Sports Betting Industry Today

May 18, 2016, 01:05 PM
I. Background 

Betting on sports is as old as the hills. Two combatants would thump their chests and bare their teeth in a bloody battle on a wet, slushy ground; and people around them would wager on who would emerge the winner. The fascination of predicting the future – about to happen a few seconds, a few hours, or a few days from now - is what hooks the gambler hidden in all of us. After placing the bet, as the game unfolds and players slug it out amongst themselves, the gush of adrenalin through the pores of the body is what makes life worth living. 

The industry comprises people of all backgrounds – from the old money bags to the nouveau riche, from the top-flight executive to the blue-collared worker, from the stock broker to the rag-picker, from the two-timing husband to multiple-divorcee walking down the aisles yet again … - everybody is a member and everybody is welcome to indulge their fantasies in this high stakes, no-holds-barred potboiler of sports betting. 

Our forefathers had fewer opportunities in betting on sports than what we enjoy now. They spent their bucks and rooted for their favorites riding on horses galloping around race tracks. From whistling wildly at the horse-racing grounds to exchanging pool cards for baseball, football, basketball and boxing that promised a big payday, betting on sports promised El Dorado during the Great Depression, and this was something that nothing else offered those days – not even the best politicians’ best speeches. 

An innovative 11/10 vigorish reduced the risk of bookies washing out their entire bank balance; and the “point spread” as a concept brought a never-before boom to the industry as a whole. New York City took the lead in legalizing Offtrack betting (OTB) system in the U.S. in 1971, while Nevada was the first state to legalize sports betting to get over its bust economy, imposing a 10% tax on every transaction, reducing it later to 2%, and then slashing it further to 0.025%. Sports books began to be maintained by reputed casinos and hotels, with plush seats, multiple television sets and electronic score boards for the latest information for the patrons. Roxborough’s outfit in Las Vegas was the first to introduce the concept of computer-generated power ratings and single-point clearinghouse for data on injury rumors and weather reports. 

The industry has not turned back since Roxy’s bold ideas were implemented way back in 1985. 

II. Current scenario – the United States 

Cut to today. 

  Super Bowl XXXIX was played at the Alltel Stadium in Jacksonville, Florida on February 6, 2005. Total amount of money wagered on Super Bowl XXXIX? $90.76 million … that’s about 12% more than the $81.2 million for the XXXVIII Super Bowl. There are now 173 sports books across Nevada; put together, they won a record $15.43 million, up from $12.44 million for the previous year. A win percentage of 17.0% (as against 15.3% in 2004) was thus recorded on February 6, 2005 – you can imagine the bunch of gleeful bookies celebrating that day! 

 Online-gambling companies have come into their own, offering interfaces with most popular wireless operating systems, such as Windows Mobile PocketPC, Palm OS, Symbian OS and Java-oriented platforms. Their objective: get customers to place their bets from their cell/mobiles, wherever they are. This is just one manifestation of the coming together of media companies, computer software giants and betting sites to engage the attention and the money of both hardcore veterans and wannabe gamblers. Interactive (iTV) is another medium where the TV remote shall be used to place bets. 

A 24 X 7 X 365 easy-availability is just one of the advantages of online sports betting – whether on the internet or on iTV. Enticements such as initial deposit bonuses and redeposit bonuses attract potential bettors in hordes. The plethora of online sportsbooks increases the chances of a gambler getting a better line. Further, since a modicum of legal licensing and regulatory framework for online sportsbooks is in place – ah well, at least the top ones (and some of them are even listed on stock exchanges) -, the risk of not getting paid in a transaction has become remote. The high level of education in points-spreads and combined-handles has ensured that the traditional “squares” are no longer so, but have “rounded off” to become a shrewder crowd, forcing bookies to fine-tune their strategies to adapt to a new marketplace. 

With the touch and feel of intra-day online stock trading  brought to the environs of online sports betting, it is estimated that e-sports-betting will grow to $100 billion by 2015. 

There are concerns voiced by a section of politicians and social workers, led by Senator Jon Kyl, who have sought to introduce legislation compelling banks and credit card companies to block payments to online Internet gambling sites. Though this proposal, tabled in the U.S. Senate in September 2005, was defeated, this particular section is not disheartened, and more action is expected on this front. 

Offshore sports betting and offshore books set up in the Caribbean region, most notably, in Antigua, Barbuda, Belize, Costa Rica, Curacao (Netherlands Antilles), and the like, have grown in popularity to such an extent, that the hub of mega-bucks betting is no longer Las Vegas: it is offshore books. Figures prove this – the combined handle managed by offshore sports books was estimated to be at $76.6 billion in 2004, yielding revenue of $3.447 billion. This is almost 38 times more than the $2.08 billion handle in Nevada. At least five offshore books lolled in money that was more than the performance of the entire state put together. 

These offshore businesses found an ally in the WTO that ruled against the US government in a dispute with the government of Antigua and Barbuda. WTO gave the verdict that the US state restrictions on internet gaming were in breach of the US’ commitments under the GATS treaty. Again, expect more action on this front, too. 

III. Current scenario – Europe 

As in the US, betting on sports is a problem that continues to vex the governments of all European countries, especially internet gaming, cross-border gambling, and their associated dilemmas, irrespective of which end of the political spectrum – left, centre, or right - they belong to. The European Court of Justice (ECJ) has, whenever differences between countries over legal matters pertaining to sports betting have sprung up, tended to uphold state monopolies, at the expense of freeing up trade. A lowdown of the latest happenings in two countries of this continent is presented below. 

Germany has been overzealous in protecting the German sports betting market from foreign competition. This may be seen by the action taken by Westdeutsche Lotterie GmbH u. Co. oHG to restrain Hilton-Group-owned and U.K.-based Ladbrokes dot com from offering wagers to German consumers. That this November 2003 decision had nothing to do with public order, but was based on hard-nosed tax and revenue issues, has been amply demonstrated by the aggressive commercial behavior of ODDSET, a subsidiary of the German State Lotteries. The FIFA World Cup 2006 is scheduled to be played in Germany and betting on the games is being handled by ODDSET, to the exclusion of other bookies. Quite obviously, enthusiasts outside Germany are expected to wager for the game in thousands, too. As of June 2005, the European Commission had received seven complaints against Germany relating to gambling services, concerning “national restrictions on the organization of gambling services, commercial organizations relating to gambling services and establishment”. 

Unlike the U.S. and Germany and many other European counterparts, Britain has been quite liberal in their attitude towards sports betting. Wagering on a sport has been a national pastime, and indeed, is part of the societal rubric. Whether it is cricket, football (soccer), rugby, or the traditional horse-racing, along with all the other professional sports worth their salt – British public love to put their money on their prediction of how a particular game will pan out. Playing the football pools every week is a national sport. 

It was in 1985 that Gary Bowman founded his “American Football Pools” in Manchester, England, after receiving a license from the British Government to accept bets from anywhere in the world. Indeed, it was Bowman who thought of the business model of offshore book for the first time! Now operating out of Mauritius with a 150+ staff, the company is a respected player in the world of sports bookies. 

It was in U.K. again that the world’s first T.V. channel devoted exclusively to Poker was launched in March 2005 – “The Poker Channel”. Yoomedia, another British-owned company, provides a red-button link from The Poker Channel to a Poker Channel-branded, interactive television, fixed-odds gaming portal. This logically leads to a multiplayer, real-money poker via interactive TV – and betting on the Poker players is not far behind. 

John Anderson, chief executive of Gibraltar-based 888 Holdings (Casino-On-Net), found the professional, welcome approach of UK’s regulations attractive enough to go in for a listing on the London Stock Exchange in September 2005. Debuting on the stock market at a valuation of US $1.04bn, Anderson’s decision has been vindicated many times over – his company’s issue was oversubscribed by five times. 

Just goes to show that when it comes to sports betting, Britain leads the world. 

IV. Current Scenario – Asia 

Cities such as Shanghai, Hong Kong, Macau, Singapore, New Delhi, Bangkok, Kuala Lumpur and the like are in different stages of development so far as “legit” sports betting is concerned. Sports’ betting is frowned upon in countries such as India where it is considered a crime, punishable under law; although millions of dollars exchange hands whenever players of their national sport walk onto the field. 

In almost all the Asian countries, horse racing has been a traditional arena for wagering their money, thanks perhaps due to their colonial past. 

Singapore is taking its first tentative steps in opening the first casinos (by 2007/2009). Tokyo can boast of just two listed land-based gambling casinos. The advent of internet sports betting and offshore books has diverted some traffic from the illegal betting network towards the computer; however, it will be a while before the impact of this shift becomes tangible on the betting economy. 

V. End Note 

The success of UK’s benevolent attitude towards gambling in general and sports betting in particular – in terms of the impact of the latter on British society as a whole, may be taken as a benchmark for the rest of the world who are thinking up of ways to impose curbs on this industry. Ingenuity has seen this industry thriving under the most crippling circumstances. It might behoove lawmakers, therefore, to not brand fun-loving citizens as criminals for their brief flings into sports betting (at least one in every four Americans wagers their money on some or the other sport at least once in a year), but instead focus attention on other aspects of the industry, such as it being used as a possible conduit for money laundering. 

Advances in technology have meant that people may indulge in betting on sports while waiting at the airport or at hotels, through their blue-tooth-enabled laptops and palmtops. 

Offshore sportsbooks have taken away the sting of people not being able to wager their bets on sports of their choice: the convenience of parking funds abroad, coupled with the facility of laying bets online and tracking its progress implies that it shall be difficult for governments to practically implement laws prohibiting citizens to participate in sports-betting avenues outside the country. Indeed, technology has removed all artificial barriers between sports and sports-betting lovers. 

Businesses are consolidating in the sports-betting space, and smaller companies are being gobbled up by the corporate behemoths aiming to emerge as dominant players. More and more companies are maneuvering for a stock market listing, besides providing them with public money for growth; this move increases their credibility and respectability in the eyes of society and government at large.