What I’m about to write may be considered one of the greatest oxymorons of all time.
Casinos are not in the business of gambling. They provide the opportunity for other people to gamble, but the goal of the casino is not for it to actually gamble as well. If they were, they wouldn’t offer games that have house advantages.
They know that when they put all those players together, that over time, the probability of the casino losing is just about zero. This is true of virtually every game in the casino, from slots to video poker to table games.
In the poker room, the casinos stay out of gambling altogether. They just take a rake or a percentage of the wager. They don’t care who wins, they just want lots of hands dealt.
The one area where the casinos might have had a threat to actually gamble was the sports book. On any given Sunday, the casino is taking some serious risk. But, on the whole, the casinos really aren’t wagering on the outcomes of the specific games.
This column is about gaming math, so my brief mention about politics is not to be taken as taking any sides. This past week, I saw a headline about a sports book that was taking wagers on the upcoming U.S. election. While most polls (and other sports books) were taking wagers that assumed that the Democrats are going to take a majority in the House, this one site was taking wagers as if the Republicans were going to keep the majority. The column was written from a political point of view – just what did these guys ‘know’ that everyone else doesn’t?
If only they would get people who understood how sports books operate and not polls or politics. The goal of a sports book is not to pick the winner, but to get an equal amount of money on both sides of whatever proposition they are talking about.
Let’s take a closer look at how this works. First of all, most wagers are placed at odds of 10 to 11. You wager $11 to win $10. This is already a pretty big house advantage.
Now, if you were wagering against a couple of your friends about the outcome of a single football game, there is a good chance you’d pick your favorite team and being a little blind about them, you’d take as much action as you could that your team will win. With this, there are two possible outcomes – you’ll win big or you’ll lose big. That is gambling. As I said earlier, the casinos don’t gamble. Imagine that they take wagers from 100 people and they all wager on team A. The casino has two possibilities. They win big or they lose big. Gambling. They want no part of it. They hedge slightly because of that 10-to-11 thing. They’ll either win $1,100 or lose $1,000.
Over time, if they are fairly accurate with how they set the lines, they may do okay. But, they see a much better opportunity. What if they get 50 people to bet on one side of the game and 50 to bet on the other? They’ll win $550 from one side and payout $500 to the other. They pocket $50 and don’t care anymore who wins or loses. Now they are no longer gambling.
So the trick is to get half the people to bet for one team and half to bet for the other team. How do sports books do this? They can’t control the outcomes of the actual events – at least we hope they can’t! Instead, they can control to some extent which team people bet on by either moving the point spread (in football) or the odds or a combination of both.
Generally speaking, the opening “line” starts roughly at the point where the game will be even. So, if Team A is the underdog by 7 points, it means that they think the game will end with this team losing 7 points. But, more important to the sports book is where the point spread should be to get half the money on each team. Nowadays, this is done with some complex computer programs. These programs start with the likely final outcome (margin of victory and total points), but has to take into account betting history of the gambling population.
So, this past week, the Rams started out as 1-point underdogs and ended as 2-point favorites. Does this mean that some computer model decided that the Rams were actually more likely to win than to lose? Did the point spread move because word spread that Cooper Kupp will likely play?
Not necessarily. It is just as plausible that as money was going on to the Rams early in the week, some of the sports books had to give bettors some incentive to put more money on the Saints. To do this, they can move the point spread and entice players to bet that way
The entire process is a bit more complex than this, but if the sports books can keep the money at 50/50, they stand to make about five percent of the total amount wagered while no longer caring about the outcome of the game.
If this happens, they are no longer gambling, they are just facilitating others gambling and they just collect a fee. It’s brilliant!