand isn’t going to be positive margin, just to reduce your exposure.
SH: Speaking of support and the wider operation, how much interconnectedness is there between the digital sportsbook operation and the FanDuel sportsbooks/lounges in about a dozen states now?
JS: Yeah, we see retail as the key component in building a brand in the U.S. We’ve obviously leaned on a heavy retail presence in Europe, and we understand the benefits that that can bring to people recognizing and growing your brand. And we’re really proud of the retail space that we’ve built out. Obviously the Meadowlands Sportsbook is an incredible place as it pertains to volume and size and demand, given it’s so close to New York City.
But I think the broader retail experience is a key part of our brand. They consume all of the same odds, you’d get the same markets largely as you can online, and there’s people who enjoy other interactions between humans and not necessarily just wagering on a mobile phone.
SH: And there’s a second FanDuel Sportsbook coming to Jersey as well, right? I saw an announcement recently you guys will have a spot in Atlantic City, so there’ll be some Philadelphia crowd there, too.
JS: Yeah, exactly. We already have a retail presence in Valley Forge in Pennsylvania, and obviously with Bally’s, by the end of the year in Atlantic City, I think that’s another good example of the investment that we have from a retail perspective.
"It’s not fair, you know, but it’s a standard of measurement."
Michael Jordan spoke with Stuart Scott about finding the next MJ back in 1998, the interview is included as a bonus feature with the blu-ray release of The Last Dance. https://t.co/cO0VEtxqZB
— SLAM Newswire (@SLAMnewswire) November 11, 2020
SH: Being on the horse racing side of things in Ireland for 6-7 years before focusing on the U.S.-based pro sports, how long have you been following these leagues? NFL, NBA, NHL, MLB?
JS: Yeah, predominantly football and basketball, I would say, were kind of the ones that I navigated towards when I was young. I remember watching the Jordan Bulls, for example, late at night in a friend’s house. We used to go around and watch them as they marched away through the postseason. And then we used to get actually quite a lot of coverage of the NFL when I was in my early teens in Ireland. They used to show a couple of games and then a highlight show covered all the games.
And at the time, I had some [New York] Giants mugs and stuff in the house, that kind of always set me up for failure now later in life. Of course, we got a couple of Super Bowls out of it, but yeah, those two sports predominantly. It wasn’t until I was in my early twenties that I kind of started watching a bit of baseball. The time of the game, the length of the game, and the times that they were on in Ireland meant that it was a bit of a challenge to kind of invest a lot of time watching baseball, but definitely a huge NBA and NFL fan since I was a teenager.
SH: I thought you may have needed a crash course on some of the popular leagues here.
JS: In terms of sports interests, no. I was following, even before I moved here in the last few years, after I got married, my Sunday afternoon was consumed with NFL. Six o’clock in the afternoon or in the evening in Ireland all the way through till 3 a.m. on a Monday morning was dedicated to NFL. So I didn’t have to go from that perspective.
And then even from an automating point of view, a lot of the fundamentals are the same. You’re just scrubbing data in and out. And it really is almost a pleasure to try and make some odds in American sports with all the data and analytics that we have access to now, whereas in horse racing, a lot more of this kind of subjective analysis, and that’s kind of the key difference. But the fundamentals of basically trying to predict probability are the same.