Guesties: Degenerates unite!

Posted: January 11, 2012 by terryvandrovec in Guesties
Tags: , , , , , , , , , , ,

By Dan Frasier
Guest blogger

In your last post, Mr. TV, you posed some interesting and pointed questions. The article used Bill Simmons’ tendency to discuss betting lines as a jumping-off point for wondering about gambling as a whole. As a person who has spent a good deal of time thinking about lines and odds, I wanted to offer you some insight. So here goes:

In 2010, the NFL reported revenue for the league of $9 billion. That’s a nice little pile of dough, and it is clearly a significant industry. Games spawn talk-radio shows, non-NFL merchandise sports-related sales (think buying your kid a football) and economic benefits to communities that surround sports venues. In all, the $9 billion, when coupled with these other economic effects, is clearly a substantial part of our culture. But, when measured in relation to gambling … this is a pittance. Over $335 billion was legally gambled (in all forms, not just sports betting) in the world in 2010. More to the point, Vegas casino’s alone took in over $1 billion in betting revenue on only the NFL. When you start adding non-Vegas casinos, off-site betting, online sites and illegal bookies, the revenue wagered on the NFL is almost certainly greater than the total revenue the NFL produces. Millions of people bet on games last year. This is a HUGE industry.

The shocking thing to me isn’t that the BS Report is so focused on sports betting, it’s that it took so long for someone to pay attention and service this large amount of people. The BS Report starts with the disclaimer that it “occasionally touches on mature subjects.” As, I suppose, a heads up that Bill will be discussing things that most talking heads ignore, the gaming industry. As an aside, when I first started listening I thought that disclaimer was a tongue-in-cheek suggestion that the majority of what the Sports Guy was discussing were immature subjects.

As for your questions about what the intrigue is, I find myself more interested lately in the lines and what they say than in straight-up game analysis. The line contains the collective wisdom of everyone looking at the games. Lines move as information changes and as the market integrates that information into the price. Much like investing, the only way to make money is to consistently find how the “collective knowledge” that is effectively putting that line where it is, can be wrong. In other words, you don’t just have to be smart enough to know that the Pats are better than the Colts this year. You have to understand what the betting public (that’s the public and the wiseguys) are thinking is important, and decide if you think those factors are more or less important than they do.

This is how your question concerning popular teams distorts things. The public thinks that the teams they love – the Cowboys, Packers and Pats are traditionally crowd pleasing teams – will win. In other words, the crowd places a lot of importance on the emblem on the side of the helmet. If you think that the emblem is less important than the public does, and it is, then you can assume that the line is set too high. See, Vegas doesn’t want to have too much at stake. So they set the lines where they can get enough people to bet on either side of it. Often that means setting the line somewhere OTHER than where the pure fundamentals of the game dictate it should be, and that is where value lies. So, if you broaden your thinking to include gambling, then every game gets interesting. Pats/Colts? How long could we discuss that without getting bored? Clearly in 9 of 10 games the Pats will beat the Colts, but if we are discussing spreads then you have more like a 50/50 shot. All of a sudden, each detail in interesting.

Greenie wouldn't make much green gambling.

People talking about sports and picking winners outright have nothing at stake. Mike Greenberg has been so consistently wrong in picking winners, that if anyone cared if he was right or wrong he would have been fired long ago. (For the record, he shouldn’t be; love me some Greenie.) When do you see commentators held accountable for their prognostications? Never. Thus, only so much will be looked at, talking points and “certainties” are established and all of the commentating world tends to fall in line. There is no benefit to being different or thinking differently. When you are discussing lines, it’s ALL about thinking differently. If you simply look at the information being discussed on mainstream media and bet with the consensus you will never be going against the crowd. Remember, to win in gambling it’s not enough to be right; you have to be DIFFERENT and right. Therefore the lines discussions and gambling talk often focus on undiscussed topics of importance and on smaller things that are important, but not beaten into a consensus on ESPN Radio. In that way, gambling advances the discussion and explores parts of games that most people will never think about. I think that is why I like it.

For the record, I’ve bet on two football games in my whole life. Lost both times. Never bet on your favorite teams. Makes you a mark for the real gamblers.

About the author: Frasier is a financier by trade. And he’s not above paying $31 for a two-glass bottle of bourbon-infused beer.

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