The art of using sports betting as insurance for your business promotion

Pekelo

Pekelo

Mattress Mack, Caesar's negative quarter, and how to get a free mattress if your local team wins:

TL;DR: Local furniture guy Mattress Mack had a promotion saying if you buy a mattress and the Houston Astros win the MLB championship this year, you get your money back. Lots of people bought mattresses, so Mack hedged his promotion by betting at Ceasar's on the Astros. Well, guess who are the champions? Caesar is looking at a 75MM loss and as a result a negative quarter, while there are lots of happy costumers at Mack's business.

https://www.reddit.com/r/path%3D%252Fr%252Fnews%252Fcomments%252Fyng8uz%252F
 
Caesars is only paying out $30M, with the other winnings coming from other sportsbooks. According to the Nevada Gaming Control Board, about $180 million was bet on baseball in the month of September, and in a low margin segment like sports betting, a $75 million loss will definitely hurt.
 
Pekelo said:
Mattress Mack, Caesar's negative quarter, and how to get a free mattress if your local team wins:

TL;DR: Local furniture guy Mattress Mack had a promotion saying if you buy a mattress and the Houston Astros win the MLB championship this year, you get your money back. Lots of people bought mattresses, so Mack hedged his promotion by betting at Ceasar's on the Astros. Well, guess who are the champions? Caesar is looking at a 75MM loss and as a result a negative quarter, while there are lots of happy costumers at Mack's business.

https://www.reddit.com/r/path%3D%252Fr%252Fnews%252Fcomments%252Fyng8uz%252F
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Pretty smart! But I wonder if some law has been broken by the store owner. Perhaps running a betting operation without a license?
 
There are a number of niche insurance companies that will insure these kinds of risks. Snowfall over a given depth on a particular day, hole-in-one, grand slams on a particular pitch. One of the option conferences offered a Harley Davidson on a particular hole for a HIO.
They ain't cheap.
And in this case, they self-insured - in derivative terms, they bought a $3 MILLION PUT.
 
R1234 said:
Pretty smart! But I wonder if some law has been broken by the store owner. Perhaps running a betting operation without a license?
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No law broken, he made simple legal bets in casinos, who took his bets. He wasn't booking the bets like a street bookie.
 
R1234 said:
Pretty smart! But I wonder if some law has been broken by the store owner. Perhaps running a betting operation without a license?
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Nope - all perfectly legal. He's done it a few other times before.
 
IntergalacticSpace said:
Net-net, it's not a bad business move at all. Worst case - if you lose - you just add an incremental 12% SG&A cost for advertising/promotional expenses.
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He doesn't lose.

You buy the mattress at full price. If the astros win, he sends you a check back. I'm sure his profit margin pays for the bet and he gets all sorts of publicity.
 
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