Part 1: The marketplace
Online daily fantasy sports sites, with their infrastructure and established player bases in a coveted demographic, would appear to be in good position to offer traditional sports betting if made legal, as well. A review of recent patents in the betting genre revealed Microsoft, Sony, Reuters and Wall Street financial firm Cantor Fitzgerald to be either existing holders or applicants. A number of individual entrepreneurs are in the mix, too; patent No.
A Microsoft spokesperson said the company had "nothing to share at this time" regarding its patent for a betting exchange or any future interest in the sports betting industry. Microsoft's patent coincides with a research paper by David Pennock, a principal researcher and assistant managing director for the company. Pennock's research produced an innovative wagering mechanism akin to pari-mutuel systems used in horse racing that Microsoft wanted to patent. There were no immediate plans for its use, Pennock said, but he does envision a future with tech companies involved in the sports betting world.
I don't have that answer and neither does anyone else at this point. If sports betting is legalized and the tech titans do get into the bookmaking game, are Las Vegas' days numbered as the epicenter of legal American sports betting? Is the traditional bookmaker an endangered profession?
Manteris believes the state's plus years of regulating sports betting are invaluable and envisions a scenario where Nevada would remain a central hub for sports betting in the U. Recently, Nevada has taken steps to position itself for such a scenario. The majority of the state's books offer mobile sports betting in Nevada. In , the state passed a bill clarifying that the state's licensed operators could manage sports pools in other legal jurisdictions, and Nevada also has set up a scheme where out-of-state bettors can invest into sports betting entities -- similar to mutual funds -- that are managed from within the state.
They appear willing to surrender the monopoly Nevada has enjoyed in exchange for the ability to expand into other jurisdictions and offer one of the rare forms of gambling that is growing: While business is booming, Nevada remains a small portion of the enormous American sports betting pie. Experts estimate more than 90 percent of all sports betting in the U. That behavior must change if the U. For the most part, the offshore industry has evaded U. People, given the choice, prefer to be in the legal, regulated market.
It's going to take more than just offering competitive odds for a new regulated market to take a bite out of the established offshore market, one longtime offshore bookmaker told ESPN. Marisa Lankester, author of "Dangerous Odds: My Life Inside an Illegal Billion Dollar Sports Betting Operation," believes offshore operators will continue to use cutting-edge technology to stay ahead of the game, even if the U.
Sources said operators desiring secure phone lines have considered purchasing an entire telecommunications company on an island, and some bookmakers are already moving operations onto yachts in international waters.
A commercial satellite engineer told ESPN that such technology "already exists. There's also a platform being designed that would take the bookmaker completely out of the equation. Every stock exchange -- and its sports betting cousins Betfair, Matchbook and Smarkets -- is centralized, meaning each bet starts and ends in the same place.
Augur, which recently entered beta, is a decentralized prediction market fueled by virtual currency. Users are free to offer or match a plethora of sports-related options.
The Augur platform will be available to anyone willing to deal in e-money. Jerry Brito, the executive director for Coin Center, a nonprofit research advocacy center focused on cryptocurrency and computing technologies like Bitcoin and Ethereum, believes a decentralized sports betting exchange market is the future.
And because it's potentially global, it could be a really big book with a lot of bets. That's going to be very interesting to watch. The United States Court of Appeals for the Fifth Circuit ruled in November  that the Federal Wire Act prohibits electronic transmission of information for sports betting across telecommunications lines but affirmed a lower court ruling that the Wire Act "in plain language does not prohibit Internet gambling on a game of chance.
Additionally, in order for an online gaming company to start, a license from the state is required. The only state to ever issue a license was Nevada, in March The Act was passed on the last day before Congress adjourned for the elections. Bush on October 13, Among the Congressional supporters of the Act were Rep. The Internet Gambling Prohibition Act , a prior version of the gambling part of the bill passed the House in but failed in the Senate in part due to the influence of lobbyist Jack Abramoff.
In response to the NPRM, four hundred and ten responses were received from depository institutions, depository institution associations, public policy advocacy groups, consumers, "gambling-related" entities, payment system operators, federal agencies, and members of Congress. The Bush administration had previously adopted the position that it would not finalize any rule subsequent to November 1, The final regulations termed the "Final Rule" were finalized and released November 12, , and came into effect on January 19, , the day before the Obama administration took office.
According to the overview posted on the FDIC website, the act prohibits gambling businesses from "restricted transactions". Restricted transactions involve gambling businesses when they knowingly accept payments from another person in a bet or wager on the internet. It also requires that the Treasury and Federal Reserve Board with consultation of the Attorney General to promulgate regulations requiring certain participants in payment systems that could be used for unlawful Internet gambling to have policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit the processing of restricted transactions.
These regulations are independent of any other regulatory framework, such as the Bank Secrecy Act or consumer protection regulations. The Act begins with Congress's findings and purpose. One of the controversial findings asserted in the opening of the bill is the assertion that Internet gambling is a growing problem for banks and credit card companies. The Act contains a clause that ensures no change be made to any other law or Indian compact.
This section outlines definitions of gambling terms to be used throughout the act. The Act defines a bet or wager to include risking something of value on the outcome of a contest, sports event, "or a game subject to chance. The Act expressly prohibits lotteries based on sports events. Some activities such as securities and commodities, including futures, that are traded on U. This expressly includes an "operator of a terminal at which an electronic fund transfer may be initiated" and international payment networks.
The Act says to ignore the intermediary computers and look to the place where the bet is made or received. All other definitions are standard. This section covers money transfers. The bill states "[n]o person engaged in the business of betting or wagering may knowingly accept" any money transfers in any way from a person participating in unlawful Internet gambling. This includes credit cards, electronic fund transfers, and even paper checks. To determine who wins against the spread, the line is either added or subtracted from a team's final score.
In the above example, if the bettor chose Miami, he would subtract 3 points from Miami's final score and compare that to Oklahoma City's final score. If taking Oklahoma City, he will add 3 points to Oklahoma City's final score. And if a bettor took Oklahoma City, they would have to win outright or lose by less than 3 points. If the final adjusted score is a tie, the bet is considered a push. This is the most common type of bet in American sports betting. The possible payout of the parlay is determined by the combined likelihood of all bets placed.
A parlay of riskier bets more underdogs will pay greater than a parlay of more likely bets more favorites. Although the rules to win his bet are the same as a parlay, he is paid less than a regular parlay due to the increased odds of winning. A sports book may choose to buy in-play futures wagers at a price below the actual payout before a championship is decided if the potential payout is very high and thus, damaging to the sports book due to the money that may be lost.
The bookmaker functions as a market maker for sports wagers, most of which have a binary outcome: The bookmaker accepts both wagers, and maintains a spread the vigorish which will ensure a profit regardless of the outcome of the wager.
Bookmakers usually hold an advantage over their customers—for small wagers it is closer to a advantage—so the bookmaker will most likely survive over the long term. Successful bookmakers must be able to withstand a large short term loss. Many of the leading gambling bookmakers from the s to the s got their start during the prohibition era of the s.
They were often descendants of the influx of immigrants coming into the USA at this time. Although the common stereotype is that these bookies were of Italian descent, many leading bookies were of eastern European ancestry. Odds for different outcomes in single bet are presented either in European format decimal odds , UK format fractional odds , or American format moneyline odds.
European format decimal odds are used in continental Europe, Canada, and Australia. They are the ratio of the full payout to the stake, in a decimal format. Decimal odds of 2. UK format fractional odds are used by British bookmakers. US format odds are the amount won on a stake when positive and the stake needed to win when negative. US odds of are an even bet. In Asian betting markets, other frequently used formats for expressing odds include Hong Kong, Malaysian, and Indonesian-style odds formats.
Odds are also quite often expressed in terms of implied probability , which corresponds to the probability with which the event in question would need to occur for the bet to be a break-even proposition on the average.
In setting odds , the bookmaker is subject to a number of limitations: In many countries, bookmaking the profession of accepting sports wagers is regulated but not criminalized. In areas where sports betting is illegal, bettors usually make their sports wagers with illicit bookmakers known colloquially as "bookies" and on the Internet , where thousands of online bookmakers accept wagers on sporting events around the world.
The National Football League is fully against any sort of legalization of sports betting, strongly protesting it as to not bring corruption into the game. On the other hand, the CEO of the International Cricket Council believe sports betting, in particular in India, should be legalized to curb illegal bookies where match fixing has occurred from nontransparent bookmakers. Many of the illegal proceeds also allegedly go to fund terror, drugs and other illegal activities. In the United States, it was previously illegal under the Professional and Amateur Sports Protection Act of for states to authorize legal sports betting, hence making it effectively illegal.
The states of Delaware , Montana , Nevada , and Oregon —which had pre-existing sports lotteries and sports betting frameworks, were grandfathered and exempted from the effects of the Act. In addition, there was a significant gender split: Age proved to be a divide: As always, a lot depends on who actually shows up to vote.
Donald Hoover, FDU professor in International School of Hospitality and Tourism Management and former casino executive commented on the results, "Betting on sports is not an uncommon practice for many New Jerseyans, but for the most part, the state doesn't supervise it, doesn't tax it and doesn't take any revenue from it. Woolley commented on the results, "If some states allow sports betting and profit by it, other states will want to follow.
He announced on May 24, that he planned to go ahead and set up a system of wagering at the state's racetracks and casinos that fall, before the National Football League season ended. In , despite federal law preventions, the state legislature of New Jersey and Governor Chris Christie signed a law that would allow sports betting to take place in New Jersey race tracks and Atlantic City casinos.
Voters were asked whether New Jersey should allow sports betting even if federal law prevents it from doing so, or wait to allow sports betting until federal law permits it.