Thoughts on the AP-FanDuel deal.

This is going to be a bit complicated and technical. I’ll do my best to make this as accessible as possible to people unfamiliar with sports betting or markets in general. First, let me lay out what has happened:

“In an unusual arrangement, the Associated Press will now exclusively cite gambling odds provided by FanDuel in its sports coverage, in exchange for payments from the online wagering company.

The companies did not say how long the agreement runs (except that it’s a multiyear pact) or how much FanDuel is paying the AP. For the 175-year-old independent news org, the commercial agreement is atypical; it’s not clear how often the AP has entered into such exclusive deals to feature paid-for content in its news reporting. Reps for the AP did not respond to requests for additional information.

Under the terms of the agreement, FanDuel-provided odds will appear in AP’s daily sports odds features, game previews and other sports stories. In addition, the companies also will integrate FanDuel widgets across the sports pages of APNews.com and distribute “select FanDuel content” across the AP wire.”

That is from Todd Spangler’s piece in Variety.

There’s a lot to unpack here. The first issue is that the Associated Press has sold space within their articles, blurring the lines between news and advertising. Insofar as the betting line on a sporting event is relevant to a story, the AP has committed to referencing FanDuel’s line. I’ll come back to this shortly.

In general, when referencing something that is traded on a market or exchange you want to quote prices from the highest limit market with the lowest bid/ask spreads. That is where the prices originate and everything else derives from them. When we refer to currency prices we reference Forex (also known as FX) as the Foreign Exchange is where the prices are set. When it moves, everything moves with it in lockstep.

In the case of sports betting you’ll see lines follow the prices set at Pinnacle Sports, CRIS, and in some cases, the largest Asian books. Circa is also a respected newcomer in the space. FanDuel (and their rival Draft Kings) are not respected in the same way. The reason for that has to do with their respective business models.

Like Pinnacle before them, Circa is taking high limit action. They are looking to earn off of their winning players. FanDuel has a different business model. If you are clearly beating them for value, then your action is undesirable and you are shown the door. This business model is sometimes referred to as “recreational.”

Let’s come back to what FanDuel has purchased from the AP. The first thing is that AP writers now have to reference FanDuel and only FanDuel when referencing lines from sporting events. This means the AP is committing to pulling their sports line information from a recreational sportsbook. That’s awful. Additionally, they have promised exclusivity, so they cannot provide further information from other sportsbooks to accurately inform their readers. As the wagering lines on sporting events become increasingly newsworthy the AP has ceded both their objectivity and their editorial control.

If this were the extent of the deal it would be absolutely terrible. Awful for readers. Awful for the AP’s credibility. Awful for the sports betting industry. Alas, it’s worse than that:

“Under the terms of the agreement, FanDuel-provided odds will appear in AP’s daily sports odds features, game previews and other sports stories. In addition, the companies also will integrate FanDuel widgets across the sports pages of APNews.com and distribute “select FanDuel content” across the AP wire.”

Oh no!

This is where the AP moves from selling its credibility to selling its ass. FanDuel will now have, um… widgits, directing AP readers to their site. It’s bad enough when sports websites have affiliate links. This is even worse, and that’s saying something. I have no comment on “select FanDuel content.” A crying emoji will have to do. ;(

This is obviously all terrible but I have to think it’s only the beginning. Things are going to get worse before they get better, and I can’t promise better is coming.