Good afternoon. You're listening to Gambling with an Edge. Now here are your
host, Bob Dancer and Richard Munchkin. Good afternoon, Welcome to Gambling with
an Edge, John, Bob Dancer, and I'm Richard Munchkin. Today our
guest is a repeat visit from Matt at plus EV Analytics. Matt, welcome
back to our show. Thank you so much. Great to be here.
I think this is my third time on this show and I love chatting with
you guys every opportunity I get, so thanks for having me again. Well,
I like your chances of being fourth and fifth. So all right,
let's start off with the Caesar's lawsuit you were involved. What happened? All
right? Yes, I'm currently involved in a little bit of small claims court
litigation against see sports book. So what happened was I bet a lot of
National Football League regular season win totals. It's something I've been working on for
a few years. It's a pretty reliable advantage that I've been able to get
for myself, and I've bet I think over a hundred of them in this
most recent season. So what I like to do as the season goes on
is sort of grade my bets in progress after every week of the NFL season,
just to see how I'm doing. Am I tracking to win, tracking
to lose, tracking to break even. So I had a pretty good idea
of where I stood when that infamous game between Buffalo and Cincinnati was postponed on
the field and then canceled after that horrible cardiac event that themar Hamlin had.
So as soon as they called the game off, I'm going to look at
my stats, and I'm thinking, okay, well, every bet I have
says must play seventeen games for action. I've got a bunch of bets on
Buffalo. I've got a bunch of bets on Cincinnati. Some of them were
still live at this point. This was near the end of the season,
so some of those bets were live, some of them were not. I
had one bet that was about a fifty fifty chance of paying out at odds
of plus four thousand, so I was in pretty good shape on one of
the bets, and the other ones were not alive at that point. So
I figured it all out. I assumed, Okay, if they don't reschedule
this game, all my bets on Buffalo and Cincinnati are going to get voided.
Some of my losing bets are going to get voided, some of my
bets that are very much live are going to get voided. Overall, I'm
going to end up a little bit down on the event, but not catastrophic.
Life goes on. So the rest of the season finishes off. The
day after the final game of the nflular season, Caesars, who I had
a lot of these bets with, graded all the bets that I had,
except for the ones on Buffalo and Cincinnati. I guess they were trying to
figure out what to do about the fact that they did not play a game
schedule. A couple of days later, I was surprised to find that the
one bet that was live was graded a void and the multiple bets that were
no longer live at that point were graded losses. And this is straight contradiction
to number one what it says right on the bet slip, but just must
play seventeen games for action. And then if you go into read their their
house rules, it also sets for NFL regular sea game that's all games must
All teams must play their full scheduled games for action. Like pretty pretty clear
cut, right, Yeah, I just have to laugh. Because this just
doesn't surprise me at all that they're you know, winners are void and the
losers will keep thank you very much. My first inclination was this is this
is crazy. You know, they're they're free rolling their customers, and this
is outrageous. UM. I later heard from some other people who had bets
that were UM guaranteed winners that Caesars actually did pay out, so I can't
accuse them of free rolling because it seems like I didn't have any bets that
that qualified to be paid out because they would have won regardless of the outcome
of this missing game. I only had some bets that lost and some bets
that were unsettled, so I wasn't personally I didn't get any winners, but
I heard of some others who did, UM, so it wasn't a complete
free roll situation. But that still doesn't excuse them violating their own house rules.
So I complained to them, and they gave me the usual line of
this is the decision our traders made and we're sticking with it. And you
know, I tried to tell them that that you know, your traders don't
have the authority to violate the terms and conditions of your contract, and they
really wanted nothing to do with it, and they said too bad. So
my next point of contact was the gaming regulator in my home province of Ontario,
and I'm thinking, for sure, these guys are going to get involved
and they are going to decide with me. I'm going to get my money
back. Everyone else in the same situation, at least those in Ontario are
going to be able to get their money back, and we're going to be
able to put this whole thing behind us. So the Gaming Commission took a
couple of weeks and they told me they were in contact with Caesars to get
their side of the story, and they made their decision and they sided with
Caesars. And I'm thinking, there's no way this can possibly be true,
Like, am I missing something? So I asked them, well, what
was the reason for their decision, and they said, we're not going to
tell you that. You have to go back to Caesar's and ask them.
So I did, and the reason I got from Caesar's was there is a
rule in the general Terms and Conditions section of their house rules. It's called
the Infamous Rule three. And what it says that is that for all markets.
For all football markets, fifty five minutes of game action must be played
for the bets to have action. Is sentenced one sentence two of that rule
is if a game is postponed, it must be rescheduled within seven days,
otherwise all bets are void. So a couple issues with this, and this
is the grounds for my lawsuit in Small Claims Court Number one. It is
very clearly obvious that this fifty five minute rule is intended to apply to single
game bets and not you have to play fifty five minutes of the season for
bets to have action, because that is just an absurd reading of that rule.
My problem number two is that there is a contradiction between this general rule
and the more specific rule both on the bet slip and in the NFL regular
Season Wins section that says must play seventeen games for action. And it's a
very well known principle of law, both in Canada and in the US that
whenever there's a contradiction between a more general rule and a more specific rule,
the more specific rule takes priority. So Caesars did not abide by that.
And then my third justification is the second sentence in the infamous. Three.
It says if a game is postponed, which it was, it must be
replayed within seven days, which it was not. So I've got three I
think fairly stable, fairly solid legal arguments on my side, and so I
filed this lawsuit in Ontario small Every person I've talked to, whether they're industry
experts, regulatory experts, legal experts, the criticism I've got has been that
it's this is not worth my time for what's basically a twenty three hundred dollars
refund that I'm seeking. People have questioned that, but zero people I've spoken
to have questioned me on the merits of the case. One hundred percent of
people that I have spoken to believe that I am in the right on this
case. Well, the other thing that I think is kind of brilliant is
to use small claims court where they can't, you know, paper you to
death and lawyer you to death, where it definitely would not be worth the
amount of money you would have to spend to actually bring the case. But
in small claims court, they're basically there are no lawyers right right, no
lawyers that the filing fees. I think one hundred and three dollars or something
so pretty small. Yeah, going going to regular court would not have been
an option for me because it would have been you know, the legal fees
for my own case would have been higher than what I could have recovered.
My only two real options were a small claims court and a class action,
And while a class action would have been fun, I think it probably would
have been a little bit too much of a drain on my time, um
for for what I had to gain. Now. One of the reasons I
am making this pursuit as public as I am as that I know that I
am not the only person who has had bets incorrectly graded as a result of
this, and I would like everyone to be able to to get what they
are owed, not just me. So I'm hoping to set a precedent.
And I've said publicly that if Caesar's lawyers were to call me tomorrow and say,
hey, I'll give you your twenty three hundred bucks, but you have
to sign a confidentiality agreement and never speak of this again, my answer would
be no. I am coming not only for myself, but as a representative
of the community that has to deal with so many legal shenanigans. In terms
of limiting sharps and unfair marketing practices with risk free bets and all these things.
They're legally allowed to do all those things, so I can't stop them.
The least I can do on behalf of my community is stop them from
doing something that is illegal. Yeah. I've almost thought that if I were
to ever be involved in a lawsuit, and you know, maybe my attitude
would change if I've actually gone through it, but my attitude would be uh,
the confidentiality agreement would be a deal breaker, like, you know,
because yeah, I would want a public what what they do to people?
Um, yeah, so definitely. And you know, as as someone who
has a little bit of a voice in the space, you know, the
money itself is not all that consequential to me. It's it's it's a decent
amount of money and I don't want to lose it. But that's not the
main reason I'm doing this. The main reason I'm doing this is number one,
just to be able to have a good story to tell and number two
to help the community. And I hope to succeed in both of those,
both of those goals. Yeah, fighting the good fight, that's right.
Well, I don't know if I ever rewards offered a quarter million dollars from
a casino, but I had to be quiet about it. I don't know
how much principle i'd have at that point. I'm not sure either. But
it's not it's not all or nothing, right, I mean, it's not
zero or two fifty. The problem is that most people, I think,
they fold way too soon and and say no, this is a deal breaker.
The confidentiality apart and let them come back to you with a new offer.
Is so for example, you know, there's a horrendous case of a
well known advantage player who had the crap beat out of him between the ex
Caliber and the Luxur. I mean, I mean this was shortly after I
think the October first thing, and you know, when they hired they started
hiring like security guards who thought they were SWAT team members in you know,
jack boots and anyway, they beat the crap out of him. Conveniently,
the video seemed to have disappeared, you know, and apparently there was a
settlement that was too everyone's agreement or whatever. But but there was a confidentiality
about it, which I think is a shame because I you know, I'd
love to see that on National Lose that casinos beat the crap out of people.
Yeah, but well that this one isn't quite as injurious to me.
No, no, Yeah, it's a similar idea, And I can a
little tiny bit of me can sympathize with Caesars because I think what happened was
they misunderstood their own rules and their initial decision. They actually paid out some
winners that they should have avoided as well, so that if they go back
and do the right thing now, they will end up paying the winners and
kind of avoiding some of the bets that would have lost. But that's their
problem, like they should have read their own rules carefully before they took any
action at all. So that that is my microscopic level of sympathy. But
Caesar's is one of many sports books. There's MJAM, DraftKings Fan, SI
Sports, etc. Did they take the same road that Caesar's did or did
they handle it more honorably? I believe they handled it the right way.
Now, all of the bets in question, on my own personal account,
happened to be at Caesar's, so I don't have firsthand experience with how this
would have been treated at any of the other books just did. All my
action on these teams just happened to be at Caesar's. But I don't.
I haven't heard of any other sites having graded this as incorrectly as as Caesar's
did, or the ones that did. Some books actually have a cause in
their rules that says must play seventeen games unless the outcome has already been established.
And if Caesar's had had that in their house rules, I wouldn't have
a case. But but they don't. All right, let's move on.
You taught a course in base in probability an Analytics dot bet, or maybe
you're teaching it again. Tell us about that. Yeah, so I did
teach a course. Um. The first offering of this course was about a
year ago. It was last the winter of twenty two. It was a
twelve week course. I was honored to be invited by the principles, the
owners of Analytics dot Bet, Harry Crane, Philip Myiman, who I got
to know last year, and I've become friends with great people, really smart
professors, and they started this this school called Analytics dot Bet, which aims
to provide an education in sports betting that is of a university level of quality.
And so my course is I mean, isn't more like graduate level or
um There are different tracks. So when I when I came out with my
course, I made I made a conscious effort to make it I guess what
you would call undergraduate level. So nothing in my course required any more than
a high school level mathematics background, because I really wanted to make this as
accessible to a wide range of potential students as I could. If if I'd
said you need a math degree to take this course, you know, I
doubt I would have had many takers. So I believe that's the case for
most or all of their offering. It would be kind of undergraduate or lower
kind of level such that it's open to the widest possible number of potential students.
So I talked this course it covers what I like to call small data.
Everyone talks about big data these days, big data. This big data
that I don't specialize in big data. I specialize in small data. And
what I mean by that is what do you do when you have information that
is of a sample size that is too large to ignore, but too small
to completely rely on. And this is something that is taught I think fairly
well in the actuarial education system, but not all that well anywhere else.
So what I try to do is take what I've learned both in my formal
education and in my years of practice and distill it to something that is useful
for practitioners in the sports betting space. And there's a big difference between teaching
in an academic setting and teaching in a practitioner set. So I'm not giving
any proofs of theorems. I'm not using any Greek letters, I'm not using
any calculus. There's a lot of things that are kind of gate keep in
the academic world that don't really resonate a lot with me as someone who's trying
to actually use this stuff in the real world. So it was really focused
on a real world, practical kind of of contacts. We had fifty one
students, which is actually quite a few more than I had been expecting.
I would have been happy with twin ended up with fifty one. The majority
of the feedback I got what was good actually had a couple of success stories
come out of that class. So you had Amber, my friend Amber on
about a month or two. She is a graduamble class Amber Gamble. She's
great, and she came into the class with not too much of a mathematical
or a sports betting background, and she has really made a name for herself
in the community and also a niche for herself in the betting space. So
that's one. Another one of my former students actually got a job working with
Rufus Peabody, who I think you've had on here, Fumes, who was
one of the sports betters out there. So yeah, I think so most
of the people got what they wanted to or more out of the class in
terms of what comes next. So the recordings of the lectures are have been
and are still available for kind of purchase, and taking the course sort of
offline at your own pace is something that is right now at Analytics. I
would love to do a second round of live classes if and when we get
the sort of critical mass of interest that is needed to do it. I
think Harry and his team have also had some discussions offering the coast in an
institutional corporate setting, you know, whether you have a sports book that has
maybe twenty employees who want to all take the class or something like that.
I think that we're investigating as well. So lots of lots of different things
that we might do with that in the future without getting too far into the
weeds. Can you give an example of the kind of small data you're talking
about where Yeah, definitely. One of the earliest problems that we look at
over the course of the class is NBA halftime totals. So let's say you
have an NBA game. Pregame total is two forty, So the first half
is now finished, and there have been one hundred points scored in the first
half. Where do you put the second half total? And the two sort
of extreme ends of the schools of thought are. Number one would be,
Okay, what I learned in the first half is completely reliable. There were
one hundred points score to the first half. I'm going to extrapolate that,
and two hundred would be my fair, you know, live total at halftime.
The other extreme end of the spectrum is to say, okay, well,
the hundred points that we observed in the first half has zero predictive value
at all. I'm going to revert to what's called my prior of two hundred
and forty points per game or one hundred and twenty point per half. I
know there's a little bit of a scoring difference between the first and second half,
but let's ignore that for the sake of example. I'm going to take
one hundred and twenty I expect in the second half plus one hundred I already
observed in the first half, and two twenty would be my fair live total.
And really the world of small data lives in between that two hundred and
that two twenty, And it really depends how much weight you want to give
to your observation what you saw in the first half, versus how much weight
you want to give to your prior. And one of the questions that is
important there is, okay, well you thought the pregame total was two forty.
How sure were you of that? Were you absolutely certain two forty was
the right number, or was two forty the center of a range that might
have gone from you know, one eighty up to three hundred any estimate we
make. And this is a cool thing about sports betting. Compared to roulette
or blackjack or craps, all of the probabilities in sports betting have to be
estimated from data from markets, from whatever, whereas in most games in the
casino, the probabilities are a natural consequence of the laws of physics. So
there's an extra layer of uncertainty whenever you are dealing with probabilities in a sports
betting contest. And that is what this chorus is all about, because you're
estimating probabilities based on information. Information is always changing, You're always getting new
information, and you have to decide, well, how much should I trust
my new information? How much should I trust my number before I got that
new information? What is signal? What is noise? And all these cool
things that form the basis of the class what used to be called Bayesian sports
betting and is now known as the art of sports betting, And that's Harry's
name. Yeah, I don't mind it, because there there there is some
art and there is some science really to this, more so than most kind
of probabilistic analysis that you might see in advantage betting. You know there there
there is an art layer in terms of how you set your model up,
how you make your assumptions, because no model is perfect. Um you have
to come up with the data, the way you're going to use the data,
the assumptions you're going to make in a way that gives you the most
accurate possible outcomes with the minimal level of processing work. And that's the challenge,
all right. Last year in April, there was an event in Vegas
called bet Bash two. Uh you were there? How did that go for
you? I was there, Um, my expectations going in. I didn't
really know what to expect. You know. I had been too um in
real life gambling meet outs before, back when I played poker many many years
ago. I had been to academic conferences before. I didn't know if this
was going to be more like one, more like the other, combination of
both. You know. It was really, um, the first of its
kind other than that one day kind of bet Bash one that I wasn't able
to attend because it was my son's birthday that day. Um. But yeah,
bet Bash two was time of my life. I just loved every minute
of it. I had a hoarse voice by the end of it, as
I think from talking so much, from hearing so many interesting stories, um,
from from meeting Richard. Uh. I got there. That I got
there. I think it was one of the first events and I like,
here, there's Richard, Richard Munchkin. Excuse me. Uh, you know,
I'm going to go introduce myself and and you know, he was just
the nicest guy, and we started talking and we became friends. And you
know, some of these people who I had only interacted with on Twitter and
on a couple of podcasts, just meeting these people in real life was really
it was like advantage betting fantasy camp and then getting to meet Jelco, who
is arguably the greatest of all time in terms of advantage players. I was
at I think the opening event talking to Rufus, and Rufus said, Hey,
Gelco's here, how would you like to meet him? And I said,
of course, I'd like to meet him. So Rufus introduces me,
and he was just the humble, kind, nicest guy, like for somebody
who has had the success and the wealth that he has, like you would
never be able to tell just from talking to the guy. He was like
the epitome of down to earth. And talk to him a couple of times
during the course of the event, which was worth the price of admission on
its own, And you know, he and I still text each other occasionally.
He texts me out of nowhere to wish me a happy New Year and
like, who am I? I'm nobody And he's the greatest there ever was
and just to be UM in that situation and get to meet someone like that,
you know, as well as the other amazing people such as yourself Richard
who who were there. Uh. It is something that I would call it
a once in a lifetime opportunity. But it's just been announced as bet Bash
three coming up this August, and I'm planning on being there. I hope,
I hope you Richard and you Bob are are going to get to Uh.
It is going to be able to It's it's were they are. They
talking about having it in a couple of different places. I think Costa Rica
was was one of the that would be interesting. There's there's there's so many
uh, there's so many offshore sites that are that are based there, so
it would make some sense. He's just for US North Americans to get to.
UM. Yeah, I think Chicago might have been mentioned. New York
would have them, and I think at the end of the day, Vegas
is just the easiest to get to. Hotel prices of reasonable. The Circa
was a fantastic coast last year, and I believe they're opening or have opened
some new conference space in the Circa. Whereas we had to have most of
the conference activities down the street. It's d U last year, so I
think, well they do. They had a theater that they debuted for the
Super Bowl and they had the super Bowl party and it was, um,
it would be a suitable a similar size to the d ballroom that they use
last year for Beet Besh too and okay, yeah, so I believe that
is where it is going to be. Um. I hope they have seminars
again. And this is another thing that was just a bucket list opportunity for
me to be able to not only attend but present as part of the Analytics
Dott seminar where you have just some of the greatest minds in gambling just kind
of sitting there and listening to me give a presentation. It's just something.
It's one of those things in life where you're like, all right, you
know, I can hang with these guys kind of I'm I'm in the big
leagues now, and it was it was special for me to do well.
I I really enjoyed the panel discussions too. Um you know, I mean,
I'm not even a sports better, but um, I just found them
really interesting and um and entertaining, and I yeah, I thoroughly enjoyed um
that bash. I had a great time. I didn't know what to expect.
Um. You know, basically I was like, all right, well
I'm gonna go and basically troll for guests for the show. But but as
I say, yeah, yeah, but yeah, I had a I had
a great time. It was it was a lot of fun. And uh,
I fits in August at Circa. I will be there. It is
great. It is, I believe August eighth through the eleventh at the Circle.
You can go to betbash dot CEO, I believe is the website.
I'm sure Spanky would come on here and uh and talk to you all about
it. Actually he's planning to Um, there's a we're just waiting for a
certain announcement about some stuff and then when it's already then he's going to come
on and all right I can't wait on Yeah, all right. I think
also the timing of it has to do with um, you know, the
whole football you know, tournaments there at Circa m you know, getting people
there prior to the whole football season starting. And yeah, that would make
sense because that would be primetime to sign up for the Circa Survivor of the
circa millions the other contests that are yeah going on around town. So yeah,
that would make sense because I'm sure a lot of these contest entrants from
out of town would plan to travel to Vegas anyway at some point during the
few weeks leading up to the season so they can register for these contests.
Do you play any of those contests? I didn't last year. I did
a couple of years ago. Maybe I will again next year. The one
thing that that sort of turned me off these contests when I played the I
believe it was the Super Contest. I think it was about three years ago
I played. I had a group of people who were friends of mine here
in Toronto and we had a joint entry. We cashed for a pretty small
amount, I think a couple of thousand bucks and they actually withheld I think
it was thirty or thirty five percent tax. And you know, I know
that's that's normal for you Americans, but in Canada, gambling winnings are not
taxable, and I believe it's that way in most of the world. Think
the Americans are the are the outliers on this. So um, whenever you
enter one of these tournaments based in the US, anything you win gets taxed
and you can get it back, but it's a real hassle, a lot
of paperwork. You have to fill in some irs paperwork to reclaim the money,
and that that whole experience kind of turned me off the contest circuit,
just because once you factor in at tax consequences, um, you know,
the EV becomes way lower. It's a lot of work. You have to
keep track if you're if you're doing Survivor, you have to play in your
whole strategy and then adjust that things happen during the season. If you're playing
the pick Um contest, whether it's a Circle Millions or the Westgate Super Contest,
you've got to figure out your whole kind of algorithm for how much you're
going to wait that the steam plays, and how much you're going to you
know, fade the public or fade the Sunday Night game because everyone likes to
play that and it's just not something that I had enough enough free time to
think about last year, but lots of time this year to try and change
my mind on that one. All Right, we have lots more questions for
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we're talking with Matt at plus CEV Analytics. Now. When you were
last on our show, we learned that you have a full time job and
are part time sports Better. Richard asked you if you ever wanted to become
a full time sports better and you said, basically, you're better off with
a full time job. Now. Has that changed in the last two years
or do you see it changing soon? That has not changed in the last
two years. I don't anticipate it changing anytime soon, And really the reasons
haven't changed either. I have a great job at a great company that I
enjoy. I enjoy the work, I enjoy the people, the money is
decent, and I'm really trying to have it all because, yes, I
have been fairly successful in sports betting. Twenty twenty two was my best year
ever, mostly because my home jurisdiction of Ontario finally opened up legalized in twenty
twenty two. But it's just not something I could see myself doing full time,
even if I could make a living income this year and next year and
maybe the year after. I've got a good twenty plus years of working career
left, and I am not confident enough that I can predict what the state
of sports betting is going to you like as we get towards the tail end
of my working years, to be able to be confident that this can put
food on the table for the rest of my life. So that's the main
reason why I'm continuing in my dual role as a full time actuary and a
gambler in my spare time as a hobby. You were before we started off
the air, you were kind of pessimistic about the future of sports betting.
Why was that? I am, and I think i'm I'm the minority in
what I'm about to say. But let me offer you an analogy. So
say you have an intersection of two really busy roads, four lane roads north
south east west busy intersection, Okay, and suppose at all four corners of
this intersection and our gas station, you have four different gas stations. They're
each setting their own price, and they each offer four different types of gas
your economy, your mid grade, your premium, and your diesel. Okay,
they're each setting their own price, and just by coincidence, each one
happens to be a couple cents cheaper than the others on one of a different
one of the four types of gas. So you have four gas stations,
each one is a little bit cheaper on their own type. But unless you
are the shrewdest of penny pinchers, most people are not going to make a
difficult left turn across four lanes of traffic to save a couple of pennies a
gallon on gas. They're just going to go to the station that is kind
of directly in their path or convenient. So what each of these stations is
going to see when they rack up their sales at the end of the month,
is the guy who was a couple of sents cheaper on diesel is probably
going to sell a little bit more diesel than the other stations, but not
too much more. They're going to have a pretty even mix, just because
people are going to go for whatever is convenient. Now, suppose the city
comes in and the city builds a network in this intersection of tunnels and ramps
that makes it easier for anybody traveling on any road in any direction to reach
any of those four gas stations. So you're no longer making a tough left
across four lanes. There is a tunnel that will get you right to wherever
you want to go. So what's going to happen now? Now the costs
of shopping has come way way down, and on what you would find now
is the guy who is a couple of cents cheaper on diesel, is going
to sell almost exclusively diesel because the guy who wants premium is going to go
to the station. That's a couple a sense cheaper on premium because it costs
almost nothing and the inconvenience is much much less of shopping around. These tunnels
and ramps are your don best, your unabated, your bet stamp, your
spank odds. They're different products. They're aimed at slightly different audiences, I
would say, but they do essentially the same thing, which is they will
tell you for any given game, for any given bet, they will put
all the different books odds in front of you at the same time on one
screen. Whereas before, if you wanted to shop for the best lines,
you would have to open up twenty different windows, log into twenty different books.
And you know, there were some really shrewd penny pinters who I'm sure
did that, but the majority did not. This makes it much much easier.
So what you're going to get going back to the gas station and own
the diesel guy is going to sell almost exclusively diesel, which is not that
much of a problem for him, because yeah, maybe he has misinterpreted or
not evaluated the competition all that well, but he's not an idiot. He's
not going to price his diesel at less than what it costs him from this
wholesale or to acquire it. So he's not going to lose money even if
he's priced a little bit cheaper than the competition. Now, imagine for a
second that the guy buying his dealer from the wholesaler didn't know in advance what
his wholesale price was going. He found out at the end of the month.
Okay, here's what you owe me for all the diesel you bought from
me in the last month. What he would have to do is he would
have to guess what his wholesale price and then mark it up. And with
that, now you introduce the possibility that the diesel guy is going to be
cheapest on diesel because he misestimated his costs. And that is more similar to
what you see in the insurance industry, and it is more similar to what
the betting industry, in my opinion, could become if these odd screens become
adopted in more of a widespread way. If you look at the travel industry,
it's almost second nature these days. If you want to book a flight
somewhere. You go to an Expedia or a travelossit or one of these aggregators,
and you type in where you want and it will search all the airlines
and find you the best deals. It wasn't always this way. It's second
nature now, and I think that is what could potentially happen with these odd
screens if they become the Expedia of sports betting and it just becomes second nature
for a large share of the betting population to use these odd screens. What
you're going to happen is what's going to happen is that books are going to
disproportionately write action where they are the best price in the market, and so
that's going to push the holes way down. It may not necessarily push them
to negative or to zero, but you don't have to. You know,
you look at these companies that are that are coming out with financial results these
days. They're holding seven to eight percent and they're still losing money because their
expense load is so high between systems and marketing and banking expenses. Like so,
so what does the fear that some of them go out of business?
Or I mean, yeah, so what could happen? So what could happen
is the gas stations could start to collude and they could start to all charge
the same price and all move at the same time in the same way.
That's one thing that could happen is that every book would find a way to
move pretty much in lockstep to avoid this adverse selection problem. Another thing that
could happen is the industry could consolidate. Where of the thirty books in the
industry, you know, you may have two or three left by the time
some of them either go out of business or get merged or bought by some
of the larger players. That's one possibility, and another possibility, really is
the whole industry could just implode. If yeah, you say, you say
no, but I think right now we're very early in this odd screen adoption.
You you have some very very good products out there from betsdamp, from
spank odds, from unabated, but they have not yet caught on in a
way that it's really disrupting the industry all that much. We've gone from making
up numbers here, but let's say used to be one percent, now two
percent will will actively shot for lines. What happens if that number ever becomes
fifty percent or seventy percent. I think the industry will look a lot different
from what it looks like today. Adverse selection. And I've lived through this,
um as someone who works in the insurance industry, where the economics are
fairly similar. Adverse selection is no joke. And UM, the the lower
you make those barriers to shopping, the easier you make it for customers,
uh to to to find the best lines. Uh. And I'm not saying
this is one hundred percent definitive, definitively what could happen, but I think
it's a very real possibility that these holds that sports books are carrying are going
to start to inch lower or and lower as line shopping starts to take more
effect. And so the one thing that could happen, books could double down
on their marketing to say, hey, you know, don't shop for the
best lines, come to come to my book because my book has the best
service and the best promotions and you know, the easiest user experience and blah
blah blah, to to to discourage that behavior. And they might try that.
It might work, it might not. UM, but I think that
that people who assume that the sports betting industry in ten years will look like
it looks now. I think there's a very real possibility that it will not.
I think it could change. I mean, I have a couple of
thoughts. One, I think people are basically lazy, and I can't you
know, I've heard several people say things like, oh, you know it's
it's it's plus one forty somewhere else, but it's only plus one twenty at
this place. But that's where I have my money on deposits. So I'm
just gonna bet it anyway, you know, because they don't have money in
all the different accounts. Yeah, and the customer service thing I can get.
I remember when I first moved to Vegas, I was playing backham And
with a guy and he told me he was a bookie, and I was
like, how can you be a bookie in Vegas? Like anybody can just
walk into a sports book and make the bets, and he goes, yeah,
but they can't call the sports book and Sunday morning in their underwear and
make the bets. And I was like, oh, yeah, I guess
that makes sense. So if you're providing service that the other books don't,
maybe you get more of a market here. But you know, when you're
dealing with a vice like gambling. I just can't see it imploding, although
I can see it if if people become educated about it, I can see
it shifting to a you know, rather than a bookmaker model, shifting to
a you know, like a betfair or or a paramutual model. Or a
paramutual model, yeah, which is something that I've thought about a lot over
the years. And the good thing about a paramutual model is that it's got
this built in immunity to adverse select because all the players are playing against each
other and the house just takes a rake. So if you think about what
happened back in the poker boom, it started out where all most of the
players were fairly inexperienced, uneducated, didn't know what they were doing. They
wanted to play the game they were seeing on TV, and they just were
not very good at it. And the people who were really good at poker
made a lot of money. And then eventually the average of the player pool
got sharper and sharper and sharper, partially because the worst players ran out of
money and quit, and partially because some of the bad players got themselves educated,
read books and became better at the game. So the average skill level
of the pool for those two reads is improving and improving and improving over time.
The poker sites didn't really care because they got their rake either way,
but the players then had to sort of rise to the level of the competition
to continue playing poker as a sustainable source of income. And that's about when
I stopped, because I was good, but I wasn't good enough to continue
winning. Once, you know, the Americans all got banned and the player
pool just sharpened up quite a bit. And that's sort of when I pivoted
to just the sports betting. And so I agree with you, Richard,
because when you say this is a vice and the industry is not going to
go away, I think you're absolutely right. The biggest difference between other gambling
games and sports betting is when you run a casino, the odds are in
your favor. The odds are always going to be you know, the odds
of the rules of craps are are known, they are well defined, you
know, unless you start, you know, doing some some funny things,
but in the in the majority of cases, you kind of know what you're
getting into. When you run a craps game, or a blackjack game,
or a roulette game. When you are running a sports book, the economics
of that are so so different. There is no way to guarantee that you
have the odds in your favor like you can when you're running a roulette table,
because you have to offer every side of every market, of every game
of every day. And meanwhile, you have a community, a world of
betters who are just waiting for you to make a mistake or to be five
minutes slow on a line move because you know, Lebron James just announced he's
out with an injury. The information is always emerging from the universe, and
it is impossible to be on top of all of it to the millisecond.
So you, as a sportsbook operator, are not able to run your business
with the certainty that you have an edge that you would have when you're running
a casino. And that I think is something that is not paid enough attention
to by the industry because they're all doing right now. Because again I'm going
to make this number up, two percent of the population is line shopping.
What's going to happen when that number gets larger. If that number gets larger,
I don't know if it will, but I do know that if it
does, and there are at least three or four companies out there who are
trying to make it happen because they have really good products and they just have
to market them. You know, the guy who was taking plus one twenty
because he's too lazy to take plus one forty. One day, he might
have an epiphany. One day, he might realize, and it may be
as simple as just the odd screen speaking to him or her in a way
that resonates with him or her. Hey, you know, you you lost
a thousand dollars betting last month. Based on your results, you could have
won two thousand if you had made the exact same bets you made but been
more choosy about where you made them. Well, that resonates with me as
an amateur. Better you know, who would like to win instead of loose,
or who wouldn't like to lose less instead of lose more. I think
the hook is sort of yet to be discovered in terms of what is that
one turning point that really pushes up the adoption of these odd screens. But
I think it's going to happen at some point sooner or later. There are
just too many good products out there, too many smart people behind them,
and the population of sports betters. They're not getting dumber over time, They're
getting smarter over to. You still have a bunch of squares. You're always
going to have a bunch of squares. But I can foresee a period of
time in the future. Just like poker. People are still playing poker today,
but there are not as many people playing poker as prominently as there were
in When was the height of the poker boom? I'm too old, two
thousand and three. It started in two and start three was Chris Moneymaker,
right, And for five or so years poker was everywhere, and I think
right now sports betting is everywhere. Like even in my home country of Canada,
there is a Saturday night hockey game every every week. It's called Hockey
Night in Canada, and it is a national institution in kind of a similar
way that Monday Night Football is in America, and the first intermission of Hockey
Night in Canada is one of the biggest prestige TV spots in Canadian sports media.
I don't know if you know a guy named Don Cherry. He was
a big Canadian kind of loudmouth pundit and he used to have that first intermission
slot until he got fired for making some racist comments a couple of years ago.
But for anyway, this is the prestige TV spot for Canadian sports media.
And last year my friend Annie Andy McNeil is digital gambler on Twitter and
they actually they put him on Hockey Night in Canada in that first intermission spot
talking about the betting lines. And this was just like a crazy amount of
emphasis and prestige to put on this, and it made sense because ever since
April, at least in Ontario, ever since April of twenty twenty two,
sports betting has been everywhere. But I can foresee a point in time where
that may no longer be the case. People are going to bet sports forever,
but there might be a time where the sort of sexiness level of sports
betting drops, like the sexiness level of poker has dropped in the last decade
or so. And when that happens again, that will be a catalyst for
some of the less sharp betters to drop out of the market. The sharp
betters are not going anywhere because the source of income for them, But again,
what happens when the average level of the population increases in poker, it
just made it harder for all the players in sports betting. That pain is
going to go to the operators unless there are some big changes made it.
I just want to make mention one thing before we get to recommendations. They
did try paramutual sports betting in Las Vegas. I think it was in the
eighties and it is legal here, but they tried it and they just couldn't
get it to catch on. They just couldn't get people to bet into it.
It would have to be marketed in a very specific way to sort of
highlight the differences between traditional sports betting and this paramutualism. The biggest downside would
be that you, as a better wouldn't know the odds you're getting until after
the game has started, sort of like it is in horse racing today.
And I think that would be a challenge to educate betters on kind of why
that's not the end of the world. If you bet some thing at plus
one sixty and it's plus one forty by the time tip off happens, that
would be a challenge. I don't think it is insurmountable, and I think
it may have just been ahead of its time a little bit, as much
as you can say about something it's been around for one hundred and fifty years.
I think it's time will come. Twenty twenty three may not be the
right time, but I think that if and when all of these challenges to
the that I'm talking about ever come to pass, I think that would be
one of possible directions the industry could go to get away from this what what
I think is an existential threat of adverse selection. We're not there yet.
One day we might be. If our listeners wanted to get a hold of
you, what would be the best way to do that? Best way it
would be on Twitter at plus ev analytics all one word, plus ev analytics.
As you all know by now, at the end of the show,
we have a recommended section, and Bob's Internet has cut out, so I'm
going to go right into my recommended I'm watching a really, really great show
right now. I a few weeks back or months ago, I recommended a
show, an Israeli show called Hit and Run, and somebody wrote to me
and said, you know, the same actor is in this show called Fouda
fau Da. It's an Israeli show about a special operations group and same actor
that's in Hit and Run. It is. They have four seasons. It
is really really well done, very suspenseful, really really good show. And
how about you, Matt, you have something to recommend for us this week?
I do, and I apologize for committing a little bit of padult,
although Richard's actually in this one, so maybe it's only a half pudultery.
But Risk of Ruin is a fantastic podcast and they do episodes not only on
betting but the stock market. They've done a couple and anything involving risk And
there was an episode last week actually about dice control in craps, which is
a subject that I now know a lot more about than I ever thought I
would. It's a fascinating story, a lot of really kind of mechanical engineering
type stuff. The guys actually built a robot, dice throwing robot see if
they could reproduce the perfect role. And like I said, Richard is in
it, as well as a couple of other people who are involved in that
story. And I highly recommend all of his podcasts at Risk of Ruin,
but especially the most recent believe it's called rabbit Hole and it's about advantage play
in craps. Yeah, it's an excellent, excellent episode, really good.
Okay, well that's it for our show this week. Go out and hit
lots of royal flushes. Everybody. Good day,