He offered free furniture if the Bengals won. So he placed a large moneyline wager (not against the spread, just a straight W/L moneyline bet) on them to win. If the Rams won, he lost his stake, but he makes money from all the furniture and finance charges from selling that furniture. If the Bengals win, he forfeits the furniture money, but wins the payout from his wagers. It’s calculated so he’s making money either way…not to mention the advertising/publicity he gets from such a stunt.
So in my $1M mattresses sold scenario (I’m sure it’s more, just making the numbers easier), he must place a bet like $750K? If Bengals win he cashes in, say $1.5M and clears $500K. If Rams win he has $250K in furniture sales + ongoing finance charge profit?
(Full disclosure, I “lost” a free mattress in 2019. I needed the new mattress anyway and still love it, so I didn’t technically lose anything, but it made the WS loss extra tough.)
Yeah, that’s basically it. You also have to remember that the $1MM worth of mattresses he sells didn’t cost him $1MM to procure, so his break even point is somewhere short of the retail sales value. I’m not sure of the exact formula, but you can bet (get it!) it’s well thought out, and he’s not losing money.
On a side note…I recently purchased a mattress from Texas Mattress Makers, and like it a lot. It was half the price of one of Mac’s. It didn’t make me feel any better about Game 7 in 2019, either, however.
I purchased one from there also. Even got to customize it a bit. I like that place.
I won in 2017 when he was doing furniture, not just mattresses, on the promo. What was interesting is that I was issued a 1099-MISC (miscellaneous income) for the amount I received.
Contest/prize winnings. Like when I won the Texans Grand Prize…a “free” trip to the Pro Bowl. It was free up until I got a $3,000 tax bill attached.
Sure, but as it was not a “no purchase necessary” contest, I would argue that I had placed a wager, and it should be gambling winnings.
What’s the difference in gambling winnings versus general income? You can offset gambling losses?
Correct
Did you try to make that argument?
I didn’t have enough gambling losses to make it worthwhile.
Of course, I argue that “Who Wants to be a Millionaire?” prizes are gambling winnings after the first five questions.
I asked Mrs. Hawk, and she said it probably has to do with the way Mac has to handle giving you free furniture. He has to write it off as an promotional expense, not a gambling loss, so your benefit has to match that in some way. That you probably signed something ahead of time indicating such. She also echoed your point about unless your gambling losses are huge, it probably doesn’t make any difference, as it’s not a dollar for dollar offset. But it’s not an unreasonable position.
Interesting thought. I’ve read about those who argue that fantasy football is not gambling because it’s relying on skill rather than chance. Of course while that’s true in some sense, you’re relying on someone else’s skill, and you have no way to influence the outcome, so how is it any different than betting on a horse race where you’re relying on the horse’s skill?
I know from personal experience that my outcome in Mihoba League fantasy baseball is tied to my skill level, and that’s not a good thing.
3 Likes
I doubt he actually placed a bet in the traditional sense. He most likely bought an insurance policy against the Bengals winning that would pay his expenses of fulfilling his advertising promise.
This isn’t as weird as it sounds. Ignoring the legalities of a Texas company making large sports wagers, such insurance policies are bought all the time. For example, teams will insure the potential payout to players for win bonuses.
Further, the insurance policy will pay Mack’s net cost, not the retail value. And, it will pay just what he “lost”, not a predetermined fixed amount which could create tax issues for a windfall or leave him out of pocket if the fixed sum turns out to be inadequate.
A lot of the people who got a free car from Oprah went bankrupt because they couldn’t pay the tax bill they didn’t realize they had coming.
Is Ceasars Sportsbook in the insurance business now?
2 Likes
Old Mac’s come a long way from the homemade commercials of him jumping around he used to run on channel 39 at 10:30 at night.
I wonder how much more business he’d have ginned up if they’d put subtitles on those ads.
My uncle once won a new truck in a golf tournament. He had just recently purchased new vehicle, so he wasn’t going to keep it anyway, but was surprised at the tax bill and sold it immediately.
You will be shocked at the number of insurance products available that look exactly like gambling if you close one eye.