Sports Betting Apps Shouldn't Have Slots
Regulators need to ban cross-selling
Editor’s note: I recently joined the American Institute for Boys and Men as a fellow focused on gambling research and policy. I’m a huge fan of AIBM’s work and am excited to be working with amazing researchers on evidence-based approaches for a safer, more enjoyable gambling landscape. I was also a recent guest on the Center for New Liberalism’s podcast.
At the heart of many debates in gambling policy are disagreements around “friction,” or how hard it is to gamble. Those who support gambling believe it should be low in friction—i.e. easy, simple, and widely available. Those who are leery of gambling, on the other hand, believe it should be legal but that the government should make it harder for Americans to bet.
Both sides have a point. Gambling advocates are right that friction-inducing regulations can create inferior user experiences, give unregulated operators a competitive advantage, and often fail to achieve their intended goals.
Critics are right that unfettered access to legal gambling is very bad for a lot of people, that operators continually demonstrate they are incapable of self-regulation, and that increasing friction would benefit society overall.
As a regular sports bettor, I don’t want my apps to be buggy or difficult to use. I think that once you’re in the system, the process should be as smooth as possible. I want the search function to work well so I can quickly navigate to bets I like, and I don’t want to have to submit my bank statement, especially not after I’ve deposited or when I’m trying to withdraw.
That said, I generally find myself on the pro-friction side. It seems insane that I need a background check for a new credit card with a $2,000 limit but can lose $30,000 on Draftkings in five minutes without anyone blinking an eye.
And there is one specific form of friction that strikes me as a no-brainer. In fact, it’s so obvious I’m ashamed I hadn’t thought of it before encountering an amazing video in support of it by Clean Up Gambling: mandating separate apps for sports betting and online casinos.
In every state where both sports betting and online casinos (iGaming) are legal, casinos are built into online sportsbooks, meaning that fans trying to bet on the NFL will be prodded to risk their money on blackjack or slots. Cross-selling—where operators entice sports bettors to play casino games, via offers such as free slot spins—is not only rampant but a company mission. As Draftkings CEO Jason Robins put it in an earnings call last year, “once you’ve already acquired [the customers], cross selling is an incredibly effective and a very fast payback means of increasing not only LTV [lifetime value], but also short-term gross profit as well.”
Fanduel also attributes much of their iGaming success to cross-selling, noting in a 2022 capital markets day presentation to shareholders that 41% of customers who signed up for the sportsbook engaged with casino products in their first month. The company’s 2024 4th quarter earnings release highlighted new online casino products, in particular “sports-themed slots content such as NBA Super Slam [which] help drive sportsbook cross-sell.”
Operators want sports bettors in the casino because casino players lose a lot more.1 In Pennsylvania, the largest state with legal online casinos, residents lost $27 million betting on sports in March. During the same period they lost $238 million to online casinos, 75% of which came from slots.
There is nothing inherently wrong with a company pushing customers towards more profitable products. One classic example of this is McDonald’s. Employees don’t ask “would you like fries and a drink with that?” to make sure you have a more balanced meal; they do it because the margins on french fries and soft drinks are far higher than on burgers.
Cross-selling becomes a problem when the product being pushed is addictive and dangerous, which online casinos, particularly slots, are. The patent application for virtual reel mapping, the technology behind most modern slots, literally says the goal is to “make a machine that is perceived to present greater chances of payoff than it actually has within the legal limitations that games of chance must operate.”2 In layman’s terms, that means the whole point is to trick you. In fact, the UK gambling commission banned cross-selling last month because “evidence shows consumers are more at risk of harm when they gamble on multiple products.”
This is a particularly salient topic for me. I make my living betting on sports. I don’t like online casino games. And yet, like many online sports bettors, I have often found myself at the tables as the result of targeted promos, boredom, or loss chasing. In fact, I almost never even click the casino tab on the app; I get sucked in by the mini blackjack icon at the bottom of the sports betting home screen, which is the default on many sites including Draftkings.3
Last year I played roughly $140,000 worth of online casino games on Draftkings, despite never downloading the casino app and never once actually wanting to play online casino.4
There is a simple solution that would protect me and millions of Americans who want to bet on sports: get rid of casino games on sports betting apps.
Draftkings and Fanduel already have dedicated casino apps, and multi-players could still seamlessly transfer their balances across products.5 But by requiring separate apps for sports betting and iGaming, regulators would insulate sports bettors from casino promos and products, which study after study have shown to be far more dangerous.
If you go to a drug store with a headache looking for Aspirin, the pharmacist isn’t allowed to try and get you to take Oxycodone instead. And they definitely aren’t allowed to give you a voucher for 10 free pills when you walk in. Yet as iGaming and sports betting have spread across the country we’ve allowed operators to normalize this type of behavior, leading to skyrocketing rates of addiction and a worse gambling experience for average bettors.
I believe online casino gambling shouldn't be legal at all, and I hope the seven states where it's currently permitted eventually ban it. But in the meantime, the least regulators can do is mandate separate apps. I’m a professional, accustomed to thinking more rationally about my bets than your average casual gambler. And sometimes, even I can’t resist the temptation.
Multi-players—those who gamble on sports and casino—are also much more loyal customers.
“Countries such as Australia and New Zealand have outlawed virtual reel mapping because of the harm the inherent deception inflicts upon players. In the United States, by contrast, the federal government granted the patent for virtual reel mapping in 1984.”
An optimistic view of this practice would highlight the frictionless nature of the product for multi-players. A cynical view would center around gamblers like myself, who don’t want to play casino but once in a while get so desperate when chasing losses they turn to blackjack instead of sports betting because it presents the quickest way to win their money back.
Part of the reason this number is so high relative to my total amount wagered is that a few months into the year Draftkings limited me, meaning I wasn’t able to bet more than very small amounts on sports. I was, of course, still allowed to play online casino games for any amount.
I think sportsbooks and casinos should have different wallets, something UK reformers are fighting for, but that’s a bit more complex than different apps; especially when the largest sportsbooks (Draftkings and Fanduel) are also the largest online casinos. It would also be great if states/operators allowed sports bettors to self-exclude from casino but still bet on sports.
This is a fantastic piece, mate. Thank you!
Really solid read! Love all the references in there to learn more