3 heads

3 heads
The Last Great Prizefight: Jack Johnson, Tex Rickard, Jim Jeffries

Monday, August 30, 2010

Nothing Like a Damn Long Pre-game Show

On a fall-like day, my wife and I rode our bikes into town to have a few beers and watch her new favorite, local, girl-band, Nothing Like a Dame.  While they were rocking the house - actually more grooving than rocking - I couldn't avoid the jumbo screen directly in front of me showing a damn long pre-game show for pre-season NFL game.  Most of the broadcast, which I saw but did not hear, was nothing more than watching Brett Favre engage in mundane activities, like warming up or talking to personnel. (Why, exactly, is this entertaining?)  The fact that a pre-season NFL game is being broadcast at all is, I want to say, amazing, or bizarre, or incomprehensible, but, that's not true.  While I can't relate to this gluttony, the appetite for football in this country seems insatiable, even if it means watching pre-season football or, heaven forbid, the draft.  So, it's understandable that the NFL wishes to extend their season.  My question is: What has taken so long?

This would be a no-brainer if it weren't for the fact that this a physically brutal sport played by human beings.  From the NY Times:

Baltimore Ravens linebacker Ray Lewis said Tuesday that he had pondered the idea of curtailing the preseason because of the injuries players sustain in meaningless games, but that he did not want to see them replaced by regular-season games.
“We’re not automobiles; we’re not machines; we’re humans,” Lewis said in Baltimore. “After the first three, four months, your body feels a certain way. You’ve got to ask yourself how many people are truly healthy in 18 games. I just think it’s a lot of football. I think if fans understood what we actually go through to play in December and January, I think a lot more people would fight with us. I don’t think it’s knowledgeable to make us play 18 games. It’s rough.”
I understand; my joints hurt just thinking about it.

Pre-season football is sometimes called exhibition football.  To me, every game is an exhibition, whether it has some sort of competitive meaning or not.  After all, I have no stake in who wins (unless I have a wager that depends on it).  Why else would the owners want to extend the season by 2 games or, for that matter, play a "regular" season at all. Just start with the playoffs; every team is in.  The primary purpose of professional sports is entertainment, period.  Who could argue with that?  And the demand for that entertainment is higher than the current supply. 18 games, 20 games, 24 games? The public wants more. The owners want more. So how will the players survive?

Let me propose more games but less actual playing. There is so little game playing already that it certainly could be reduced even further without affecting fan interest. The game, in and of itself, no longer seems to matter a whole lot anyway except as a catalyst for hype, analysis, and melodrama. There just needs to be enough of a sports kernel to fuel the process, like a few ounces of enriched uranium to fuel a nuclear power plant.

According to the Wall Street Journal, only 9.4 percent of an NFL game, excluding commercials, is actual playing time.  What if that were reduced to compensate for the longer season?  Would that be a fair compromise? Make up for extending the season by 2 games, or 12.5%, by extending the play clock from 40 seconds to 50 seconds, or 25%.  The networks will have no problem filling that gap.  A shot of Brett Favre breathing should be satisfactory.

Friday, August 27, 2010

Dubia World Cup, brought to you by Camelicious

To tie this post to sports and gambling is most definitely a stretch, but I feel compelled to share.  My first reaction to this article was to check the dateline to make sure it wasn't April 1.


Wernery's veterinarian father, Ulrich, made a pitch about a camel dairy to Sheik Mohammed a decade ago.
"I told him, `You race camels. Why not milk them?'" said the elder Wernery, who first became enamored with camels while working in Somalia in the 1970s.
The giant real estate bubble that was Dubai has burst; other industries need to pick up the economic slack. That brings us to Sheik Mohammed's latest entrepreneurial venture: camel milk, exported to the world under the brand Camelicious.   
European Union health regulators in July cleared the United Arab Emirates to become the first major exporter of camel milk products to the 27-nation bloc. If onsite inspections and other EU tests pass muster, the first batches of powdered camel milk could be heading to European shelves next year.
U.A.E camels, however, have been bred for racing, not milking, so camels have been imported from Saudi Arabia and the Sudan.  No cross breeding here. Racing camels, like thoroughbreds in the U.S., still fetch top dollar in Dubai where camel racing is big business. Whether racing camels produce much milk or not, it doesn't seem right to milk them. Look at it this way, if you were milking horses, you wouldn't load Rachel Alexandra or Zenyatta into the milking machine.

Tuesday, August 24, 2010

The Philosophy of Bookmaking at LVSC

I've been ignoring the Internet for a few days, so I just saw last Friday's Las Vegas Review Journal article about the shakeup at LSVC.  I suppose that many readers have no idea what LSVC is or does and why this is important to the business of sports betting.  So, how about a little background?

First off, the sports-book supervisors you see behind the counter at your favorite Nevada casinos are not the geniuses they appear to be -- many regulars have long since figured that out.  But, tourists still think the bookies know everything about everything: NFL, college, or Canadian football, NBA and college basketball, hockey, baseball, tennis, golf, NASCAR, etc.  The truth is that most bookies know just enough to make small talk: the same information Joe Blow gets by watching Sportcenter.  That doesn't necessarily mean that they don't know how to make book; believe it or not, you don't need to know a whole lot about sports to be a successful bookie as long as you have a good opening line to start from.  The opening line comes from the brains behind the sports books, the consultants, which used to only mean Las Vegas Sports Consultants (LVSC) but now is just as likely to mean Pete Korner's Sports Club.

To read a history of LVSC, its founder "Roxy" Roxborough, and the evolution of sports book management, see this.

Today's sports wagering menu is overwhelming; it is impossible for individual books to make their own lines on all sporting events and keep on top of related information such as injuries, weather, and schedule changes.  That's why they pay a consultant.  For example: If Rutger's star quarterback gets suspended, the consultant will post an alert on their electronic information service and probably phone their sports-book clients to make sure they move the line or take the game off the board before the wise guys get a chance to hammer a bad number.

Besides information, they also provide advice.  I came up with some fun and popular proposition wagers when I was in the business, like the over/under on Shaquille O'Neal's free throw percentage and the number of majors that Tiger Woods would win, but I would alway run my odds past the consultants first to get their opinion.  (Usually Pete Korner, who was then with LVSC.) They not only keep an enormous amount of statistical information, but they also staff experts for each sport and a professional statistician to review the probabilities.

With their centralized knowledge and ties to nearly every sports book, LVSC and Sports Club have enormous statewide influence on sports book management and philosophy.  The shakeup at LVSC shows that LVSC has shifted from a philosophy of conservative bookmaking to an aggressive one. The president of Cantor Gaming, which owns LVSC, fired LVSC's Chief Operation Officer over philosophical differences.  From the LVRJ:

 Amaitis has innovative ideas and desires to see big changes. In his view, he and Mike Colbert, the M sports book director, are leading Cantor's efforts to carry the state into a more lucrative future.
"I think this town has been at a standstill for 15 years, and that's what we're trying to do is change it," Colbert said. "We've only been here a year.
"Some people would say, 'Wow, they do a big handle. Big deal.' But we want to write 10 times the business. We want to take $2 billion in bets and hold 2 percent. We're not an amenity to anyone's hotel. We're here to take bets and make money."

The philosophical split, and probably the reason that LVSC has lost its consulting monopoly, is between whether a sports book should be simply an amenity to the larger casino business, or whether it should take more risk in an effort to generate more revenue.  I can guarantee you this: the major hotel-casinos want nothing to do with taking more risk; their market is the low-hanging fruit: easy, tourist money.  But not all casinos run their own books; some lease space to independent operators like Lucky's, the Cal-Neva out-stations, or Leroy's.  Those operations don't make money off slot machines, lodging, or food and entertainment, only off sports betting, so they may be more inclined to side with the new LVSC philosophy.
  
Cantor Gaming's takeover of LVSC has shifted their philosophy to one more akin to that of offshore books: make less per dollar wagered but make up for it in volume; and they've implemented that strategy at the M Resort's sports book.  The fact that LVSC is owned by the same company that also runs the M would make LVSC's founder more than a little uncomfortable.  When "Roxy" Roxborough ran LVSC he would have considered that an inappropriate conflict of interest.  At that time, employees of LVSC were not allowed to wager on sports at all.  How would it look for if the person who sets the state's line wagered on the same event?
  
Cantor has been running a high-volume business at the M Resort, which was buoyed by a successful Super Bowl. Amaitis said his one book is responsible for "close to 15 percent" of Nevada's $2.7 billion handle for fiscal year 2010. In his opinion, the state's handle, which shows modest annual increases, should be at least 10 times larger.

For one sports book to have 15 percent of the state's handle is unbelievable. The only way a bookie can generate that kind of volume is to offer an attractive number.  If every book on the planet has, say, the NY Giants -7, all you need to do to generate a lot of volume, is to make the Giants -6 or even -6.5.  They would be flooded with Giants money.  That means the bookie has an opinion; that's called gambling.  If the M sports book truly generated 15% of the state's handle, then they must be gambling, and that would make the M a wise guy paradise.  There's no way the major strip hotel-casinos will go for this.  I suspect that must be one of the reasons that Pete Korner split from LVSC and why his Sports Club has gained so many clients.

Thursday, August 19, 2010

$15 Billion Jock

Translating the value of money from one historical era to another is difficult and subjective. In the Last Great Prizefight I tried to convey the fact that the $50k that Jim Jeffries earned and the $70k that Jack Johnson earned in prize money for their 1910 fight in Reno was an exorbitant amount of money for a time when the average salary was around $700 per year.

In Roundtable, the blog of Lapham's Quarterly, Peter Struck faced a similar problem when trying to convey, across two millennia, the wealth of an illiterate Roman charioteer named Gaius Appuleius Diocles. Struck's suggestion is creative, and certainly on the high end of estimates, but hey, when it comes to this type of calculation, there is no right answer and I'm all for using the high end.  $15 billion sounds so much more thrilling than the $57 million which one of the posters mentioned. 
His total take home amounted to five times the earnings of the highest paid provincial governors over a similar period—enough to provide grain for the entire city of Rome for one year, or to pay all the ordinary soldiers of the Roman Army at the height of its imperial reach for a fifth of a year. By today’s standards that last figure, assuming the apt comparison is what it takes to pay the wages of the American armed forces for the same period, would cash out to about $15 billion. Even without his dalliances, it is doubtful Tiger could have matched it.




Tuesday, August 17, 2010

Nicolas Anelka, Bienvenue aux États-Unis

The French Football Federation suspended Nicolas Anelka for 18 matches, thus, those in-the-know suspect his international career is over.  From the Guardian:


Nicolas Anelka's career in international football was in effect brought to an end today after he was given an 18-match ban for his role in France's controversial mutiny during the World Cup in June.

The Chelsea striker was given by far the heftiest punishment of the five players brought before the French Football Federation (FFF) after he insulted the then France coach, Raymond Domenech, which led to the player's expulsion from the tournament and the team staging a boycott.

Here's an idea: The United States could grant Anelka U.S. citizenship and he could play for the United States national team. He would easily be the Red, White, and Blue's  (as opposed to the Bleu, Blanc, et Rouge) best ever striker.  Get Thierry Henry, too and the chances for les États-Unis at WC2014 will be greatly improved. Hey, didn't Beckham just get canned by Fabio Capello? A midfielder to feed Henry and Anelka? Formidable!

Write your congressman.

Saturday, August 14, 2010

Odds to Win the Super Bowl 2011

Sit down in front of a slot machine and you have no way of knowing what the hold percentage is. But look at the odds in a sports book, and you can calculate or estimate the percentage if you are so inclined.  In my last post, I mentioned that offshore books are generally more competitive than land-based casino books.  With that in mind, I've done a quick and dirty look at the odds to win the 2011 Super Bowl comparing 3 Nevada books to the Greek and Betfair, the largest betting exchange.

By comparing these odds, it's obvious that the Greek, an offshore book, and Betfair, an exchange, are superior to the 3 Nevada sports books, although the Cal Neva is not bad.  As far as HET (Harrah's Caesar's, Bally's, etc.) and Atlantis go, well, uh hum, frankly. kind of embarrassing.  (I'll have to verify that 6-1 on the Panthers at Harrah's, but that is what they have posted.)  As an exchange, Betfair makes it's money by taking a percentage of the winnings.  For NFL futures, their cut is 5%.

Here's another way to look at this. If each team had an equal chance to win; they would all have the same odds.  Here is what each teams odds would be:



HET 15.5
Cal-Neva 20.6
Greek 22.8
Betfair 30
No Juice 31

Thursday, August 12, 2010

Offshore: Better for the Bettor

This article with a dateline of 2004 showed up yesterday at http://sportsbettingsolutions.co.uk.  The first paragraph:
Las Vegas, NV (PRWEB) March 19, 2004 -' A PROFILE OF THE ONLINE GAMBLER By Robert Jay - Online gambling on sports in America has surpassed the total handle of Las Vegas casino-based sports books. A December, 2002 Congressional Report by the US General Accounting Office stated that online gaming reached new heights in 2002 as worldwide revenues topped $4 billion. Of that amount, over $2 billion was wagered by US residents. Bear Stearns backed up these findings by estimating the worldwide market would have been in excess of $5 billion had many American credit card providers not discontinued offering transfers to offshore sports books. Meanwhile, the Nevada handle on sports books was less than $2 billion in 2002; this is the first time in a decade that the Nevada handle dropped below $2 billion.

The fact that more people bet online than at Nevada casinos is no surprise; online books are more convenient and far more competitive.  Sports betting has a cost; that's the juice.  And like any other product, you frequently find a better price online as well as a wider selection. Even with the limited availability of sports books that accept U.S customers (thanks to UIGEA), finding a better price online is not difficult; Nevada sports books do not and will not compete with offshore books. They have a different customer in mind. To land-based casinos, the sports book is an ancillary service, a service that they need to provide so that visitors who play slots and table games can also make a sports wager. For a serious sports bettor, it's not worth the trouble to make a trip to the casino to find worse odds and less selection than you can find online.

Wednesday, August 11, 2010

The Exploitation of Darrelle Revis

3 years through a 6 year contract and Darrelle Revis, cornerback for the New York Jets, is renegotiating his contract. Every time this happens a debate ensues.  There are those who always argue that a player should honor his contract. Finnish hockey star, Teemu Selanne, while having a particularly good season with the Ducks a few years ago, was asked why he didn't renegotiate his contract. He replied that he wouldn't ask for a new contract when he was having a good season because he didn't expect management to renegotiate if he were having a bad season.  

Nevertheless, the consensus seems to be that Revis is right to renegotiate. Even the Jets agree.  The amount he wants is the problem. The reason Revis' situation is different from Selanne's is that NFL careers are on average very short; players need to get what they can while they can. Further, there is an asymmetry in negotiating power between young players and management due to the draft; the fact that one team "owns" a player when he joins the league limits his options.  If there were no draft, a rookie could negotiate with any or all of the NFL teams to see who would give the best deal. Maybe if Revis had a better contract from the start, he would be in camp instead of holding out.

Frankly, the draft is un-American.  After 4 years ( 3 for Revis ) of playing major college football for what usually works out to be less than minimum wage, while major college football programs and coaches make bank, a player should be able to negotiate the best NFL deal with any team he wants.  

The NFL draft was challenged in court in 1968 by "Yazoo" Smith and the NFL lost, but thanks to agreements with the players' union the draft remains.  Slate magazine has an excellent article covering this issue. It's well worth reading in its entirety. In this excerpt, Wood refers to NBA player Leon Wood, who sued the NBA in 1984.

The time for another challenge in the NFL may be near. At the end of the 2010 season, the league's collective-bargaining agreement will expire. If players and owners can't come up with a new agreement right away, any draft conducted without union support might be subject to all sorts of Yazoo Smith-style legal action. Even with a new agreement, the NFL draft system could still be vulnerable. The 2nd Circuit decision in the Wood case came with an intriguing endnote:
Wood has offered us no reason whatsoever to fashion a rule based on antitrust grounds prohibiting agreements between employers and players that use seniority as a criterion for certain employment decisions. Even if some such arrangements might be illegal because of discrimination against new employees (players), the proper action would be one for breach of the duty of fair representation.
In other words, those who wish to challenge the NFL draft in the post-Yazoo Smith era should think hard about their target. It's not the league. It's the union.

Tuesday, August 10, 2010

Liberté, Equalité, Fraternité?

With HR2267, the bill to regulate and license online gaming, working its way through Congress, I mentioned that federal regulation would not necessarily compel current unlicensed operators to become licensed unless their sites could be blocked. Without filtering the Internet like Saudi Arabia and China do, the feds cannot stop online gambling sites from operating as usual (that's not a bad thing). And while that's not likely to happen in the United States, France does not share the same bias toward Internet freedom.

Bookmaker Stan James, based in Gibralter, continues to take bets from French citizens despite not being licensed to do so.  Therefore, the French government has ordered ISP's to block access to the Stan James website as well as other unlicensed sites.  The ongoing dispute between the French government and Stan James has become one between the government and the ISP's, who support Internet Freedom. According to www.gamblingcompliance.com:

The French internet (sic) providers will be fined €10,000 a day if they have not blocked the Stan James website by the beginning of October.
You can sympathize with Stan James for not complying; the tax rate on sports bets is a ridiculously high 8.5%.  

- The tax rate will be calculated on the amount of the wagers: the total sums outlaid by players and punters. The winnings, invested by the latter in the form of new bets, will be equally taxed. The taxation is set according to the following scheme:

8,5% for sports betting
15,5% for horse racing betting
2% for online poker
An 8.5 tax rate added to the juice makes sports betting an unattractive proposition. French Stan James customers surely hope that they will be able to continue accessing their account and that Stan James remains unlicensed.


History is repeating itself.  In the 50's and 60's, Nevada bookies faced a 10% federal tax.  Sports books did not exist in casinos, but in separate businesses called Turf Clubs, which did not offer any other gambling.  Due to the high federal tax, the volume of legal sports betting was low and some Turf Clubs reportedly cooked the books in order to appear as though they were complying with the tax code when in reality they were not.  Tickets were written with one less significant digit than the actual bet amount. That is to say, a ticket might read $110 dollars when if fact (wink, wink) it was actually an $1100 wager.

When the federal tax was lowered to 2% in 1974, sports betting took off in Nevada.  It has since been lowered to less than 1% and, of course, become a staple of the casino business.  The turf clubs have all disappeared. If the French government keeps its extortionist tax rate, than bettors and bookies will continue to find ways to circumvent the law.

Monday, August 9, 2010

Professional and Amateur Sports Protection Act

Legalized casino gambling spread rapidly once it broke out of its Nevada quarantine.  The lure of easy money enticed one state after another.  So, why is the Nevada casino industry, especially Las Vegas, still viable?  For one thing, Nevada is the only state with full-fledged sports betting. Gamblers flock to Nevada for the NCAA tournament and the entirety of football season.  Having a monopoly on sports betting is a great benefit now that its casino monopoly is long gone.  But that could change.  There has been talk of legalizing sports betting in New Jersey, Rhode Island, and California.  Major sports leagues are opposed but that won't make any difference if the law preventing sports wagering is overturned.  From online-casinos.com

The Interactive Media & Gaming Association (iMEGA), and others, have brought a federal lawsuit against the United States Department of Justice seeking to overturn or rework that legislation. The plaintiffs in the case include New Jersey state senators Ray Lesniak and Stephen Sweeney plus various horse racing groups from New Jersey. The consortium is arguing a case of state’s rights against the current state of American gambling laws.

If the Professional and Amateur Sports Protection Act went away, sports betting would be free to spread to all the states that already have casino gambling.  And just like the logic which argues that states need casinos so they can keep gambling revenue in state rather than losing it to the drop in other jurisdictions, the need for sports books in those same casinos will become inescapable.  Sure, New Jersey, might be the first to follow in Nevada's footsteps, but then Pennsylvania, and Indiana, and Connecticut, and California, and Louisiana ... will follow. 

I've always wondered if Las Vegas could last or if sometime this century it will become a giant ghost town.  I can't see what is so unique about Vegas that will maintain that special attraction for another 80 years.  If it loses sports betting, that will be just one more reason for its clientele to go somewhere else. 

Thursday, August 5, 2010

Bacchanalia

When I hear or read what politicians have to say on virtually any topic, I frequently get a dyspeptic rumbling in my small intestine, similar to the discomfort caused by eating too many Jalapenos.  That's how I felt when I read the Las Vegas Sun's latest news on HR 2267: Internet Gambling Regulation, Consumer Protection, and Enforcement Act.

On Wednesday, the House Financial Services Committee passed a bill to legalize and regulate online betting — but not before tacking on amendments designed to prevent online operators now violating U.S. gambling laws from becoming licensed under the new regime. The bill will be forwarded to the House.

“Al Capone couldn’t get a liquor license if he’d stayed around to the end of Prohibition,” said Rep. Brad Sherman, D-Calif., who authored one of the amendments.

It's a bit of a stretch comparing online casino operators to the leader of a violent criminal syndicate and the perpetrator of the St. Valentine's Day Massacre.  And about that liquor license: I suspect Al Capone would not have had a problem getting the City of Chicago to issue him one. 

More from our incorruptible representatives — although I use the possessive "our" loosely when referring to Alabama. 

“These are criminal enterprises,” Rep. Spencer Bachus, R-Ala., a gambling opponent who voted against the bill, said of the many betting websites.

Is it possible that the land-based casino industry (i.e. Harrah's Entertainment, Inc, an official supporter of the bill) had anything to do with amending HR 2267 to exclude the currently existing practitioners of online poker, which is what will be legalized?  Wouldn't it be a convenient marketing ploy to be licensed by the U.S. Treasury while excluding your competitors from obtaining the same license?  But, would it make any difference?  If outfits based in a foreign jurisdiction are currently accepting U.S. customers, denial of a U.S. license won't change that, unless there is some sort of international draconian enforcement or Internet traffic filtering, as in China. 

Access to the spigot of campaign contributions is Congress's first priority, it's raison d'etre.  Protecting existing business interests like the casino industry ensures spigot connectivity, so no doubt corporate casino power played a role here.  That's even more true on the state level in Nevada; there is no way any online gaming that doesn't benefit the existing casino infrastructure would be legalized.

Priority number 2, and the justification for legalizing anything deemed morally questionable, is tax revenue.  Legalize and tax: that is the mantra for dealing with so called sin crimes.  Marijuana? Legalize and tax.  Gambling? Legalize and tax.  As if the ability to tax something is the litmus test for legality.  How about just legalize because it's the right thing to do, because adults should be allowed to gamble online, because, it never should have been illegal in the first place?

Does every issue of commerce need to be rooted in the ability to raise tax revenue?  Don't get me wrong, I'm not saying that the gambling industry should not be taxed; pigovian taxes are in order. I'm just saying that increasing state revenue should not be a justification for legalization.



 
The gambling genie has long since escaped its bottle; states have fallen like dominoes, lured by the promise of painless tax revenue and jealousy of their neighbors.  So, the moral question is settled; gambling is not immoral as long as the state benefits.  The remaining debate is about restriction of trade and personal freedom.

Wednesday, August 4, 2010

After A Grueling Mile and an Eighth, It's a Lovely Day for a Guinness

Forever Together, one of the top mares in racing, gets her oats with a pint 14.9 oz can of Guinness draft.  Trainer Jonathan Sheppard asserts that it helps her sweat better.  I don't know anything abut horse sweat, but I'll take that with a grain of salt.  However, since Forever Together has been in the money but failed to win as the favorite for a year (6 races), including last Saturday's Diana Stakes at Saratoga, maybe it's time to upgrade to a better stout: Beamish or Murphy's anyone?  Actually "Guiness is Good" and if I were a horse, I'd much prefer Guinness to carrots, especially the draft in a can with the widget that Forever Together enjoys.

But what if the connections want to race her in Dubai, where human consumption is forbidden under Islamic law.  Could an exception be made for horses?  A personal appeal to Sheik Mohammed might be in order and perhaps an Islamic precedent could be set.

In any case, I will never again be able to think of Forever Together without also thinking about Guiness beer.  I'll be stopping at the store later.  Guinness has been added to my grocery list.