If you are coming from our is state and you need a place to crash or to work on this in lower Western Massachusetts reach out to me (I’m in Monson, near the Connecticut border)
Fanduel is likely to cap your $5,000 risk-free long bet, that is, limit your wager to a maximum dollar amount that’s only shown when you type in “$5000”. You should avoid this because only your very first bet is “risk-free”. You can look for other games or wait for caps to loosen, but opportunities are slim to place a full $5,000 bet at +300 (1-in-4) odds, maybe just some NBA games when they’re about to start.
But, there’s a way around the caps: parlay bets. When you select two wagers on different games onto your betslip, a “2 Leg Parlay” bet option will show, which bets on both outcomes happening together—that is, you’re paid only if both teams win their respective games. This lets you combine, say, two coin-flip games into one roughly 1-in-4 (+300) bet, but often with a looser cap that lets you wager the full $5,000. I’ve confirmed that parlay bets qualify for the promo on Fanduel and seen people successfully do this.
I’ve been helping organize bets like this for the last couple weeks, so I’m happy to answer any questions.
People considering this strategy should be aware that the sports-betting companies have lobbied many state legislatures to make these promotional “risk-free first bets” deductible from the companies’ tax bills.
The tax treatment of these promotions in Massachusetts seems to be unsettled; however, companies may end up being able to deduct promotional bets from their taxable income, as they can in other states. That would mean that following the steps outlined here would reduce the tax revenue that Massachusetts has available to pay for public programs like education and public safety (or return directly to taxpayers, as it did with surplus revenue last year).
The New York Times recently revealed that numerous states that have recently legalized betting have allowed apps to deduct the money they dole out in promotions from their taxable revenues. The question remains unsettled here in the Commonwealth. At the most recent meeting of the Massachusetts Gaming Commission, commissioners decided that they had the authority to decide whether promos would be deductible (by a 3-to-2 margin) but tabled the question until a future meeting.
If they ultimately do decide in the apps’ favor, we’ll all be paying for my bonus bets.
I think reasonable people could differ on whether it’s morally permissible to take a favorable promotional deal from companies in an unusually harmful industry, especially if the deal has a side effect of reducing public resources. I’m not personally comfortable taking such a deal, and I’d encourage others to allow some time for reflection before doing so.
The tax treatment of these promotions in Massachusetts seems to be unsettled; however, companies may end up being able to deduct promotional bets from their taxable income, as they can in other states.
That seems like the straightforwardly correct way for things to work. Offering these promos is an expense for the company, reducing profits, just like if they had spent the money on advertising. Since corporate taxes are levied on profits, anything that reduces your profits should reduce your taxes.
Of course, if the promotion is effective, it will overall increase their revenue and profits—and hence the taxes paid—again just like an advertising campaign.
The same argument could be applied to any discount that any firm offers—should people feel guilty for buying clothes on clearance sale, or accepting a free sample at the supermarket, as this also reduces profits and hence taxes? I don’t think people should feel guilty about ’it is possible that this activity might be taxed in a manner consistent with other activities.
Most people aren’t buying clothes on clearance or accepting free samples at the supermarket with a primary goal of maximizing altruistic impact; if they were, I think it would be reasonable for them to account for the tax-revenue consequences in their decision. (I do think it’s permissible to accept those kinds of promotions in everyday life, but I think that’s separate from how we should account for their impact.)
I’m not sure how corporate taxes work exactly, but I don’t think the companies benefit overall by giving you the money if you only take advantage of promotions like this and don’t also bet more often than otherwise besides with promotions. Otherwise, companies would donate a lot more and enough to never pay any taxes (or pay only the minimum required after all possible deductions).
So the net effects of taking advantage of this are that the companies earn less in net profits and pay less taxes. But they’d pay less in taxes if they were less profitable, anyway (although they’re probably paying even less, relative to their net profits). Then
If you think it’s good that these companies earn less in net profits after taxes, then that counts in favour of taking and using their promotion money.
If you’re worried about reducing public resources, then this also counts against you using charitable tax credits/deductions in order to donate more to EA charities in general. But EAs don’t typically worry about this, because our charitable dollars do much more good and the rate here is still pretty favourable.
Although more controversial, you might even believe reducing public expenditures overall is good, if you believe the state uses marginal funding in net harmful ways, with harms from wars, enforcing unjust laws or overburdensome regulation.
Thanks for this addition. I think I agree about the likely net effects on the companies’ profits and tax bills, and I mostly mean to be highlighting that some (uncertain) fraction of the money people gain by following this approach would counterfactually have ended up in the hands of the state government, not the sports-betting companies.
That consideration makes the strategy less attractive than it would be if the money came entirely from the companies,[1] and it might be enough to make the proposed strategy net-harmful by some people’s lights, especially if they are less than certain that:
They will stop betting as soon as they exhaust their “free” bets.
They won’t inadvertently promote sports betting to others who might be harmed by exposure to the industry.
They will donate almost all of the proceeds to charitable causes that are more beneficial than marginal public spending.
I think it’s reasonable for people to worry that one or more of these conditions won’t hold in practice.
This point doesn’t hold if you think marginal public spending is worse than marginal corporate profits for sports-betting companies, but my guess is that relatively few people hold that view.
Those of us who feel this way can voluntarily pay a higher tax rate or donate some of the proceeds of this method to an effective charity (which they should do anyway!) to offset the perceived harm of reducing Massachusetts tax revenue.
“f) Bet Credit stake is not included in any winnings from a redeemed Bet Credit.”
I bet on the Rockies winning against the Padres (they were an underdog) and I only got $2430 out of $1500 invested. If I had used that bet credit on an overdog that won, I would have lost money on net. [this is different for some of the other sites]
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Also you HAVE to get the FIRST DEPOSIT right on DraftKings—I wrecked my first bet there by depositing only $25 and then placing a microbet just because I was scared… (I should have placed my first microbets on the other sites)
---
Shrug, I think I’m only up $1300 across sites mostly due to some impulsive microbets that choked up my “guaranteed free bets”
Does the Bonus Bet token for DraftKings only apply for the first wager you put money for? (it’s “up to $5000”, but if you bet for less than $5000 [eg only make a deposit of $500], are you not filled in for 5,000 ever?)
Yes I believe that’s how it works—if you’ve deposited but not bet yet, you may be able to just deposit more and still be eligible (you’d have to check with customer support). Once you’ve bet, you’re ineligible
Why stop at +400? Doesn’t the ev of the free bet continue to rise as the odds get longer? Is it just because the longer odds run into the bet caps?
Edit: also for the free bets, wouldn’t you want to make many small ones to lower the variance?
Another factor is that the sportsbook’s house edge (vig) loses you more EV for longer bets, since it’s larger relative to your chance of winning when that chance is small. Around +600 (very roughly) is the sweet spot for EV.
Yes, it’s good to split your free bets to lower variance on FanDuel and Barstool who allow it. However, the DraftKings and Caesars bonus bets can’t be split. BetMGM splits your bonus into 5 equal-size bets that can’t be split further.
Hmm where did you hear that sportsbooks take a higher vig on longer odds bets? I knew this about one-way bets, like the winner of a golf tournament, because you can’t bet on the event not happening so there isn’t an easy way for the lay-bettor to see how much they’re getting ripped off. I’ve seen plenty of arbitrage opportunities on oddsjam for long odds bets—just flagging in case anyone doing handicapping or +EV betting without promos sees this.
Also, I could be wrong so please let me know if there’s something I’m missing!
This is just empirical, that the vig is roughly 4-5% for long and short bets alike. But the math works out that for a fixed vig, long bets lose more EV because the vig is larger as a fraction as your chance of winning,
Great question. A mix of risk tolerance (for most people) and tax liability (especially for the $5,000 best). Sure you could make a +2000 odds bet, but then you’d have to pay taxes on a $100,000 windfall, and that dominates the marginal gains in bet efficiency between converting a free bet at 80% of the principal (+400 odds) to 95% of the principal (+2000 odds).
Also, sites may not let you get a full $5000 credit on a +2000 odds bet. And oddsjam may not have much data on which +2000 longshots are good value relative to other books bc so few sites would offer bets on that event (or parlay) that you could compare apples to apples
Oh and you definitely would want to make a bunch of small bets. You just can’t do that the way the promo is structured on any place except barstool and betmgm. Takes a bit more time to hunt around for a bunch of bets, so up to you
Sure, when you itemize you can write off losses against wins across sportsbooks, meaning that you’re taxes on the net profit you make across all bets. When you take the standard deduction you can only write off losses against wins within a sportsbook. So if you won $10,000 on Fanduel and lost $8,500 on all the other sportsbooks, you’d be taxed on $1,500 of income if you itemize and on $10,000 of income if you take the standard deduction.
Say you lose $5,000 on Fanduel and gain $6,000 on DraftKings. If you take the standard deduction, your pay taxes on the $6,000 gain but can’t write off the $5,000 loss. If you instead itemize, you can put the $5,000 loss as a deduction, in effect paying taxes on a $1,000 gain. This makes a big difference even at moderate tax rates.
Also responded over dm while mods were approving this comment. Here’s the answer for public visibility:
That will work, but will only perfectly hedge your bet if the odds on both sides are +100 or greater (very rare). I also recommend hedging with a different sportsbook so as not to appear to be “colluding” against the sportsbook.
An example could be you and your wife each bet on the pacers vs celtics, and spurs vs wizards games tomorrow on each fanduel and draftkings. You could bet on the pacers on Fanduel, and the Spurs on Draftkings, your wife could bet on the Celtics on Draftkings, and the Wizards on Fanduel. That way there aren’t bets on the same game on the same sportsbook across the two accounts.
Responded over DM when this comment was pending review from admins since it came from a new account, but for public visibility, bets settle as soon as the game ends. So for example, to get the fanduel bonus today, you could bet on basketball games starting at 9pm ET and earlier, but probably not after that.
If you are coming from our is state and you need a place to crash or to work on this in lower Western Massachusetts reach out to me (I’m in Monson, near the Connecticut border)
Fanduel is likely to cap your $5,000 risk-free long bet, that is, limit your wager to a maximum dollar amount that’s only shown when you type in “$5000”. You should avoid this because only your very first bet is “risk-free”. You can look for other games or wait for caps to loosen, but opportunities are slim to place a full $5,000 bet at +300 (1-in-4) odds, maybe just some NBA games when they’re about to start.
But, there’s a way around the caps: parlay bets. When you select two wagers on different games onto your betslip, a “2 Leg Parlay” bet option will show, which bets on both outcomes happening together—that is, you’re paid only if both teams win their respective games. This lets you combine, say, two coin-flip games into one roughly 1-in-4 (+300) bet, but often with a looser cap that lets you wager the full $5,000. I’ve confirmed that parlay bets qualify for the promo on Fanduel and seen people successfully do this.
I’ve been helping organize bets like this for the last couple weeks, so I’m happy to answer any questions.
It seems like if you’ve made accounts for these same sites In other states you can’t get these promotions in Massachusetts. Does everyone agree?
Yes I believe that’s correct.
People considering this strategy should be aware that the sports-betting companies have lobbied many state legislatures to make these promotional “risk-free first bets” deductible from the companies’ tax bills.
The tax treatment of these promotions in Massachusetts seems to be unsettled; however, companies may end up being able to deduct promotional bets from their taxable income, as they can in other states. That would mean that following the steps outlined here would reduce the tax revenue that Massachusetts has available to pay for public programs like education and public safety (or return directly to taxpayers, as it did with surplus revenue last year).
As recently reported in The Boston Globe:
I think reasonable people could differ on whether it’s morally permissible to take a favorable promotional deal from companies in an unusually harmful industry, especially if the deal has a side effect of reducing public resources. I’m not personally comfortable taking such a deal, and I’d encourage others to allow some time for reflection before doing so.
That seems like the straightforwardly correct way for things to work. Offering these promos is an expense for the company, reducing profits, just like if they had spent the money on advertising. Since corporate taxes are levied on profits, anything that reduces your profits should reduce your taxes.
Of course, if the promotion is effective, it will overall increase their revenue and profits—and hence the taxes paid—again just like an advertising campaign.
The same argument could be applied to any discount that any firm offers—should people feel guilty for buying clothes on clearance sale, or accepting a free sample at the supermarket, as this also reduces profits and hence taxes? I don’t think people should feel guilty about ’it is possible that this activity might be taxed in a manner consistent with other activities.
I think there are two differences that might matter to some people, but I don’t mean to claim that they will or should be decisive for everyone:
The relevant marginal tax rates for sports-betting companies are much higher than for companies selling consumer goods like clothes and food; in Massachusetts, I think the relevant tax rate is 20% for app-based sports betting.
Most people aren’t buying clothes on clearance or accepting free samples at the supermarket with a primary goal of maximizing altruistic impact; if they were, I think it would be reasonable for them to account for the tax-revenue consequences in their decision. (I do think it’s permissible to accept those kinds of promotions in everyday life, but I think that’s separate from how we should account for their impact.)
Money in the hands of charities is orders of magnitude more effective than “public resources”.
I’m not sure how corporate taxes work exactly, but I don’t think the companies benefit overall by giving you the money if you only take advantage of promotions like this and don’t also bet more often than otherwise besides with promotions. Otherwise, companies would donate a lot more and enough to never pay any taxes (or pay only the minimum required after all possible deductions).
So the net effects of taking advantage of this are that the companies earn less in net profits and pay less taxes. But they’d pay less in taxes if they were less profitable, anyway (although they’re probably paying even less, relative to their net profits). Then
If you think it’s good that these companies earn less in net profits after taxes, then that counts in favour of taking and using their promotion money.
If you’re worried about reducing public resources, then this also counts against you using charitable tax credits/deductions in order to donate more to EA charities in general. But EAs don’t typically worry about this, because our charitable dollars do much more good and the rate here is still pretty favourable.
Although more controversial, you might even believe reducing public expenditures overall is good, if you believe the state uses marginal funding in net harmful ways, with harms from wars, enforcing unjust laws or overburdensome regulation.
Thanks for this addition. I think I agree about the likely net effects on the companies’ profits and tax bills, and I mostly mean to be highlighting that some (uncertain) fraction of the money people gain by following this approach would counterfactually have ended up in the hands of the state government, not the sports-betting companies.
That consideration makes the strategy less attractive than it would be if the money came entirely from the companies,[1] and it might be enough to make the proposed strategy net-harmful by some people’s lights, especially if they are less than certain that:
They will stop betting as soon as they exhaust their “free” bets.
They won’t inadvertently promote sports betting to others who might be harmed by exposure to the industry.
They will donate almost all of the proceeds to charitable causes that are more beneficial than marginal public spending.
I think it’s reasonable for people to worry that one or more of these conditions won’t hold in practice.
This point doesn’t hold if you think marginal public spending is worse than marginal corporate profits for sports-betting companies, but my guess is that relatively few people hold that view.
Those of us who feel this way can voluntarily pay a higher tax rate or donate some of the proceeds of this method to an effective charity (which they should do anyway!) to offset the perceived harm of reducing Massachusetts tax revenue.
FYI for the Caesar’s $1500 bonus bet..
“f) Bet Credit stake is not included in any winnings from a redeemed Bet Credit.”
I bet on the Rockies winning against the Padres (they were an underdog) and I only got $2430 out of $1500 invested. If I had used that bet credit on an overdog that won, I would have lost money on net. [this is different for some of the other sites]
----
Also you HAVE to get the FIRST DEPOSIT right on DraftKings—I wrecked my first bet there by depositing only $25 and then placing a microbet just because I was scared… (I should have placed my first microbets on the other sites)
---
Shrug, I think I’m only up $1300 across sites mostly due to some impulsive microbets that choked up my “guaranteed free bets”
For most people, it’s better to use https://www.caichinger.com/blog/2018/04/19/kelly_criterion4/ than expected value
Does the Bonus Bet token for DraftKings only apply for the first wager you put money for? (it’s “up to $5000”, but if you bet for less than $5000 [eg only make a deposit of $500], are you not filled in for 5,000 ever?)
Yes I believe that’s how it works—if you’ve deposited but not bet yet, you may be able to just deposit more and still be eligible (you’d have to check with customer support). Once you’ve bet, you’re ineligible
Why stop at +400? Doesn’t the ev of the free bet continue to rise as the odds get longer? Is it just because the longer odds run into the bet caps? Edit: also for the free bets, wouldn’t you want to make many small ones to lower the variance?
Another factor is that the sportsbook’s house edge (vig) loses you more EV for longer bets, since it’s larger relative to your chance of winning when that chance is small. Around +600 (very roughly) is the sweet spot for EV.
Yes, it’s good to split your free bets to lower variance on FanDuel and Barstool who allow it. However, the DraftKings and Caesars bonus bets can’t be split. BetMGM splits your bonus into 5 equal-size bets that can’t be split further.
Hmm where did you hear that sportsbooks take a higher vig on longer odds bets? I knew this about one-way bets, like the winner of a golf tournament, because you can’t bet on the event not happening so there isn’t an easy way for the lay-bettor to see how much they’re getting ripped off. I’ve seen plenty of arbitrage opportunities on oddsjam for long odds bets—just flagging in case anyone doing handicapping or +EV betting without promos sees this.
Also, I could be wrong so please let me know if there’s something I’m missing!
This is just empirical, that the vig is roughly 4-5% for long and short bets alike. But the math works out that for a fixed vig, long bets lose more EV because the vig is larger as a fraction as your chance of winning,
Great question. A mix of risk tolerance (for most people) and tax liability (especially for the $5,000 best). Sure you could make a +2000 odds bet, but then you’d have to pay taxes on a $100,000 windfall, and that dominates the marginal gains in bet efficiency between converting a free bet at 80% of the principal (+400 odds) to 95% of the principal (+2000 odds).
Also, sites may not let you get a full $5000 credit on a +2000 odds bet. And oddsjam may not have much data on which +2000 longshots are good value relative to other books bc so few sites would offer bets on that event (or parlay) that you could compare apples to apples
Oh and you definitely would want to make a bunch of small bets. You just can’t do that the way the promo is structured on any place except barstool and betmgm. Takes a bit more time to hunt around for a bunch of bets, so up to you
Thanks for pointing this out. Can you clarify why the EV is so much lower when taking the standard deduction?
Sure, when you itemize you can write off losses against wins across sportsbooks, meaning that you’re taxes on the net profit you make across all bets. When you take the standard deduction you can only write off losses against wins within a sportsbook. So if you won $10,000 on Fanduel and lost $8,500 on all the other sportsbooks, you’d be taxed on $1,500 of income if you itemize and on $10,000 of income if you take the standard deduction.
Say you lose $5,000 on Fanduel and gain $6,000 on DraftKings. If you take the standard deduction, your pay taxes on the $6,000 gain but can’t write off the $5,000 loss. If you instead itemize, you can put the $5,000 loss as a deduction, in effect paying taxes on a $1,000 gain. This makes a big difference even at moderate tax rates.
Can I place a 5K bet on one side of a wager and have my wife place a 5K bet on the other side? That way it’s perfectly hedged?
Also responded over dm while mods were approving this comment. Here’s the answer for public visibility:
That will work, but will only perfectly hedge your bet if the odds on both sides are +100 or greater (very rare). I also recommend hedging with a different sportsbook so as not to appear to be “colluding” against the sportsbook.
An example could be you and your wife each bet on the pacers vs celtics, and spurs vs wizards games tomorrow on each fanduel and draftkings. You could bet on the pacers on Fanduel, and the Spurs on Draftkings, your wife could bet on the Celtics on Draftkings, and the Wizards on Fanduel. That way there aren’t bets on the same game on the same sportsbook across the two accounts.
Lmk if you have any other questions!
Just saw this (and I live in MA). How long does it take bets to settle typically?
Responded over DM when this comment was pending review from admins since it came from a new account, but for public visibility, bets settle as soon as the game ends. So for example, to get the fanduel bonus today, you could bet on basketball games starting at 9pm ET and earlier, but probably not after that.
Does this work if you travel from out of state?
Yes! I believe you have to have a US social security number though.