Breaking the prominent myths about sports betting

Nov 15, 2012 |
Breaking the prominent myths about sports betting
The Senate may vote down bill C-290.
The Senate may vote down bill C-290.
Editor's note: George Cassiday is a long-time Covers user and a recreational sports bettor.

I am a sports bettor. I have a very good job, a wife and two kids. I pay my taxes, my parking tickets and save for my retirement. I own my house and have voted in every election. My favorite non sports shows are the NBC Nightly News, 60 Minutes and Modern Family. I have a college education, have read Winston Churchill's biography and I understand how nanotechnology works.

Most of all, I’m not a degenerate sports gambler, which the leagues, the media and the politicians would like you to believe.

Sports betting has been my saviour for the past 20 years. I’m not a big drinker and I have never liked going to the clubs. My nights from an early time in life were spent in front of the TV watching sports. In college I was introduced to sports betting and began betting through friends. I have not stopped since.

In those 20 years I have gone to college, excelled in my career and raised a family. Was that easy? Absolutely not. Anyone trying to juggle a family and a career these days in this economy can attest to that.

Most days begin at the crack of dawn at the gym and end just past eight when the kids are tucked into bed. My own time then begins and all I’m looking for is a distraction away from the next day’s meeting agendas, the three planned activities for the kids or my wife’s demands that I visit Pottery Barn with her on the weekend. So I turn on the TV, fire up the computer and place a wager.

I bet $50 per game and maybe place three wagers in an evening. I bet on a game that I can watch and for those two or three hours I’m entertained by the excitement of sports and my fifty on the line. My wife comes down every so often to check in and see how I’m doing. She’ll even get a little excited at the end of the game when the outcome is in doubt.

My friends also bet and we like to discuss our favorite games that evening online. We chat most of the night but only sometimes about our bets. Most of the time, we talk about other things that are happening in our lives. Sports betting is the common element that brings us together and I like that.

I also hang out in sports betting community forums like Covers where I can talk with other sports bettors. When 11 p.m. rolls around and my games are finished I usually catch the late news, check the weather for tomorrow and head to bed.

I lay my head down on the pillow and I’m ready to be a father and employee for another day. An escape. A reprieve from real life. That’s what sports betting is for me.

For those worried that my extreme gambling that night has put my family in danger let me educate you on the economics of sports betting.

I bet three games at $50 per game. The house charges 10 per cent on all winning bets, which is like charging 5 per cent on all bets because you win roughly 50 per cent of the time.

Some win more. I don’t, but I’m not looking to supplement my income. So for $150 dollars wagered, I will pay the house a commission of $7.50 for that night’s entertainment. I roughly bet four times a week which rounds up to $35 per week, or around $140 per month, or $1,800 per year.

Some men golf. Others hit the bars. Others like to fish. My pastime is the cheapest option of the four.

It has always amazed me the distorted slant opponents make on the sports betting industry. It’s an activity that unfortunately has opposition from the extreme right, the extreme left and the 100 most powerful men in North America, the league owners. I’m part of the silent majority, the middle, the group that voted 66% on the New Jersey ballot last year looking to legalize sports betting. However, I will not be silent anymore. This is my cross to bear for other bettors and society and I will not let these freaks and special interests taint the facts. It’s time to set the record straight and have my voice, which mirrors many others, heard. Enough is Enough.

Time for the real truth about sports betting.

Lesson #1: The Demographic Is M 25-49 HHI

Getting this far was your first lesson. The overwhelming majority of sports bettors are like me. I’ve been interacting with them for decades. They’re respected professionals in good jobs and in professions you wouldn’t naturally expect. There’s a large group in the financial services industry, sales roles and real estate. Law enforcement is also a segment and you can see why - what police officer doesn’t want to escape for a couple hours? Men make up 80% of the betting revenue.

Contrary to what the opposition says kids don’t bet on sports. No bookie could ever collect and online sites require a credit card and several forms of ID, and in some cases even fingerprints. I I have still yet to see the numbers on the epidemic that opponents were quoting years ago about kids stealing their parents’ credit cards and gambling online. When I do, I’ll include the underage in my demos.

The majority of the wagering revenue comes from established men in the 25-49 demo. The majority have household incomes over $100,000 and are college educated. Surprised? Expecting it was college students gambling their tuition or welfare recipients trying to double up the rent money? These are the talking points employed by the opposition. It’s wrong and they know it.

Lesson #2: Credit Betting Kills

Why isn’t there more revenue in the younger demographics? The answer is these kids usually start betting on credit. Mom and Dad see the credit card bill, if they have one, so they can’t sign up to an online site. Therefore they usually start betting with a campus bookie and wager on credit.

For those of you who do not know what credit betting is (and I’m referring to the 105 Senators in the Canadian Parliament right now) a customer can wager with a bookie without immediately paying for losing bets. The betting week usually begins on a Tuesday with the “settle-up” day being the following Tuesday. The history behind Tuesday is it gives the customer Monday Night Football to try and even his balance before he meets his bookie the next day. During the week the customer eithers calls his bookie to place their bets, or more recently goes online to the bookie’s website and makes his selections.

The trouble with credit is no different than the trouble with credit cards in a young person’s hands: very few are fiscally responsible and know their limits. It’s no different than the mindset to buy that $400 pair of jeans and worry about the payment later because you need those jeans for tonight’s party. The young user usually starts out the week betting $25 a game and in the weeks they’re winning they keep betting the same amount, or stop betting to protect their winnings. However, the weeks they are down they start to increase their wagering to try and make up the difference. This is what’s commonly referred in the betting world as chasing.

The dreaded “chase” has claimed many an innocent young man. A $200 hole for a $25 bettor heading into the weekend becomes a $1000 hole once a bettor starts wagering $100 a game to bring himself out of the hole. A once-in-a-lifetime Monday Night Football losing bet brings the total owed on Tuesday to tuition and now has the student in a huge mess.

This is when the trouble begins.

If they have the money, great. But most of the time they don’t and it’s either call the parents, find another job in place of the night classes or sell the laptop, iPad and iPhone to settle up. Most times the student stops sports betting and doesn’t pick it up again until later in life when more mature.

In extreme cases the chase never ends and this exposure to very large bets doom the student to a life of problem gambling and a boom bust cycle that eventually destroys their life and their prospects. Even later in life adults can fall into the credit trap chasing losses. Especially in this down economy when even smaller losses are hard to stomach.

This is why there is not more users in the younger demographic. They usually burn themselves out very quickly on credit and leave the activity. I would say at least 75% of young people lose way more than they ever imagined betting on sports on credit.

There is another reason why sports betting leaves a bad taste in the younger generations’ mouths and that’s from deadbeat bookies. In school, the bookies aren’t deep pocketed Gambino crime lords but usually students themselves who thought about the benefits of getting on the other side of the counter.

Trouble is they’ll usually have a portion of their clientele chasing and unable to pay. These losses are needed to pay the winners of the week. What usually ends up happening is the bookie says they can’t pay this week because Johnny has stiffed them. In most cases it’s not the bookie trying to collect but the client who is up for the week. When that client can’t collect they end up wagering their balance and eventually lose their winnings. Now this user also has a negative impression of the activity and stops.

Regulated gaming works via the post-up model meaning you need to post your cash first before placing a wager. When you go to Vegas you have your cash at the ticket window, you say “I’ll have the Miami Heat for $110”, you give $110 cash to the ticket agent and they say “$110 to win $100 on the Miami Heat”. End of transaction. The customer loses the bet and the final tally is immediate.

There’s no chasing the losses because it’s real money. The settlement date is every bet. Like everything on credit (and boy haven’t we learned this since the great credit bubble burst) it’s a lot easier to spend when you don’t have to pay in full.

People who wager on credit bet six times as much as they would versus wagering via post-up. That’s a fact. Of the $400 billion spent on sports betting in North America  last year over 75 percent of it was wagered via credit wagering. Most adults understand the risk, it’s the younger generation who it really hurts.

So as the opponents rail against legalizing sports betting make no mistake they are endorsing a very dangerous model for our young males. Credit betting.

#3 This Is The Best Environment For Game Fixing

This one cracks me up. I really can’t believe educated people in public service, in college institutions and the professional leagues actually spout their rhetoric on how legalized sports betting would lead to game fixing. It’s absolutely the complete opposite.

The best environment for fixing game is the one we have now.

I have extensive experience in the financial services industry, probably why I like sports betting as much as I do. Insider trading on public stock exchanges is also a problem, which really is identical to game fixing. An insider trades on information that is not available to the public and therefore has an advantage determining the fair value of the price of a stock. A game fixer wagers (trades) on information that is not available to the public and therefore receives better odds. It’s no different.

So how do they catch insider trading?

When an investor buys and sells securities they need a brokerage account that has access to specific stock exchanges throughout the world. The big ones are the New York Stock Exchange, the NASDAQ and in Canada the Toronto Stock Exchange. In North America these exchanges would handle the majority of stock transactions.

When a trade is executed there are a number of safeguards to protect against insider trading. For one the customer must declare that they are an “Insider” of the company, meaning they could have knowledge not publicly available. It doesn’t mean they can’t trade company stock for which they are an insider, it’s just that these transactions will be more scrutinized to determine if they were playing above board. An insider should expect a call from the regulator if they buy before big news that affects the price of a stock.

This is a pretty easy way for the officials to catch insider trading and it doesn’t happen this way very often. However, the regulators have more tools than self-declaration. Since there are only a couple of markets in which securities trade it is very easy for officials to comb the trades looking for irregularities.

There is a normal flow to markets and prices when information is widely available. Anomalies stand out. Regulators look for these anomalies and investigate when appropriate. Crafty insiders will try various methods to beat the system. Maybe they tip off an unrelated broker with info to receive reciprocal treatment in another security. Maybe they tip off old friends, or maybe they try and set up dummy offshore corporations to hide their identity. This all happens.

Because there are large consolidated markets and the identities of the investors are ultimately known (see clients of UBS’s offshore wealth management fiasco for proof) regulators have the tools to identify these anomalies and investigate. They can connect the dots, they have the data and they have the paper trail.

Now let’s back this up to game fixing. What are the differences? 

First, in unregulated sports betting there is no identity disclosure. Enforcement does not have the name of the person betting Oregon State for $1000 tonight, for example. Second, there is no financial transaction and therefore no paper trail. It’s a cash business. Third, there is no consolidated market like the NYSE for which abnormalities can easily be spotted. Only the most stupid game fixers go to Las Vegas to wager.

In essence there are hundreds of thousands of individual markets for which enforcement has no idea what pricing is taking place.

This is the perfect environment for game fixing. If you don’t believe me answer this question - how many game fixing scandals has been uncovered in the last 20 years?

NBA official Tim Donaghy is one that comes to mind and the reason why this was uncovered is because the fixers got greedy. Smart college basketball players who don’t want to get greedy and are never going to play pro can easily make some extra cash by fixing games at low limits.

How would you catch them? Only big money would eventually move lines. A couple small wagers a year via a cousin or friend out of state and the $5,000 won wouldn’t even make the radar.This changes dramatically if sports wagering was regulated like any other $400 billion market.

Know Your Customer (KYC) rules developed in other regulated parts of the world ensure the identity of the bettor is maintained so at least the cousin or friend is on file. Consolidating the market information and allowing access to regulators would give them the tools to identify inconsistent activity, and finally there would be a financial trail in place. Remember, even if you don’t give your ID in Vegas your photo is still captured on the cameras.

The argument from the professional leagues that game fixing would increase because of legalization is even more absurd.

Let’s assume in professional sports there is a rogue player who is fixing games. The average salary in the NBA is $5 million, MLB is around $3 million, NHL just over $2 million and the NFL around $2 million. The average career is around five years give or take for all sports. Therefore the average player stands to earn at least $10 million over their career.

Let’s chop this by 90 percent for the taxi squad group. The fringe players we’re going to say will earn around $1 million during their career. What would this player have to earn fixing games to make it worth their while? Five-hundred thousand? Maybe $1 million?

Let’s just say, for discussion purposes, this fringe player is somehow willing to sacrifice jail, his reputation and their livelihood for $100,000.

Now let’s look at the reality of the situation. We said before only big money will show up in this unregulated markets. You can’t come out of the blue and place a $100,000 without drawing attention. You may be able to place ten $10,000 bets through a couple different outlets if there has been some similar history. Let’s make a stretch and say this can take place.

So in essence the professional leagues’ argument is a fringe player is going to have the opportunity to affect the betting outcome of 10 games. He might be able to do this today. There’s not a chance in hell he’ll be able to do it in a regulated market.

The fact of the matter is only certain players can reliably affect or fix a game. Point guards in basketball who handle the ball at the end of the game and those who usually shoot free throws is one. Quarterbacks and long snappers are others. A goalie in hockey or a pitcher in baseball. Only the long snapper would be considered a fringe player and it would take exactly one game of bad snaps and his career is over, forget being able to do it for 10 games.

Can you imagine a point guard trying to shave points for 10 straight games? Are you serious? It would be kind of obvious.

In any crime there needs to be a motive. Give me the motive for a professional athlete to throw a game under these scenarios. It doesn’t happen.

The only instance in which it will happen is when an athlete has a gambling problem and gets in way over his head. And when does that happen? When the industry is based on credit.

So for the professional leagues to say game fixing will be rampant is ludicrous. They are promoting the very environment in which game fixing can occur and thrive at only the amateur level, and when their players have gambling problems it’s usually due to chasing caused by their ridiculous stance on sports betting.

Remember, a large part of professional athletes are in their twenties. No different than our student example.

The NCAA’s stance on this issue is even more bizarre given the problems of student betting and the ease for which a non-professional player could influence the game with immunity.

Point blank. It would be impossible to stop financial insider trading if Wall Street were run the way sports betting is in North America. If the leagues really want to protect the integrity of their game the clear answer is regulation. Don’t let them blow smoke and tell you otherwise.

#4 It’s Bad Public Policy, Not Organized Crime

This is always the favorite saying of the right wing: blame organized crime. Mr. Mobster is trying to corrupt our youth and taint our national pastimes with running rackets including sports betting. They’re using this money to support child pornography, drugs and even terrorism. They must be stopped!

Now let’s stop the rhetoric and understand what really happens in regards to sports betting and organized crime.

The credit betting markets are managed in two forms: a bookie or an agent. The majority of bookmaking activity is operated by independent bookmakers who have a clientele they service. They range from bartenders or school teachers. They have zero connections to organized crime. Their winnings go into their pockets just like any other activity in the underground economy.

An agent is someone who works for a bookmaker who runs a more sophisticated organization. The agent is responsible for collecting losses and paying winnings. They receive a percentage of net revenue.

In this setup, the bookmaker has a much bigger business and has way more exposure to losses. Sometimes the bookmaker needs to offload wagers that are above and beyond his ability to pay. This is where larger sports betting clearinghouses step in. These houses have very deep pockets and will accept these oversized wagers.

In our contemporary view of North American sports betting, all of these entities - the bookie, the agent and the clearinghouse - are organized crime. In England we call these entities William Hill, Bet365 and Ladbrokes and most of the individuals running these organizations we call “Sir” because they’ve been knighted by the Queen.

Making the leap to label something, which the majority of citizens support, organized crime is a practise that has existed over time, and one that has been proven not in society's best interest.

The left wing was labeled communistic back in the Joseph McCarthy era. We all know the racial history of our ancestors. History shows when extremists label something to support suppression of freedom, nothing good comes out of it. We do operate in a free society don’t we?

There is no better analogy that alcohol prohibition in the early 20th century. The extremist view was alcohol was evil and it needed to be banned. This was against the opinion of most ordinary citizens and few abided by the law.

Was organized crime responsible for the scurge of drinking? Of course not.

Politicians not respecting the rights and freedoms of adults to choose were responsible for highly lucrative underground market being established. Once the bans were lifted, many well known family names emerged from the shadows with new-found wealth and were accepted with open arms by society.

Do we consider the Kennedys or Bronfmans organized crime?

Ask any law enforcement official, politician or general citizen if they would like a reduction in organized crime. The resounding answer is obvious and the easiest way would be to legalize sports betting.

The individual bookmaker would not be part of a criminal organization but an entrepreneur trying to service his clients. As in Europe, he’ll probably open an office, employ a staff or sell his business to a larger outfit. At the very least they’re paying taxes and the value in his enterprise can be passed down to their family.

Bobby Kennedy, the author of most of the anti-gambling laws in the states, certainly benefited from the supposed wealth passed down that was created during the prohibition era.

In our example the agent now has a marketing career and is taxed on his earnings. The clearinghouse is now called Caesars Palace and has outlets, staff and pays taxes. The so-called organized crime element of sports betting doesn't exist anymore and is replaced by hard working members of the gaming industry, just like casinos and lotteries.

What’s the difference between what Steve Wynn does offering one arm bandits to pensioners versus a bookmaker taking a bet on the Patriots?

Instead of forcing average citizens into a void called “organized crime” an enlightened society has repatriated these citizens and has actually shrunk the size of what we can all perceive to be the real issues: hard drugs, forced prostitution, child endangerment and white collar crime.

Don’t fall for the boogie man narrative. Poor public policy is to blame. Not organized crime.

#5 You Are The Problem In Problem Sports Gambling

If the Christian right wing loves the organized crime angle the Liberal left loves to attack the problem gambling issue.

Is problem gambling the prevailing issue in sports betting? NO!

Does problem gambling exist in sports betting. YES!

I don’t believe there is an appetite to open the gambling debate again. Gambling in North America has taken a long and winding road from the early settlers who carried different beliefs from their homelands to the Puritans who wanted to establish a new society, one without gambling.

During the generations, gaming has flipped from regulation to prohibition to its current form where gaming is found in almost every state and province. I can say with absolute certainty there will be gambling in the future especially considering the fiscal shape of most governments.

Gambling will exist, and if the last twenty years is any example, thrive. If society is going to accept gambling as an activity available to citizens then it also has to accept there will be citizens who have a gambling disease or disorder. This is no different than alcohol, cigarettes or severe obesity. Heck, you could even add compulsive shopping to this list as more families find themselves in trouble from shopping than sports betting.

When evaluating different forms of gambling one must weigh the benefits and the costs to society. Gaming activities that derive a disproportionate amount of their revenue from the lower end of the economic scale are not considered advantageous forms of gaming. Gambling that enhances the triggers for problem gambling are also not considered good forms of gambling.

A Video Lottery Terminal or VLTs are examples of these poor forms of gaming. The VLTs are usually found in bars and attract the lower economic customer. The games happen fast and contain visual and audio effects than enhance the gaming experience at its best, and induce addicts at their worse. Slots are also in the category but not to the extreme as they are located usually in casinos or racetracks.

Sports betting is different. The game takes place over hours. There are no gimmicks - just what normal ordinary people see on the television screen.

Harvard commissioned a study of online customers of European gaming giant Bwin years ago and found very little incidents of excessive gambling – only about 1 percent of participants. This is considerably less than other forms of gambling.

Where sports bettors get themselves in trouble is from credit wagering and the perils that come with it. Regulate the industry and remove credit wagering and 90 percent of the most serious cases of problem gambling in sports betting would disappear.

So there is problem gambling. We agree there will always be problem gambling in a society that allows gaming. Sports betting, though, is one of the safest forms of gambling as far as addiction and problems are concerned. It has one of the best demographic profiles and one of the lowest forms of problem gambling according to Harvard.

The left wing needs to get off its high horse and really take a look at the issues.

The Right Way Forward

North America doesn’t have the time or patience any longer to have extremists create the agenda for its citizens. Government's stance on sports betting has for too long been controlled by leagues who falsely use the “integrity of sport argument” even though they secretly want the revenue associated with it.

The leagues cleverly use the extremist views of the right and left to create a coalition, so that when you include the most powerful men in North America the forces are impossible to overcome.

Enough Is Enough. Like many aspects of modern North America it’s time to kick the special interests to the door and let democracy take over. Not the sham democracy that’s being talked about currently in the Canadian Senate, but real democracy like the one in New Jersey where citizens came to the polls and overwhelmingly supported legalizing sports betting.

There is nothing wrong with this activity. It’s practised in almost every region of the world. Regulation ensures the integrity of the game, a reduction in problem gaming, jobs - did I mention jobs?! - and much needed government revenue from the higher end of income earners.

How dare we let billionaires harm our youth. How dare we let a Canadian Senate filled with unelected officials stop legislation passed unanimously by elected members of government, for the first time in history.

I hope the leagues gave you some great seats. What a sham.

ENOUGH IS ENOUGH! Take action and sign THIS PETITION today! Let the Senate know they should say 'yes' to Sports Wagering Bill C-290.

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