The democratization of sports betting
On Tuesday afternoon, as I was recording my podcast with Teddy Covers and Dan Fabrizio of Sportsinsights.com, I got an email from a buddy. His name is Ron Lieber and he is a personal finance columnist for The New York Times. He also knows that I happen to like the gambling beat. "Damn!" the email read. And it included this link to a report from The Wall Street Journal.
In case you're too lazy to click, I'll fill you in. It's a story reporting that the Department of Justice has accused Full Tilt Poker and its owners, including Howard Lederer and Chris Ferguson, of running a massive Ponzi scheme with their operation. The Journal wrote that the civil suit alleges the poker superstars and other members of the Full Tilt board defrauded "thousands of online poker players out of more than $300 million that is still owed to them. The government said that, in total, the 23 owners of the site had taken out $444 million in distributions over the years."
"Damn!" is right. Ever since the DOJ shut down Full Tilt, PokerStars and Absolute Poker, the argument for those in the online poker industry has been that it would finally lead to legalization. This was their logic: The Feds would shut down the sites living in the gray area of the Unlawful Internet Gaming Enforcement Act (UIGEA), which makes it illegal for companies to use third-party payment processors when paying money won gambling. Then the government would create a new law that legalizes online poker and allows federal and state governments to tax the buckets of money coming in. And then the long-established gaming companies would open their own sites. It would be the typical American story of happiness, with corporations and government reaping millions, or even billions, and the rest of us get to gamble. Woo hoo!
While there has been a lot of talk from federal legislators, nothing has come to fruition yet. But that number, nearly half a billion bucks in gambling proceeds, is staggering. Forget about the case for a second -- if it happened as the DOJ alleges, it is a slimy, faith-breaking play by two of poker's name brands who had done the most to legitimize that industry. Those dollars are from one company and give a pretty clear picture of just how much money could be had if this business were legit.
But I thought my buddy Ron's email was coincidentally well-timed. It came across the transom as I listened to Teddy and Dan go at each other on my podcast about the influence of public money on point spreads. The truth is, it's becoming nearly impossible to separate the public from the sharps, the square from the pros, just as it happened in poker. Online there are guys betting $10K a game from their living room who can move a spread from Curacao to The Strip as easily and quickly as a respected wiseguy from Vegas can. The Internet has democratized all of sports betting, the way it has nearly everything else. It has made the public sharper, by virtue of the access it provides, and made the public decidedly more influential, by offering places to bet as soon as lines are posted on Sunday nights.
It's also become such a specialized industry -- the books in Vegas that cater to locals, the books that cater to tourists, the books offshore that cater to sharps, the books offshore that cater to retail players -- that there is an expanding list of influencers. What matters to Pinnacle, one of the sharper offshore books, doesn't necessarily matter to The Mirage, a book that is built on public action. "I don't factor the public money into every game, but I will for five or six marquee games on Saturday and two or three on Sunday," says Jay Rood, the boss at The Mirage. "You have to know that certain games are going to be bet certain ways by the public. In college football last weekend, for example, I knew all the money was going to come in on Stanford so I set the number a little higher, even though it might leave me vulnerable to some sharp action. I actually knew I was going to need every bit of Arizona money I could get. Or, look at how it influences our profit potential. All the money we made during the day on Saturday was wiped out by Oklahoma covering that night. And that was public money."
The story will be no different in the NFL this weekend, with public teams like the New England Patriots and Baltimore Ravens listed as favorites on the road. "Those are always tricky," Rood says. "The public loves road favorites. My buddies always come out to Vegas, show me their betting tickets and tell me about their road faves. And I always tell them to be careful. They just don't listen."
But you can. I asked Rood to give me his breakdown on five of the more intriguing point spreads this weekend. Here's his take:
Matchup: San Francisco 49ers at Cincinnati Bengals
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