Profile of An Internet Bookie

prostoalex writes "The New York Times Magazine has a story about one of Internet's most lucrative businesses - online bookmaking. Writer William Berlind travels to San Jose, Costa Rica, where the offices of such online powerhouses as BetOnSports and SkyBook are located. Quite an interesting story about numerous Americans traveling to Costa Rica with the grand business plan of online gambling, US government trying to shut down the offshore gambling operations, and how the bookies operate."

Comments

Re:how silly is the government?

[leviramsey]

Number one reason sports betting is nog going to be legalized in the US:

It will kill the state lotteries.

Why? Look at the vig on sports betting versus lotteries (the vig is the amount the bettor can expect to lose and is the difference between the money returned by a winning bet and the actual probability of winning). For a typical Vegas-style bet on football against the spread or on an over-under, here's basically the way it works:

A line is set. For instance, tonight's preseason game between the Rams and Bucs has a line of "Rams - 2.5". A bet on the Rams means that, after deducting 2.5 points from their score, you are betting on them to win; a bet on the Bucs is a bet on them to win if 2.5 points is added to their score. Thus a bet on the Rams loses and a bet on the Bucs wins if the score is Rams 35, Bucs 33. Bets (assuming standard Vegas payouts, though many times the payout rates will be adjusted to encourage betting on one side or the other) are paid out on an 11-10 basis, i.e., you're betting 11 to gain 10.

The house will thus (if an equal amount of money is bet on both sides) make a $1 profit on every $22 bet (ie 4.5%).

Now, contrast this with a state lottery. In Massachusetts, 50% of the bet is the state tax on lotteries. An additional 10% of what's left is taken by the lottery as their share, for administrative expenses. Thus only 40% of the money bet on any given game will be returned to bettors in the form of winnings. These figures are not significantly different from state to state.

The end-result of this is that you only need to be right (or lucky) 53% of the time to make a profit betting on sports (when, picking totally randomly, you would be right 50% of the time), but you need to be right 2.5 times as often as random selections would be in order to reasonably expect to break even in a lottery.

One of the great appeals of sports betting is the better odds of making a profit doing it. Indeed, Oregon tried a few years ago to create a "sports lottery", which was sports betting but with payout rates similar to the lottery. No one bet with it.