Is There a Defense for the Sports Books?
In my most recent book Review, I had the absolute pleasure of breaking down the memoir, 'The Smart Money,' by accomplished author Michael Konik. In brief, the memoir details his time working for a well-known betting syndicate knows as, 'The Brain Trust,' with a special focus on the relationship between the Book and the Sharpies.
Throughout the course of that book, the Sports Books, and various individual people associated therewith, were characterized as such things as 'P***ies.'. The author made a fairly serious effort to portray the Vegas Books in a negative and hypocritical light, but I'm not entirely convinced that he is correct.
Anticipating the counter arguments that many individuals are sure to make, I'd first like to start with a position that should be mutually agreeable: The Sports Books and the Sharpies both do what they do in order to make money. I sincerely hope that nobody has an issue with that statement!
The money is made in different ways, of course. What the Books hope to accomplish is to release a, 'Perfect,' initial Line (or Totals) that will generate balanced action on both, 'Sides,' with both sides of the action laying 11 to win 10, or some multiples thereof. When this happens, one side wins and the other side loses, the losers essentially, 'Pay,' ten units to the winning side and one unit to the Books for the privilege of making a losing bet.
This system often breaks down on the side of the Books because the Lines are not going to be perfect every time. Additionally, there will occasionally be a fundamentally good Opening Line that needs to be moved because heavy betting comes in on one side of the Line. It is important to note that such betting does not make the Line wrong by default, it simply means that Bettors (for one reason or another) think they have the best of the Line. In these cases, the Line might move because the Books, to varying degrees, might not have an interest in gambling too much that their Lines were solid. Generally, individual people make individual Bets, but the Books are covering everything, so they may not want to hold the line in place and effectively bet against where the action is going. In some cases, and again to varying degrees, they will bet against the action: In reality, though, if they could just generate equal action in both sides of the opening line, they would be more than happy just to collect the juice. The juice is a guarantee (barring a push) if the action is balanced.
Sharp Bettors simply want to beat that Juice, and in order to do that, they have to find, "Soft Lines," upon which to bet. There are arguments to be made that their goal is simply to, 'Beat the Book,' but I believe that portrays the Sharpies in an unduly favorable light: The goal of the Sharpies is to make money, and the casino has to take action to give action, so for the most part, the Sharpies are primarily beating weaker Bettors.
It is also interesting to note that sometimes the Sharpies and the Books are on the, 'Same side' as relates to the desired result of a contest. If the Books take too much action on one side of a Line, then they are inclined to move that Line the other way which then might make the Sharpies inclined to bet the new Line. The casino simply wants to reduce its exposure (while praying it doesn't effectively get middled) and the Sharpies want to bet what they perceive to be a good Line.
The Sharpies would like to bet as much as they possibly can (Kelly Criterion or Half Kelly notwithstanding) on the new lines. However, there will be occasions that the Sharpies want to, "Get down," on a Line that may already have fairly balanced action. Casinos are often considerably less interested in that arrangement.
The accusations of hypocrisy abound when casinos are chastised for taking money from the losers while being afraid to bet against Smart Money. It can be argued, however, that the casino never really wanted to gamble to begin with, what they would rather do is sit back and collect the Juice on a balanced Line.
In the situations where the Line is already largely balanced, a substantial amount bet by known sharp Bettors puts the casino in an unfavorable position. The reason is because the Line is now imbalanced and the action causing the disparity is, "Smart Action," the losers will not lose enough to pay the winners, thus, any notion of, "Juice," is meaningless. The strong side of an out of balance game has a positive expectation. As such, the casino will be directly on the hook for the difference.
As sure as, 'Gut feeling,' Punters will inevitably go El Busto, the Books know that the smartest of the Smart Bettors will beat them in this situation more often than not. At that point, the casino is gambling and they do not have the best of it. Remember, in the case of the Books, they want to rake, not gamble. There's a reason the guy with the casino's logo emblazoned on his breast wearing a casino name tag is dealing Poker rather than playing it on the casino's behalf and with the casino's money: The casinos are perfectly happy to sit back and collect a rake, but they don't want to gamble!
One other very human aspect of this that should be remembered is that a Vegas Book will have a number of people responsible for the initial Lines as well as moving the Lines, if necessary. These individuals would quite likely prefer having a job to losing a job, so they have to pay attention to what the Sharpies are doing and might want to do. If the Book doesn't perform to expectations, then there might be a few heads on chopping blocks!
The relationship between Book and Sharpies goes well when the Sharpies want the same side the Books need action on, but not so well otherwise. On many occasions, the Limits of players may be dropped, and Bets may be outright refused. Is this a sign of hypocrisy on the part of the Books, or merely a solid way to do business?
There is no question that it is an unfortunate situation for the Books to have to reduce the betting limits of a given Sharpie, (or runner for a Sharpie) or alternatively, to refuse known Sharp action altogether. First of all, the casino does not want the reputation of being a House that's afraid to take Bets, most especially Bets that fall within their stated Maximums, if any. Secondly, there is something of a cost-benefit analysis that must be done for each individual situation because the Smart Money does, on occasion, work to reduce the casino's exposure by taking a certain amount of action on a side that has become disproportionately soft due to heavy betting going the other way.
Therefore, the two questions the House must ask are:
A.) Is this guy hurting us more than helping us?
B.) If so, is it worth possible damage to our reputation to take countermeasures?
As anyone would expect, these questions will often be answered on a case-by-case basis as well as revisited from time to time.
There are three fundamental components to a bet, not unlike a contract (which it is) and those are: Understanding, Consideration and Agreement.
The first part, Understanding, simply entails both parties knowing precisely what the matter in question is. For a Sports Book, the understanding might be that you are going to lay 110 to win 100 that the Carolina Panthers will win a given football game by more than three points, however, if they win by exactly three points, the result is a tie.
To compare that to a friendly Prop Bet that could theoretically be made, I might say, "If someone will bet $10 against my $1, I bet the next car coming down the road will blow this stop sign!"
The next aspect of a bet is Consideration, and for that to take place, it is assumed that both the party offering the bet and the party taking the bet already understand it. Consideration is simply the part where the non-moving party, as it were, says, "Yes, that's a great bet for me!" However, the non-moving party, after conducting due consideration, might decide to adjust the terms in one way or another.
Imagine that The Wizard has decided that he wants to Lay 10:1 against a car running that stop sign, but he believes that he has knowledge of the general likelihood of a car running the stop sign, or worse for me, knowledge based on a large sample size of cars at that particular stop sign! Given this knowledge, Wizard decides that he likes the Odds I am proposing, but he would rather Lay $10,000 to win $1,000.
At this point, I find myself incredibly concerned because the mere fact that Wizard does not like my side causes to me to question myself, and that's at the original bet amount! I am much less happy that The Wizard wants to bet MORE than I had originally proposed.
At this point, I must do something psychologically painful, but necessary; admit inferiority. I must say, "Wizard, I absolutely do not want action for the amount of money you propose, and furthermore, I want to take a second and reevaluate whether or not I want to take my originally proposed bet." In the case of only losing $1, I'd probably go ahead and tell Wizard I accept the terms of my original proposition to save face.
The question then becomes: Have the casinos already indicated Consideration AND Agreement merely by the act of proposing a bet? By posting a Line or Total? If pressed, I might suggest that they have, but only for the maximum bet amounts that would apply to anyone coming in off of the street. If a casino allows a big bettor to make bets at Maximums that might otherwise not be available, then I think those can inherently be assumed to be on a case-by-case basis.
Unlike me backing up my initial assertion with the offer to still bet $1 to win $10, despite the fact that I probably have the worst of it given The Wizard likes the other side, the Book has little to no interest in making a bet just to, "Save face." I cannot reiterate this enough: The casino would rather not be gambling!
According to the Las Vegas Sun:
The Nevada Sports Books only made 7.2 million dollars (7% hold) on all Super Bowl Bets made three years ago, in 2013. There are 191 Sports Books, (with various betting limits) so each book did a Mean average profit of $37,696.34. As should be clear, a significant sum bet on the, "Smart side," if there was a Smart side to bet, could easily wipe out a single Books profits on that entire game.
Finally, much like a casino taking countermeasures against a Blackjack card counter, the casinos are inherently within their rights to, "Back off," a Sports Bettor, which is to say to unilaterally cease accepting that player's action. If a Book determines to its satisfaction that a player is, 'Smart,' which is to say that the mere fact that the player is betting likely puts the casino at a disadvantage on that bet, then that player might be backed off.
The accusation goes that the casino, "Hates winners." In reality, the casino is probably entirely fine with winners provided it is the other players, not the casino, being beaten. For instance, the casino has virtually no interest in what player comes out ahead at the Poker Table, they're raking their cut of the action either way. They're not gambling, they don't want to. Indeed, when a casino needs action on the other side of a Line, they might knowingly let a Smart guy get more on that side, if he so desires.
While it is certainly not honorable, I don't know that the actions of Sports Books in Nevada's casinos rise to the level of hypocrisy, and let's be quite clear: They are not there to be honorable, they are there to make money.
Everyone involved in a Sports Betting transaction is involved because they think the proposition is beneficial to them: The Book wants its juice, the Sharpies think they have the best of it, and honestly, so do the Punters. Unlike Table Games or Machines, Sports Betting offers Punters the illusion of a realistic expectation of having the best of it, so all sides think there is money to be made.
Nobody is any more or less hypocritical than anyone else, but while the casinos may or may not choose to openly recognize that they are just doing what's best for business, the Sharpies need realize that they are winning money, by and large, from the losing Bettors. The losers pay the winners and the juice, after all. If there was no square money coming in, the Books would all close and there would be nowhere for the Smart Money to bet.