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Sports book a bright spot for casinos

Dec 16, 2008 5:09 PM
by David Stratton |

Sports betting action in October was one of the few bright spots for Nevada casinos, which posted year-over-year declines in virtually every other gaming area.

Nevada sports books raked in $18.3 million, a healthy 25 percent increase over the $14.4 million they won in October 2007.

Players actually bet more a year ago: the "handle" or total amount wagered this year was about $286 million, versus $306 million bet last year.

But a slightly higher house edge this year (6.4 percent versus 4.7 percent) accounted for the higher win total.

Between parlay cards and board action, football betting accounted for more than half of all sports revenue. The sports books won $4.1 million from bettors, up 27 percent from last year, and $5.4 million from parlay card players, down about 21 percent.

While sports book operators are mostly pleased with the positive revenue results for October, several felt there were areas that could stand improvement.

One of those areas is in the house edge or "hold" percentage, the amount retained by the books after all winning bets are paid off.

The football hold percentage in October was only 1.85 percent. Traditionally, sports books hold about 5 percent on all football bets for the season. Over the past five years, the season-long hold dipped below 5 percent only once, in 2005.

Some experts attribute the lower hold to sharper players – bettors have access to more information about a game than every before.

But others say that, no matter how sharp the bettor, the line maker has to be every sharper, thus making a more difficult line in which to bet.

"When they put out a ‘soft’ line, or one that is completely out of whack, the players will jump all over it," said the supervisor of a locals-oriented Las Vegas sports book. "When we take one-sided betting action, and all that action is on the right side, it’s probably because the line was off to start with."

The supervisor, who spoke on condition that his name or casino not be named, cited a line a few weeks ago, in which the San Diego Chargers were made a 5½ point favorite over visiting Atlanta.

From the outset, most of the money came in on Atlanta, which drove the line down to 3 points or less, and Atlanta won the game relatively easily.

"The game should have opened a pick or the Chargers a small one- to two-point favorite," the supervisor said. "In this instance, the bettors and handicappers knew more about the teams than the people who assign the betting odds."

Not all bookies agree. One sports book director noted that setting lines is a process that changes throughout the season, with swings in both directions occurring. "These trends tend to even out over the course of the season, and I expect by end of January we’ll see the same 5 percent hold that we’ve enjoyed in prior years," he said.

One trend that some books would like to see is an increase in parlay card action. While parlay cards actually won more money than board bets for casinos in October ($5.4 million versus $4.1 million), the betting handle on cards was significantly less.

Only $13.4 million was played on parlay cards, just a fraction of the $221 million bet on football off the board.

The difference was the parlay card hold percentage, a whopping 40.5 percent in October.

No other game in the casino has such a high hold percentage – keno, at 30 percent, and Three Card Poker at 25 percent, come close, but nothing wins at the rate of parlay cards.

That’s why it’s perplexing to some why parlay cards, especially during football season, aren’t marketed more aggressively or offered more liberally.

For instance, this week most parlay cards in town failed to include the upcoming college bowl games, which features 34 games over the next four weeks.

"Granted, the first bowl game isn’t played until next weekend, but there are plenty of tourists in town who would like to play a card and won’t be back any time soon," said a sports bettor at the Las Vegas Hilton, which along with Boyd properties, was astute enough to print cards with the bowl games.

For their part, several sports book directors said they plan to put out cards this week with the bowl line-up, and that they held off because they wanted the betting lines to stabilize, and that they didn’t expect much action so early in the bowl season.

Nonetheless, the more bets on a parlay card and the longer the cards are available to players, has to be a priority for sports books. After all, it’s hard to ignore a 40 percent winning edge.