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FanDuel could lose over $300,000 after paying Alabama bettors too early

Zack Guzman
Senior Writer

With Alabama suffering a disappointing, 28-point defeat to the Clemson Tigers in the College Football Playoff National Championship, it would be easy to assume the Crimson Tide was the most embarrassed team on Monday.

That would normally be a safe assumption to make but gambling site FanDuel has even more to be embarrassed about. The company decided to effectively declare Alabama the winning team two months before the game was even played.

Back in November, FanDuel turned heads by paying out bettors who decided to pick Alabama to win the championship even before the final four playoff teams were set. At the time, the company said the decision was in part due to Alabama's dominance and to reward customers for risking money on the team even when the odds diminished winning payouts.

SANTA CLARA, CA - JANUARY 07: Clemson Tigers defensive end Clelin Ferrell (99) and cornerback Trayvon Mullen (1) celebrate after the Clemson Tigers defeated the Alabama Crimson Tide in the College Football Playoff National Championship game on January 7, 2019, at Levi's Stadium in Santa Clara, CA. (Photo by Douglas Stringer/Icon Sportswire via Getty Images)

It was a bit of a gamble for FanDuel, which was acquired by Irish bookmaker Paddy Power Betfair in May 2018. In November, when the decision to payout Alabama bettors was made, the company estimated the move would, at worst, add up to a $400,000 loss, depending on parlay bets that included an Alabama win.

With Alabama’s loss, FanDuel said it paid out an additional $42,000 to those who bet on Clemson winning, compared to the $40,000 it pre-emptively paid to Alabama bettors, despite the team losing. The company also said in a statement that an additional $230,000 hangs in the balance as parlay bets that had Alabama winning the championship now still remain in play.

For example, one bettor who risked $50 on a five-leg parlay bet that correctly called two NFL games and correctly took the over in the Louisville Cardinals-Syracuse Orange matchup, still stands to win a lot of money despite picking Alabama to win the championship. That bettor could see a $9,000 payout if the Kansas City Chiefs win the Super Bowl.

“Even though Alabama didn’t win, we have no regrets and are excited to make similar bold moves to prove there are more ways to win on the FanDuel Sportsbook,” FanDuel said in a statement.

To add insult to injury, FanDuel saw its betting app crash right before the Alabama-Clemson kickoff. But, as Yahoo Sports points out, the stunt to payout bettors even before the game was played might still pay off in the long run. The amount of buzz created by the stunt might prove more effective than what would have been spent on traditional advertising — especially as the betting space becomes more and more competitive.

Zack Guzman is a senior writer and on-air reporter covering entrepreneurship, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.