Betting arbitrage, surebets, sports arbitraging is a particular case of arbitrage arising on betting markets due to either bookmakers’ different opinions on event outcomes or plain errors. By placing one bet per each outcome with different betting companies, the bettor can make a profit.
In the bettors’ slang an arbitrage is often referred to as an arb. A typical arb is around 2%, often less, however 4%-5% are also normal and during some special events they might reach 20%.
Arbitrage betting is usually done on the web by researching prices (odds) on betting web sites or subscribing to one of the arb-hunting services. As an investment practice, it is not completely risk-free despite the commercially used terms ‘no-risk’ and risk-free betting. It involves relatively large sums of money (stakes are bigger than in normal betting) while another variety, betting investment, means placing relatively small bets systematically on overvalued odds most of which will lose but some win thus making a profit.
Arbitrage in theory
There are a number of potential arbitrage deals. Below is an explanation of some of them including formulas and risks associated with these arbitrage deals. The table below introduces a number of variables that will be used to formalise the arbitrage models.
Variable
Explanation
s1
Stake in outcome 1
s2
Stake in outcome 2
o1
Odds for outcome 1
o2
Odds for outcome 2
r1
Return if outcome 1 occurs
r2
Return if outcome 2 occurs
Arbitrage using bookmakers
This type of arbitrage takes advantage of different odds offered by different bookmakers. Assume the following situation:
The event to be bet on has only two distinct outcomes (e.g. a tennis match – either Federer wins or Henman wins).
Bookmaker 1
Bookmaker2
Outcome 1
1.3
1.5
Outcome 2
4.3
3
Placing a back bet of $100 on outcome 1 with bookmaker 2 and of $35 on outcome 2 with bookmaker 1 covers both possible outcomes and provides a profit of $15 if outcome 1 occurs, and a profit of $20.5 if outcome 2 occurs.
Hedging the bets to one side or the other can provide the bettor with a ‘risk free’ winnings. For instance if $50 was bet on outcome 2 with bookmaker 1 instead of the $35 in the example above, nothing would be won or lost if outcome 1 was the result ($100 x 1.5 = $150, covering the total of the two bets), however if outcome 2 was the final result then the overall profit would be $65.
Let’s formalise this arbitrage model. r1 and r2 can be calculated as follows:
r1 = − s1 * (o1 − 1) + s2
r2 = s1 − s2 * (o2 − 1)
Plugging the numbers from the above example into the formulas gives:
Betting exchanges open up a new range of arbitrage possibilities since it is possible to back as well as lay an event. Arbitrage using only the back or lay side might occur on betting exchanges. It is in principle the same as the arbitrage using different bookmakers. Arbitrage using back and lay side is possible if a lay bet provides lower odds than a back bet.
Betfair is the world’s largest Internet betting exchange. The company is based in Hammersmith in West London, England.
Since Betfair was launched in June 2000 it has become the largest online betting company in the UK and the largest bet exchange in the world. Betfair currently has over 1,000,000 clients and a turnover in excess of £50m/week.
A bet exchange allows punters (gamblers) to bet at odds set and requested by other punters rather than by a bookmaker. Members can make both ‘Back’ bets (normal bets on a selection to win) and ‘Lay’ bets (bets on the opposite side of the Back, against the selection), thereby eliminating the traditional bookmaker.
Betfair uses decimal odds, which are easier to calculate with than fractional odds. Its bookmaking model brings together two counterparties with opposing views, and thus removes the need for a bookmaker’s markup or overround. As a result, the odds are up to 20% better than bookmakers’ odds, according to the site’s operators. At the more fancied end of the market the odds offered on Betfair tend to be closer to the bookmakers’ odds, whereas for a more speculative bet the odds available may be over 50% higher on Betfair, more accurately reflecting the bet’s true chances of success. Betfair punters are able to offer odds based on their own opinion rather than on a set bookmakers’ margin. Betfair charges a commission on all winning bets, which is set at 5% of the net winnings for most markets, although according to how much a client wagers on the site, it is possible to reduce the amount of commission paid to as low as 2%.
The Betfair interface can be seen as bearing a strong similarity to that of the Stock Exchange, with the ‘bet’ and ‘lay’ options comparing to the buying and selling of derivatives. Indeed there are many professionals who play the Betfair market for profit, using purpose-designed software, in much the same way as a Stock market trader.
The company has attracted much comment in the British and Australian press.
History
Betfair’s co-founders, Andrew Black and Edward Wray, won the Ernst and Young Emerging Entrepreneur of the Year award. In 2003, the company was one of about 50 recipients of the Queen’s Awards for Enterprise in the Innovation category. The Queen’s Awards are the UKs highest official awards for business.
In October 2005 chief executive Stephen Hill announced his resignation when the board decided not to proceed with plans for a stock market flotation, the investors holding out for a higher valuation.
In November 2005 the Tasmanian government announced a deal to licence Betfair in the state. The deal will see Tasmania receive AU$5 million up front and is projected to pay Tasmania about $40 million per year. Now that it has been approved by the Tasmanian Parliament, it will be the second licence Betfair has received outside the UK – the first being in Malta. The deal has infuriated the established monopolistic totalisators and bookmakers (due to loss of revenue) and governments (due to loss of taxes) in the other Australian states. A ban on the use of betting exchanges took effect in Western Australia on the 29th January 2007 and possibly South Australia in the future. Betfair claimed this new law violates the Constitution of Australia and filed a legal challenge. On 27 March 2008, the High Court of Australia, in a unanimous decision, found that two provisions of the legislation, purporting to ban Western Australians from using a betting exchange and prohibiting an unauthorised business from using Western Australian race lists, were invalid as they applied to Betfair because the provisions were characterised as imposing a burden on interstate trade that was protectionist in nature, and therefore contravened section 92 of the constitution. The Court decision suggests, but leaves open, that a more narrowly drafted ban may have been allowed (eg, banning people in Western Australia from laying ‘lose bets’ on events held in Western Australia).
On 28 February 2006 Betfair launched a new interface, including current live scores of in-play soccer matches, jockey silks and horse form, and an ‘express view’ in which only the currently available back odds are viewable. Within two days the ‘Xpress’ idea was also adopted by BETDAQ. The changes were criticised on the Betfair forums by many members who disliked the smaller fonts and the right-aligned columns, which displayed a large amount of whitespace. On March 1 these display issues were addressed, although many users still felt the site had been dumbed down in order to attract new punters to the exchanges. The gambit worked, however, with a significant increase in membership and deposits during the Cheltenham Festival.
Softbank purchased 23% of Betfair in early April 2006 valuing the company at £1.5 billion. In December 2006, Betfair completed the purchase of the horseracing publishing company Timeform (which traded under the name Portway Press Ltd).
Betfair launched its own radio service, Betfair Radio, in March 2007 available via its website and on the telephone. Betfair Radio broadcasts horse racing commentary, results and sports news seven days a week from the studios at their headquarters in Hammersmith.
Controversy
The fact that gamblers can now lay outcomes on the exchanges has caused tremendous criticism from traditional bookmakers with much of the anger coming from the UK’s “Big Three” – Gala Coral Group, Ladbrokes and William Hill. These firms argue that granting who they consider to be anonymous punters the ability to bet that an outcome will not happen is causing corruption in sports such as horse racing (since it is much easier to ensure a horse will lose a race, the bookmakers reason).
Betfair has led their defence by countering that while corruption is possible on any gambling platform, the bookies’ arguments are motivated not by concern for the integrity of sport but by commercial interests. Betfair also asserts that unlike the high street brokers, who all accept anonymous cash bets, Betfair is well aware of who their customers are. Customers are required to create personal accounts, and Betfair keeps records of each customer’s betting history. Betfair in particular has noted that they have signed numerous agreements with governing bodies of sport including the Jockey Club, with whom they insist they will co-operate fully if the latter suspects corruption to have taken place.
Betfair embroiled itself in further controversy after suspending payments following a tennis match between Martin Arguello and Nikolay Davydenko, quoting: ‘Betfair has suspended settlement of the match-odds market on this afternoon’s second-round match of the ATP Orange Prokom Open in Poland between Martin Arguello and Nikolay Davydenko, pending consultation with relevant regulatory authorities.’ This is believed to be the first time Betfair has suspended payouts in an event after the conclusion of the event. As of this time, investigations are still pending.
Outside the United Kingdom
Although the bulk of its customer base is in the UK, Betfair offers its services in a number of countries. Betfair has never accepted customers and/or credit card numbers from the United States, where online gambling is legally proscribed. Being the leading betting exchange, Betfair has been reluctant to entangle itself in legal trouble and has thus turned away business from countries where its services are likely prohibited. As a result, unlike some other online gambling operations Betfair was not seriously affected when the U.S. Congress passed strict prohibitions affecting Internet gambling in late 2006.
Betfair has several thousand customers in Australia but its marketing activities are currently restricted to Tasmania, where it is licensed. Betfair is well known in Australia because of negative publicity from the racing industry and the totalizators. However, Betfair signed a landmark agreement with Racing Victoria in July 2006 which saw Betfair begin covering Victorian racing and left the exchange on decent terms with two of Australia’s six states. Betfair also has agreements in place with several major sports in Australia including the Australian Football League, Cricket Australia and the PGA Tour of Australasia.
Betfair Poker
In late autumn of 2005, Betfair finalised a deal that began in early summer, to purchase the online poker site PokerChamps.com, which the company will integrate into its network, replacing a poker arm that previously used gaming technology software from CryptoLogic Inc. On 30 October 2006, Betfair Poker left the Cryptologic network to move to its new platform.
In a press release the company’s poker head, Ben Fried, stated: “Having our own poker software puts us in command of our own destiny. It means we can react quickly to customer feedback and continue to develop an innovative, community-focused product. We are confident that we are laying the foundations of a market leading poker room.”
On 21 July 2006, all American accounts were frozen and the return of players’ funds were in progress, a move that immediately followed the arrest of David Carruthers, former Chief Executive at BetonSports. Betfair had previously implemented geolocation software in 2004 to deny U.S. residents the ability to place bets on its site.
Pokerchamps currently has a 20k/week cashout limits which make high stakes players favour betfair poker over pokerchamps.
It has been recently announced that pokerchamps is closing and becoming part of betfair officially.
Zero lounge
In 2006 Betfair Casino introduced its “Zero lounge – where the house has no edge”. According to Betfair, perfect play should result in the player having an equal chance of winning or losing. For example, the roulette wheel has no zero. This means that someone playing red-black, odd-even, or high-low has an exactly 50% chance of winning, (as opposed to a 48.65% chance on a normal roulette wheel with a zero). However, in some games, such as blackjack, it is necessary to learn perfect play in order to match the house. Players who draw a card when they have 17 or more are likely to lose money to the house. The zero blackjack rules have been slightly modified (re-written) compared to normal European blackjack. For example natural suited blackjacks pay 2 to 1 instead of 1.5 to 1, Any five card 21 automatically pays 2-1, pairs of aces cannot be split, all other pairs can be split, including 4s, 5s, and 10s, only one split is allowed, doubling is allowed on 8, 9, 10 and 11, including “soft” 18s, 19s, 20s and 21s, and insurance can be taken any time the dealer shows an ace, no matter what cards the player holds.
The games offered in the Zero lounge are blackjack, roulette, baccarat and Jacks or better.
A betting exchange is a p2p gambling website acting as a broker between parties for the placement of bets. The concept is similar to that of a stock exchange or a futures exchange, where in this case the commodity being traded is a bet, rather than a stock or futures contract. Most betting on a betting exchange is a form of fixed odds gambling.
History
The concept was first brought to the public by the UK website Flutter.com in May 2000 in person-to-person betting form, followed closely by UK-based Betfair in June 2000. Betfair embraced a pure exchange model – one Flutter later adopted and even improved upon in places – but first-mover advantage proved decisive for Betfair. Though Flutter managed to climb to a reported 30% market share, Flutter’s backers were content to broker a merger which left Betfair the dominant partner by a reported ratio of 84:16. Post merger, Flutter’s customers were transferred to Betfair’s system, which was later upgraded to embrace some of Flutter’s functionality. Betfair went from strength to strength and controls a reported 90% of global exchange activity today. In late 2004, Betfair announced a rescue package which resulted in it absorbing the customers of Sporting Options, which had gone into administration with debts in excess of £5 million.
As with other types of exchanges, betting exchanges thrive on liquidity and customers tend to focus on the exchange where they are confident their bet can be paired up with a matching counterbet. Breaking with British tradition, Betfair uses decimal odds instead of fractional (traditional) odds because they are more popular globally. Some of its competitors allow customers to use fractional odds if they prefer.
Exchanges make their money by charging a commission which is calculated as a percentage of net winnings for each customer on each event, or market. Gamblers whose betting activities have traditionally been restricted by bookmakers (normally for winning too much money) have found these sites a boon since they are now able to place bets of a size unrestricted by the exchange – the only restriction is that one or more opposing customers need to be willing match their bets. Moreover, the odds available on a betting exchange are usually better than those offered by bookmakers in spite of the commission charged.
Exchanges have their limitations. Exchanges are not suited to unrestricted multiple parlay betting. Betfair does offer accumulators of their own content management construction, but these are limited in number. Users cannot determine the outcomes contained in accumulators themselves. Exchanges also tend to restrict the odds that can be offered to between 1.01 (1/100) and 1000 (999/1).
Unsurprisingly, Betfair’s success has attracted a number of rivals.
“Laying” an outcome
Exchanges also offer the opportunity to lay outcomes, which is to bet that a particular participant in an event will lose. This is the position bookmakers take when offering a bet for somebody to back that the participant will win.
For example, if someone thinks Team A will win a competition, he may wish to back that selection. A bookmaker offering the punter that bet would be laying that selection. The two parties will agree the backer’s stake and the odds. If the team loses, the layer/bookmaker keeps the backer’s stake. If the team wins, the layer will pay the backer winnings based on the odds agreed.
As every bet transacted requires a backer and a layer, and the betting exchange is not a party to the bets transacted on it, any betting exchange requires both backers and layers. Of course, the distinction is moot: A layer is always simply backing the opposite outcome. Laying the home team is the same as backing the visiting team to win or draw. Laying one horse in a race is just the same as backing all of the other horses to win.
Controversy
The fact gamblers can now lay outcomes on the exchanges has resulted in criticism from traditional bookmakers including the UK’s “Big Three” – Coral, Ladbrokes and William Hill. These firms argue that granting “anonymous” punters the ability to bet that an outcome will not happen is causing corruption in sports such as horse racing since it is much easier to ensure a horse will lose a race.
Exchanges counter that, while corruption is possible on any gambling platform, the bookies’ arguments are motivated not by concern for the integrity of sport but by commercial interests. Exchanges also assert they are well aware of who their customers are and some have signed agreements with governing bodies of sport including the Jockey Club, with whom they insist they will co-operate with fully if the latter suspects corruption to have taken place. In the summer of 2004, Betfair provided data to investigators, including the City of London Police which on September 1 lead to 16 arrests on charges related to race fixing. Among those arrested was champion jockey Kieren Fallon, whose case remains before the courts.
A bookmaker, bookie or turf accountant, is an organisation or a person that takes bets and may pay winnings depending upon results and, depending on the nature of the bet, the odds. Bookmaking may be legal or illegal, and may be regulated; in the United Kingdom it was at times both regulated and illegal, in that licences were required but no debts arising from gambling could be enforced through the courts. Bookmaking is generally illegal in the United States, with Nevada being a notable exception.
In some countries, such as Singapore and Canada, the only legal bookmaker is state-owned and operated. In Canada, this is part of the lottery program and is known as Sport Select.
Most bookmakers in the USA bet on college and professional sports, though in the UK they offer a wider range of bets, notably on political elections. The probability that it will snow on Christmas day is another common event for betting in the UK.
By adjusting the odds in his favour or by having a point spread, the bookmaker will aim to guarantee a profit by achieving a ‘balanced book’, either by getting an equal number of bets for each outcome, or (when he is offering odds) by getting the amounts wagered on each outcome to reflect the odds. When a large bet comes in, a bookmaker can also try to lay off the risk by buying bets from other bookmakers. The bookmaker does not generally attempt to make money from the bets themselves, but rather profiting from the event regardless of the outcome.
Traditionally, bookmakers have been located at the racecourse, but improved TV coverage and laxer laws have allowed betting in shops and casinos in most countries. In the UK, bookies still chalk up the odds on boards beside the race course and use tic-tac to signal the odds between their staff and to other bookies.
In 1961, Harold Macmillan’s Conservative Government legalized betting shops and tough measures were enacted to ensure that bookmakers remained honest. A large and respectable industry has grown since. At one time there were over 15,000 betting shops in the U.K. Now, through consolidation, they have been reduced to about 8,500. Currently there are four major bookmakers in the United Kingdom: William Hill, Ladbrokes, Coral, and state-owned ToteSport.
Increasingly, gamblers are turning to the use of betting exchanges which automatically match Back and Lay bets between different bettors, thus effectively cutting out the bookmaker’s traditional profit margin. Some bookmakers have even taken to using betting exchanges as a way of laying off unfavourable bets and thus reducing their overall exposure.
Sometimes, savvy individuals set up an illegal book in an attempt to make money – a scene often seen in films, sitcoms and so on. One of the most infamous real-life illegal bookmakers was Robert Angleton of Houston, Texas. Not only was he a bookie, but he also was a police informant about his smaller rivals. When they were shuttered, he took their business. His bookmaking scheme ended with the death of his wife, Doris Angleton.
In horse racing terminology, a trifecta is a parimutuel bet in which the bettor must predict which horses will finish first, second, and third in exact order. The word comes from the related betting term, “perfecta.”
The term has been extended to the realm of politics, where it is used to describe a situation in which an executive of government appoints another elected official to a position and is also allowed to appoint his successor. This process can be chained together; in other words, the executive can appoint an elected official to a position, appoint another elected official to the other’s previous position, and finally appoint anyone to the second official’s position. The first permutation of this chain is called a “quadfecta”.
The trifecta system is seen by many as a loophole in democracy, because it allows an executive to essentially override a choice by the voters. This is mitigated by the fact that the system requires the agreement of all parties involved. Executives have been able to get around this by making the position offered a very financially lucrative or long term one.
In first-person shooter video games such as Counter-Strike, a trifecta can refer to a situation in which a single bullet kills three players.
A trifecta can also refer to any sequence of three (generally unfortunate) occurrences, drawing on the traditional belief that deaths (and presumably, disasters and other bad things) always come in groups of three.
The word trifecta is also slang for a three-point field goal in the game of basketball.
“Trifecta” is also gaining popularity as a slang term to describe any successful phenomenon that comes in threes, for example: “She has the ‘trifecta’ of attractiveness, intelligence, and career success.”
It is also a term in Limit Hold’em poker where a player checkraises on the flop, turn, and river.
A tote board is a large, numeric or alphanumeric display used to convey information, typically at a race track (to display the odds or payoffs for each horse) or at a telethon (to display the total amount donated to the charitable organization sponsoring the event).
The first tote boards were manufactured for the horse racing industry by the American Totalizator Company, and “tote board” is probably a colloquialism for totalizator.
A totalisator or totalizator (tote board in common parlance) is the name for the computerised system which runs parimutuel betting, calculating payoff odds, displaying them, and producing tickets based on incoming bets.
The first totalisator was an entirely mechanical system invented by the Australian George Julius of Julius Poole & Gibson Pty Ltd. It was installed at Ellerslie Racecourse in New Zealand in 1913. The first totalisator installed in the United States was at Arlington Park racecourse, Chicago, Illinois, in 1933. Julius, who was later knighted, founded Automatic Totalisators Ltd. in 1917 and added electrical components. The first entirely electronic totalisator was developed in 1966. By 1970 nearly every major racing centre used an ATL totalisator.
Totalisators have been superseded by general purpose computers running specialised wagering software such as Autotote.
Tic-tac (also tick-tack and non-hyphenated variants) is a traditional method of sign language used by bookmakers to communicate the odds of certain horses. It is still used in on-course betting in the UK. A tic-tac man will usually wear bright white gloves to allow their hand movements to be easily seen.
A few simple examples of signals:
Odds of 9/4 (“top of the head”) – both hands touching the top of the head.
Odds of 10/1 (“cockle” or “net”) – fists together with the right-hand thumb protruding upwards, to resemble the number 10.
Odds of 33/1 (“double carpet”) – arms crossed, hands flat against the chest.
Within the UK there are some regional variations in the signals, for example in the south odds of 6/4 are represented by the hand touching the opposite ear, giving the slang term “ear’ole”, whereas the same odds are indicated in the north by the hand touching the opposite elbow (“half arm”).
Some of the signals may be called out verbally too. These names have evolved over time in a mixture of Cockney rhyming slang and backslang. For example, 4-1 is known as rouf (four backwards).
Essentially, the bookies use tic-tac as a way of communicating between their staff and ensuring their odds are not vastly different from their competitors, an advantage the punters could otherwise exploit. In particular, if a very large bet is placed with one bookmaker, this may be signalled to the others as a way of lowering the price on all the boards.
British racing pundit John McCririck uses tic-tac as part of his pieces to camera when explaining the odds of the horses for the next race.
The language is used less frequently than before, due in part to the use of radio communication by betting companies.
Spread betting is a form of gambling on the outcome of any event where the more accurate the gamble, the more is won and conversely the less accurate the more is lost. A bet is made against a ‘spread’ (or index), on whether the outcome will be above or below the spread. The amount won or lost depends on the level of the index at the end of the event. The spread represents the index firms’ margin.
The concept has a long history in American sports betting and was exported to the United Kingdom in the 1980s. In North America the bettor usually bets that the difference in the scores of two teams will be less than or greater than a value specified by the bookmaker. For example, if a bettor places a bet on an underdog in an American football game when the spread is 3.5 points, he is said to take the points; he will win his bet if the underdog’s score plus 3.5 points is greater than the favourite’s score. If he had taken the favourite, he would have been giving the points and would win if the favourite’s score less 3.5 points was greater than the underdog’s score.
Spreads may be specified in half-point fractions to avoid ties, or pushes. The winner of a North American spread bet wins the amount that he has bet, while a losing bettor loses the amount wagered plus the bookmaker’s commission, which is commonly known as the vigorish or vig, and is usually 10 per cent of the original wager; in the United Kingdom both sides are held at odds of 9-10. In North American betting a push is treated as if no bet at all had been made, while in the United Kingdom “dead heat” rules apply, resulting in a net loss of £5 on a £100 wager due to the 9-10 odds of the proposition.
If a key player on a side is marginally injured and may or may not play, the “sports book” — or establishment that handles the bets — may declare the game off-limits to bettors (by not quoting any spread at all on it), or may “circle” the game; in the latter scenario, lower maximum amounts for each bet are enforced (typically $5,000 instead of the $25,000 limit observed at most Las Vegas sports books) and certain specialty wagers, such as “teasers,” are banned on either side in the game. (A “teaser” is a bet that alters the spread in the bettor’s favour by a predetermined margin, often six points – for example, if the line is 3.5 points and the bettor wants to place a “teaser” bet on the underdog, he takes 9.5 points instead; a teaser bet on the favourite would mean that the bettor takes 2.5 points instead of having to give the 3.5. In return for the additional points, the payout if the bettor wins is less than even money. At some establishments, the “reverse teaser” also exists, which alters the spread against the bettor, who gets paid off at more than even money if the bet wins.)
In the United Kingdom spread betting has come to resemble the futures market. The bets are usually on the outcome of sporting events or indeed on financial instruments, but the firms often offer bets on more arbitrary events – such as the number of corners during a football match or the total shirt numbers of the goal scorers.
Unlike fixed odds betting the amount won or lost can be very large, as there is no single stake to limit the maximum losses. However, it is usually possible to place a “stop loss” with the bookmaker, automatically closing the bet if the value of the spread moves against the better by a specified amount. “Stop wins” are the opposite — closing the bet when the spread moves in a better’s favour by a specified amount.
Example: In a soccer match between Liverpool and Everton the spread for corners is 12-13, the index firm believes there will be 12 or 13 corners in total during the match. A bettor approaches the firm with the belief that there will be more than 13 corners during the game, the bettor ‘buys’ at £25 a point at 13. If the final total of corners is 16 the bettor has won, receiving 3 x £25. If the final total of corners is 10, the bettor loses 3 x £25. A ‘sell’ transaction is similar except made against the bottom value of the spread. Often there is live pricing, which changes the spread during the course of an event allowing a profit to be increased or a loss minimized.
In North American sports betting many of these wagers would be classified as over-under (or, more commonly today, total) bets rather than spread bets. However, these are for one side or another of a total only, and do not increase the amount won or lost as the actual moves away from the bookmaker’s prediction. Instead, over-under or total bets are handled much like point-spread bets on a team, with the usual 10% commission applied. Many Nevada sports books will allow these bets to be used in parlays, just like team point-spread bets, making it possible to bet, for instance, “the Packers and the over,” and be paid if both the Packers “cover” the point spread and the total score is higher than the book’s prediction. (Such parlays usually pay off at odds of 13:5 with no “vig,” just as a standard two-team parlay would.)
The mathematical analysis of spreads and spread betting is a large and growing subject. For example, sports which have simple 1 point scoring systems (e.g. baseball, hockey, and soccer) may be analysed using Poisson and Skellam statistics.
Soft lines is a betting terminology representing betting odds that have been poorly researched by sportsbooks.
Handicappers commonly use this term to emphasize the value of their play. Since handicappers can focus on a smaller subset of all the possible games, they have the chance to identify soft lines. Soft lines usually exist in the games where the least number of people bet because there is less incentive by the sportsbooks to put an effort into making strong lines.
A sportsbook (sometimes abbreviated as book) or a race and sports book is a place where a gambler can wager on various sports competitions, including football, basketball, baseball, hockey, soccer, horse racing and boxing. The method of betting varies with the sport and the type of game. The more prominent the event, the more wagering options that are made available.
Winning bets are paid when the event finishes, or if not finished, when played long enough to becomes official; otherwise all bets are returned. This policy can cause some confusion since there can be a difference between what the sportsbook considers official and what the sports league consider official. Customers should carefully read the sportsbook rules before placing their bets.
The betting volume at sportsbooks varies throughout the year. Bettors have more interest in certain types of sports and increase the money wagered when those sports are in season. Likewise the interest in sports varies by country since the level of interest in the various sports is not constant the world over. Some major sporting events that don’t follow a specific schedule, like boxing, can create peaks of activity for the sportsbooks.
Word origin
A sportsbook is a portmanteau, French for “jacket holder,” meaning a suitcase with two storage spaces. Sportsbook combines two meanings into one word for a sports gambling operation, in this case SPORTS and BOOK which is short for bookmaking.
Odds
In the mid 1930s, Leo Hirschfield started a company in Minneapolis, Minnesota called Athletic Publications, Inc., that published and distributed odds to bookies across the country by telephone and telegraph. He had a team of handicappers analyzing the matchups who also studied newspapers across the country. The company was a major provider of odds and prices until it finally disbanded, under fear of prosecution from the Federal Wire Act of 1961.
Today most sportsbooks get their opening prices from other sportsbooks as well as private companies like Las Vegas Sports Consultants. They adjust prices based on the bets coming in, news, injury, and weather information, and the price movement by other sportsbooks.
Nevada sportsbooks
Today there are roughly 150 licensed sportsbooks in the United States, all located in Nevada casinos. Now that many casinos share the same parent company, they offer the exact same wagering choices and odds, which is a disadvantage to the astute gambler who in the past could do more shopping for better prices.
In the 1950s the first Nevada sportsbooks, called turf clubs, opened. They were independent from the casinos, and had an informal agreement with the hotels that they would stay out of the casino business as long as the hotels stayed out of the sportsbook business. The sportsbooks had to pay a 10% tax so they charged a high vigorish to gamblers, but they still brought in a lot of business.
In 1974 the tax was lowered to 2%, (and in 1983 lowered to 0.25%), and in 1975 Lefty Rosenthal, who ran the Stardust Casino, convinced legislators to allow them in the casinos, and soon nearly all of the casinos added them. The turf clubs were no longer able to compete and eventually all closed.
In Nevada casino sportsbooks you will find:
Betting Windows
Numerous big screen televisions
Places to sit and watch
Interactive betting stations
Odds boards, usually computerized
UK sportsbooks
Betting shops are common in the United Kingdom. Companies like Ladbrokes and William Hill have offered walk-in betting shops for decades.
Internet sportsbooks
While internet sportsbooks lack face-to-face transactions, they can handle more customers than land based sportsbooks and operate more cost effectively. They pass lower costs on to customers in the form of reduced vigorish (cheaper prices) or bonus incentives. They can also offer similar products, such as casino games, bingo, and poker to their existing clients.
While Internet sportsbooks take bets online, normally they are licensed in some jurisdiction. Taxation and regulation vary greatly by country.
Internet sportsbooks range from fraudulent operations with no intention of paying their customers to multi-billion dollar publicly traded companies. Internet sportsbooks range in focus, as some primarily cater to American sports, while others focus on European soccer. Some sportsbooks handle large wagers while others have low wagering limits. Some offer many exotic proposition wagers, where others have limited choices. Payment methods are not universally accepted at all sportsbooks.
Costa Rica is home to a large number of offshore sportsbooks, as it caters to many of the needs of the industry with an open regulatory environment and a large, capable workforce. A number of sportsbooks are also located in Jamaica, Gibraltar, Antigua, Curaçao, Australia, and many other countries around the world.
The United States Justice Department claims that wagering at offshore sportsbooks is a violation of the 1961 Federal Wire Act. Jeffrey Trauman of Harwood, North Dakota, was the first player ever to be prosecuted for online sports betting in the United States. The former car salesman, who quit his job to become a professional gambler, was cited under a North Dakota state law. [1]
Sports betting systems refers to a set of events that when combined for a particular game for a particular sport represents a profitable betting scenario. Since sports betting involves humans, there is no deterministic edge to the house or the gambler. Systems allow the gambler to have an edge.
Sportsbooks use systems in their analysis to set more accurate odds. Therefore the novice gambler may believe that using a system will always work, it is the general consensus that at some point, the oddsmakers will have adjusted for the system to make it no longer profitable. Very short-lived systems are called trends. Any single event that estimates a selection to have a higher likelihood of winning is called an angle as they are meant to be used in conjunction with other angles and trends to produce systems.
Betting on systems
Systems can be deceiving. Any sample space can be constrained enough with meaningless criteria to create the illusion of a profitable betting system. For example, a coin can be flipped with heads being home teams and tails being road teams. Heads and tails each have a 50% probability of landing but if the amount of flips is limited to a small number, it is conceivable to create the illusion of predicting heads will come up 75% of the time.
That, in conjunction with the fact that sportsbooks adjust their odds according to the systems makes it difficult to follow systems indefinitely. The sportsbooks are slower to adjust the odds in some sports versus other sports depending on the number of games played and the amount of money they take in from bettors.
Determining systems
Determining systems is a matter of using computer analysis tools and extracting all the possible games that meet a bettor’s criteria. Then the bettor analyzes the results of those games to make a determination if one team is favored over the other.
Football pools, often referred to as “The Pools”, are competitions based on predicting the outcome of association football matches set to take place in the coming week.
British Pools
Several different companies such as Littlewoods, Vernons, Zetters and Brittens have organised similar games, the most famous of which was historically known as Treble Chance. Competitors were given a list of football matches set to take place over the coming week, and attempted to pick a line of eight of them whose results would be worth most points by the scoring scheme, traditionally by crossing specific boxes on a printed coupon. A proportion of the players’ combined entry fees were distributed among the competitors whose entries were worth the highest scores.
Entries
Entries were traditionally entered by post or via members of the public acting as Agents or Collectors. Collectors walked a route door to door, delivering forms and cash to a central office, taking a percentage of the money as a fee. Legally they were agents of the entrants, not the pools company. There have been a few cases whereby a rogue Agent has fraudulently withheld players’ stake money, even though one entrant had actually chosen a set of jackpot-winning fixtures. These days, Internet applications are also accepted.
Business for Collectors was drummed up by “canvassing”, where a team of company agents knocked on doors in an area of a town or housing estate.
Scoring
Scoring schemes varied over the years. The current Treble Chance games use a scoring scheme which awards three points to score draws (matches where both team scored the same, strictly positive, number of goals), two points to no-score draws (matches where neither team scored a goal) and one point to both home wins (matches where the home team scored more goals than the away team) and away wins (matches where the away team scored more goals than the home team). The most famous historical scoring scheme differentiated between home wins and away wins, awarding one and a half points for games resulting in away wins. A scoring scheme used for only one year split score draws into two catgories, awarding three points only for matches ending 1-1 and two and a half points for higher-scoring score draws.
The total score of each line would be calculated, up to a maximum of 24 points. The highest scoring line achieved by any player in that particular week’s competition would be declared to be worth the top dividend, with a large proportion of the prize pool awarded to the players responsible for submitting the highest-scoring lines. Large football pools would award second and subsequent dividends, splitting smaller proportions of the prize pool among players who had submitted lines scoring nearly as many points; at its peak, the Littlewoods Treble Chance game would offer up to six dividends.
During the summer, when football leagues were not in operation in the United Kingdom, competitions were based on the results of football matches taking place in Australia. Matches which were postponed would often have their results adjudicated, for the sake of the football pools results, by a board known as the Pools Panel; The Times reports that the Pools Panel was formed in 1963 when a particularly cold winter scrapped football for three weeks running. Panel members included retired footballers with international experience and retired referees.
Results
Before their popularity dwindled, pools results were published in most national newspapers a day or two after the Saturday on which the matches were played. Grids marking the points totals per game were sometimes published, against which your pools coupon could be aligned to read off the scores.
The BBC television programme Grandstand used to broadcast the winning match numbers and any Pools Panel verdicts as part of its Final Score segment in the late afternoon. Remarkably, only two people have so far announced the classified football results on the programme since its inception in 1958 – Len Martin until his death in 1995 and, since then, Tim Gudgin.
With scores being read out on radio and television it was also common to relay the message “claims by telegram” for days when a few draws occurred (with correspondingly few winners), through “claims by registered mail only” for days when more winners were expected, to “no claims” when there were likely to be so many claimants that the mail would have been overwhelmed.
Winning
Typically a fraction of a penny would be charged for each line entered, though players often had the option to play each line at a higher stake and so receive a higher share of the pool should their line prove a winner. Accordingly, players would usually submit many different lines in a single entry. Popular ways to do this were “full perm” entries, where 10 (or 11, or more) matches were selected and every possible combination of eight matches selected from the ten (etc.) was entered as a single line. As there are C(10,8) = 45 ways to select eight matches from ten, the cost of such an entry was 45 times the cost of entering a single line. Note that the term “perm” was used despite the relevant mathematical operation being combination rather than permutation, as the order in which the eight matches were selected was irrelevant. The pools companies, many daily newspapers, and the sporting press also issued “plans”, which were subsets of full perms: these enable the punter to cover more matches for the same stake, with the proviso that even if 8 draws were in the selections, they might not all be in a single line of the plan (but well designed plans could give a guarantee something like ‘if the plan hits 8 draws it must win at least a 3rd dividend’).
The largest prizes would be awarded when only one line was entered scoring the maximum number of points; typically this would occur when only eight or nine matches ended in score draws, so only one player would have the line scoring the maximum. These biggest jackpot prizes could be several hundred thousand pounds, sometimes even more than a million. Prizes depended on the number of players and the cost per line, which varied over the years; one winner, Viv Nicholson, gained notoriety by declaring she was going to “spend, spend, spend” after winning GBP 152,319 in 1961. The story of her subsequent divorces, remarriages, extravagance and eventual bankruptcy was eventually made into a musical named after the famous quote.
At the other extreme, payouts of less than a pound were quite common in lower dividends when many entries won. Most “punters” could expect to receive at least one low payout if they played for long enough.
History
Littlewoods football pools was founded in 1923, Vernons in 1925, Zetters in 1933, and Brittens in 1946. The Treble Chance game was also inaugurated in 1946.
The popularity of the Treble Chance game was due to the fact it offered a potential single large jackpot at a time when no other form of gambling in the United Kingdom did; premium bonds were not offered until 1957 and never offered a jackpot which was as high. The popularity of football pools in the UK declined dramatically after the introduction of the National Lottery in 1994, which offered larger jackpots still. Some football pools offer additional ways to win based on scores of football matches at half-time, or football matches in which particularly many goals are scored.
The football pools did not fall under gambling legislation because they claimed to be competitions of skill, rather than chance; however, their rules typically stated that all transactions were “binding in honour only”. Typically, between one quarter and one half the entry fees taken would be returned to the players as prizes. Companies organising football pools were heavily taxed; in 1991, the level of tax levied was reduced from 40% of turnover to 37½% of turnover. Additionally, from 1975 on, 2½% of the entry fees went to form the Football Trust which distributed money to football throughout the UK, most famously to help clubs redevelop their stadiums in line with the recommendations made by the Taylor Report.
The Littlewoods Football Pools Collection which shows the history of the pools, is held by the National Football Museum.
Other games
Other games offered by football pools companies take the form of “8 homes”, “4 draws”, “5 aways” or the like, where lines consisting of a smaller number of matches are selected and a line is deemed to have won if all the selected matches result in home wins, away wins or draws (irrelevant of the size of the draw) respectively. The cost per line is generally higher; because these attract far fewer players, prizes are generally lower. Some football pools companies additionally organised lotteries, betting on lottery results or spot the ball competitions at various points.
Continental European Pools
Similar football pools competitions are frequently known as toto competitions on Continental Europe. While the principle of requiring entrants to predict the results of football matches in advance remains the same, the details are fundamentally different. The name toto derives from totalisator machines which are used to process the parimutuel betting involved.
Typically, a list of 13 matches for the coming week will be given. Pools entrants have to select the result of each one, whether it will be a home win, an away win or neither of these, typically by marking each match with either a 1, a 2 or a N (sometimes X). It is possible to enter two or three results for one or more matches, in which case the entry is treated as a number of separate entries for all possible combinations given; marking two possible results for each of five matches and all three possible results for each of four matches will result in submitting 2 * 2 * 2 * 2 * 2 * 3 * 3 * 3 * 3 = 32 * 81 = 2592 different entries. All entries submitting 13 correct predictions will be declared to have won the top prize; sometimes, prizes for fewer correct predictions are also awarded.
The Intertoto Cup competition was inaugurated by the football pools companies of central Europe to provide matches for their toto coupons during the summer months.
(from the French language: pari mutuel, mutual betting) is a betting system in which all bets of a particular type are placed together in a pool; taxes and a house take are removed, and payoff odds are calculated by sharing the pool among all placed bets.
The parimutuel system is used in gambling on horse racing, greyhound racing, jai alai, and all sporting events of relatively short duration in which participants finish in a ranked order. A modified parimutuel system is also used in some lottery games such as Lotto South.
Parimutuel gambling is frequently state-regulated, and offered in many places where gambling is otherwise illegal. Parimutuel gambling is often also offered at “off track” facilities, where players may bet on the events without actually being present to observe them in person.
Parimutuel betting differs from fixed odds betting in that the final payout is not determined until the pool is closed – in fixed odds betting, the payout is agreed at the time the bet is sold.
Example of parimutuel betting
Consider a hypothetical event in a country using a decimal currency such as dollars which has 8 possible outcomes. Each outcome has a certain amount of money wagered:
Thus the total pool of money on the event is $514.00. Following the start of the event, no more investments are accepted. The event is decided and the winning outcome is determined to be Outcome 4 with $55.00 invested. The payout is now calculated. First the commission or take for the wagering company is deducted from the pool, for example with a commission rate of 14.25% the calculation is: $514 – 0.1425 * $514 = $440.76. The remaining amount in the pool is now distributed to those who invested in Outcome 4: $440.76 / $55 = $8.00 per $1.00 invested. Thus, in decimal odds, outcome 4 is said to pay out $8.00.
Often at certain times prior to the event, betting agencies will provide approximates for what should be paid out for a given outcome should no more bets be accepted at the current time. Using the example above, an approximates table using the same commission rate in decimal odds would be:
In real-life examples such as horse racing, the pool size often extends into millions of dollars with many different types of outcomes (winning horses) and complex commission calculations.
Sometimes the amounts paid out are rounded down to a denomination interval – in the United States and Australia, 10 cent intervals are used. The rounding loss is sometimes known as breakage and is retained by the betting agency as part of the commission.
History of parimutuel betting
The parimutuel system was invented by Parisian perfume maker Pierre Oller in 1865 when asked by a bookmaker friend to devise a fair system for bettors which guarantees a fixed profit for the bookmaker.
The large amount of calculation involved in this system led to the invention of a specialized mechanical calculating machine known as a totalisator, “automatic totalisator” or “tote board”. The first was installed at Ellerslie Racecourse, Auckland, New Zealand in 1913, and they came into widespread use at race courses throughout the world (the U.S. introduction was 1933 at Arlington Park, near Chicago,IL USA).
Parimutuel bet types
There may be several different types of bets, in which case each type of bet has its own pool. The basic bets involve predicting the order of finish for a single participant, as follows:
In North America
Win – A first place finisher wins the bet.
Place – Either a first or a second place finisher wins the bet (at most tracks the race must have at least four runners in it for place betting to be conducted).
Show – First, second, or third place finisher wins the bet (at most tracks the race must have at least five runners in it for show betting to be conducted).
Across the Board: A combination triple-bet of Win, Place, and Show
In Australia
Win – Runner must finish first.
Place – Runner must finish first, second or third place. (In events with five to seven runners, no dividends are payable on third place (“NTD” or No Third Dividend) and in events with 4 or less runners, only Win betting is allowed).
Each-way – A combination of Win and Place. A $5 bet Each-way is a $5.00 bet to Win and a $5.00 bet to Place, for a total bet cost of $10.
In Ireland and the United Kingdom
Win – Runner must finish first.
Place – Runner must finish within the first two places (in a 5-7 runner race), three places (8-15 runners) or four places (16+ runners).
Each-way – Charged and settled as one bet to win and another bet to place (if asking for a bet of “five pounds each way” you will be expected to pay ten pounds).
Depending on the facility rules, which might vary from event to event, other bets may also be offered which allow the user to pick the finish of more than one participant, or more than one event. These are called exotics, and generally pay higher dividends. However, the facility’s take is usually higher for these bets as well. The major exotics (in North America and Australia) are:
Exacta (exactor, perfecta) – Picks the first and second place finishers, in order.
Quinella – Picks the first and second place finishers, in either order.
Trifecta (triactor) – Picks the first, second, and third place finishers, in order.
Superfecta – First four finishers in order.
Daily/Extra Double – Picks the first place finishers in two different events.
Quadrella – First in four consecutive races.
Pick 3 and pick 4 – first in three or four consecutive races, not necessarily the first three or four races of the day. Some tracks offer a “rolling pick 3,” on the first three races, the second through fourth, third through fifth, and so on.
Pick 6 (jackpot) – Picks the winners in six consecutive events.
Strategy and comparison with independent bookmakers
Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house. The science of determining the outcome of a race is called handicapping.
It is possible for a skilled player to win money in the long run at this type of gambling, but overcoming the deficit produced by taxes, the facility’s take, and the breakage is difficult to accomplish and few people are successful at it.
Independent off-track bookmakers have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, with the introduction of Internet gambling has come “rebate shops”. These off-shore betting shops in fact return some percentage of every bet made to the bettor. They are in effect reducing their take from 15-18% to as little as 1 or 2%, still ensuring a profit as they operate with minimal overhead. Rebate shops allow skilled horseplayers to make a steady income.
Historically, sports betting has been associated with a number of unsavory characters, which has a lot to do with its desultory legal treatment throughout the world. Organized crime notoriously has relied upon sports betting for money laundering or funding purposes. The corruption or threat of a boxer to take a dive at the x round is a frequent theme in mafia-related movies. All of the American professional sports leagues, as well as the National College Athletic Association (NCAA), take stringent measures to disassociate themselves from sports gambling. Nevertheless, sports history is riddled with several incidents of athletes conspiring with gamblers to fix the outcomes of sporting events, or criminals acting against athletes whose on-field performance affected their wagers.
In 1919, gamblers bribed several members of the Chicago White Sox to throw the World Series. This became known as the Black Sox Scandal and was recounted in book and movie form as “Eight Men Out”.
In 1978, mobsters connected with the New York Lucchese crime family, among them Henry Hill and Jimmy Conway, organized a point shaving scheme with key members of the Boston College basketball team.
Andrés Escobar, a Colombian defender, was murdered shortly after his return from the 1994 World Cup, where he scored an own goal, the first of a 2-1 defeat to the USA that knocked out the Colombians at the first phase. In the most believed explanation, the Medellín drug cartel bet large sums of money that Colombia would advance, and blamed the Medellín-born Escobar for the loss.
In 1994, a comprehensive point shaving scheme organized by campus bookmaker Benny Silman and involving players from the Arizona State University men’s basketball team was uncovered with the assistance of Las Vegas bookmakers, who grew suspicious over repeated large wagers being made against Arizona State.
On 10 February 1999, a plot to disable the floodlights of The Valley during a Charlton-Liverpool match was discovered. Three individuals were arrested, and the scam tracked to Malaysia, where the Premiership is very popular, and bets frequent.
In early 2000, Hansie Cronje, then highly-regarded captain of the South African cricket team, rocked the cricketing world with frank admissions of match-fixing. Hansie admitted to receiving more than $140,000 USD from London-based bookies to influence aspects of his team’s performance. For example, he convinced Herschelle Gibbs to score less than 20 runs in a One Day International for a $15,000 USD reward. Hansie received a lifetime ban from any involvement in professional cricket but he maintained throughout his numerous trials that he never consipired to fix overall match results. He died tragically in a plane crash in 2002, leaving behind many unanswered questions and a tainted legacy.
In late 2004, the game between Panionios and Dinamo Tbilisi in the 2004-05 UEFA Cup was suspected of being fixed after British bookmakers detected an unusually high number of half-time bets for a 5-2 win for the Greek side, which was trailing 0-1. As the final result ended up being 5-2, suspicions of fixing quickly emerged, but were quickly denied by both clubs, although UEFA started an investigation.
The Italian Football Federation said in October 2000 it had found eight players guilty of match-fixing. Three were from Serie A side Atalanta and the other five played for Serie B side Pistoiese. The players were Giacomo Banchelli, Cristiano Doni and Sebastiano Siviglia (all Atalanta) and Alfredo Aglietti, Massimiliano Allegri, Daniele Amerini, Gianluca Lillo and Girolamo Bizzarri (all Pistoiese). The charges related to an Italian Cup first round tie between the two sides in Bergamo on August 20, 2000 which ended 1-1. Atalanta scored at the end of the first half and Pistoiese equalised three minutes from full time. Atalanta qualified for the second round. Snai, which organises betting on Italian football, said later it had registered suspiciously heavy betting on the result and many of the bets were for a 1-0 halftime score and a fulltime score of 1-1.
In early 2005, the German Football Association (DFB) revealed that referee Robert Hoyzer was under investigation for suspected betting on a first-round German Cup tie between regional league side Paderborn and Bundesliga club Hamburger SV in August 2004, and possibly fixing the match. In the match, HSV took a 2-0 lead, but Hoyzer sent off HSV striker Emile Mpenza in the first half for alleged dissent (a sending-off that many observers considered unwarranted), and later awarded Paderborn two dubious penalties. Paderborn went on to win 4-2. Several days later, Hoyzer admitted to having fixed that match, as well as several others he worked. He went on to implicate other referees and several players in the scandal. Hoyzer himself was arrested on February 12 after evidence emerged that he may have fixed more matches than he had admitted to fixing. On February 16, UEFA announced that it would send an investigator to Athens to investigate possible links between this scandal and the aforementioned Panionios-Dinamo UEFA Cup tie. Eventually, Hoyzer was sentenced to 2 years and 5 months in prison. The Croatian betting syndicate which had paid Hoyzer to fix matches was also found to be linked to the Panionios-Dinamo match.
In late September 2005, two referees (Edilson Pereira de Carvalho and Paulo Jose Danelon) were accused of fixing several matches in the São Paulo championship for an internet betting ring that moved over USD100,000 on each match day, receiving around USD 4,400 for each match. In the following days, Armando Marques, president of the national commission of referees resigned and Nagib Fayad and Vanderlei Pololi, two businessmen, were arrested as suspects of working as middlemen between the referees and the corruption ring. In early October, a court ordered that the matches where Carvalho was the referee would have to be replayed and free to the public. No decision was made about Danelon’s matches.
Most people believe that bookmakers attempt to “balance” their action, by adjusting their prices so that they get the same amount of money on both sides of a game. Theoretically, the bookmaker’s only financial interest in the bets it accepts is the vigorish it takes from losing wagers, and it simply wants to ensure that the amount of wagers on each side is equal. In reality, however, bookmakers attempt to maximize their bottom line. While having an exactly equal amount of money wagered on each contestant would guarantee themselves a profit and eliminate their risk, that won’t necessarily maximize their bottom line. They can make more money when they accept bets at odds which are “inflated” from those which are likely to occur. So for example, if the majority of their customers are going to bet on a team regardless of the price, they will set the price as high as possible. This is called “shading” the line. Generally, the public prefers to back the favorite, and unsophisticated bettors often show up during large events such as the Final Four and the Super Bowl. Some bookmakers actually offer different prices to different customers, using past bets as an indicator of who the customer will bet on as a way of additionally increasing their potential profit.
With a match offering a point spread, however, bookmakers must be careful of moving the line too much. Assume, for example, that a large number of Oklahoma betters caused the line to be moved from 27 points all the way to 29 points. If Oklahoma won the game by 28 points, the bookmaker would have to pay both those who wagered that Oklahoma would win by 27 and those who took Kansas on the 29 point spread. Bookmakers refer to such an event as “being middled.” This famously occurred in the 1979 Super Bowl between the Pittsburgh Steelers and Dallas Cowboys, which American bookmakers still remember as “Black Sunday.” For that game, bookmakers opened Pittsburgh as a 3.5 point favorite, and the line closed just before kickoff at Pittsburgh -4.5. Pittsburgh won the game 35-31, enabling both those who took the Steelers -3.5 and those who wagered on the Cowboys +4.5 to collect.
Sometimes, a point spread is set at an amount that equals a common margin of victory for a particular sporting event. For instance, American football games are often decided by 3 points (the amount awarded for a field goal) or 7 points (the amount awarded for a touchdown with a successful extra-point attempt). In the case of a football game where the favorite is -7, moving the line up or down would likely result in a middle if the favorite wins by exactly 7 points. In this situation, the bookmaker may choose to adjust the vigorish in response to unbalanced action, rather than move the point spread. If the 7 point favorite is getting the most wagers, a bookmaker may change the vigorish on that team from -7 (-110) to -7 (-120), and move the underdog to +7 (+100). Once this occurs, bettors looking to wager on the favorite must risk $120 for every $100 they wish to win, while underdog players will get even money for every dollar they wager.
A bookmaker’s line can be influenced by one or several large wagers made on a match. Bookmakers pay particular attention to the bets of a professional sports gambler, commonly known within the industry as a “sharp” or “wiseguy.” Some bookmakers will not accept bets from bettors they believe fit in this category. As a result, professionals use “beards” to make the bets for them. Groups of professionals who work together are known as a “syndicate.” These syndicates will often place large wagers with several books simultaneously, causing the prices to move quickly. Observers refer to these fast line movements as “steam.”
Conversely, bettors who are primarily recreational are referred to as “squares”. Online, there are certain betting shops that cater more towards sharps and those toward squares. Shops that cater towards professionals generally have higher (or no) upper betting limits and offer lower vigorish, while making some of the money back on fees for withdrawals or minimum bets. Meanwhile, “square” shops generally have lower betting limits and offer more sigmup bonuses. In return, they charge the standard 11-to-10 vigorish, and offer worse moneylines than the “sharp” shops. In many of the minor sports, sharps make up the majority of bettors, while for large public sporting events such as the NCAA Men’s Division I Basketball Championship and the Super Bowl, recreational bettors make up almost 90% of the betting action at sportsbooks, and are the top betting events both in Nevada and online.
Because of how lines move quickly during sporting events, arbitrage betting is possible. Theoretically, this will guarantee a small profit of 3-6% when a person bets on one line at one shop and on the opposite line at another shop. However, a large sum of capital is required for the amount of reward, and great care must be exercised to avoid accidentally betting on the same side at both shops. Arbitrage situations are commonly found during halftime and intermission periods, where there is a limited amount of time for each bookmaker to determine the line and accept bets.
The Federal Wire Act of 1961 was an attempt by the US government to prevent illegal bookmaking.
Sports betting is the general activity of predicting sports results by making a wager on the outcome of a sporting event. Perhaps more so than other forms of gambling, the legality and general acceptance of sports betting varies from nation to nation. In North America, for example, sports gambling is generally forbidden, while in many European nations, bookmaking (the profession of accepting sports wagers) is regarded as an honorable occupation and, while highly regulated, is not criminalized. Proponents of legalized sports betting generally regard it as a hobby for sports fans that increases their interest in particular sporting events, thus benefitting the leagues, teams and players they bet on through higher attendances and television audiences. Opponents fear that, over and above the general ramifications of gambling, it threatens the integrity of amateur and professional sport, the history of which includes numerous attempts by sports gamblers to fix matches, although proponents counter that legitimate bookmakers will invariably fight corruption just as fiercely as governing bodies and law enforcement do.
Types of bets
Aside from simple wagers–betting a friend that one’s favorite baseball team will win its division, for instance, or buying a football “square” for the Super Bowl–sports betting is commonly done through a bookmaker. Legal sports bookmakers exist throughout the world (perhaps most notably in Las Vegas). In areas where sports betting is illegal, bettors usually make their sports wagers with illicit bookmakers (known colloquially as “bookies”) and on the Internet, where thousands of online bookmakers accept wagers on sporting events around the world. (In the United States, the legality of Internet wagering is ambiguous, due to the fact that online bookmakers generally operate outside of the U.S. Many online bookmakers do not accept wagers from the U.S. due to these unresolved legal questions.) The bookmaker earns a commission or “vigorish” by regarding the money at risk as less than the size of the bet placed. A common line is a $110 bet on a fair coin which pays $210 to win and $0 to lose. On this line, it costs $220 to bet both sides of the same coin simultaneously, but the combined bet always pays $210. The $10 loss constitutes the vig. There are opposing positions on whether the winner or loser can be construed as paying the vig, but this debate is not especially meaningful. If you view $110 to win $210 on a fair coin as $100 at risk, then it will appear as if the loser pays the vig; if you view the same line as $110 at risk, then it will appear as if the winner pays the vig. It happens that standard practice among bookies is to adjust odds so the amount at risk remains constant from the winning side of the proposition, hence the common perception that the loser pays the vig. Vigs expressed as percentages suffer from the same perceptual bias. On the line as given in this example, for a fair coin, the bookie has an expectation of making $5 for each $110 bet placed, which is often divided out and expressed as 4.5% Odds on teams or opponents are quoted in terms of the favorite (the team that is expected to win, thus requiring a riskier wager) and the underdog.
Bookmakers generally offer two types of wagers on the winner of a sporting event: a straight-up or money line bet, or a point spread wager. Moneylines and straight-up prices are used to set odds on sports such as soccer, baseball and hockey (the scoring nature of which renders point spreads impractical) as well as individual vs. individual matches, like boxing. For these sports, bookmakers in Europe and Asia generally use straight-up odds, which are quoted based on a payout for a single bet unit; for example, a 2-1 favorite would be listed at a price of 1.50, whereas an underdog returning twice the amount wagered would be listed at a price of 3.00.
American bookmakers generally use moneylines, which are quoted in terms of the amount required to win $100 on a favorite, or the amount paid for a $100 bet on an underdog. The amount “won” in a bet is the net amount over and above the initial bet. If a person wins $200 on a bet of $100, the bookmaker actually pays the winner $300 (i.e. $200 plus the initial bet of $100).
For example, a baseball game between the St. Louis Cardinals and Chicago Cubs might have a moneyline on St. Louis (the favorite) at -200 and Chicago (the underdog) at +180. A bettor looking to take St. Louis must risk $200 for every $100 he wishes to win over and above the initial $200 bet. A person wagering on Chicago will win $180 for every $100 he bets.
The +180 moneyline on Chicago includes a 20 cent “dime line”. Bookmakers generally use a “dime line” with moneylines to calculate the vigorish they receive on losing wagers. Without the 20 cent dimeline in the example above, the Chicago moneyline would be +200.
For favorites of -120 to -150, the difference between the favorite and underdog is 10 cents; i.e., the underdog to a -120 favorite is priced at +110. The discrepancy between prices rises for favorites of -160 or higher.
Unlike point spread bets, a moneyline wager requires only that the team wagered upon win the match. In sports such as baseball, where certain teams can be heavy favorites against weaker opponents (sometimes as much as -350 or higher), the moneyline system requires that a hefty sum be risked on the favorite, while enticing underdog players with a higher payout.
In sports such as basketball and American football, rather than varying the money odds (which can be substantial in lopsided matches), the point spread is used. A point spread wager typically requires a bettor to risk $110 to win $100, the extra $10 being the bookmaker’s vigorish if the wager loses. However, bettors backing the favorite collect only if their team wins by more than a specific victory margin, which is set at the time of the wager. Similarly, underdog bettors can collect even when their team loses, as long as they cover the point spread by losing by fewer points than were quoted by the bookmaker. For example, suppose that a college football game between Oklahoma and Kansas had Oklahoma as a 27 point favorite (quoted as Oklahoma -27, or Kansas +27):
If Oklahoma defeats Kansas by more than 27 points, bettors on Oklahoma would receive $100 on a $110 bet. Kansas bettors lose the $110 they wagered.
If Kansas defeats Oklahoma, bettors on Kansas would receive $100 on a $110 bet. Oklahoma bettors lose the $110 they wagered.
If Kansas loses by less than 27 points, they have covered the spread. Bettors on both sides are then treated exactly as if Kansas had won the game.
If Oklahoma wins by exactly 27 points, the wager is called a “push”, and neither side wins. Standard practice by U.S. bookmakers is to return the stakes of all bettors on the game in full. To prevent pushes and ensure that they receive their commission on losing wagers, bookmakers often set point spreads that include a half-point.
Another common wager available for sporting events involves predicting the combined total score between the competing teams in a game. Such wagers are known as “totals” or “over/unders.” For example, the Oklahoma/Kansas football game described above might have a total of 55 points. A bettor could wager that both teams will combine for over 55 points, and play the “over.” Or, she could predict that the score will fall under this amount, and play the “under.” As with point spreads, bookmakers frequently set the totals at a number involving a half-point (i.e., 55.5), to reduce the occurrence of pushes.
Many bookmakers offer several alternative bets, including the following:
Proposition bets. These are wagers made on a very specific outcome of a match. Examples include guessing the number of goals each team scores in a soccer match, betting whether a wide receiver in a football game will net more or less than a set amount of total yardage, or wagering that a baseball player on one team will accumulate more hits than another player on the opposing team.
Parlays. A parlay involves multiple bets (usually up to 12) and rewards successful bettors with a large payout. For example, a bettor could include four different wagers in a four-team parlay, whereby he is wagering that all four bets will win. If any of the four bets fails to cover, the bettor loses the parlay, but if all four bets win, the bettor receives a substantially higher payout (usually 10-1 in the case of a four-teamer) than if he made the four wagers separately.
Run line, puck line or goal line bets. These are wagers offered as alternatives to straight-up/moneyline prices in baseball, hockey or soccer, respectively. These bets feature a fixed point spread that offers a higher payout for the favorite and a lower one for the underdog. For example, the above-described Cardinals/Cubs baseball game might offer a run line of St. Louis -1.5 (+100) and Chicago +1.5 (-120). A bettor taking St. Louis on the run line can avoid risking $200 to win $100 on the moneyline, but will collect only if the Cardinals win by 2 runs or more. Similarly, a run line wager on the Cubs will pay if Chicago loses by no more than a run, but it requires the bettor to risk $120 to win $100.
Future wagers. This bet predicts a future accomplishment by a team or player. One example is a bet that a certain NFL team will win the Super Bowl for the upcoming season. Odds for such a bet generally are expressed in a ratio of units paid to unit wagered. The team wagered upon might be 50-1 to win the Super Bowl, which means that the bet will pay 50 times the amount wagered if the team does so.
Sports betting forums
The Internet not only revolutioned the ability to bet online, but also the ability to communicate with like-minded bettors. Sports betting forums offer lively give and take where bettors discuss their predictions about games and help one another decide on profitable bets.
Betting in fiction
In the 1989 film Back To The Future Part II, after Marty and Doc travel to 2015, the old Biff Tannen takes a Sports Almanac back in time to give it to himself in 1955, advising his younger self to use it for betting on any forthcoming sports events up until 2000. Younger Biff does and becomes a millionaire, which creates an altered version of time which Marty and Doc encounter when they return to 1985. In order to restore the damage done from the bets, they need to travel to 1955 and destroy the almanac before it is ever used.
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