Speaker 1: Pushkin. Hello, Hello, Revisionist History listeners. Malcolm here, I'm stopping
Speaker 1: by near the end of my book tour because I
Speaker 1: have a special guest in the house, Michael Lewis. You
Speaker 1: may know him as the author of Moneyball, The Big Short,
Speaker 1: Liar's Poker, and most recently Going Infinite, which just came
Speaker 1: out in paperback, by the way, or you may know
Speaker 1: him by his alter identity as a Pushkin SuperHost. Michael's
Speaker 1: show Against the Rules is now in the middle of
Speaker 1: a fantastic new season. It's all about the insane rise
Speaker 1: and the consequences of sports betting in the US. You're
Speaker 1: going to get a chance to hear one of the
Speaker 1: latest episodes in just a moment, But first I thought
Speaker 1: we would chat with the man himself. Michael Lewis. Welcome
Speaker 1: to Revisionist History.
Speaker 2: It's been too long. Yes, I haven't seen you in ages.
Speaker 1: I know, I know we need to write that wrong.
Speaker 1: So you've done this show about uh, sports betting, and
Speaker 1: this comes after what your first droom was about referees
Speaker 1: and then coaching right experts.
Speaker 2: We sort of set them off into the sports arena
Speaker 2: and this is yeah, you know, we frame this as
Speaker 2: fans and it's sort of like the fracking of the
Speaker 2: fan how the sports leagues have decided to squeeze ever
Speaker 2: more juice out of the fan base. And and and
Speaker 2: you know, six years ago, the Supreme Court uh uh
Speaker 2: repealed a federal ban on sports gambling. And at that time,
Speaker 2: the NFL, the NBA, Major League Baseball, the nc DOUABA,
Speaker 2: we're all saying sports betting is evil. You know that,
Speaker 2: it's just like it will it will destroy the integrity
Speaker 2: of sports, et cetera, et cetera. And there's long been
Speaker 2: this taboo in the sports world about gambling. I mean,
Speaker 2: not even gambling on your own sport. If you've caught
Speaker 2: sports gambling, people have been tossed out of sports and
Speaker 2: they flipped on a dime. And and essentially when into
Speaker 2: business with the sports gambling industry, and particularly Fan Duel
Speaker 2: and DraftKings, the two sort of big companies at the
Speaker 2: center of this world. And there's this kind of sports
Speaker 2: gambling industrial complex that has arisen in the last few years.
Speaker 2: And it's really interesting. It's like, so the past seasons,
Speaker 2: I love doing the podcast. You are responsible for me
Speaker 2: doing the podcast, So I mean, you kind of talked
Speaker 2: me into this and I love that. I love the
Speaker 2: way it works kind of different muscles, and when you're
Speaker 2: writing these scripts, it's a different thing than writing the books,
Speaker 2: and I like it for all kinds of reasons. But
Speaker 2: up to up till now, we've taken themes. This season
Speaker 2: is whatever seven episodes, and it's it's it's variations on
Speaker 2: a theme, but it isn't one story. And in this case,
Speaker 2: this could be a book. It's like almost plotted like
Speaker 2: a book, and it's it's about this vast social experiment
Speaker 2: that's going on that's largely invisible because the consequences are
Speaker 2: sort of you know, you don't see it the way
Speaker 2: you see on an opioid addiction or alcohol addition. You're
Speaker 2: seeing this thing that historically regarded as a vice, understood
Speaker 2: to be kind of risky behavior, being foisted upon the
Speaker 2: American people, especially young American males, in a way that
Speaker 2: would have been unthinkable a decade ago. And so like
Speaker 2: how this is happening, how the industry works, with the
Speaker 2: economics of the industry, are where this is going and
Speaker 2: the effects it's having on We're talking to everybody from
Speaker 2: athletes to high school students who are creating sports gambling
Speaker 2: rings in their high school and like, ultimately, how to
Speaker 2: defend yourself because the industry's coming for you or your children.
Speaker 2: It's sort of finally calibrated to exploit all of your
Speaker 2: mental weaknesses, finally calibrated to get you do the stupidest
Speaker 2: things you could possibly do in a casino.
Speaker 1: I'm just curious about how you settled on this particular topic.
Speaker 1: When did you when was sports gambling did you start
Speaker 1: buzzing around your head?
Speaker 2: Well, completely honest, it was buzzing around my head because
Speaker 2: you can't avoid it. Right, Even in California, sports gainly
Speaker 2: is still illegal. It's legal in thirty nine states. California's
Speaker 2: not one of them. Soon will be one of them probably.
Speaker 2: But even in spite of that, living in California, four
Speaker 2: years ago, I started getting bombarded with ads by from
Speaker 2: Draft Kings and vendor telling me to bet on sports.
Speaker 2: And the commentary around sports had completely changed. So it
Speaker 2: caught my attention then. But it was our brilliant producers
Speaker 2: who came and said, you know, what do you think
Speaker 2: about this as a subject, and it instily went yes, yes,
Speaker 2: like yes that it just hasn't quite been done. Sometimes
Speaker 2: the best stories are things that no one ever thought about.
Speaker 2: Some of the best stories is just like what's under
Speaker 2: your nose that no one's really noticed and sight hiding
Speaker 2: in plain sight. The more we dug into it that
Speaker 2: the more shocking it was. Just how predatory it is,
Speaker 2: how the as a business fan, Duel and DraftKings the
Speaker 2: two companies at the center of the of the industry.
Speaker 2: They're they're framed in the public mind it's always just fun,
Speaker 2: it's gaming or whatever. It's maybe like a casino. It's
Speaker 2: not at all like a casino. These are businesses that
Speaker 2: really haven't ever existed before. It's casinos with unbelievable amounts
Speaker 2: of data about the gamblers, an incredible ability to nudge
Speaker 2: the gamblers into ever and ever stupid things, and it's
Speaker 2: in your pocket. It was a combination of that that
Speaker 2: kind of dragged me into it, and it was also
Speaker 2: just like the whole sports gambling is as an activity,
Speaker 2: it's more interesting to me than casino gambling or even blackjack.
Speaker 2: We spent the time with sports gamblers, pro the very
Speaker 2: best sports gamblers who beat the house, and they're doing
Speaker 2: stuff very like what the Oakland A's front office did
Speaker 2: back in the late nineties and early two thousands where
Speaker 2: they were. They're doing a fresh analysis of this sports
Speaker 2: to glean fresh insights that the market, you know, is
Speaker 2: sort of oblivious to so that they get an edge.
Speaker 2: And that's interesting to me. It's like, at the same
Speaker 2: time the corporate side of it is kind of dark
Speaker 2: and gross, the gambling side of it is kind of
Speaker 2: fun and interesting for the people who know what they're doing.
Speaker 1: I've been struck by how much the sports gambling has
Speaker 1: has infected our world podcasting. I mean, sports podcasts have
Speaker 1: turned into sports gambling podcasts.
Speaker 2: You got it.
Speaker 1: I mean I've listened. I spent many, many hours of
Speaker 1: my life listening to Bill Simmons. But it's like all
Speaker 1: he mentions FanDuel in every second paragraph.
Speaker 2: They've rained so much money on media that there's just
Speaker 2: not much blowback. There's a huge financial disincentive to doing
Speaker 2: the story. Like first question your business people ask me
Speaker 2: is can we take fan duel and draftings money? And
Speaker 2: very much not in your spirit? I said no, Now, I.
Speaker 3: Know you very much not in spirit because you were
Speaker 3: so because you are so good at plowing right through
Speaker 3: the ordinary ethical objections in getting that and getting to
Speaker 3: the cash.
Speaker 2: It's so true.
Speaker 1: It's so true, isn't true? You know, we got mouths
Speaker 1: to feed to hear at Bush kind you do.
Speaker 2: You're a responsible parent and you're generating the income for
Speaker 2: the family. But I'm kind of off to I'm just
Speaker 2: I'm winging that off to the side of your operation,
Speaker 2: and I just said, no, it's pretty clear that we've
Speaker 2: got to be completely free of the taint of their money.
Speaker 2: These two companies in the last five years have spent
Speaker 2: something like two billion dollars each on marketing, and a
Speaker 2: lot it ends up in the pockets of sports work.
Speaker 1: Yes, brillion two billion, Yes, that's like General Motors level.
Speaker 2: They We had someone who I think is the trust
Speaker 2: is or us tell us that they're the biggest advertisers
Speaker 2: in America. They're bigger than the beer They're bigger than
Speaker 2: the car companies. And that isn't actually surprising anybody who
Speaker 2: watches sports. It's like every other ad is an afrogambling
Speaker 2: and and and beyond beyond that, Like the announcers, not
Speaker 2: just Bill Simmons, the announcers during the games are framing
Speaker 2: all their commentary around their bets, and their bets that
Speaker 2: they make are are encouraging or sort of suggesting to
Speaker 2: the audience they might make. Two are are precisely the
Speaker 2: stupidest bets you can make, and the bets that maximize
Speaker 2: the profits of the companies Like it's it's it's long
Speaker 2: shot bets, it's parlay bets. Uh yes, and when it's
Speaker 2: taking advantage of we haven't quite got to this the last.
Speaker 2: I don't want to burn the season on your podcast.
Speaker 2: But the human mind makes all kinds of mistake when
Speaker 2: it's placed in conditions of uncertainty, and one routine mistake
Speaker 2: it makes is that when it's given long odds, it
Speaker 2: starts to cease to make distinctions. So if someone offers
Speaker 2: you forty to one odds on some parlay bet or
Speaker 2: twenty to one odds, you think, wow, I get twenty
Speaker 2: dollars for everyone I put up, and you don't stop
Speaker 2: and to realize that actually the true odds or something
Speaker 2: like one hundred to one.
Speaker 1: You mean, because you're betting on a series of long
Speaker 1: shots and you're feeling multiply out. Yes, the odds well
Speaker 1: don't get right.
Speaker 2: Yes, people don't do exponentials very well, and the mind
Speaker 2: is sloppy when when you're starting to present people with
Speaker 2: long shot bets. That's why people play the lottery. They've
Speaker 2: been kind of grooming the American gambler to move away
Speaker 2: from oh, just betting on the taking the chiefs and
Speaker 2: giving up the points to these bets where the house
Speaker 2: take is multiples of what a casino takes for its
Speaker 2: for casino games. As a result, the two companies that
Speaker 2: they're both listed companies, DraftKings has listed DraftKings, and FanDuel
Speaker 2: was owned by what's holy companies called flutter All of
Speaker 2: Wall Street basically got them wrong the minute they ran
Speaker 2: up as companies. The stocks ran up in the wake
Speaker 2: of the legalization of sports gaming, and everybody came up
Speaker 2: and said, oh, they're inflated short them, and they crashed temporarily.
Speaker 2: It's like the Land of twenty twenty one because everyone's
Speaker 2: sort of looking at them as standard casino businesses, and
Speaker 2: they knew what the take was for standard casinos, and
Speaker 2: they could kind of guess with the handle was going
Speaker 2: to be, with the betting volume was going to be,
Speaker 2: and they did the casino Mathew, they said, this doesn't
Speaker 2: justify the stock price. In fact, the take is multiples
Speaker 2: of what casinos and is growing the margins, and a
Speaker 2: way to think about it is it's sort of like
Speaker 2: exploiting their ability to get people to do dumber and
Speaker 2: dumber things. And I think, I think it's going to happen.
Speaker 2: Our podcast is going to be a part of this.
Speaker 2: The way to address this is to make it clear
Speaker 2: that anybody who is a VIP of fan Duel or
Speaker 2: DraftKings or one of these fourths gaming apps, or anybody
Speaker 2: who even kind of does it a lot, is like
Speaker 2: someone who's who's almost certainly making dumb bets because they
Speaker 2: are on the other side of this. The gaming apps
Speaker 2: are really good at figuring out who's a smart better
Speaker 2: and kicking them out. If you know what you're doing,
Speaker 2: if you're the equivalent of the card counter, if you
Speaker 2: actually figured out something about football that nobody has realized before,
Speaker 2: and you've got a systematic edge, very very quickly, they
Speaker 2: figure it out and they get rid of you.
Speaker 1: So you know what they could do that I never
Speaker 1: understood this. They you not allowed if I walk into
Speaker 1: a store, they can't kick me out. You know, there's
Speaker 1: isn't it a whole kind.
Speaker 2: Of you would think you would think their analogy that
Speaker 2: they want to draw it is. It's like the card
Speaker 2: counter coming into the casino. We can throw out that
Speaker 2: we don't we don't have to service the card counter
Speaker 2: at the blackjack table. I don't want to rule the
Speaker 2: whole show. But our producer took an enormous pile of
Speaker 2: cash with smart betting ideas, and it took her moments
Speaker 2: to get chucked out. Poor lidiagen Cott has been banned
Speaker 2: by every sports betting or so. Yeah, because and the way,
Speaker 2: it's a very simple way how they identify that you
Speaker 2: are smart. If the line moves in your favor after
Speaker 2: you've made the bet systematically you knew something is basically
Speaker 2: were saying the odds, the odds will drift to the
Speaker 2: true odds, and if you were ahead of the market,
Speaker 2: they don't want you. And so, but the part of
Speaker 2: part is that, and I send this to an audience
Speaker 2: of money managers not that long ago. They're asking me like,
Speaker 2: do you have any tips to how to identify a
Speaker 2: good money manager? And I said, well, there's a new
Speaker 2: one now available. Before you let someone manage your money,
Speaker 2: you got to ask them if they if they have
Speaker 2: accouncil Fando and DraftKings and their sports betters and like,
Speaker 2: what's their relationship with those enterprises And if they say, man,
Speaker 2: I'm like a VIP or I do it all the time,
Speaker 2: or I don't give them your money to invest, like
Speaker 2: they are identifying people who should not be professional investors.
Speaker 1: Michael, can you describe the the Tell me a little
Speaker 1: bit about the episode we're about to hear.
Speaker 2: So this is the episode where we're the main character
Speaker 2: is Rufus Peabody, who is one of America's great sports betters.
Speaker 1: And by the way, did you make up that name?
Speaker 2: No? No, I don't.
Speaker 1: It's like that is like if I had to imagine
Speaker 1: the name that Michael Lewis would make up for his
Speaker 1: lead character, it would be Rufus Peabody.
Speaker 2: I told Rufus Peabody when I met him that if
Speaker 2: my name was Rufus Peabody and Michael Lewis, I'd be
Speaker 2: worth three times when I'm worth that It's are you
Speaker 2: kidding me? Yeah? It would be totally. It's wasted on
Speaker 2: a sports better It should it should be. It should
Speaker 2: be an author. Rufus was in he's still young Yale
Speaker 2: class of two thousand and nine or whatever. He is
Speaker 2: the leading kind of smart edge of gambling, but he
Speaker 2: was present before legalization. He was present in the markets
Speaker 2: back when Vegas was the market. We traveled with him
Speaker 2: to the point where his bets are no longer accepted.
Speaker 2: What interested me about him and his mentor is also
Speaker 2: a big character in the in the episode Roxy Roxborough
Speaker 2: a legend in the old Vegas spoiling I know, I know,
Speaker 2: I know. And what your love about Roxy is?
Speaker 1: He's Canadian, He's Canelo Michael, did we know we have
Speaker 1: two Improbably we now have a parlay of improbably perfect names.
Speaker 2: You're gonna love listening to them. They're wonderful, they have
Speaker 2: a lot to say. They're very smart people. I just thought,
Speaker 2: what is the most interesting point of view on this market?
Speaker 2: And it was obviously it was the point of view
Speaker 2: of the sharp, the edge player, the person who's beaten
Speaker 2: the market. It's like, who's the most interesting person to
Speaker 2: talk to about a casino? Either the person actually running
Speaker 2: the casino or is the card counter, or the person
Speaker 2: who's figured out how the slots are rigged, or who's
Speaker 2: seen that the roulette wheel is slightly off. It's someone
Speaker 2: who is looking at the market from a superior kind
Speaker 2: of vantage point. So it's walking us into this new
Speaker 2: market through the eyes of an edge player.
Speaker 1: You have the one thing that has distinguished you throughout
Speaker 1: your career is I feel like you. No one has
Speaker 1: his finger closer to the pulse than you. You've done
Speaker 1: it repeatedly, and it sounds like you've done it again.
Speaker 2: It's a gas of the season.
Speaker 1: Michael Lewis is host of Against the Rules right here
Speaker 1: at Pushkin. Here's his latest episode, A Hard Way to
Speaker 1: Make an Easy Living. Give it a listen and head
Speaker 1: over to Against the Rules and subscribe to hear more.
Speaker 1: Thank you, Michael, Thank you, Malcolm.
Speaker 4: Oh yay, oh yay, oh yay.
Speaker 5: May twenty eighteen, the United States Supreme Court strikes down
Speaker 5: the federal law that has effectively banned sports gambling in
Speaker 5: nearly every state. What happens next happens faster than anyone imagined.
Speaker 5: It happens in so many places at once that it's
Speaker 5: basically impossible to follow it all in real time.
Speaker 6: I ended up picking Mississippi and Kansas as the two
Speaker 6: states that I really decided to focus on and merely
Speaker 6: was just there, becoming a part of the furniture as
Speaker 6: the lobbyists were working their magic.
Speaker 5: That's Eric Lipton, New York Times reporter, who with his
Speaker 5: colleague Ken Vogel, just sat and watched as lobbyists created
Speaker 5: the conditions for a new industry to emerge overnight sports.
Speaker 6: Gambling and buttonholing various legislators, getting them to introduce language
Speaker 6: that they wanted into the gambling bills and changing the
Speaker 6: tax rates, getting provisions included that would allow them to
Speaker 6: entice betters with free bets that they wouldn't have to
Speaker 6: pay taxes on.
Speaker 5: Derek knows that state capitols or where the action is.
Speaker 5: He started his career covering state governments for local papers.
Speaker 5: When he returns to his old beat, he sees right
Speaker 5: away how.
Speaker 2: Much lonelier state capitals are because his old job, state
Speaker 2: House reporter, now barely exists.
Speaker 6: There were times when I was in the state capitol
Speaker 6: where I was pretty much the only reporter there while
Speaker 6: they were debating sports betting, and I would stay until
Speaker 6: they wrapped up two in the morning, as the session
Speaker 6: was closing and they were trying to get the bill
Speaker 6: passed and there were no other reporters present.
Speaker 2: It's like, if you do something at the federal level,
Speaker 2: there's going to be a lot of people watching. Still
Speaker 2: a lot of reporters who will cover national politics. But
Speaker 2: if you push things down to the states, you're more
Speaker 2: likely to just operate in the shadows.
Speaker 6: Yeah, and I think the lobbyists know that. And it's
Speaker 6: actually a lot easier to get things done in state capitals.
Speaker 6: You can build a national strategy through a collection of states.
Speaker 5: Eric and his colleague at the Times wrote about Kansas
Speaker 5: back in twenty twenty two, but he could have written
Speaker 5: the same piece almost anywhere. In the United States. Thirty
Speaker 5: eight states plus Washington, d c.
Speaker 2: Were rushed to legalize sports betting and rolling over for
Speaker 2: the new sports bookies who were pushing to minimize just
Speaker 2: how much of a cut the states took.
Speaker 5: They cut the tax rate almost in a half.
Speaker 6: They gave them the ability to give out free bets
Speaker 6: as a promotion to sign people up and not have
Speaker 6: to pay taxes on that. So essentially the state becomes
Speaker 6: a lost leader promoter of getting people into gambling by
Speaker 6: giving them tax free promotions.
Speaker 2: And without a whole lot of pushback from anyone.
Speaker 6: Oftentimes the legislators weren't even aware that they were passing
Speaker 6: these things, or they were. It was sent, it was
Speaker 6: given to them in the last minute, just before they
Speaker 6: were asked to vote on it, and they weren't even
Speaker 6: fully informed as to what they were voting on.
Speaker 5: Overnight, the States have gone from the bookies cop to
Speaker 5: the bookies' partner. So of all the pro sports leagues,
Speaker 5: the NFL.
Speaker 2: The NBA, and Major League Baseball, the entire sports industrial
Speaker 2: complex now has a stake in the revenues that flow
Speaker 2: into sports gambling companies like DraftKings and fan Duel. There's
Speaker 2: now a vast new machine with one clear purpose to
Speaker 2: maximize those revenues by maximizing the number of bets that
Speaker 2: Americans make on sports. A sports sequinot zus coming for
Speaker 2: sports one day one to contest that stream to sports
Speaker 2: econts frequently contes.
Speaker 5: It's as if when prohibition ended, there were these two
Speaker 5: massive liquor companies sitting there with databases on individual Americans
Speaker 5: and their tastes for alcohol, and the government ordered them
Speaker 5: to go wave a glass of whiskey under the nose
Speaker 5: of every alcoholic to persuade as many as possible.
Speaker 2: To start drinking again. Of course, there are some restraints,
Speaker 2: some rules. No state has allowed small children to gamble
Speaker 2: on sports.
Speaker 5: Eight have declined to allow people to gamble on their phones,
Speaker 5: and the taxes that the new industry pays varies a
Speaker 5: lot from state to state. New York takes fifty one
Speaker 5: percent of all sportsbook revenues. Indiana takes only nine and
Speaker 5: a half percent. In twenty seventeen, the year before the
Speaker 5: Supreme Court struck down a federal log in sports betting,
Speaker 5: legal sports bookies in the United States generated roughly three
Speaker 5: hundred million dollars in revenues. In twenty twenty three, they
Speaker 5: took in eleven billion. In twenty seventeen, Americans made roughly
Speaker 5: five billion dollars in legal sports bets. Last year, they
Speaker 5: laid down more than one hundred and twenty billion. The
Speaker 5: numbers are crazy, the consequences are even more so, and
Speaker 5: we'll be exploring them for the rest of the season.
Speaker 2: Take your shot at more than two hundred and seventy
Speaker 2: thousand dollars in payouts. That's a lot of money. I'm
Speaker 2: Michael Lewis, and this is Against the Rules, a show
Speaker 2: where we look at specific roles in American life and
Speaker 2: how they're changing. The fans.
Speaker 5: Roles changing because a powerful new machine has sprung up
Speaker 5: to encourage the fan to gamble on sports. Sports gambling
Speaker 5: has never been just a simple and straightforward marketplace. It's
Speaker 5: more like a jungle, and DraftKings and FanDuel are like
Speaker 5: this invasive species that's been dropped into it by accident.
Speaker 5: They've disrupted the food chain and overrun the habitat because
Speaker 5: they feed so efficiently on fan emotion, and fan emotion
Speaker 5: is the jungle's greatest food source. But they're also vulnerable
Speaker 5: to a creature that feeds on them. Let's recall for
Speaker 5: a minute what sports gambling once was in America by
Speaker 5: listening to just a snippet of a press conference held
Speaker 5: back in nineteen sixty one by then Attorney General Robert F.
Speaker 2: Kennedy.
Speaker 4: The record has since the passage of the legislation, and
Speaker 4: that's big time gambling by the big time operators has
Speaker 4: been materially decreased since the passage of the legislation.
Speaker 2: Kennedy celebrating a new law called the Federal Wire Act.
Speaker 2: The point of the law was to cut the legs
Speaker 2: from under the mafia by shutting down it's sports gambling operations.
Speaker 2: By giving the federal government the power to arrest and
Speaker 2: prosecute anyone who booked a sports bet over any phone
Speaker 2: or telegraph wire that crossed state lines, and.
Speaker 4: In fact, head of the Royal Mounted Police in Canada
Speaker 4: said in the speech last week that Canada will now
Speaker 4: have to pass legislation and take new steps because many
Speaker 4: of the big time gangsters and hudlums of the United
Speaker 4: States are now moving to Canada because of the drive
Speaker 4: that has been made against them here in this country.
Speaker 5: When you think of Canada, this isn't the first thing
Speaker 5: that pops into your head. Happy refuge for big time
Speaker 5: gangsters and sports gamblers. But I don't know a different era.
Speaker 7: I always had an interest in sports. My father coached
Speaker 7: me in swimming and coached me in tennis. But my
Speaker 7: world changed when I found out you could gamble on it.
Speaker 7: I became no longer a fan. I became interested in gambling.
Speaker 5: That's Michael Roxborough. Everyone just calls him Roxy now. He
Speaker 5: grew up in the nineteen fifties in Canada in a nice,
Speaker 5: upper middle class family. He's now zooming with me from
Speaker 5: a home in rural Thailand, with the ac blasting in
Speaker 5: the background and a straw fedora on his head, and
Speaker 5: the emotional feel of a man in a Witness Protection Program,
Speaker 5: a placeless man, but he really did grow up in Canada.
Speaker 5: When Roxy was a kid, there was a sports gambling market.
Speaker 5: It was smaller and more constrained than it is now,
Speaker 5: but very real, and its center was the pool halls
Speaker 5: of Vancouver, British Columbia.
Speaker 7: If you envision in the movie to Hustler, if you
Speaker 7: take a look at the pool rooms of that day,
Speaker 7: those were the pomo were the full rooms of my day.
Speaker 7: It was just full of wannabees, desperados, hustlers, drug dealers, bookmakers,
Speaker 7: everybody that was operating outside the law.
Speaker 2: When you got the bug. What's your parents think about it?
Speaker 2: Not too happy.
Speaker 7: My father was a Harvard MBA and my mother was
Speaker 7: a high school valedictorian, and I think they had higher aspirations.
Speaker 5: Roxy's dad wanted him to go to Dartmouth and he
Speaker 5: got in, but he went to American University in DC
Speaker 5: because he sensed the action was better there.
Speaker 1: I ran a blackjack game in the.
Speaker 7: American University dorm at night, and that's what's the source
Speaker 7: of most of my profits.
Speaker 2: But then I got kicked out for what for ready
Speaker 2: that blackjack game. Roxy never did finish college.
Speaker 5: Instead, he went back to Canada, in and out of
Speaker 5: boring jobs, but never stopped gambling.
Speaker 2: And then he finally caught a big break by reading
Speaker 2: a book.
Speaker 7: I was in a Reno airport flying back to Vancouver,
Speaker 7: and I picked up a copy of Ed Thorpe's Beat
Speaker 7: the Dealer.
Speaker 5: Beat the Dealer was the first book to show how
Speaker 5: a gambler inside a casino could have a systematic edge
Speaker 5: by counting cards in blackjack. The other casino games, like
Speaker 5: slots and roulette, were more or less perfectly rigged against
Speaker 5: the gambler. Anyone who played them for long enough was
Speaker 5: sure to lose. Blackjack was an exception. Played blacksjack for
Speaker 5: long enough, at least the way Ed Thorpe taught people
Speaker 5: to play, and you were sure to win Betthorpe published
Speaker 5: his book in nineteen sixty six. A few years later
Speaker 5: Roxy read it and it gave him the idea that
Speaker 5: changed his life.
Speaker 7: I decided that if I'm going to look at sports betting,
Speaker 7: I need to look at it statistically driven, data driven
Speaker 7: not by not visual or instinct or just watching a
Speaker 7: lot of games.
Speaker 5: Outcomes in sports were obviously far less regular and predictable
Speaker 5: than outcomes inside slot machines or even at blackjack tables.
Speaker 5: But that didn't mean you couldn't learn stuff about sports
Speaker 5: that would allow you to make better predictions. Not perfect predictions,
Speaker 5: but better predictions than everyone else betting on games. In
Speaker 5: the nineteen seventies, Roxy had baseball in mind. The guys
Speaker 5: who booked baseball legally in Nevada and illegally everywhere else
Speaker 5: AREFRED gamblers. The chance to bet on not just who
Speaker 5: would win the game, but how many runs both teams
Speaker 5: would score. Roxy had an insight that seems obvious now.
Speaker 5: The number of runs scored in any baseball game depended
Speaker 5: on factors like the weather at game time and the
Speaker 5: size of the fields. San Diego's was a good example.
Speaker 7: You just could not hit the ball out of there,
Speaker 7: And then the Padres went and spent like an outrageous
Speaker 7: contract to sign a guy like Oscar Gamble. All he
Speaker 7: had is hit fly balls, and that park was a
Speaker 7: place where flyballs went to die. So you've soon found
Speaker 7: out that general managers really didn't know anything about their
Speaker 7: own ballparks either.
Speaker 2: The idea that the people who run sports teams don't
Speaker 2: know what they're doing has probably never been a new idea.
Speaker 5: Fans have always thought that they know better. What was
Speaker 5: new is that someone in the stands was actually figuring
Speaker 5: something out the effects of the wind and the humidity
Speaker 5: and the barometric pressure on a ball that was flying
Speaker 5: through the air.
Speaker 7: We started to start getting weather reports from all the cities,
Speaker 7: the parts out in which ones helped scoring or hindred scoring.
Speaker 2: And dimensions right, I mean just the length of the
Speaker 2: left field fence.
Speaker 7: Dimensions were important, and we found out a couple of
Speaker 7: the ballpark dimensional drawings were wrong. They had the north
Speaker 7: pole raw well pointed north. Because we went out and
Speaker 7: did to ourselves.
Speaker 5: Roxy moves to Vegas full time in nineteen seventy five
Speaker 5: to bet on sports, and just by taking into account
Speaker 5: the weather and the size of ballparks, he's able to
Speaker 5: make a killing while trying to avoid the people who
Speaker 5: know a thing or two about actual killing. Where the
Speaker 5: Nevada legal bookmakers detectively run by the mob.
Speaker 7: They'd have had a hand in till about right well,
Speaker 7: aged seven.
Speaker 2: Yeah, I just wonder in that environment was it dangerous
Speaker 2: to win too much now?
Speaker 7: Because actually what they would do is they could find somebody.
Speaker 1: Else who could take your bet, and they can move.
Speaker 7: It for more money someplace else in the country.
Speaker 5: The old sports gambling market inside the United States was shady,
Speaker 5: but it had its unwritten rules, and one was that
Speaker 5: they always took your bets if you bet a lot.
Speaker 5: They eventually moved the lines. These betting lines were all
Speaker 5: set in Vegas for a very long stretch. They were
Speaker 5: actually set in a single Vegas casino, the Stardust. The
Speaker 5: bookie at the Stardust set the odds and everyone else
Speaker 5: just followed his lead. There was a bank of payphones
Speaker 5: outside the Stardusts that were said to be the most
Speaker 5: profitable in the country for the phone company because sports
Speaker 5: gamblers used them to relay the odds to the illegal
Speaker 5: bookies and betters across the country.
Speaker 7: Communications back then it was just with a phone call.
Speaker 7: That was the only communications there were.
Speaker 5: In the late nineteen seventies, the Nevada Gaming Control Board
Speaker 5: tossed the mob out of Vegas and out of sports gambling,
Speaker 5: and pretty soon Roxy became old news. By the early
Speaker 5: nineteen eighties, everyone knew that the weather and the size
Speaker 5: of ballparks had big effects on baseball scores, and Roxy
Speaker 5: never found another systematic edge, and his life became a
Speaker 5: bit of a mess. He'd been arrested for violating rfk's
Speaker 5: Wire Act, he'd taken crazy risks as an illegal book maker,
Speaker 5: and he'd run through two marriages.
Speaker 2: Is a gambling business hard out of relationships, charity why?
Speaker 7: It just sort of takes over your mood and your personality.
Speaker 7: I don't know anybody who's ever been in gambling thought
Speaker 7: they were a better person for it.
Speaker 2: It's interesting because when you think about why a person
Speaker 2: would drift into gambling in the first place, it would
Speaker 2: be because you think it might be an easy way
Speaker 2: to make money, Yes, and it ends up being a
Speaker 2: harder way to make money.
Speaker 8: It does what did they say?
Speaker 2: It's a hard way to make an easy living.
Speaker 5: People said that Roxy now knew it. So in nineteen
Speaker 5: eighty two, he quits gambling. He creates a company called
Speaker 5: Las Vegas Sports Consultants. This new company will effectively replace
Speaker 5: the Stardust Casino in setting the odds for all major
Speaker 5: sports contests. Roxy's just better at it, and pretty soon
Speaker 5: he's selling his odds to all the sports bookies, including
Speaker 5: the Stardust. This makes sense to everybody in Las Vegas.
Speaker 5: Hiring Roxy to set the odds in sports is like
Speaker 5: hiring the first card counter to guard the blackjack tables.
Speaker 7: So I said, you know, I'm going to try this
Speaker 7: for a couple of years, but I'm not sure if
Speaker 7: it's going to work, because it wasn't given that every
Speaker 7: hotel was going to have a sportsbook. Was there rather
Speaker 7: limited business. But that was one of my better decisions
Speaker 7: because it turned out to be a massive business.
Speaker 5: Sports gambling isn't exactly a financial market, but it rhymes
Speaker 5: with financial markets. What happens on Wall Street, somehow eventually
Speaker 5: also happens in sports gambling. And Wall Street's about to
Speaker 5: undergo dramatic change. First computers and then the Internet will
Speaker 5: allow the markets to become a lot more complicated, and
Speaker 5: the BET's a lot more complex. The world's about to
Speaker 5: speed up, and a new kind of person with a
Speaker 5: different kind of education is going to enter it. Old
Speaker 5: school traders with high school degrees and lots of body
Speaker 5: hair and names like Vinnie and Donnie are about to
Speaker 5: be replaced by hairless PhDs from MIT with computer models
Speaker 5: who as kids thought they grow up to be professors,
Speaker 5: not traders. On Wall Street in the late nineteen eighties,
Speaker 5: smart old school guys served as a kind of bridge
Speaker 5: between the two cultures in sports gambling. Roxy was that bridge,
Speaker 5: but it took a while for anyone to cross it.
Speaker 2: We're here to see Rufus pebo. We're in the right place.
Speaker 2: We're still in Vegas, but far from the strip. We're
Speaker 2: not gonna be a wrong We're just gonna make a
Speaker 2: bunch of sports bets. He runs into legal gamblin operation.
Speaker 2: I've never even knew that you want any action.
Speaker 5: The real action is no longer on the strip. The
Speaker 5: real action is basically invisible. But here on the seventeenth floor,
Speaker 5: with a sweeping view of the distant casinos, Rufus Peabody
Speaker 5: lives and works.
Speaker 2: Rufus We're here.
Speaker 4: We're here.
Speaker 2: Rufus Peabody is who crossed Roxy's bridge.
Speaker 8: I never was a better as a kid. I didn't
Speaker 8: know anything about sports betting.
Speaker 2: You can feel a little twinge of desire none.
Speaker 8: Most people that got their start, they started losing and
Speaker 8: they learned how to win. But I was never better.
Speaker 8: I never grew up betting like besides NCAA tournament pools,
Speaker 8: I was always good at those, But for me, it
Speaker 8: was a game and I'm not I'm a risk taker.
Speaker 8: But I'm not a gambler by nature.
Speaker 2: Rufus grew up outside of Washington, DC, always loved sports,
Speaker 2: thought he might like to be a sports journalist.
Speaker 5: He still reminds me a bit of a journalist. He's
Speaker 5: a watcher, a person whose eyes move more than his mouth.
Speaker 5: But even when he was a kid, his mind took
Speaker 5: him places that journalism usually doesn't.
Speaker 8: So so it was this team one eighty two to
Speaker 8: sixty four, But why did they win? Basically I kind
Speaker 8: of wanted to report on the why it happened rather
Speaker 8: than just this guy got eighteen points and twelve rebounds
Speaker 8: and this team one right. I kind of wanted the
Speaker 8: story of why.
Speaker 2: He wanted explanation.
Speaker 8: I want explanations.
Speaker 5: In two thousand and four, Rufus graduated from high school
Speaker 5: and went to Yale. He was still obsessed with figuring
Speaker 5: out why. He studied statistics and built models that predicted
Speaker 5: the performance of athletes and the outcomes of sporting events,
Speaker 5: not because he wanted to gamble on them, just because
Speaker 5: it was cool to figure out stuff that even people
Speaker 5: who run sports teams don't know.
Speaker 2: He wanders around Yale looking for someone to teach him more.
Speaker 9: Rufus wants to do a thesis on, if I remember correctly,
Speaker 9: behavioral biases and the baseball betting market.
Speaker 5: He's who rufe has found. His name is Cade Massey.
Speaker 5: He's a professor of organizational behavior. Was it interesting, Oh.
Speaker 9: Yeah, absolutely, I mean what's not interesting about trying to
Speaker 9: find psychological mistakes that people make with like, you know,
Speaker 9: hundreds of thousands of observations of real money being.
Speaker 2: Met, and he found mistakes.
Speaker 9: I mean, he was finding profitable strategies right off the bet.
Speaker 5: Rufus just kept asking questions about the behavior of sports gamblers.
Speaker 5: He still wasn't placing bets himself. He was just working
Speaker 5: with this professor to build a model to predict college
Speaker 5: football scores. They pitched it to the Wall Street Journal,
Speaker 5: and the journal agreed to publish their college football picks
Speaker 5: of the week. It was just how they would bet,
Speaker 5: were they to bet on college football.
Speaker 9: And he would then post our picks of the week.
Speaker 9: We're just posting them because we were working with the
Speaker 9: Wall Street Journal, So post him on Tuesday or Wednesday,
Speaker 9: and then he would watch as the prices started moving
Speaker 9: on his screen.
Speaker 2: Oh my god.
Speaker 5: Which is to say the sports gambling market would see
Speaker 5: their picks and move in response because the market figured
Speaker 5: out that their picks were that good.
Speaker 9: Within a year or so, we quit posting college picks
Speaker 9: because it was getting too much in the way of
Speaker 9: what he was trying to do, because he wanted to
Speaker 9: bet it himself, because he wanted to bet it, and
Speaker 9: then if they're so good you would bet them, you
Speaker 9: wouldn't sell them, right. I mean, it was bound to
Speaker 9: eventually occur to Rufus that if he could predict the
Speaker 9: scores of college football games, then he should just bet
Speaker 9: on them himself. But it's funny how he got there.
Speaker 5: In his head, Roxy Roxboro had started as a gambler
Speaker 5: who then set out to find some kind of edge
Speaker 5: to bet. Rufus Peabody started by finding these edges and
Speaker 5: kind of stumbled into gambling and then found Roxy. During
Speaker 5: Rufus's junior year at Yale, he read an article in
Speaker 5: ESPN about Roxy's sports analytics company, Las Vegas Sports Consultants.
Speaker 5: Roxy's company wasn't used to getting resumes from Yale juniors,
Speaker 5: but they gave him a summary internship anyway and showed
Speaker 5: him their world from their offices right next to the
Speaker 5: Las Vegas Airport.
Speaker 8: They would bet on what plane was most likely to
Speaker 8: land next, right, And this is like sort of pre
Speaker 8: internet days or pre like being able to see flight
Speaker 8: plans and stuff like that, and so it was like, okay,
Speaker 8: American Airlines is like six to one, like you know,
Speaker 8: Southwest is two to one whatever. What people didn't realize, though,
Speaker 8: was Roxy actually had a contact in the control tower,
Speaker 8: and so Roxy won. He made money off of these bets,
Speaker 8: but he didn't make enough to draw suspicion. That was
Speaker 8: the key. But he would occasionally hit the japan Air
Speaker 8: at three hundred to one, right or whatever.
Speaker 5: Roxy screw would bet on everything. Rufus wasn't like that.
Speaker 5: He didn't even think of what he wanted to do
Speaker 5: as gambling, but he did want to understand this other world,
Speaker 5: this world where people bet on anything that moved.
Speaker 8: They shared the building with American Wagering, so with LeRoy's,
Speaker 8: which was a sort of third party sportsbook operator. Le
Speaker 8: Rois didn't have a casino, but they were in casinos
Speaker 8: like Hooters or Terrible Herbst. Right, Hooters has a casino, Yeah,
Speaker 8: Hooters casino. It's on the strip. It's right, tropic cannot
Speaker 8: basically right, Yeah, So I met, I meet this the
Speaker 8: head trader there right, and I have all these questions.
Speaker 8: A book maker can make more money, Let's say, if
Speaker 8: they know the public's bias, they can make more money
Speaker 8: setting a line somewhere between the true price and the
Speaker 8: price of the public thinks that's the way to maximize.
Speaker 2: There's no reason you should understand what rufe has just
Speaker 2: said there, but let me try to explain it, because
Speaker 2: it tells you a bit about how this old school
Speaker 2: sports gambling world works. The line is just the odds
Speaker 2: or the points spread.
Speaker 5: The true price is what the odds would be if
Speaker 5: you somehow knew every possible relevant bit of information about
Speaker 5: some upcoming game. Of course, no one ever knew everything,
Speaker 5: so there is in reality, never a perfect true price,
Speaker 5: just some number that the smartest and best informed betters
Speaker 5: agree on. Say they agreed that the Packers should be
Speaker 5: eight point favorites over the Cowboys, but most of the
Speaker 5: gamblers are Cowboys fans, and the Cowboys fans think the
Speaker 5: Cowboys are only three point underdogs. Rufus was asking the
Speaker 5: bookie if he thought he could entice the public to
Speaker 5: make more stupid bets if he set the line not
Speaker 5: at the true price of eight points, but it's say
Speaker 5: five points because Cowboys fans will think the Cowboys are
Speaker 5: better than they actually are and bet even more.
Speaker 8: I said, theoretically, you can make more money setting a
Speaker 8: line somewhere between the true price and where the public
Speaker 8: thinks the price is. And he says, theory, theory, and theory.
Speaker 8: A dick don't fit in an asshole. And this guy, yeah,
Speaker 8: he was probably three hundred pounds five to eight, smoking
Speaker 8: a cigar in a dark room, looking at a bunch
Speaker 8: of numbers on a screen.
Speaker 2: In just a flash, there you've changed our podcast rating.
Speaker 8: Sorry.
Speaker 5: Rufus Peabody recently of Yale is no one's idea of
Speaker 5: a hustler. He's too sweet natured and even tempered, and
Speaker 5: way too open to telling other people about the stuff
Speaker 5: he's learned. He finishes up at Yale and moves back
Speaker 5: to Vegas to work full time at Las Vegas Sports Consultants.
Speaker 5: But now Rufus thinks he might have an edge, and
Speaker 5: people in and around Roxy's firm think that maybe he's right.
Speaker 8: The Super Bowl was my first big break. Super Bowl
Speaker 8: two thousand and nine. Okay, I had made a friend
Speaker 8: with a professional sports better guy that bet baseball, and
Speaker 8: he loaned me ten thousand dollars to bet. I had
Speaker 8: my own ten to twelve thousand dollars. My boss, Kenny,
Speaker 8: unbeknownst to everybody else, invested forty thousand dollars in me
Speaker 8: and gave me a twenty percent free.
Speaker 2: Roll on it, meaning that if it wins, you take
Speaker 2: twenty percent of nance, but you've suffered another losses correct.
Speaker 8: And so I ended up with close to sixty thousand
Speaker 8: dollars bet on the Super Bowl, and so I basically
Speaker 8: was pretty leveraged. Yeah, and I remember being like, this
Speaker 8: game doesn't work out, you know, I gave it a shot.
Speaker 2: All right, And what is causing you to have such
Speaker 2: conviction about a game?
Speaker 9: Oh?
Speaker 8: Nothing. It wasn't conviction about the game. It was betting
Speaker 8: the props.
Speaker 5: The props short for proposition bets not on the whole game,
Speaker 5: but pieces of the game. But the standard story, which
Speaker 5: is almost certainly not true, was that the prop bet
Speaker 5: was invented for the nineteen eighty six Super Bowl between
Speaker 5: the Chicago Bears and the New England Patriots. The Bears
Speaker 5: were such heavy favorites that Vegas had trouble jinting up
Speaker 5: in interest in the game, so a Vegas bookie created
Speaker 5: a side bet the odds that a Bear's defensive tackle
Speaker 5: named William the Refrigerator Perry would score a touchdown. It
Speaker 5: was a long shot bet, and the betting public loved it,
Speaker 5: and Vegas bookies lost a fortune when the fridge did
Speaker 5: indeed score. But back to Rufus and forward to the
Speaker 5: Super Bowl of two thousand and nine, the Pittsburgh Steelers
Speaker 5: played the Arizona Cardinals. Rufus wasn't betting the whole game,
Speaker 5: but pieces of the game. His Pro Football model spits
Speaker 5: out odds for all this weird stuff that Vegas bookies
Speaker 5: are now offering bets on the odds that Steeler's running
Speaker 5: back Gary Russell will score the game's first touchdown. For example,
Speaker 5: Rufus has vast troves of data to mine. He can
Speaker 5: do stuff with it that Roxy would never imagine. He
Speaker 5: could do stuff that even the people who run the
Speaker 5: Pittsburgh Steelers would never imagine doing.
Speaker 2: I mean, even Gary.
Speaker 5: Russell likely has no idea that you can calculate the
Speaker 5: odds that he will score the game's first touchdown.
Speaker 2: But Rufus can. His model puts those odds much higher
Speaker 2: than the bookies' odds. So in Rufus's mind, it's a
Speaker 2: great bet. He makes dozens of similar bets BET's where
Speaker 2: his model tells him that the bookies are giving him
Speaker 2: better odds than they should.
Speaker 8: I still remember going. It was like Hara's Caesar's the Rio.
Speaker 8: I ended up getting down like two hundred dollars at
Speaker 8: a time, like five thousand dollars. Positions on a few
Speaker 8: things like that were really good, and so I was
Speaker 8: diversified within the game. Within the game, I wasn't betting
Speaker 8: on the outcome of the game, but I was. I
Speaker 8: still to this day, have never watched that game.
Speaker 2: I was too nervous. How did you experience the game
Speaker 2: if you didn't watch it.
Speaker 8: I went to this little par three course that's open
Speaker 8: at night, right south of the airport, and I played
Speaker 8: the part three course twice until I felt like the
Speaker 8: game would definitely be over. And then I went grocery shopping.
Speaker 8: And I didn't have a smart this is pretty smartphone.
Speaker 8: I went grocery shopping, and then I went home and
Speaker 8: cooked myself dinner.
Speaker 2: Huh.
Speaker 8: And then and only then did I open my computer
Speaker 8: and check and see how the game went.
Speaker 2: And were you just going through your prop bets seeing
Speaker 2: what happened?
Speaker 8: First I went to the boss score and I saw
Speaker 8: the first score was Gary Russell one yard touchdown run.
Speaker 8: I was like, ah right, And it turned out out
Speaker 8: of like fifty six thousand dollars bet like, I profited
Speaker 8: like twenty three thousand on it.
Speaker 5: Rufus figures out how much he's won. Then he physically
Speaker 5: retraces his steps to the many casinos that had taken
Speaker 5: his many bets, still driving an old Honda Civic.
Speaker 2: You had all these little tickets you have to write,
Speaker 2: you go cash each one individually, so you had you
Speaker 2: must have had one hundred tickets.
Speaker 8: Oh yeah, probably.
Speaker 5: He just drives around Las Vegas and the money piles up, and.
Speaker 8: I remember how having like thirty thousand dollars on the
Speaker 8: front seat and being like, oh my god, so much money.
Speaker 2: In cash in cash. After that, lots of people in
Speaker 2: Vegas wanted to lend money to Rufus and take a
Speaker 2: cut of his bets.
Speaker 5: Rufus, for his part, was still sitting in his office
Speaker 5: in Las Vegas Sports Consultants, but pretty soon he was
Speaker 5: directing an army of people to lay bets in sports
Speaker 5: books across the city, sports books that got their odds
Speaker 5: from Las Vegas sports consultants. Rufus was in effect betting
Speaker 5: against the lines created by Roxy's firm. Roxy himself had
Speaker 5: moved on at this point, but he watched what Rufus
Speaker 5: was doing and he admired it.
Speaker 7: He came to bootcat once I met him, even after
Speaker 7: one line. She said, this guy's thinking at a higher
Speaker 7: level than other people. And I learned a lot for
Speaker 7: a moment, not because he was divulging your secrets, but
Speaker 7: he was just thinking at a higher level.
Speaker 2: To get his edge.
Speaker 5: Roxy had used weather reports, Rufus was using the spin
Speaker 5: rates on pitcher's curveballs.
Speaker 8: I try to drill things down to their root. Cause
Speaker 8: it's kind of what you do when you write books.
Speaker 8: You try to figure out the person, what makes them tick,
Speaker 8: what's the story. I try to figure out why things
Speaker 8: happen in a baseball game or a golf tournament, what
Speaker 8: makes the player good. It's not just their score, Like
Speaker 8: what are the things that are driving their score? Which
Speaker 8: of those are repeatable, which aren't. And right now you
Speaker 8: have all this computer vision and that type of data
Speaker 8: available now, and with a lot of these sports. I mean,
Speaker 8: we're now talking about bat speed, measuring bat speed and
Speaker 8: looking at like aging curves for bat speed.
Speaker 5: The whole point of Rufus is that he never lets
Speaker 5: emotion interfere with his process. But that doesn't mean he
Speaker 5: doesn't feel emotion.
Speaker 2: He does. He feels it for his process.
Speaker 8: We're using bat speed to then predict exit velocity, and
Speaker 8: we're using exit vie to then predict like waited on
Speaker 8: base average and basically whether a ball will be hit
Speaker 8: or not, and what kind of damage it'll be if
Speaker 8: it is, and then you know, use that to predict wins.
Speaker 2: And how did it work?
Speaker 8: How did it work? It works? Well, we made one
Speaker 8: hundred and twenty five thousand in the first month. I
Speaker 8: don't know what our volume was overall, and I got
Speaker 8: twenty percent of it, which was great because my yearly
Speaker 8: salary was twenty five thousand.
Speaker 5: Rufus had become the card counter at the blackjack table,
Speaker 5: only it was richer than that. He was generating new
Speaker 5: insight about why things happened in sports. A blackjack dealer
Speaker 5: knows where the card counter gets his edge the sports book.
Speaker 5: He couldn't really tell where Rufus was getting his, which
Speaker 5: made Rufus and what he was doing even more unsettling,
Speaker 5: and did the M at any point say we're now
Speaker 5: taking your bets. The M Casino was one of Rufus's
Speaker 5: favorite sports books.
Speaker 8: Now they had their whole thing was we're going to
Speaker 8: take all comers. We want to be we want a
Speaker 8: lot of volume. We think we're better than people.
Speaker 5: Then comes the Supreme Court decision of twenty eighteen, twenty
Speaker 5: three states soon legalized sports gambling. Rufus now has the
Speaker 5: M Casino and a lot of others right in his pocket.
Speaker 10: Fan Duel and the PGA Tour have teams up. Now
Speaker 10: you can get more action out of every stop on
Speaker 10: the tour.
Speaker 5: And Rufus of course stands to make a killing. The
Speaker 5: bigger the markets, the more he can bet, bet.
Speaker 10: The PGA Tour and make every moment more with Fan
Speaker 10: Duel sports book.
Speaker 5: But as it turns out, that's not how it's going
Speaker 5: to go down. This ecosystem is going to change in
Speaker 5: ways Rufus didn't predict, and he began to sense it
Speaker 5: in late twenty twenty.
Speaker 8: So I would drive up to New Hampshire to bet
Speaker 8: at these kiosks initially and then once there was mobile betting.
Speaker 8: I had an account on DraftKings.
Speaker 5: Rufus had a girlfriend in Masses. Massachusetts hadn't yet legalized
Speaker 5: sports betting, so he needed to cross state lines to
Speaker 5: use the betting app on his phone. The drive took
Speaker 5: him like forty five minutes, but it was actually easier
Speaker 5: than running all over in Vegas trying to get cash down.
Speaker 5: He and his process were built for this new type
Speaker 5: of casino. He could bet on golf basically all day long,
Speaker 5: until one day he couldn't.
Speaker 8: One week, I lost thirty thousand dollars. I got a
Speaker 8: phone call to tell me that they were cutting my
Speaker 8: limits on golf.
Speaker 5: He'd lost thirty thousand dollars, and DraftKings stopped taking his
Speaker 5: big bets. By the way, we've reached out to DraftKings,
Speaker 5: and so far they have declined to talk with us. Anyway,
Speaker 5: it was clear to Rufus back in twenty twenty that
Speaker 5: this was definitely no longer his old sports gambling world.
Speaker 8: Because I had bet enough. It spurred them to actually
Speaker 8: go in and look at the stuff I'd been betting
Speaker 8: and how I'd been doing. Books are not limiting people
Speaker 8: just because they win, They're limiting them because they think
Speaker 8: they're going to win.
Speaker 5: Future Rufus used data to predict what athletes were going
Speaker 5: to do. DraftKings was using data to predict what Rufus
Speaker 5: would do. When they looked at the data, they saw
Speaker 5: that after Rufus placed his bets, the odds nearly always
Speaker 5: moved in his favor. These were the bets of someone
Speaker 5: who knew things before the market knew them, and the
Speaker 5: new bookies were not like the old bookies. They only
Speaker 5: wanted to take certain kind of bets, Bets that were
Speaker 5: more like the bet you make when you press the
Speaker 5: buttons on a slot machine. Bets that if you made
Speaker 5: them often enough, you were sure to lose, the sort
Speaker 5: of bets a fan would make, the sort of bets
Speaker 5: Rufus Peabody never made.
Speaker 8: Refusing a bet wasn't a thing. It never was a
Speaker 8: thing here, huh. Like you if you got kicked out
Speaker 8: of a casino, or if you couldn't get there, it
Speaker 8: was because you did something wrong, like you violated the
Speaker 8: sacred bookmaker better covenant.
Speaker 5: Being smarter than the market didn't used to get you
Speaker 5: kicked out of the market, But the market's changed. Sports
Speaker 5: gambling is still a hard way to make an easy living.
Speaker 5: But now it feels even less fair. Now it feels
Speaker 5: like someone should step in and help.
Speaker 2: Rufus okay cool.
Speaker 11: So I downloaded FanDuel, DraftKings, Fliff Fanatics, Caesar's Bet, MGM,
Speaker 11: and PayPal. So now everyone has all of my information
Speaker 11: and my social security number.
Speaker 8: Oh, your social security number.
Speaker 11: They all asked for it.
Speaker 5: Yes, these new sports gambling apps, they all ask for it,
Speaker 5: and so we're going to give it to them in
Speaker 5: our next episode. Against the Rules is written and hosted
Speaker 5: by me Michael Lewis and produced by Lydia gene Kott,
Speaker 5: Catherine Gerardeau, and Ariela Markowitz. Our editor is Julia Barton.
Speaker 5: Our engineer is Jake Gorski.
Speaker 2: Our music was composed by Matthias Bossi and John Evans
Speaker 2: of stell Wagon Sepinett.
Speaker 5: Our fact checker is Lauren Vespoli. Against the Rules is
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