A number of states will ultimately legalize sports betting following the U. S. Supreme Court decision that lifted the ban and some already have. Casinos and racetracks in such states will have an issue to cope with that they did not have when their product line was limited to slot machines, table games, and pari-mutuel wagering.
In sports betting, a casino attempts to balance the money bet on each team by adjusting the odds. That way, the casino makes money on its takeout. However, if too much money is bet on one team, the casino stands to lose should bets on that team need to be paid off. Particularly vulnerable are casinos located near a team or teams that local fans are likely to open their wallets to bet on.
The Wall Street Journal recently (June 7, 2018) wrote about the liabilities casinos can face and provided an actual example pertaining to Las Vegas’ first professional sports team:
“Enthusiastic local fans kept betting—and mostly winning—on the Las Vegas Golden Knights of the National Hockey League, hurting Nevada sportsbook operators. In a playoff game last month, a late goal by the Golden Knights reversed the fortunes of Nevada bookmakers including William Hill U. S. The betting operator went from recording a slight loss on the game to a huge one, a swing of over $100,000. Events like that one offer a glimpse into the challenges betting firms are likely to face around the country.”
In the playoff run by the Las Vegas Golden Knights, 70% of the money wagered with William Hill was bet on the Golden Knights. During the regular season, the figure was 90%.
The Journal reported that each state must operate as its own betting market because, at the present time, there is no legal basis for states to spread risks on a national basis. Bookmakers will have to seek legislation on interstate compacts like those currently in place for horse racing and state lotteries.
One could see casinos, for instance, in Philadelphia inundated with bets on provincial fan favorites like the Eagles and Villanova Wildcats and at the other end of Pennsylvania the Pittsburgh casinos could be swamped by bets on the always-contending Steelers and Penguins. This scenario will likely be played out all over the country in states with sports betting. Just wait until the Oakland Raiders move to Las Vegas and watch the money plunked down by many people betting more on emotion than reason.
The Journal commented that if casinos make it unattractive for bettors to support the home team via manipulation of odds, the beneficiaries are likely to be illegal bookmakers, who already have the advantage of offering a means to evade taxes on earnings.
From growing up in Kentucky, where basketball is a passion bordering on a mania, I am certain that nearby casinos should expect an avalanche of emotion-fueled bets whenever the University of Kentucky and the University of Louisville teams are part of March Madness. Same for when the Ohio State Buckeyes are on the gridiron.
Copyright © 2018 Horse Racing Business
Recent Comments