Advertising laws provide significant protection to consumers giving them the rights to seek damages if they are misled. There are both state and federal laws that provide remedies to the consumer, for example, section 5 of The Federal Trade Commission Act says that “unfair or deceptive acts or practices in or affecting commerce” are declared illegal. Also, every state has laws against false advertising with many states enforcing the Uniform Deceptive Trade Practices Act which bars misrepresentation and bait-and-switch advertising. A bait and switch involve advertising something to get the attention of the consumer but when the consumer shows up, they find out the merchant’s intention was to sell them something else.
Offering odds essentially is an advertisement to take wagers at the displayed prices. Legally, they are offers by bookmakers to enter into contract with the consumer and are indication of interest to take bets at offered terms. Backing away from the offered odds when a bettor tries to place a bet can be construed as consumer deception especially if it happens on regular basis. Recently several cases have been reported on blogs and social media that some sportsbooks are changing their odds when bettors try to complete their wagers.
Some bettors are reporting a process that they call “Spinny Wheels and Altered Odds,” a tactic by sportsbooks that changes the odds for worse right in front of their eyes when they try to place their bets. There are reports that a single bet could spin for a minute or two, sometimes even for five or ten minutes and when the spin stops, their bets go through at a fraction of the intended amounts and at worse odds.
We all know some unscrupulous car dealerships advertise a particular car at a low price with the intention of luring consumers to their dealerships and when they show up the salesman claims the advertised vehicles were already sold. They are the master of getting around the laws by bringing excuses that are difficult to prove in court, such as the low price is available only on limited models or the consumer must meet some eligibility criteria. Sportsbooks, however, cannot bring these kinds of excuses as their offers are publicly exposed, they will have a difficult time explaining themselves in front of a judge or a jury when it is so easy for bettors to record their evidence on their laptops to demonstrate their experience with Spinny and Altered Odds.
Some sportsbooks use algorithms to manage their odds and some use live traders who watch larger and higher risk bets as they come in by setting limitations to trigger certain bets for a case-by-case approval process. The triggering parameters could be based on type of games, type of bets, dollar amounts or by customer. For example, a $500 bet on an NFL game typically does not trigger a manual approval but a $500 bet on a parlay or future bet can trigger a manual approval by a trader or must meet the criteria of an algorithm.
Changing pre-match odds when the bettor tries to place a bet irritates the bettor and creates unhappy customers. They feel they were deceived knowing that the odds were available at the time they wanted to wager but got changed because of their intentions to bet. However, this will not be the case in case of In-Play wagering when the bettor is aware that the odds could change on the fly due to events happening on the field rather than the bookmaker making last minute changes to give them a worse deal.
The securities industry has overcome this issue and has developed a solution that bookmakers need to adopt and follow. For example, Nasdaq market makers are required to display a minimum quotation size of one unit of trading which is 100 shares. For thinly traded stocks they offer bid and ask prices for 100 shares and are obligated to fill orders for up to 100 shares at the quoted prices and are free to change their prices afterwards. For stocks of larger companies that have liquidity, they quote much larger units to help them trade larger volumes. By following this process, the securities firms manage their risks and provide transparency with their clients and regulators.
Sportsbooks need to adopt policies and procedures similar to those used by the securities industry. They should quote their odds along with the dollar amount of the bets they are willing to take at those prices or clearly communicate their minimum bet sizes for different types of bets. The advertised size of a bet gives bettors adequate information to know their bets will be covered up to those amounts with the bookmaker having the right to change the price after the amount displayed are filled.
The sports wagering business is getting to be large enough to get the attention of class action lawsuit attorneys who can do a quick cost and benefit analysis and see they can prove their case inexpensively and force the industry to settle. For example, if they go after certain sportsbooks with a lead plaintiff who acts on behalf of all other class members in directing the class action lawsuit and settling the case at $250 per bettor for let’s say a million bettors, the case could cost the books $250 million with the attorneys pocketing a handsome $100 million based on a 60/40 split which is the norm for class action lawsuits.
Overall, it is in the best interest of the industry to adopt rules and procedures to honor a minimum amount for the odds they offer. By disclosing the sizes and the rules for honoring the odds up to the advertised amounts they avoid antagonizing their customers and do not expose themselves to potential class action lawsuits which could cost them hundreds of millions of dollars.
