Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 4: Tracy, guess what what. I'm going to Vegas tomorrow.
Speaker 3: I know you are. I'm trying to I'm trying to
Speaker 3: restrain myself. The irony is that you left me high
Speaker 3: and dry in Vegas last time. But now for the
Speaker 3: next week, I'm going to hear how much you love Vegas.
Speaker 4: Come out. It's not too late to get a ticket.
Speaker 3: I would love to come out.
Speaker 4: You're welcome.
Speaker 3: But I'm doing the opposite of Vegas. I'm going to Vermont.
Speaker 4: Oh yeah, you're going antiquing.
Speaker 3: That's right.
Speaker 4: I'm not sure if I was supposed to say that.
Speaker 3: The pinnacle of middle age. Thank you, Joe.
Speaker 4: It's the well, it's both.
Speaker 2: It's it's two expressions of middle aged news, right, like
Speaker 2: I'm going out with or friends. We're I'm gonna go
Speaker 2: see a dead end Coo show at the Sphere.
Speaker 3: That's something other than middle aged.
Speaker 2: I think like post middle age. I'm going to take
Speaker 2: a road trip to the Hoover Dam. Maybe I'll get
Speaker 2: some good infrastructure photos. And you have some good gamble.
Speaker 2: I like to play poker, and you're gonna be in
Speaker 2: Vermont antiquing. But you know what's something I find really interesting, Tracy,
Speaker 2: and Vegas is booming despite the fact that for years
Speaker 2: Vegas had this monopoly on gambling, and you would think, Okay,
Speaker 2: now gambling is everywhere, it's on your phone, many more
Speaker 2: jurisdictions have opened up casinos, and yet that doesn't really
Speaker 2: seem to have slowed it down. Well.
Speaker 3: I will say the last time I was in Vegas,
Speaker 3: which was I guess October of last year, I did
Speaker 3: notice some differences. So I was wandering around the big casinos,
Speaker 3: as one does, and I was going past you know
Speaker 3: those big sports spading areas where they have like the
Speaker 3: armchairs and all recline in them and stare at this.
Speaker 4: Big theater of like fifty.
Speaker 3: Yeah exactly, and those looked pretty empty. So I kind
Speaker 3: of wonder if, like, okay, people still like gambling at
Speaker 3: table games or whatever, but maybe you're getting less interest
Speaker 3: in the sports aspect of it, because why go all
Speaker 3: the way to Vegas to watch a basketball game and
Speaker 3: bet on it if you can do it from your
Speaker 3: couch at home.
Speaker 4: No, that is a good question. It would be interesting.
Speaker 2: I mean, I feel like the last time I was
Speaker 2: in Vegas, I don't remember exactly when, Like I think
Speaker 2: there was like a big game going on, so like
Speaker 2: that environment of the casino can get like super raucous
Speaker 2: and exciting, but it still does raise questions.
Speaker 4: I mean about the rise of being able to.
Speaker 2: Bet literally on your phone everywhere and basically every state
Speaker 2: I think, or close to it.
Speaker 3: I have a random collection of thoughts on this topic,
Speaker 3: which is kind of ironic because I know absolutely nothing
Speaker 3: about sports better and now you're going to rattle off
Speaker 3: a p now I'm gonna rat it. Here. Here are
Speaker 3: all my thoughts on it. Well, one, I remember when
Speaker 3: I used to come to the US from other places,
Speaker 3: a big culture shock was when you would watch TV
Speaker 3: and there would be all those ads from metas and
Speaker 3: it would be like talk to your doctor and request
Speaker 3: the specific medicine, which doesn't happen as far as I know,
Speaker 3: in any other country in the world. Now, I think
Speaker 3: the big culture shock is all the gambling ads. Like
Speaker 3: you watch TV and there are all these ads going, oh,
Speaker 3: you know, we'll pay you an initial lump sum to
Speaker 3: get on our platform. And make a few bets and
Speaker 3: you're gonna win all this money and it's gonna be
Speaker 3: loads of fun. Blah blah blah blah blah. And then
Speaker 3: the other thing I was thinking is I feel like
Speaker 3: a lot of the gambling operators, and this isn't exclusive
Speaker 3: to the sports betters, but maybe to the casinos in
Speaker 3: Vegas as well, I think like, I feel like they're
Speaker 3: getting smarter with a lot of the way they're operating.
Speaker 3: So again, the last time I was in Vegas, I noticed,
Speaker 3: for instance, this isn't necessarily new, but it was kind
Speaker 3: of more extreme. The minimum bets on tables change a
Speaker 3: lot between the weekend and the weekdays, but I feel
Speaker 3: like they change even more than they used to, Like,
Speaker 3: I feel like the pricing is more dynamic. And Joe,
Speaker 3: I know you make fun of me, but it ruined.
Speaker 3: It ruined my cap system.
Speaker 2: Tracy claims to have had a crap system and my
Speaker 2: response says, no, she didn't.
Speaker 4: And if you think you, I never said it was.
Speaker 3: A good system. I just said it was a system. Okay, okay,
Speaker 3: it was a way of betting. And I couldn't do
Speaker 3: it last time because.
Speaker 2: You know, it's getting more sophisticated about pricing strategies. But
Speaker 2: you're right, like sports media, as everyone knows these days,
Speaker 2: is just completely suffused with gambling and it sort of
Speaker 2: funds the whole thing. And gambling has become not just
Speaker 2: more prevalent and more exotic. And of course you can
Speaker 2: bet on the games, and you can always bet on
Speaker 2: the spread, but now you can bet on like who's
Speaker 2: going to be winning at the end of each quarter,
Speaker 2: or you could be betting on how many home runs
Speaker 2: a certain player will hit, or how many three pointers
Speaker 2: a certain hit like, and you know, it's basically just
Speaker 2: like what we've seen in the stock market. Used to
Speaker 2: just be able to buy stocks and now everyone's doing
Speaker 2: like zero day options and stuff and endless sort of
Speaker 2: like exotic number of bets have just become, you know,
Speaker 2: become part of how people talk about sports.
Speaker 3: Yeah, that was the other thing I was going to say.
Speaker 3: So a weird thing now is watching sports some of
Speaker 3: the commentators will like call out these specific plays and
Speaker 3: like mention the odds and the payouts and things, which
Speaker 3: is completely different to the way sports used to be.
Speaker 4: Totally I forget what it was.
Speaker 2: There was some screenshots someone took recently of like a
Speaker 2: baseball game, and you know, it used to be like
Speaker 2: you look at a batter and it was like the
Speaker 2: stats they would show would be like batting average, home
Speaker 2: runs and RBIs and that was kind of it, and
Speaker 2: maybe steals or something like that. And now like there's
Speaker 2: all these other stats that are not really even probably
Speaker 2: that interested interesting to normal fans unless you have a
Speaker 2: bet placed. And so there's been this proliferation. Of course,
Speaker 2: this a lot of like anxiety, tons of articles about
Speaker 2: young men getting addicted to gambling and what does it
Speaker 2: say about this generation and all kinds of stuff, and
Speaker 2: so there's a lot going on in sports better.
Speaker 3: Yeah, we need to dig into it. As I said,
Speaker 3: I know nothing about this particular area. I don't think
Speaker 3: I've ever placed a sports bet in my life. What
Speaker 3: horse racing? Yeah, but does that even I don't know if. Okay,
Speaker 3: but this is something that I feel like it's growing
Speaker 3: a lot.
Speaker 1: Ye.
Speaker 3: Clearly there's a lot of money involved here. So I'm
Speaker 3: very excited about digging into it.
Speaker 2: I'm very excited. Well, I pleased to say. We really
Speaker 2: do have the perfect guest today. We're going to be
Speaker 2: speaking with Isaac rose Berman. He is himself a professional
Speaker 2: sports better. He also writes about the industry on a website,
Speaker 2: how Gambling Works dot com. He also talks about the
Speaker 2: regulatory side and some of the tactics that businesses us to,
Speaker 2: as you say, hook people in for the first time
Speaker 2: and keep them betting, and I guess, from the perspective
Speaker 2: of the businesses, keep them losing money. So, Isaac, thank
Speaker 2: you so much for coming out nod Laws.
Speaker 5: Thank you so much for having me a big fan
Speaker 5: of the show. Happy to be here.
Speaker 4: Thank you so much.
Speaker 2: I introduced you as a professional sports better. Is that
Speaker 2: really true? You can be a professional sports better. I mean,
Speaker 2: I'm aware of it, but what actually do you do?
Speaker 5: That's a great question. So, unlike other casino games, it
Speaker 5: is possible to win on sports betting because the odds
Speaker 5: are dynamic and they're constantly changing. So when you know
Speaker 5: Tracy's going to play craps whenever she sits down at
Speaker 5: the table, that the odds are always stacked against her
Speaker 5: and they're never changing, she cactus in, Yeah, but when
Speaker 5: it comes to sports betting, things are constantly changing. So
Speaker 5: to give you a super simple example, you know, let's
Speaker 5: say the Lakers are playing and Lebron James gets announced injured.
Speaker 5: If you rush to your sports book and you place
Speaker 5: a bet on the opposing team before they've factored in
Speaker 5: the information that Lebron is injured, you're going to lock
Speaker 5: in a really good price before the odds update. And
Speaker 5: so when it comes to being a professional sports better,
Speaker 5: it's all about identifying value. And by value we mean
Speaker 5: bets which have a greater expected return than the amount staked.
Speaker 5: So if someone offers you, you know, bet ten dollars
Speaker 5: to win eleven dollars on a coin flip, and it's
Speaker 5: a fair coin flip, even if you place that and
Speaker 5: you guess the wrong side ten times in a row
Speaker 5: and you keep losing. In the long run, if you
Speaker 5: keep doing that, you're going to make money. And that's
Speaker 5: how professional sports betters make money, by constantly placing bets
Speaker 5: which have a positive expected return.
Speaker 3: So, just so we can better understand this dynamic, walk
Speaker 3: us through your sort of day to day as a
Speaker 3: professional sports gambler. What kind of opportunities are you trying
Speaker 3: to identify? And then how do you decide how much money,
Speaker 3: for instance, to apply to each individual bet.
Speaker 5: Yeah, that's a great question. So it really depends on
Speaker 5: you know, what sports are in season. So right now
Speaker 5: you know end of the NBA, but there's a lot
Speaker 5: of MLB things like tennis or year round, and so
Speaker 5: it does depend on the sports they're in general. Two
Speaker 5: ways of identifying profitable sports bets. The first is you
Speaker 5: can take sort of a market based approach. And by
Speaker 5: a market based approach, what we mean is there are
Speaker 5: tons of sportsbooks out there, and as Joe mentioned, they're
Speaker 5: all offering all of these different kind of bets, and
Speaker 5: you if you constantly scroll through all of the odds,
Speaker 5: you're going to find slight miss pricings. So let's say
Speaker 5: you know everybody has you know that Yankees is two
Speaker 5: to one underdogs, and one sportsbook has them as a
Speaker 5: three to one underdog. You know, you can identify that
Speaker 5: as off market and you can place that bet. So
Speaker 5: so one part is, I.
Speaker 3: See, so you're you're not saying that like the platforms
Speaker 3: have the odds wrong, You're trying to identify like outliers
Speaker 3: among the platforms.
Speaker 5: That's exactly right. Yeah, So that's that's probably the main
Speaker 5: way that the majority of professional or winning sports betters
Speaker 5: make moneies by identa defying markets. Which are simply mispriced.
Speaker 5: And for that you don't need any special sports knowledge.
Speaker 5: You just need to have a screen with all the
Speaker 5: odds and constantly be scrolling through them and looking for
Speaker 5: price changes and looking for, you know, books that are
Speaker 5: slow to update. The other way to do it, which
Speaker 5: is a lot harder and a lot rare, is to
Speaker 5: basically create your own numbers. So you say, Okay, you know,
Speaker 5: I know exactly how much each player is worth. I
Speaker 5: know what the weather is going to be today, I
Speaker 5: know these matchups, and so I'm going to generate kind
Speaker 5: of from scratch, from my own model the odds and
Speaker 5: then apply that to the market. And when it comes
Speaker 5: to major liquid markets like the NFL or the NBA
Speaker 5: or the MLB, that's really really hard to do, and
Speaker 5: there are very very few people who can do that,
Speaker 5: but those are the people who make the most money.
Speaker 4: To zoom out even further.
Speaker 2: So it's like there's some big gang crosstown rivalry Yankees
Speaker 2: versus Mets, there's some odds or something. Where does that
Speaker 2: price initially come from? Well, guess through how that line
Speaker 2: gets established.
Speaker 5: It's a great question. So when you log onto your
Speaker 5: DraftKings or FanDuel account, you're going to see all of
Speaker 5: these different bets, and you're going to see all these
Speaker 5: different prices, and those prices come from one or two places.
Speaker 5: The first type of bet you're going to see is
Speaker 5: the major market odds, like you mentioned. You know who's
Speaker 5: going to win, how much they're going to win by
Speaker 5: the total, and what those those odds come from a
Speaker 5: price discovery process. And what that means is that a
Speaker 5: market maker sports book, not Draft Kings or FanDuel, but
Speaker 5: places like Pinnacle, places like bet Chris. What they do is, well,
Speaker 5: before the game starts, they basically throw out a price
Speaker 5: and they don't really know if that price is good.
Speaker 5: And what they say is, you know, anybody can come
Speaker 5: bet here. You can only bet a very small amount,
Speaker 5: maybe fifty dollars, maybe one hundred dollars, and they keep
Speaker 5: taking bets on both sides. And what happens is all
Speaker 5: of the smart people they go there and they say,
Speaker 5: you know, we're going to bet on this side because
Speaker 5: it's good, and they keep adjusting their price based on
Speaker 5: the action. And then eventually, when sort of that betting
Speaker 5: flurry has has settled, then DraftKings comes in and says Okay,
Speaker 5: you know, now we know that this price is roughly accurate,
Speaker 5: we're going to take it. And then when it comes
Speaker 5: to all of the derivative bets like you mentioned before,
Speaker 5: stuff like how many home runs someone is going to hit,
Speaker 5: you know, whether or not this player is going to
Speaker 5: get seven threes. All that stuff is generated by third
Speaker 5: party content providers who take the input of the odds
Speaker 5: from those liquid markets and generate the odds for all
Speaker 5: these other things. So when you look at a sportsbook,
Speaker 5: you know either the odds are coming from a market
Speaker 5: maker or they're coming from a model based on that
Speaker 5: market maker price.
Speaker 3: Wait, can you talk a little bit more about those
Speaker 3: sort of like single plays or exotic bets or whatever
Speaker 3: you call them, because to me, it seems almost if
Speaker 3: you're watching a baseball game, to me, it seems almost
Speaker 3: random whether or not there's going to be a home
Speaker 3: run or two home runs or whatever. And I take
Speaker 3: the point that they're deriving those odds from maybe the
Speaker 3: more liquid markets, like which team is better overall or whatever,
Speaker 3: but it still seems kind of hard to price.
Speaker 5: No, it's really really hard, and that's why there's you know,
Speaker 5: in general, there are lots of different content providers. So
Speaker 5: the person who's deriving the prices for how many home
Speaker 5: runs there are in a game is not going to
Speaker 5: be the same person who's deriving, you know, how many
Speaker 5: three pointers there are in a game. So a sportsbook
Speaker 5: is going to work with a bunch of different content
Speaker 5: providers to get the odds for all these different markets
Speaker 5: and their jobs. That's all they're trying to do. And
Speaker 5: in general, the sports book knows that these lines aren't perfect,
Speaker 5: which is why. You know, if you want to walk
Speaker 5: into a sport, into a casino or go to a
Speaker 5: sportsbook and bet a million dollars on the Yankees, they're
Speaker 5: going to say, you know, oh sure, come on in.
Speaker 5: You know, he'll give you a free hotel room, we'll
Speaker 5: give you anything. But if you walk in you say
Speaker 5: I want to bet, you know, a million dollars on
Speaker 5: this player to get under one point five three pointers,
Speaker 5: obviously they're not going to accept that bet because they
Speaker 5: know there's inside information. And so that's why in general,
Speaker 5: in these markets there are both lower limits and there's
Speaker 5: higher scrutiny on the sportsbook side, and they also add
Speaker 5: a higher house edge, so you have to win by
Speaker 5: a much higher margin compared to betting on just who's
Speaker 5: going to win or how much they're going to win by.
Speaker 3: That was exactly what I was going to ask. So
Speaker 3: presumably they sort of like pad their own edge in
Speaker 3: order to offset the uncertainty.
Speaker 5: That's exactly the right. So if you're if you're throwing
Speaker 5: darts at a sportsbook and you know you're picking winners
Speaker 5: and losers randomly, you're going to lose four to five percent.
Speaker 5: But if you're throwing darts at you know, this player
Speaker 5: to get X number of home runs, you're going to
Speaker 5: lose ten percent, twenty percent. When we talk about things
Speaker 5: like same game parlays, these bets where you're combining this
Speaker 5: team to win, this guy to get a home run
Speaker 5: in this picture, to get a lot of strikeouts, unless
Speaker 5: you're doing it in a way that really beats the market,
Speaker 5: you're going to be losing thirty to forty percent, really
Speaker 5: really high margins in a way that's really that's very
Speaker 5: new and not seen until quite recently.
Speaker 2: And of course those are the bets that they really
Speaker 2: are like pushing more, and that's why we're flooded with
Speaker 2: all these exotic statistics to encourage this kind of action.
Speaker 2: I have to imagine that with these exotic bets, whether
Speaker 2: it's like, again, how many home runs someone's going to
Speaker 2: win in or you mentioned tennis, how many sets it'll
Speaker 2: take for one player to beat another, that while the
Speaker 2: house does have a structurally higher edge for reasons that
Speaker 2: you've described, I assume these are the markets also which
Speaker 2: because they're less efficiently prized, because the fans just don't
Speaker 2: set the line that one can find actual I don't know,
Speaker 2: maybe alpha is the word, but true mispriced bets.
Speaker 4: Is that correct?
Speaker 5: That's exactly right. So I think, you know, people think
Speaker 5: that the hard part is finding profitable bets or even
Speaker 5: you know, pure arbitrages, but it's really not the case,
Speaker 5: especially when you look at the total number of bets
Speaker 5: these companies are putting out. It's just impossible to price
Speaker 5: everything perfectly all of the time. The issue is, you know,
Speaker 5: once again, if you go into a sports book and
Speaker 5: you say, I want to bet a million dollars on
Speaker 5: this one person to get X number of strikeouts, they're gonna,
Speaker 5: you know, raise their eyebrows at you. And if there's
Speaker 5: a systemic error, they might fix it, or if you're
Speaker 5: you keep winning, they're gonna shut you down. And so
Speaker 5: the problem from a professional standpoint is not just identifying
Speaker 5: those mispricings, but actually being able to bet enough money
Speaker 5: and not get kicked out to make it work.
Speaker 4: Well out, Tracy.
Speaker 2: I had a friend years ago who is a semi
Speaker 2: professional blackjack player. Most of the work that he did
Speaker 2: was not really and the strategy, but just like, how
Speaker 2: can he maximize his time at the table without the
Speaker 2: odds of getting kicked out of the casino?
Speaker 3: I never okay, hot take, I never understood why counting
Speaker 3: cards is like not allowed at casinos. Isn't that just
Speaker 3: playing the game? Well, I don't get it.
Speaker 5: I agree with that, but the answer is that the
Speaker 5: casinos make the rules and they.
Speaker 4: Don't want to lose money. Yeah, okay, well seems like nonsense.
Speaker 3: Yeah, so you mentioned this idea that and Joe kind
Speaker 3: of riffed on it. Just then, this idea that a
Speaker 3: lot of the expertise of being a professional better is
Speaker 3: just figuring out how you can stay at the table
Speaker 3: for as long as possible or stay on the app
Speaker 3: for as long as possible. How do the platforms I
Speaker 3: know how the casinos do it, but how do the
Speaker 3: platforms like identify you and then say, actually, we don't
Speaker 3: want you to bet anymore or in this particular size.
Speaker 5: It's a great question. So we kind of call it
Speaker 5: the science versus the art of sports betting. So the
Speaker 5: science of sports betting is figuring out what bets you
Speaker 5: want to place. The art of sports betting is figuring
Speaker 5: out how to place your bets in a way that
Speaker 5: you don't actually kicked out. And so the problem is
Speaker 5: that the way that sports books identify who's good is
Speaker 5: the same way that professional betters place good bets, and
Speaker 5: it's through something called CLV or closing line value. And
Speaker 5: the idea there is that markets, in general, they get
Speaker 5: more efficient, and so by the time a game has started,
Speaker 5: the market is considered to be very efficient. And so
Speaker 5: what I mean by that is, let's say you place
Speaker 5: a bet on the Celtics, and when you place a bet,
Speaker 5: they're big underdog, so you risk one dollar to win
Speaker 5: five dollars. By the time the game starts, it's now
Speaker 5: fifty to fifty, so it's one dollar to win one
Speaker 5: dollar no matter what happens in that game. Even if
Speaker 5: the Celtics lose, you placed a good bet. The odds
Speaker 5: moved in your favor, and so from a professional standpoint,
Speaker 5: that's how you know you placed a good bet. But
Speaker 5: of course from the sportsbook side, they can also track
Speaker 5: that on there end and say, Okay, this guy is
Speaker 5: constantly getting the better of us. It doesn't matter if
Speaker 5: he lost this specific bet, we're still going to kick
Speaker 5: him out. And that's why, you know, I know many
Speaker 5: people who have lost many thousands of dollars in sports
Speaker 5: betting apps and they've still been limited or kicked out
Speaker 5: of sports books because it's not that hard to tell
Speaker 5: when someone is placing really good bets. It's pretty difficult
Speaker 5: to be able to disguise the bets that you're placing.
Speaker 3: Wait, and then what is the actual message? They just
Speaker 3: say like you've been cut off.
Speaker 5: So it really varies in general. When it comes to legal,
Speaker 5: regulated sports books, they don't kick you out, but they'll
Speaker 5: just limit the bet. They'll limit the bets that you
Speaker 5: can place to a very very small amount. So you know,
Speaker 5: if you might open up an account and at first
Speaker 5: you can bet let's say a thousand dollars in this game,
Speaker 5: once you place a few bets and they identified as
Speaker 5: you you as good, maybe you can only bet fifty
Speaker 5: dollars or sometimes you know, even as little as a
Speaker 5: couple of dollars, or I've seen people limited to literal cents.
Speaker 5: And that's because in general, the laws and a lot
Speaker 5: of states are that they aren't allowed to kick you out.
Speaker 5: But from a professional standpoint, if they're only letting you
Speaker 5: bet a few dollars, it's really just not worth your while,
Speaker 5: and so it's essentially the same as getting kicked out.
Speaker 2: All right, Well, we've been leading up to the question,
Speaker 2: but let's just go to it directly. Your professional sports better.
Speaker 2: You've mentioned a couple of different strategies. What do you
Speaker 2: do and how do you overcome the challenge of just
Speaker 2: sort of these constraints.
Speaker 5: So it's the million dollar question. Unfortunately, I can't tell
Speaker 5: you all the specifics of what I do me a
Speaker 5: bunch of money, but I can tell you in general
Speaker 5: how people get around these links. The first thing is
Speaker 5: you need a lot of accounts. If you go to
Speaker 5: a place like New Jersey, there's twenty twenty five I
Speaker 5: think legal regulated sportsbooks, and so any professional sports better
Speaker 5: will have an account at all of those different sports books.
Speaker 5: And that's important for two reasons. Not only does it
Speaker 5: mean that if you get kicked out of one, you
Speaker 5: have another to go to. But also it means that
Speaker 5: you can constantly compare prices. So you know, let's say
Speaker 5: if the best price for a game is on a
Speaker 5: sportsbook that I don't have, it means that I can't
Speaker 5: bet there, and that's bad. You know, this is a
Speaker 5: game of relatively small margins, A few percent difference really,
Speaker 5: you know, makes all the difference. And so you need
Speaker 5: to have all of those different sports books to be
Speaker 5: able to find the best price and when you get
Speaker 5: kicked out, to make sure. So that's one way. The
Speaker 5: other way is that you use you know, non non
Speaker 5: regulated sports books. So there's two different types of ways
Speaker 5: to bet on sports that's not on your legal regulated
Speaker 5: sports books like your DraftKings and your FanDuel. The first
Speaker 5: is offshore sites, and these are sites where you know
Speaker 5: you're going to be depositing and withdrawing and crypto. Most
Speaker 5: likely they've been around for a while and they're still around,
Speaker 5: and they're used by a lot of both professionals and
Speaker 5: recreational betters, and in general they're a little bit lax
Speaker 5: or when it comes to kicking you out. The other
Speaker 5: is bookies. Like if you think of what Shoho Tani's
Speaker 5: interpreter was using to place all those bets, he wasn't
Speaker 5: betting on DraftKings. He was using a bookie. And the
Speaker 5: benefit there is that a you're dealing with an individual,
Speaker 5: so they might be you know, less savvy in terms
Speaker 5: of detecting you if you're really good. And also you
Speaker 5: can bet on credit, so instead of depositing one hundred
Speaker 5: dollars like you would need to unfanduel, you can settle
Speaker 5: up at the end of the week and a leverage exactly.
Speaker 5: And so that's why a lot of the you know,
Speaker 5: particularly high rollers, use bookies, like was the case with
Speaker 5: ipeing Uzuhara. So another thing that a lot of people do,
Speaker 5: obviously is you bet on other people's accounts. You know,
Speaker 5: you go and you get your roommate's account, your mom's account,
Speaker 5: your friend's account, and you're just constantly cycling through different accounts.
Speaker 5: I'm not advocating for that, that's against the terms and
Speaker 5: conditions of these sites, but that's just a reality. And
Speaker 5: that's how a lot of betters able to get down
Speaker 5: a sufficient amount of volume, especially when they're constantly getting
Speaker 5: kicked out and the real thing is that you know,
Speaker 5: you're just you have to disguise your bets in a
Speaker 5: way that they don't they don't see or they don't
Speaker 5: realize that what you're doing. And so one of the
Speaker 5: one of the common ways that sportsbooks identify and profile
Speaker 5: their customers is based on the first few bets that
Speaker 5: you place. So one thing that a lot of people
Speaker 5: do that's really quite silly, in my opinion, is you know,
Speaker 5: you go into a book and you bet a bunch
Speaker 5: of stuff that's pretty obviously a really smart bet. You know,
Speaker 5: if you open up an account and you're betting the
Speaker 5: maximum amount on you know, Bulgarian table tennis, and you
Speaker 5: keep winning. And then you know, I have friends who
Speaker 5: come to me and they're like, Isaac, you know, why
Speaker 5: did I get kicked out of this book? And I
Speaker 5: look at their bet history and they're betting on the
Speaker 5: most obscure stuff at like random times for very large amounts,
Speaker 5: and it's like, yeah, you know, these these companies aren't dumb.
Speaker 5: So the main way is, you know, you when you
Speaker 5: open up an account, you place a bunch of bets
Speaker 5: which look kind of normal. You bet on some NBA.
Speaker 5: Maybe these bets won't have a positive expect bet for
Speaker 5: the home team exactly exactly. You know you're in New
Speaker 5: yor you want to bet on the Yankees, you place
Speaker 5: a bunch of bets, which in the short run they
Speaker 5: might lose a little bit of money, but in the
Speaker 5: long run they'll make you money because they're kind of
Speaker 5: putting the sportsbook.
Speaker 3: Off your set. This reminds me. So I finally opened
Speaker 3: a Spotify account the other day. I didn't have it
Speaker 3: for a long time because I was an Abu Dhabi
Speaker 3: and you weren't allowed to have Spotify over there, and
Speaker 3: so I just waited a long time. And I felt
Speaker 3: so much pressure choosing that first song because I was like,
Speaker 3: this is going to be my identity and it's dictated
Speaker 3: by the algo forever. What did I pick?
Speaker 5: Oh?
Speaker 3: I did Beyonce Texas hold on okay solid, Yeah, we'll see,
Speaker 3: We'll see how that goes. My impression is that the
Speaker 3: American market, because in many ways it's a lot more liberalized,
Speaker 3: at least compared to Europe and the UK, that it's
Speaker 3: kind of seen as like this holy grail money maker
Speaker 3: for a lot of international operators. And you touched on
Speaker 3: some of the offshore operators just then. But I think
Speaker 3: we have big European gambling companies that are coming in
Speaker 3: as well. Do you notice a big difference between the
Speaker 3: US platforms versus the European ones.
Speaker 5: It's a great question. So this in general, that the
Speaker 5: European book making model has been adopted in the US.
Speaker 5: You know, FanDuel, the largest sports book is owned by Flutter,
Speaker 5: which is which is based in the UK. You know,
Speaker 5: William Hill partners with Caesars, also a UK based company.
Speaker 5: And in general, the European model is viewed as much
Speaker 5: less friendly towards winning players, and what that means is
Speaker 5: much more aggressive in terms of how quickly you limit
Speaker 5: people in terms of, you know, even if there is,
Speaker 5: let's say a seventy five percent chance that this person
Speaker 5: might be a winner, the European book making model is
Speaker 5: we don't we don't want their action at all. And
Speaker 5: it's in general, you know, the way it used to
Speaker 5: work is if you were a professional better or a
Speaker 5: smart better, sometimes sportsbooks would accept your action because then
Speaker 5: they could shade their lines. You know, they say, Okay,
Speaker 5: this guy's winning and he's betting on this team, so
Speaker 5: maybe we can move the line over in general these
Speaker 5: companies today. Part of that is the European book making model.
Speaker 5: Part of that is just you know, there's more information now,
Speaker 5: they don't need information from the individual better, they don't
Speaker 5: care as much, and so they're more willing to just
Speaker 5: kick you out or limit you to one or two dollars.
Speaker 2: I want to go back to this constraint on bedsizing,
Speaker 2: because this seems to be a way that sports betting
Speaker 2: is fundamentally different than'd say, trading options. Whereas if you know,
Speaker 2: if you're trading options and you're really good at it,
Speaker 2: suddenly like you know, you're broker is not going to say, oh,
Speaker 2: you can only trade a thousand dollars or options. And
Speaker 2: in fact, I think generally speaking with financial markets, the
Speaker 2: better you are, probably the more liberal line of credit
Speaker 2: you're going to get, and you know, the more leverage
Speaker 2: you can get and so forth. This seems really unfair.
Speaker 2: It seems like, Okay, here's this platform that anyone can use,
Speaker 2: but they're pretty good at identifying who's good at it,
Speaker 2: and they're pretty good at identifying who's bad at it.
Speaker 2: It seems unfair to.
Speaker 5: Me, you know, I mean, I completely agree. I don't
Speaker 5: spend too much time thinking about it, because I don't
Speaker 5: think it's good a champion, and the reality is that
Speaker 5: these are private companies. They can they can do what
Speaker 5: they want. I think actually the more predatory thing is
Speaker 5: not that they limit winners, but that they actually expand
Speaker 5: those limits if you're a big loser and about that sure,
Speaker 5: and so you know, when you open up an account,
Speaker 5: let's say the limit is, you know, one thousand dollars
Speaker 5: on a bet. If you place a few bets and
Speaker 5: they think that you're really smart, it might go down
Speaker 5: to you know, ten dollars. But if they if you
Speaker 5: keep losing a lot of money and you keep losing
Speaker 5: and redepositing, maybe you get into their VIP program, those
Speaker 5: limits often can increase to five ten. I've seen accounts
Speaker 5: where you know, the person is able to bet fifty
Speaker 5: times what a standard person is able to bet. And
Speaker 5: obviously the only reason that's the case is because the
Speaker 5: companies know that these people are our losers. And so
Speaker 5: from a professional standpoint, the holy grail is what we
Speaker 5: call flipping a whale, which is basically what you take
Speaker 5: someone who historically has lost a lot of money and
Speaker 5: is you know, in good with the casino, they can
Speaker 5: bet however much they want, and you say, okay, we're
Speaker 5: going to work together now, and you're going to place
Speaker 5: these bets for me. And because they've already been profiled
Speaker 5: as someone who's not a good better, the sports book
Speaker 5: is more likely to take their action for large amounts.
Speaker 5: And so that's sort of the real holy grail of
Speaker 5: professional sports betting, and that's you know, people like Phil
Speaker 5: Mickelson Ashton Kutcher famously work with professional betting groups because
Speaker 5: they were high profile figures who identify who were identified
Speaker 5: as you know, whales and then they were flipped.
Speaker 3: Do professional sports betters do you have a lot of
Speaker 3: privacy concerns in the sense that you want to make
Speaker 3: sure that like a platform isn't using cookies to trace
Speaker 3: where you're going around the Internet, and you use a
Speaker 3: VPN and stuff like that to make that.
Speaker 5: So yes, and know that one thing that modern sports books,
Speaker 5: especially legal regulated sports books, are really good at doing
Speaker 5: is telling where you are, telling your location. So if
Speaker 5: you try to, you know, have a VPN that puts
Speaker 5: you in a different state, you won't be able to
Speaker 5: use fandul or draft cans. They're very good at that.
Speaker 5: So you know, obviously these companies like any you know,
Speaker 5: modern technology company, they're getting all this data about you.
Speaker 5: When you sign up for a sports book. They know
Speaker 5: what your birthday is, they know how old you are,
Speaker 5: they know where you live, your address, they know all
Speaker 5: of you know, the New York source security number, all
Speaker 5: this information, so you do kind of give that up.
Speaker 5: They also probably know a lot more, you know, when
Speaker 5: you log into the app. They're tracking everything, but there's
Speaker 5: nothing you can really do about it.
Speaker 2: Going back to pricing, and you mentioned tennis, but you
Speaker 2: mentioned these you know, the more obscure, the less like
Speaker 2: you know, Bulgarian soccer, tennis, et cetera.
Speaker 4: Talk to us a little bit more about.
Speaker 3: Like how you just suggested all of tennis is obscure.
Speaker 2: Well, you know, it sounds in the yeah, right, Tennis
Speaker 2: is not in itself obscure, but I guess compared to
Speaker 2: some of the major sports. Talk to us about that process,
Speaker 2: because again, it doesn't sound like a science where it's like, okay,
Speaker 2: you have the liquid markets setting the line and then
Speaker 2: you try to back out implications. It sounds like back
Speaker 2: out implications from that line for what it means. So
Speaker 2: imagine if like who's even big at tennis, And I'm
Speaker 2: still my head is still in like the federal Nadal
Speaker 2: era or Djokovic, but Djokovic, Nadal, Djokovic is the edge.
Speaker 2: Then you try to derive some price where he's going
Speaker 2: to win. In three four, talk us a little bit
Speaker 2: more about that process of backing out the price for
Speaker 2: the derivatives from from the sort of headline liquid.
Speaker 5: Per It's a great question. So the reality is it's
Speaker 5: it's just not a science at all. And I think
Speaker 5: what's what's really important here is what Tracy mentioned before,
Speaker 5: which is that they add a huge additional margin to
Speaker 5: these derivative and prop markets. And so what that means
Speaker 5: is that if there's you know, a thirty percent house
Speaker 5: edge in a market, even if you can have a
Speaker 5: huge edge, you know, of twenty or twenty five percent,
Speaker 5: it's still very very difficult to actually beat these markets.
Speaker 5: And the incentives from a betting company standpoint are not
Speaker 5: actually necessarily to have these prices be super super efficient.
Speaker 5: They don't really care. They know that most people are
Speaker 5: not going to bet, you know, on these random niche
Speaker 5: markets that might be mispriced, and if they can, they
Speaker 5: set the limits very low. What they They reason they
Speaker 5: have these there is that they can have an expanded
Speaker 5: betting menu so that when you log into the app,
Speaker 5: you see, oh my god, you know there's all of
Speaker 5: these options. And that's why you know, I'm going to
Speaker 5: use fan Duel as opposed to some random sportsbook which
Speaker 5: doesn't and FanDuel they know that, you know, you might
Speaker 5: be able to get an edge here, and you know
Speaker 5: they're going to monitor that market and if you win,
Speaker 5: they're going to limit you. But they don't really actually
Speaker 5: care that much about getting the prices perfectly because a
Speaker 5: lot of these markets there just so that you know,
Speaker 5: you can say, hey, we offer all these different markets.
Speaker 3: What's been the impact on sports themselves? So we mentioned
Speaker 3: you know, some of the commentators will sometimes bring up
Speaker 3: specific plays if there are odds on them and they
Speaker 3: suddenly pay off. But do you see like the actual
Speaker 3: activity of sports start to react to all this gambling
Speaker 3: activity and all the money that's involved with it.
Speaker 5: Sure, So I think it really depends, as Joe mentioned,
Speaker 5: you know, between these high profile and lower profile sports.
Speaker 5: So in the NBA, these guys are making so much
Speaker 5: money that it really doesn't impact the actual play. You know,
Speaker 5: if you're making thirty million dollars a year, you know,
Speaker 5: you're not really ever going to be incentivized to throw
Speaker 5: a game or really change the way you play. And
Speaker 5: it doesn't really factor into there when it comes to
Speaker 5: smaller sports. You know, we talk about tennis. There was
Speaker 5: this big scandal last year where it turned out that
Speaker 5: someone was running a giant match fixing ring, and it's
Speaker 5: because the players playing were making you know, a few
Speaker 5: hundred dollars a match, and the guy was able to
Speaker 5: bet tens of thousands of dollars in their match. And
Speaker 5: so when there's that mismatch, that's when you really get
Speaker 5: these game integrity issues. You know, in the NBA there
Speaker 5: is recently the scandal with John tay Porter, and you know,
Speaker 5: he was a very low level player. He wasn't that
Speaker 5: significant to the team. He wasn't able to impact the overall, uh,
Speaker 5: you know, the overall outcome of the game. But if
Speaker 5: you bet, the fact is, you know, at modern sportsbook,
Speaker 5: you can bet on anything. You can bet on whether
Speaker 5: or not John tay Porter will have one or two threes, right,
Speaker 5: And so that's really the issue when you get into
Speaker 5: these player props for very niche unimportant players. For college
Speaker 5: player props, this is a big debate right now whether
Speaker 5: or not you should be able to bet on how
Speaker 5: many points a college basketball player is going to have,
Speaker 5: because obviously, you know, it's easier to control how many
Speaker 5: points you have versus throwing an entire game, and so
Speaker 5: from a game integrity standpoint from the major sports, I
Speaker 5: don't really think it's an issue, but especially for smaller
Speaker 5: markets and for prop markets, it really can be.
Speaker 3: But beyond the big risk of match fixing, do you see,
Speaker 3: like I guess, more of an urge towards like satisfying
Speaker 3: some of those like single plays like maybe I don't know,
Speaker 3: like maybe the game like.
Speaker 4: Which are really hard to hit a home run?
Speaker 3: Yeah, well, but not just I mean like rebounds or whatever.
Speaker 5: So I think I think not from the player's standpoint,
Speaker 5: but more from the viewer and the media standpoint. Like
Speaker 5: you mentioned before, I think it's I think it's quite sad,
Speaker 5: you know, even as someone who bets on sports is
Speaker 5: my job, it's quite sad that when you watch a
Speaker 5: game now you can't escape the betting. And you know,
Speaker 5: you imagine a kid watching a game today he just
Speaker 5: loves basketball or he loves baseball. He can't appreciate that
Speaker 5: without being inundated with betting advertisements. And so I think
Speaker 5: it's it's less about the game itself, but more every
Speaker 5: everything surrounding.
Speaker 3: It, the experience.
Speaker 2: Exactly, if I started sports betting, I don't think I'd
Speaker 2: be very good at it, which is why I don't
Speaker 2: do it. But I probably wouldn't be very good at it.
Speaker 2: And then because you know, then the sports books would
Speaker 2: let me bet more and more and I would lose
Speaker 2: more more.
Speaker 3: Money, but then you could sell your This is what
Speaker 3: I was gonna ask.
Speaker 2: Is there some you know, I don't need the u
Speaker 2: URLs here or anything, but are there places where someone
Speaker 2: like me, or a listener to odd laws who hasn't
Speaker 2: been a successful uh sports better? No, seriously, Like, are
Speaker 2: you mentioned hunting whales? Yeah, I'm I'm actually curious about
Speaker 2: how the whalehunt process worth.
Speaker 5: Yes, so, no, it goes, it goes, It goes both
Speaker 5: ways both. You know, you can be let's say, you know,
Speaker 5: a VIP customer and get really fed up, and you know,
Speaker 5: I'm not.
Speaker 2: Encouraging anyone to break it, of course, but I do
Speaker 2: want to understand, of.
Speaker 5: Course, of course, Yes, So It can work both ways.
Speaker 5: You know, maybe if you're a professional better, you can
Speaker 5: go out and try to network and meet a bunch
Speaker 5: of rich people who are all betting on sports and say, hey,
Speaker 5: you know, give me give me your sportsman account.
Speaker 3: I can win.
Speaker 5: It can also work from the other way, where you
Speaker 5: can maybe be a VIP customer who's lost, you know,
Speaker 5: tens hundreds of thousands of dollars and get really fed
Speaker 5: up at STAMP some point, and then you can reach
Speaker 5: out to a professional better or a betting group. You know,
Speaker 5: maybe you DM them on Twitter and you say, hey,
Speaker 5: you know, I have this betting account where they let
Speaker 5: me bet whatever I want. You know, you're really good
Speaker 5: at this, obviously, can we partner up? That's sort of
Speaker 5: how it can work.
Speaker 3: So how does all of this play out in the end?
Speaker 3: You know, if you had to make a bet on
Speaker 3: the overall direction of the sports betting industry, what would
Speaker 3: it look like. We've had this, you know, massive like
Speaker 3: liberalization of the market. Lots of people are making money.
Speaker 3: There's all these new book makers and platforms that are
Speaker 3: coming in. Everyone has an app. Now what happens in
Speaker 3: the end, do we see like a crackdown eventually as
Speaker 3: this becomes a bigger and bigger market.
Speaker 5: So I think, just to take a slight issue with
Speaker 5: part of that, which is that everybody's making a lot
Speaker 5: of money, everybody's not making a lot of money. FanDuel
Speaker 5: and Draftings, I think both just became profitable for the
Speaker 5: first time this year, and pretty much every other sports
Speaker 5: book is is losing money.
Speaker 3: It's pretty great. How is that possible because they control
Speaker 3: the odds, like I would have assumed as I just
Speaker 3: said that they're minting.
Speaker 5: Yes, so they're minting when you go in and place
Speaker 5: a bet. But there are tons of other costs. You know,
Speaker 5: every time you see fanduels the official sponsor of major
Speaker 5: of a major sports league, that cost them a lot
Speaker 5: of money. Customer acquisition costs are incredibly high. Actually, six
Speaker 5: years ago today the Supreme Court struck down the rule
Speaker 5: that prevented states from legalizing sports betting. But ever since then,
Speaker 5: these companies have spent a ton of money trying to
Speaker 5: acquire customers, to increase their market share, to do all
Speaker 5: sorts of branding deals. And so it's not just the
Speaker 5: betting itself, but all of the things surrounding it. And
Speaker 5: in reality, sports betting is a relatively low margin game
Speaker 5: compared to other casino games. So all of these companies,
Speaker 5: they actually don't care that much about sports betting. Most
Speaker 5: of this is all an angle for online casino gambling,
Speaker 5: because that's where the real money is. You know, even
Speaker 5: if you, let's say, lose five percent on every bet
Speaker 5: you place, that bet gives you entertainment for two hours.
Speaker 5: If you're losing five percent at the roulette wheel and
Speaker 5: you have that on your phone and you can click
Speaker 5: it and play a new spin every five seconds, that's
Speaker 5: where the real money comes. And so when we look
Speaker 5: at more mature markets like Australia and the UK, where
Speaker 5: online gambling has been around for longer, the vast majority
Speaker 5: of profits for these companies come from online gambling. When
Speaker 5: we look at the US right now, online it's called
Speaker 5: ie gaming is legal in certain states. It's it's illegal
Speaker 5: in most states. But in the states that it's legal,
Speaker 5: the vast majority of the revenue is coming from eye gaming.
Speaker 5: And and it's and that's uh and that's probably where
Speaker 5: you're gonna see the industry headed. And that's what FanDuel
Speaker 5: and draftings, that's where they envisioned most of their revenue
Speaker 5: coming from in the future.
Speaker 2: I like gambling, I don't really like the table games.
Speaker 2: I like casinos. The thought of like sitting there, like
Speaker 2: playing a virtual.
Speaker 3: Spinning everything that depressed.
Speaker 5: It's really depressive.
Speaker 4: It's really depressing.
Speaker 2: Actually, the most depressing thing that I've seen gambling wise
Speaker 2: is not even a phone thing. I was in Iceland
Speaker 2: one time and I was watching this one of the
Speaker 2: TV channels. It was just a woman on the TV channel,
Speaker 2: like spinning this roulette wheel on TV, and my god,
Speaker 2: that's so bleak. But it also like it gets very
Speaker 2: bleak when you sort of think about the person at
Speaker 2: home watching a TV network it's a roulette wheel.
Speaker 5: And and and then sorry and and so in the UK,
Speaker 5: for example, we don't have this data yet in the US,
Speaker 5: but it's incredibly concentrated. So in the UK, yeah, five
Speaker 5: percent of customers make up about eighty five percent of
Speaker 5: the of the gambling operators revenue, and so we don't
Speaker 5: have those numbers in the US, but you can assume
Speaker 5: that it's relatively similar for sports betting. With eye game,
Speaker 5: it's going to be even more, even more extreme.
Speaker 3: Yeah, Joe, you mentioned bleak. You haven't seen bleak until
Speaker 3: you've seen like Patty Power on Edgeware Road on like
Speaker 3: a Sunday morning. That's depressing.
Speaker 2: And it's like, you know, sometimes they show those you
Speaker 2: see those like gifts or videos on Twitter of like
Speaker 2: a bunch of old elderly people the casino, like hitting
Speaker 2: the bed over them. At least they're like kind of
Speaker 2: around their friends or something. But the idea of like
Speaker 2: doing that equivalent, and like casinos are fun and maybe
Speaker 2: even get a free drink or it's like lively and
Speaker 2: whatever and you can smoke there.
Speaker 3: But oh, that was the other thing that I noticed
Speaker 3: when I was last in Vegas. You know a lot
Speaker 3: of them. You can just put your like card in
Speaker 3: down and just keep drawing on the same machine.
Speaker 4: It's super grim. But then so how bad you know?
Speaker 2: The other element of this, and Tracy brought up to
Speaker 2: concerns about like match fixing is like sort of like
Speaker 2: one idle concern and is particularly acute at the NC
Speaker 2: double A level where there's no the players aren't really
Speaker 2: making much money, if any, and you know, it's sort
Speaker 2: of disturbs the purity of non professional amateur sports. But
Speaker 2: then the other big concern is this sort of like
Speaker 2: you know, people. There are tons of articles the world
Speaker 2: of like young men out there, predominantly men addicted losing
Speaker 2: tons of money.
Speaker 4: How I don't know.
Speaker 2: I guess it's subjective question because everyone's gonna have a
Speaker 2: different perspective, but like, what is your view on what's
Speaker 2: going on?
Speaker 5: So it's a huge problem. And after I started writing
Speaker 5: about this issue, a bunch of different addiction counselors and
Speaker 5: social workers who were working with these people reached out
Speaker 5: to me. And you know, the predominant segment of the population,
Speaker 5: as you mentioned that it was having problems, was was
Speaker 5: young men. And in particular, what they told me is
Speaker 5: that sports spinning is different than other forms of gambling
Speaker 5: because we have this emotional attachment to it. You know,
Speaker 5: if you go to the casino, you're always gonna have
Speaker 5: one friend who's like, you know, five reads. The next
Speaker 5: one must be a black classic Classica.
Speaker 3: I don't understand probabilities, so I never.
Speaker 5: Have and but it's total But that's kind of fine.
Speaker 5: But you know, when it comes to sports betting, people
Speaker 5: are much more delusional when it comes to their ability
Speaker 5: to win. So, you know, addiction counselors will tell me
Speaker 5: it's like, you know, I have a sixteen year old
Speaker 5: boy who comes in. He says, you know, I'm a
Speaker 5: huge Yankees fan. I know the Yankees are a lock tonight.
Speaker 5: It doesn't matter if they're you know, three to one favorites,
Speaker 5: four to one favorites, five to one favorites. I know
Speaker 5: they're a lock. And when you're delusional about your ability
Speaker 5: to win, that's when this activity can get really risky
Speaker 5: and you're more likely to double down, chase your losses,
Speaker 5: and really exhibit signs of problem gambling. And so it's
Speaker 5: not necessarily that that sports spending is riskier than other
Speaker 5: forms of gambling, but particularly when it comes to young men,
Speaker 5: and you know, it gets into this ego and you
Speaker 5: think you have an edge when you don't, and that's
Speaker 5: that's what's really scaring, what's really dangering. And there are
Speaker 5: all of these companies which are actually you know, catering
Speaker 5: to minors. Really they are these things called social sports
Speaker 5: books where you don't necessarily deposit with real money, you
Speaker 5: use like coins, and they're really targeting young kids. Apps
Speaker 5: like Prize Picks an Underdog Daily Fantasy, which are essentially
Speaker 5: just sports betting, and they're available to people you know
Speaker 5: that are eighteen and over instead of twenty one and over.
Speaker 5: And you know, this, this delusion, combined with a lack
Speaker 5: of understanding of you know, how much the house actually wins,
Speaker 5: is creating a huge swaths of the population who were
Speaker 5: losing a lot of money, but they maybe don't even
Speaker 5: realize it, or they think that, you know, they're just
Speaker 5: one they're one bet away from from winning big.
Speaker 3: I just have one more question, and you know, taking
Speaker 3: all of this into account, what advice would you give
Speaker 3: to Joe as he heads to Vegas.
Speaker 5: It's a great question. I would say, you know, go
Speaker 5: with go with the amount of money that that you're
Speaker 5: willing to lose in and you know, try to stick
Speaker 5: to it. Obviously easier, obviously easier said than done. You
Speaker 5: don't have a good time.
Speaker 2: So I recently lost my debit card and I realized,
Speaker 2: you know, because Vegas needs cash.
Speaker 4: So I asked my wife.
Speaker 2: I was like, oh, I need to bring your debit
Speaker 2: card to Vegas and she was like, why don't I.
Speaker 4: Just get her cash? No I did.
Speaker 2: I said, why didn't can I bring your debit card
Speaker 2: to Vegas? And she said, well, how about I just
Speaker 2: give you some cash? And then the limit you're gambling
Speaker 2: to whatever the amount of cash, and I'm like, no,
Speaker 2: I'm not setting a cap.
Speaker 4: So she agreed, thank you.
Speaker 3: Do you want me to share my now obsolete crap
Speaker 3: system with you and then you can make you make
Speaker 3: negative money.
Speaker 2: One way to address the societal concerns would be to
Speaker 2: ban sports betting, but it doesn't seem like that. It
Speaker 2: seems like we're going full on in the other direction.
Speaker 2: Are there regulatory moves that I guess could actually sort
Speaker 2: of curb the addiction side and the devastation that can
Speaker 2: cause to whatever percentage of betters do get hooked while
Speaker 2: maintaining these viable businesses.
Speaker 5: Sure, so when it comes to sort of the optimal
Speaker 5: regulations or what we can do, I kind of think
Speaker 5: that there are three things that we can do. The
Speaker 5: first is, you know, better regulations. When it comes to advertising.
Speaker 5: As Tracy mentioned, it's not just the frequency of the ads,
Speaker 5: but that they're really deceptive. You shouldn't be able to
Speaker 5: run a sports betting ad where it's a guy with
Speaker 5: a big check in hand and it's like join now
Speaker 5: and you'll win big. And then there's you know a
Speaker 5: little thing at the bottom of the screen which says
Speaker 5: gamble responsibly. What the heck does that mean? There's a
Speaker 5: one eight hundred number, you know, it's twenty twenty four.
Speaker 5: No one is calling those you know why instead of
Speaker 5: gamble responsibly, isn't there you know, a mandatory message that
Speaker 5: says nine to nine percent of people who gamble will
Speaker 5: lose money and you know, maybe even if you win,
Speaker 5: we're going to kick you out. So that that's the
Speaker 5: first thing, just the deceptiveness of the ads. The second
Speaker 5: thing is some things that should be done in app
Speaker 5: to make them more transparent. So if you're on you
Speaker 5: know a lot of these sports betting apps, it's very
Speaker 5: difficult to figure out how much money you've won or lost.
Speaker 5: And that's intentional. You know, it should be mandated that
Speaker 5: when you go to the Maya account page on any sportsbook,
Speaker 5: they show you how much money you've won or lost
Speaker 5: in the last month or over the course of the
Speaker 5: lifetime account. Fairly simple stuff. And then the last thing
Speaker 5: I would say is we need we need more research.
Speaker 5: Right I don't know all of the exact solutions. I
Speaker 5: don't think anybody does, but we need good research and
Speaker 5: a lot of the research out there right now, isn't
Speaker 5: that good. It's funded by the industry, which has obvious problems,
Speaker 5: But there are some simple things you can do. For example,
Speaker 5: a lot of these sites like to use things like
Speaker 5: responsible gambling tools like deposit or time limits where you say,
Speaker 5: you know, if you had set a deposit limit of
Speaker 5: one thousand dollars a month, once you reach that, you
Speaker 5: can't deposit anymore. And all of these are opt in
Speaker 5: and the reality is that we know that no one
Speaker 5: uses these tools, why not try to have these things
Speaker 5: be opt out instead of opt in like we do
Speaker 5: for you know, organ donation when it comes to you know,
Speaker 5: when you're getting your driver's license. That might increase adoption,
Speaker 5: but the reality is, you know, you make make you know,
Speaker 5: these sports betting companies team up with some researchers, have
Speaker 5: it be government or impartial funding that's not funded by
Speaker 5: the research to see what stuff actually can work, as
Speaker 5: opposed to the industry giving a bunch of money and saying,
Speaker 5: you know, here's what we think would happen. Because we
Speaker 5: know that's not going to work.
Speaker 2: Identifying flaws and actually having that alpha to identify mispricing
Speaker 2: still seems like kind of a mystery to me.
Speaker 5: Sure, yeah, so I'll give you one example, which is
Speaker 5: from a buddy that I work with. He made a
Speaker 5: lot of money off this, which was sportsbooks used to
Speaker 5: offer and they still offer this bet on which basketball
Speaker 5: team is going to score the first point. And in general,
Speaker 5: the way that they would price this bet is it's,
Speaker 5: you know, roughly a fifty to fifty and sometimes the
Speaker 5: better team would be slightly favored. And because you know,
Speaker 5: there's a tip off at the beginning, and whoever wins
Speaker 5: that it's roughly fifty percent and whoever you know gets
Speaker 5: the ball first, that team is going to be more
Speaker 5: likely to score. But what they didn't factor in, and
Speaker 5: what my buddy and a bunch of other people realized,
Speaker 5: is that it's not actually a fifty to fifty because
Speaker 5: some teams have centers who are much taller than the
Speaker 5: other team. So, for example, if you know, our two
Speaker 5: teams are going up against each other, and my guy
Speaker 5: who's jumping is seven foot two and your guy who's
Speaker 5: jumping is six foot nine, my guy is going to
Speaker 5: win the ball toss a lot more of the time,
Speaker 5: and as a result, our team is going to start
Speaker 5: with the ball a lot more, and that means that
Speaker 5: they're going to score the first point much more often.
Speaker 5: So that's kind of a simple example of how you
Speaker 5: can identify an edge in a market. And the important
Speaker 5: thing there is that that's a market that's derived from
Speaker 5: a model. It's not a market which is where the
Speaker 5: prices are derived through price discovery. So knowing how tall
Speaker 5: a center is is not going to give you an
Speaker 5: edge when betting on who's going to win a game,
Speaker 5: but it might give you an edge when betting on
Speaker 5: who's going to score the first point.
Speaker 2: I'd have one last short question, actually re guized if
Speaker 2: someone wants to be a professional sports better, what should
Speaker 2: they know about themselves to say, Actually, I'm the type
Speaker 2: of person that can live this life.
Speaker 5: The key is being able to handle variants. I think
Speaker 5: it's really easy to win, and everybody is, you know,
Speaker 5: everybody's really happy when you win. But it's really hard
Speaker 5: to lose, and especially if you're if you're gambling professionally
Speaker 5: or even if you're gambling recreationally, that's that's when it
Speaker 5: gets hard. Even if you're betting with an edge, you
Speaker 5: can still lose. You know, five ten bets in a row,
Speaker 5: you can lose a lot of money. And the real
Speaker 5: problems people have is when you start doubling down, you're
Speaker 5: chasing these losses, all of these problems, and so the
Speaker 5: emotional regulation involved, especially when you're losing, to try to
Speaker 5: you know, keep your cool and not and not go crazy.
Speaker 5: That's the most important thing, both for anybody who wants
Speaker 5: to try to do this professionally, which I probably wouldn't recommend,
Speaker 5: and anybody who even wants to do this for fun
Speaker 5: is just make sure that that you're able to control
Speaker 5: your emotions, especially when you're losing.
Speaker 3: Can you put a stop loss order on your gambling book.
Speaker 5: So you can pre program one you you can you
Speaker 5: can use these you know, deposit limits where you say, okay,
Speaker 5: I'm not going to do more than you know, a
Speaker 5: thousand dollars a month, and at that point you know
Speaker 5: they won't allow you to. In reality, they just don't
Speaker 5: really work and that no one uses them.
Speaker 3: Uh.
Speaker 5: And then you can always just go to another sportsbook
Speaker 5: where you haven't put that in and then and then
Speaker 5: go gamble there so you can. But the problem is
Speaker 5: when we put the entire onus on the user and
Speaker 5: we have this personal responsibility, it's just it's just not
Speaker 5: going to work. What we need is more active regulation
Speaker 5: of these companies.
Speaker 2: Isaac Roseberman, that was fantastic. Thank you so much for
Speaker 2: coming on Odd Loves.
Speaker 5: Thank you so much. It's been a pleasure.
Speaker 4: Tracy. I thought that was great.
Speaker 2: That demystified several things about this industry that I hadn't appreciated.
Speaker 3: Same again, like this is something I'm totally unfamiliar with,
Speaker 3: but I thought Isaac laid it out all really clearly.
Speaker 3: Is it bad that I've come away wanting to make
Speaker 3: sports that.
Speaker 2: Our listeners stick away from that? I guess if you
Speaker 2: want to make a few sports, I trust you to
Speaker 2: handle your.
Speaker 3: The world's most complicated single game park.
Speaker 2: You know it would be fun. Now, Actually I want
Speaker 2: to do it. We should, you know, we should do Actually,
Speaker 2: this should be fun. We should both open up accounts
Speaker 2: and you like bet on the yank or you like
Speaker 2: bet on like you know, Austrian rules football or some
Speaker 2: other sports.
Speaker 4: That I've never heard, and I'll bet on the Yankees.
Speaker 2: Let's do this, this is an experiment, and I'll just
Speaker 2: like bet on the Yankees and the Mets, and let's
Speaker 2: just watch what happens to our position limits over time.
Speaker 3: Yeah, Actually, I think that'd be fun. We start with
Speaker 3: like the same amount of money and then take it
Speaker 3: from there. All right, I would do that.
Speaker 4: All right, let's do that.
Speaker 3: I mean, I have to say, when it comes to
Speaker 3: soccer football, I've kind of I've given up on the
Speaker 3: purity of the sport as as a long time football
Speaker 3: fan who's watched FIFA for a long time, I like,
Speaker 3: it just doesn't matter to me anymore. So yeah, I
Speaker 3: might as well make some money.
Speaker 2: That I also thought, you know, even though Isaac didn't
Speaker 2: identify it as like the key issue here, the very
Speaker 2: the betting constraints and the fact that basically if you're good,
Speaker 2: you're not allowed to bet very much, and the idea
Speaker 2: that if you're good like that strikes me it's very unfair,
Speaker 2: and that seems like kind of obvious. But again, you know,
Speaker 2: thinking about because people look at them, you know, and
Speaker 2: when people get anxious and for other brows about sports betting,
Speaker 2: they're like, well, why don't you get the you know,
Speaker 2: you don't. You know, financial markets are casino too, and
Speaker 2: that's kind of true. But if you're good at financial markets,
Speaker 2: or if you're good at trading, if you're good at
Speaker 2: investing or stock selection, they're not going to like cut
Speaker 2: you off for de facto cut you off by telling
Speaker 2: you can only like invest a dollar in a stock totally.
Speaker 3: It's very it feels very animal farm to me. It's
Speaker 3: like everyone is allowed to make money, but everyone is
Speaker 3: also allowed to be prevented from making money.
Speaker 2: The other thing we'll do after you and I do
Speaker 2: our experiment. Now, I won't do this, but it would
Speaker 2: be fun to see who would buy one of our
Speaker 2: I won't do that because that is violation, but you know,
Speaker 2: I'd be curious what the market rate for my account
Speaker 2: where I lost a lot of our naivete.
Speaker 3: We can put a price on our lack of expertise.
Speaker 3: The other thing that was really interesting and I would
Speaker 3: love to dig into this sport, but the sort of
Speaker 3: third party pricing some of the more exotic plays. I
Speaker 3: would love to know, like who those companies actually are
Speaker 3: and how they come up with those numbers. Some of
Speaker 3: it just to return to traditional finance and market Some
Speaker 3: of it reminds me of like the third party pricing
Speaker 3: providers and credit yeah exactly. And they use like matrix
Speaker 3: modeling where they're sort of triangulating the market price for
Speaker 3: something that doesn't actually trade that much.
Speaker 4: Now, there's so much good stuff here. I like, you know.
Speaker 2: One of the things that's fun about these types of
Speaker 2: episodes that we explore a new market is we learn
Speaker 2: things about traditional markets that we didn't necessarily see before,
Speaker 2: but by looking at them in another context, suddenly things
Speaker 2: were more familiar with become like legible in a new way.
Speaker 3: Absolutely, shall we leave it there?
Speaker 4: Let's leave it there.
Speaker 3: This has been another episode of the Authoughts podcast. I'm
Speaker 3: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guest Isaac rose Berman He's at Round Robin
Speaker 2: forty two. Follow our producers Kerman Rodriguez at Kerman Arman,
Speaker 2: Dashel Bennett at Dashbot, and Kelbrooks at Kilbrooks. Thank you
Speaker 2: to our producer Moses Ondem. More odd Laws content go
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Speaker 2: Welcome to the Odd Lots podcast on Bloomberg Radio.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: Today you are listening to our conversation with professional Sports
Speaker 2: Better and writer Isaac rose Berman about how is sports
Speaker 2: Better actually makes money.
Speaker 3: Stay tuned for more of our interview with Isaac rose Berman.
Speaker 3: He is a professional Sports Better and we are talking
Speaker 3: about the explosion in gambling in the US. To hear
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Speaker 3: your podcasts. I'm Tracy Alloway and.
Speaker 2: I'm Joe Wisenthal, and this is Odd Lots on Bloomberg Radio.
Speaker 2: This is Odd Lots on Bloomberg Radio.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: Today's episode is looking at the business of Today's episode
Speaker 2: is looking at the business of sports gambling. How do
Speaker 2: the gamblers make and lose money? How do the casinos
Speaker 2: make and lose money? Our guest Isaac rose Berman, a
Speaker 2: professional sports better and writer.
Speaker 3: More to come from our conversation with professional sports better
Speaker 3: and writer Isaac rose Berman. We are talking all things
Speaker 3: sports betting.
Speaker 2: I'm Tracy Alloway, I'm Joe Wisenthal, and this is Odd
Speaker 2: Lots on Bloomberg Radio.
Speaker 3: To hear all of our episodes in full, be sure
Speaker 3: to subscribe to the podcast on your favorite platform.
Speaker 2: You're listening to the Odd Lots podcast on Bloomberg Radio.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: On today's show, we are discussing the explosion of sports betting.
Speaker 2: Our guest is Isaac rose Berman, a professional sports better
Speaker 2: and a writer at how Gambling Works dot Com.
Speaker 3: This has been all Thoughts on Bloomberg Radio. I'm Tracy Alloway.
Speaker 4: And I'm Joe Wisenthal.
Speaker 3: To hear the rest of this episode and all of
Speaker 3: our other interviews. Be sure to subscribe to Odd Lots
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Speaker 4: Right, we good? Thanks great, Well that was a lot
Speaker 4: of fun.
Speaker 2: Thank you.
Speaker 4: Was so good.