He Hit Three Monster Bets — and Then the Sportsbook Wouldn’t Pay

Rob Schumacher-Arizona Republic
Sep 11, 2022; Glendale, Arizona, USA; The BetMGM Sportsbook opened for business during the season opener between the Kansas City Chiefs and the Arizona Cardinals on the Great Lawn outside of State Farm Stadium.

There’s a common marketing slogan in sports betting: “Sweat the game, not the payout.” In other words, when dealing with legitimate sportsbooks and not some shady neighborhood bookie, gamblers shouldn’t have to worry about getting stiffed.

Yet bettors say gaming operators aren’t always living up to that promise, and some industry officials agree. Bookmakers sometimes use a clause in their fine print as an “insurance plan,” as one top regulator put it, to get out of paying big winners – and multiple industry observers say the practice is increasing.

That caveat nearly cost Christopher Kozak $127,420 recently, after Hard Rock Bet voided three successful long-shot hockey wagers – involving bets on a host of NHL players being held scoreless in the same game – that he placed in Tennessee. The sportsbook, operated by the Seminole Tribe, notified him several days after the games in question that his payouts were an “obvious error,” and therefore he wasn’t owed anything beyond a refund.

When he pushed back, Hard Rock sought to renegotiate the odds – “a slap in the face,” said Kozak, who shared screenshots of his bets, as well as his extensive correspondence with Hard Rock, with The Washington Post. The messages show company officials repeatedly declining to explain the nature of the “error” or what made it “obvious.”

The company declined to answer questions from The Post. Then, last week – nearly two months after voiding Kozak’s bets and following questions from a reporter – it agreed to pay him in full. He had recently brought his complaint to the Tennessee Sports Wagering Council, though a company spokesperson said Hard Rock hadn’t been ordered to pay up.

The Tennessee Sports Wagering Council declined to answer questions from The Post regarding Kozak’s case, how often sportsbooks are citing “obvious errors” to avoid paying customers and how the state determines what errors are and aren’t obvious.

Virtually every U.S. sportsbook has similarly open-ended language in its terms and conditions. There’s consensus that bookmakers shouldn’t have to honor bets that take advantage of a “fat finger” input screw-up, such as listing the “over/under” point total of a football game as 500 instead of 50. (In such a case, any bettor would bet on fewer than 500 points being scored for a guaranteed win.) But increasingly, according to a half-dozen people who work with sportsbooks, operators are canceling winning bets that result from murkier types of bookmaking blunders, raising a philosophical debate that’s dividing regulators across the country.

Many states give sportsbooks considerable leeway to void winning bets after the fact simply because their odds or lines were markedly out of sync with those offered by competitors. Some regulators, however, insist that, with few exceptions, a bet is a bet, no matter how badly an operator wishes to take it back.

“We’re taking a hard line,” said David Rebuck, director of New Jersey’s Division of Gaming Enforcement. “These types of [pricing] errors should not be happening.”

There’s no way of knowing precisely how often customers are seeing their winning bets canceled, but Rex Beyers, who has worked for Caesars and several other sportsbooks, estimates that every day across the industry at least one operator attempts to void a bet. Some protection is only fair, Beyers said: If a customer tries to cash in on a blatant fat finger, “you’re basically stealing money from someone who made a mistake.”

Mistakes appear to be piling up as a result of sportsbooks offering vastly more wagering opportunities than ever, mainly through props – involving team and player statistics – and in-game “microbets,” such as whether a football possession will end in a score. Sportsbooks are also pushing same-game parlays, allowing customers to bundle props for the chance at a substantial payout if each leg of their bet hits.

The house has a bigger edge on parlays, in some cases collecting roughly $20 for every $100 wagered, compared with about $5 for every $100 in conventional “straight” bets. But generating accurate, real-time odds for thousands of hypothetical combinations every second of every day is “essentially impossible,” said Ed Miller, a former executive at odds provider Huddle – mainly because the legs of most same-game parlays are correlated. That ranges from outcomes that are nearly 100 percent linked – if one team’s wide receiver makes a touchdown catch, for example, that probably means the starting quarterback threw for a TD – to more subtle connections, such as what a quarterback attempting a lot of passes implies about the total score.

Bookmaking software can’t account for every correlation. “They’re going to make mistakes,” Miller said. “There’s no way around it.” But as he sees it, there’s a fundamental difference between overt technical failures, such as listing a favorite as the underdog, and analytical oversights, whether by a human or a program. Too many sportsbooks, Miller said, are using the “obvious error” rule as a “get out of jail free” card, letting them clean up on props and parlays against casual bettors while voiding big winners “repeatedly, indefinitely,” instead of being required to take down flawed products and address their weaknesses.

Kozak, a Chicago-based financial derivatives trader and an experienced sports bettor, tried to capitalize on this type of vulnerability. On a trip to Nashville in November, he placed 10 NHL same-game parlays through Hard Rock’s sportsbook and won three of them. In one $300 wager, he bet that eight players wouldn’t score in a game between the Anaheim Ducks and Florida Panthers, and that Anaheim would score fewer than three goals. (Florida won, 2-1.)

Hard Rock initially graded the 200-1 parlay a winner and credited Kozak’s account with $60,000, only to revoke the funds five days later. Two similarly constructed parlays involving a game between the Minnesota Wild and Ottawa Senators should have earned him about $36,000 each, but those were never graded.

Hard Rock’s house rules say a bet can be voided if odds or lines “caused by human or system error … significantly differ from the general market or are clearly erroneous.” In New Jersey, the company goes a step further, defining an obvious error as “a deviation of more than one hundred percent (100%) in the pay-out compared to the market average or intended odds.”

The odds for each leg of Kozak’s parlays were comparable to those offered at other sportsbooks, based on data archived on bet tracking site Betstamp. It’s impossible, however, to determine a market average for same-game parlay payouts because operators calculate correlations differently. Kozak estimates that his 200-1 bet had about a 1 percent chance of succeeding – more favorable than the payout implied, but not wildly so.

After all, Kozak said, he handicaps all of his bets and places a wager only after determining there’s value in his favor. In a sense, the entire objective of sports betting is to spot and exploit mispriced odds and lines. In the eyes of many gamblers, voiding those wins betrays the spirit of the game.

Eventually Kozak sent a message on X to Matt Primeaux, Hard Rock Digital’s executive managing director and president, who proposed paying Kozak “based on correct correlation values”: $25,200 for the three winners combined. Kozak rejected the offer and brought his dispute to state regulators.

Even the voiding of bets on obviously incorrect lines can be galling to customers. Danny Moses, one of the mortgage bond traders depicted in the book and movie “The Big Short,” recently had a $50 bet on the Baltimore Ravens to defeat the Detroit Lions in the Super Bowl – placed at generous 500-1 odds – voided by Hard Rock Bet. The company, he said, made no attempt to reach him to explain its decision.

“No one would ever get away with this on Wall Street,” he said. “If you meant to buy 100,000 shares instead of a million, guess what? You eat it. Why? Because it’s a regulated business, the SEC and [the Financial Industry Regulatory Authority] watch it, and you’re responsible for your own mistakes. If sports gambling wants to be a regulated business, operators have to own their mistakes.”

Even more “mind-boggling,” Moses added, was the fact that Hard Rock voided his wager but hasn’t canceled an identical bet from a friend who lives in New Jersey. The company told The Post that it has sought permission from New Jersey’s gaming authority to void that bet. But would the company still have asked to refund the bet had the Lions lost their first playoff game, or simply graded it a loser? (The company did not respond to that question.)

In the United Kingdom, where online sports betting has been legal since 2005, sportsbooks reserve the right to void what they call palpable errors, or “palps.” Luke Paton, a longtime bettor who previously worked for British betting exchange Betfair, said sportsbooks should be spared massive payouts resulting from blatant palps. If a TV typically sells for 1,000 pounds but is accidentally listed for 10 pounds, he said, it wouldn’t be reasonable to insist on holding the store to that price.

But sportsbooks “can’t have it both ways,” he added – sloppily setting odds, then collecting when bets lose while voiding those that win.

Rebuck said he saw Europe’s lax standard for palps and decided to impose much stiffer criteria in New Jersey. Soon after his state legalized sports betting, in 2018, an operator mistakenly listed the Kentucky men’s basketball team as a double-digit underdog instead of a heavy favorite. After investigating, New Jersey ordered the operator to pay up because Kentucky’s overmatched opponent still had a theoretical chance of winning. On another occasion, an operator was allowed to void bets on a field goal in a football game being longer than two yards because a field goal must be longer than 10 yards and is almost always at least 18.

When an operator tries to void a bet because of a pricing error, New Jersey demands to know what software or supervisory failures allowed the mistake to happen and how it will be corrected going forward, he said.

Some operators in his state still publish terms that cite a blanket right to void obvious errors. His agency doesn’t have the capacity to vet every operator’s fine print, Rebuck said, but as for voiding bets without the agency’s approval, “You’re not going to do it, and if you did, it’s a consumer violation and we’re going to sue your ass off.”

With stricter regulatory enforcement, Rebuck said, fights over odds errors wouldn’t break out so frequently. “This is not good for the industry,” he said, “and it’s certainly not good for patrons.”