Mattress Mack didn’t hedge — and that’s gotta hurt for several operators of online sports betting sites in the United States, as well as their shareholders.
The win by the Houston Astros on Saturday night to clinch the World Series also clinched an approximately $75-million payout for Jim “Mattress Mack” McIngvale, the Houston-based furniture seller who is notorious for making whale-sized wagers in connection with promotions at his stores.
McIngvale’s action was spread across several legal sportsbooks, but Caesars Sportsbook took the hardest single hit, as Mack was into them for a $3-million bet on the Astros to win the Series at 10/1 odds.
The $30-million win was “the largest payout on a single sports bet in legalized sports wagering history,” Caesars said, and it forms part of what is believed to be the biggest overall win in the history of legal sports betting.
“What can we say? We just wrote the biggest check in sports betting history to Mattress Mack for $30,000,000,” said Ken Fuchs, chief operating officer of Caesars Digital, in a statement.
Phillie Phanatics get phried
But Caesars wasn’t alone in having to make a big payment to Mack. PENN Entertainment Inc.’s Barstool Sportsbook was another loser due to a $2-million bet McIngvale made with the operator that cost them around $10 million. Other victims reportedly included BetMGM, Unibet, and WynnBET.
Betfred was dinged for $5 million due to a Mack-related bet. The payout was their largest ever on a sports bet, the company said.
The massive play by Mack was a hedge against promotions he ran at his furniture stores, where he offered to refund customers what they paid for purchases if the Astros won the World Series. The winning wager will surely make those customers happy, and give McIngvale the buzz and bankroll he needs for another huge bet — if operators will take that action.
That is, indeed, a question to ponder. Mack was betting with online sportsbooks owned and operated by entities that are publicly traded and whose share prices rise and fall with material developments, which McIngvale’s wagers arguably were. Those same operators are now fighting to prove to the stock market that they can be a consistently profitable business, but losing bets like the ones to Mack aren’t going to help.
PENN CEO Jay Snowden said last week during a call for analysts and investors that a win by McIngvale could be the difference between a profitable fourth quarter or not for the company's online sports betting division.
“So go Phils, for sure,” Snowden said Thursday during Penn’s latest earnings call. “And I think if Mattress Mack doesn't hit, we’ll be profitable [in] Q4. If he does, then it'll probably be closer to break-even-ish, somewhere in that range.”
So both Caesars Entertainment and PENN have reported a material-enough Mattress Mack liability to have mentioned it on their third-quarter earnings calls. The gambling business is funny like that. https://t.co/l0Fm2Al7hr
— Geoff Zochodne (@GeoffZochodne) November 3, 2022
Caesars CEO Tom Reeg made similar comments during their latest earnings call. The executive told those who tuned in that their "fairly high-profile liability" with the Astros would be a "swing factor" in determining whether their online-gaming division would generate positive adjusted earnings during the fourth quarter.
“We are huge Phillies fans” for the near future, Reeg added later in the call.
But when the Phillies lost this past weekend, it left Caesars on the hook for $30 million. And, based on comments by Fuchs during a recent media availability, Caesars may not have had much of a hedge in place either.
“At the end of the day, it's a really large bet,” Fuchs said during the availability with McIngvale. “It's not something that you look to offset. It's the nature of the business and that's what we do. Caesars is the biggest casino company in the world. And so we're used to taking those risks and we're on that side of it this time with Mack.”
How tweet it is 75 million pic.twitter.com/btaCd8bYY6
— @MattressMack (@MattressMack) November 6, 2022
It’s worth noting that McIngvale has lost some pretty big wagers as well, including an approximately $9.5 million bet on the Cincinnati Bengals to win the last Super Bowl.
So, will the outsized wins and publicity that books get from taking Mack’s bets continue to be worth the financial risk to them and their shareholders in the future? Again, going by some of Fuchs’ comments, the answer is probably yes.
“Would we do it all again? You bet," he said in his statement. "While Mack may have won this round on the field, we’re proud of how we teamed up to support first responders and military veterans in Houston, Philly, and Atlantic City.”
Operators could also keep taking big bets on one side if they allow themselves to take similar-sized bets on the other, although annoyance with books that limit sharp players is a constant theme in the industry.
But if, for instance, McIngvale were to wake up tomorrow morning with a desire to bet big on the Houston Texans to win the Super Bowl, he would probably find the industry very willing to accept that action. Despite the NFL squad being pretty frisky in its last game, they remain an extremely long shot to pull it off.
“And to Mack – we tip our Astros cap – and remind him that he can now support his Texans and Rockets…both attractively priced at +100000 to win a championship,” Fuchs said in his statement. “The Astros are also currently +550 to win next year’s Fall Classic.”
