Thanos: Supervillian capable of wiping out half the world with the snap of his fingers.
Chanos: Super hedge fund manager capable of boosting the stock price of DraftKings while simultaneously ticking off nearly 100% of the sports betting public.
So yeah: Jim Chanos is a longtime, soon-to-retire, and famed — he called Enron going belly up — hedge fund manager. His specialty is, and remains, short-selling.
And DraftKings was in his crosshairs. He started shorting the company in May of 2021, according to a Financial Times article. But then this past July — and after taking a $10 million profit — Chanos dramatically shifted his position. The man who made a living betting against companies turned bullish on DraftKings — and on sports betting companies in general.
“The betting numbers have continued to be strong in the U.S., stronger than we thought they'd be,” he told the Financial Times. “The thing that we underestimated — that I think is going to be a benefit for all these companies for a while anyway — is what bad bettors the U.S. gamblers are.”'
Ooof. Snap.
Parlay away
When it comes to “bad” betting, Chanos may have a point. A look at the volume of parlay wagering, for instance, paints a picture of Americans who aren't exactly looking for +EV opportunities on their betting apps.
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Now to be clear, most states don't break down parlay numbers. But those numbers that are available say plenty.
In Colorado this past October, 21.1% of money wagered at sports betting sites was on parlays. That's up from 17.4% the previous year. Same for September, from 16.6% in 2022 to 19.3% in 2023.
Indiana? A similar story. More than 33% of handle in October 2023 was on parlays, up from 28.3% a year earlier. September's numbers were close to those, 30.4% vs. 28.4%.
And make no mistake — more parlays equals more money for the sportsbooks. Overall hold percentage, according to the Financial Times article, is around 9% across American sportsbooks, up from 6% or so when PASPA was still the law of the land.
Or take this nugget from New Jersey, as highlighted by ESPN's David Purdum: New Jersey bettors, through November of this year, wagered more than $2.5 billion on parlays — and the books won more than $486 million on those bets, for a hold of (avert your eyes) nearly 19%.
So of course — of course! — Americans are bad bettors, just like Chanos says.
Right?
Well, it depends on what your definition of “bad” is. Also, of “bettors.”'
Terrible, just terrible
“Are Americans bad bettors? Right now, probably.”
That's Jeff Benson, the director of sportsbook operations for Circa Sportsbook, which, since its inception in 2019, has been the North Star for the sharp set.
As to the why?
“I think many people nowadays have the 'bet a little to win a lot' mentality, while viewing sports betting as more of an entertainment product,” he said.
And that, right there, is a major dividing line between how people — both inside and outside the industry — view sports betting. Is it a serious income-generating endeavor? Is it a fun and inexpensive hobby? Is it somewhere in-between? Is it both? Is it neither?
“What even is a bad bettor?” wonders Alun Bowden, senior vice president for strategic insight at Eilers & Krejcik Gaming. “It's a silly concept. Are slot users worse gamblers than blackjack losers? Is losing 5% good and 9% bad? It's an insane way to look at this.”
Bowden thinks trying to bridge this divide between serious bettors and 14-leg single-game parlay wish-upon-a-star-ers is better left to the philosophers.
“You can’t frame gambling utility and entertainment from the perspective of a winning, +EV bettor,” Bowden said. “It's like the Wittgenstein thing of talking to a lion. You just don’t understand each other because your frames of reference are so different.”
And if the lion, in this case, is the +EV bettor?
“America is a nation of horrible gamblers — ignorant of the odds, ignorant of the science, ignorant of the math. They always have been,” said Capt. Jack Andrews, a professional gambler for a quarter-century and co-owner of Unabated, which seeks to educate sports bettors.
“If Jim Chanos didn't realize that until just recently, then he missed Atlantic City in 1978, Mississippi in the early ’90s where they couldn't build the casinos fast enough to meet the demand, Foxwoods and Mohegan Sun in the mid-’90s where they literally couldn't count the money fast enough and had to resort to weighing it rather than counting it. All fueled by bad gamblers.'
“Here's the thing,” Andrews continued. “The richest nation in the world, the nation with the most discretionary spend, combined with a nation that believes they can make something out of nothing, anytime they want. It's a toxic recipe.”