Wednesday, 14 January 2015

The USA's Big Secret

Anyone who has spent much time in the USA, at least outside of Las Vegas, will be aware that one of the biggest differences between the UK and the US is in the attitudes to betting. American Main Streets are not home to bookmakers, yet it doesn't take long, once you find a bar where everybody knows your name, to discover that there is no shortage of bets being made and that you are never far from someone who will take your bets, or knows someone who will take your bets (although the odds might not be that generous, and betting on round-ball football might be a little tricky). These days many Americans have off-shore accounts for their betting, and bet on-line, but the bar bookie is still around collecting or handing out envelopes at the end of each month because people love to bet on sports. It may be technically illegal, but like blasphemy, it is a victimless crime, and no one cares. As is the case with their position on a lot of matters, the US is at odds (pun intended) with much of the world and with common sense on gambling. There is a Silver living when it comes to the NBA though. Legislate, regulate and profit from it. Prohibition doesn't work. Huffington Post's Blayne Davis has an article worth reading on the topic, even if it does contain some odd words - broadcasted? viewership?

For millions of Americans, the mere mention of football season triggers sweaty palms and stomach churning. Sports betting is the most taboo yet pervasive activity among sports fans and grows in popularity exponentially. It's directly related to the profitability of every professional league, but to acknowledge its importance and interdependence would grate against history. Sports betting is the secret love that everyone in the room is sharing, and it has never been bigger in the United States than it is today. With such a big secret one would think the message would be broadcasted across the wire, but instead sports betting continues to channel in a gigantic whisper.
Let me explain the correlation of sports and gambling from a superficial economic standpoint. I'm going to use the NFL as my example because of its universal appeal and because football betting drives the largest number of bets here in America. The NFL has never been more successful than it is today. The games are now broadcasted up to three times a week, and the viewership of these games allows the league to command enormous sums of money for the privilege of advertising to its fan base. Simply put, the advertising pays the multi-million dollar player contracts and justifies the billion-dollar stadium. Eyeballs drive this marketing monster -- the larger the viewership, the more money media outlets can demand from their advertising partners.
But let's go back to those initial viewership numbers and exactly why they are so great in the first place. Delving into the hot demand for the NFL product, we must move into some basic psychology behind watching a game versus watching a sitcom. Fans are "active viewers" and are engaged on a second-to-second level. They are riding a roller coaster during a speculative course of events, and it's those crucial actions on the field that manifest themselves on both the physical (a racing heart) and spiritual (praying to the Football Gods) plane. All of us have felt the adrenaline surge for a must-have fourth down conversion or seen the handy camera work pan to a fan, whose eyes are closed, and is in solemn prayer. It's awesome.
Consider that the base, and now let's spike that unquantifiable interest with a financial stake in the game. This magical interaction now intensifies, bringing a deeper quality to the game.
Everything suddenly matters more, every call and every play. Yelling at the big screen at a dropped pass (that we could've caught, right?) or a questionable penalty, (the conspiratorial referee, right?). All of these factors create the level of drama and excitement that we all secretly desire in our lives. We want this action; we need it.
Perhaps the most troubling part is the negative spin often associated with sports betting. The days of back-room alleys and street bookies are largely over, as even they have moved to the Internet, though they are still breaking federal law. I continue to draw comparisons to any financial market that entertains a speculative investment. In today's fantasy crazed-society, the stats and information available are at worst equal to, but in my opinion better than, information one could obtain before purchasing stock of a company. They both require the responsible management of risk capital and making the best possible investment decisions after a thorough analysis of the information. The days of offering game odds driven by rumor and "on the ground" contacts are over. Those responsible for setting the Vegas line are surrounded by banks of computers running calculations and formulas as complex as those used by hedge funds on Wall Street.
I must assume the NFL throws the public red flag on grounds of morality, though it's completely disingenuous. As the NFL continues its international expansion into the United Kingdom, where they now have a regularly scheduled game, I'm confronted with the reality that the marketing gurus of the NFL know how much sports betting is engrained into the local culture and the integral role it plays for selling tickets. It would be foolish to think otherwise. I would also venture to say that more than fifty percent of those UK fans have laid a bet with one of the publicly traded companies licensed to accept wagers. If morality is truly the reason, can you imagine a scenario where the NFL questions fans before allowing entrance to the stadium, and then denies entrance to the gambler and issues a refund? No chance of that.
The undeniable truth remains that regardless of the public message put out by the league, if miraculously all betting stopped there would be a dramatic decline in revenue and the financial repercussions would rock the league. There has always been, and there will continue to be, an intrinsic relationship between sports and betting. The NFL needs the gamblers just as much as the gamblers need the NFL. I applaud the most recent comments of Adam Silver, the commissioner of the NBA and the legislative efforts of Chris Christie of New Jersey. They openly recognize the existence and the economics behind creating a regulatory framework.
Right now, the offshore bookmakers and the underground world are hoping things continue unchanged while they happily siphon millions of dollars each year catering to the voracious betting appetites of the American public.
Fortuitously, when I started to the write this article, my wife relayed to me a funny story about our son. She told me the first thing Ben wanted to know when he woke up was if the Cowboys beat the Bears. At seven years old, and to his frustration, his bedtime curfew cannot embrace the whole game. She told him they had won, and he erupted with absolute glee. She asked him, "Ben, why are you so happy about that?" and he replied with a smile, "My friend owes me a dollar today." Obviously, I do not condone elementary betting, but I'll chalk this up to kids having fun. However, it does go a long way toward proving my point. Do I think Ben loves sports? Without question. Do I think he will ever place action again in his lifetime? I'm betting that he will.

1 comment:

fizzer555 said...

There is also a rapid increase in the 1-day Fantasy Sports business in the US with individual sites now doing upwards of $10m a week and rising fast.

The Fantasy sports market has been well established over the last 25-30 years and a large number of people will play at some level, either in a free or paid league. (Fantasy sports in the US is different to what you see in the UK where salary cap style games with thousands of players compete in one league as in say the Daily Telegraph. In the US It tends to be 12-15 player leagues played over a season or a shorter period).

Fantasy Sports are seen as a game of skill and all the big sports sites such as cbssports and ESPN operate and also host paid leagues.

The emergence of 1-day sites that include leagues and even 1-to-1 contests is based on the principle that Fantasy Sports is skill based. All entries in these contests must be made up of players drawn from a minimum of two sporting events.

These sites play within the "rules of skill" but they are much closer to the gambling market than the season long fantasy games. When you look at the skill involved in picking which basketball players will play well tonight versus will the Hawks beat the spread, its hard to know which needs more skill or luck.