Is low-vig in the future of offshore books?

[Fezzik]

21 is a lot different than sports.

In 21, as the house, you have to sit back and take it from the sharps. They have the edge. You have no chance.

It's a lot different at sports. When you deal at -105 you can shade your numbers to get onesided action on many, many games. If you deal -108/-102 for example you will often get flooded with -102 money.

Effectively, the house is "betting" at +102 on all these games. One can see how some gifted places are going to do quite well betting whatever they want at +102.

Personally, I feel the neutral books that just try to deal to 100% balanced action are the ones that are struggling. Those that are competent and willing to take some positions should do very well, provided they can pick 50.5% ATS.

 

[drunkguy]

I will respectfully disagree and say that the future is not in the low juice shops, but in the betting exchanges. I think a lot of people are taking notice to the "party poker" business model, where they are woirking on straight commision and making money on shear volume.

The majority of shops have a stake on who wins the game due to uneven betting. For instance, if the superbowl landed on 7 this year, alot of books would have been hit hard. A betting exchange does not have this complication.

 

[gambler1]

The future is in getting PAID, so why would anyone with half a brain not play at books like Olympic,Cris,Grande,WWTS,PINNACLE then you would never see any posts saying "i can't get paid from so and so book" you can wipe your arse with that 20% or 30% bonus but it won't show up in your bank account. PERIOD

 

[DavidMatthews]

I posted a response to Fezzik's article elsewhere, but the gist of it is that I disagree.

I think of all the books the two with the best models for business are Olympic... and (this will surprise you) SIA!

I think Olympic's model is brilliant, they don't give away anything but some small (but worthwhile) bonus offers, and they have a ton of bets to choose from. They offer 20-cent baseball and -110 bets, and 30-cent props... but they have a huge number of betting options, good customer service, and your money is probably as safe there as it would be in a Citibank checking account. I like their model big time.

SIA on the other hand, caters to squares and has low limits. They get huge advantages over the square public, and they boot people after they win $10k to $20k. Get rid of the good players, rape the squares. From a sports book standpoint, I think that is a great way to go.

Pinnacle rules... there's no doubt. Hollywood and Canbet can get away with it. Others that try low-vig will get thoroughly thrashed, and once you go low-vig, you can't really go back.

Pinnacle has a great model, but I think the number of operations that could pull it off successfully is ver small. I think more books should imitate Olympic's model than anything else.

 

[Celica]

Bottom line is that the more competition there is the better offers the customer will get, but we still have to be with credible books for safer payouts. And that was a great article.

 

[NickDouglas]

Fezzik,

There are exceptions to any rule but as a rule you won't stay on low juice at Pinnacle if you beat them to numbers.

David,

While I am generally a proponent of SIA the fact that they are slow of pay scares me. The best ways to keep squares are 1) start them off on credit, 2) pay fast and 3) give big bonuses. Customer service is close to those three, maybe even in there. Anyway, SIA does not do credit business that I know of and we all know they don't pay fast. Good thing is they have bonuses but will that keep enough squares? Only time will tell, but I think it will. That said, I think other books have better business plans.

You are spot on with Olympic. Places like Olympic and CRIS that pay out super fast and have big betting squares on both credit and post up are always going to be the safest shops in my opinion.

 

[valueman]

I am more of the opinion that low-vig books will fall as the mathematical model for low vig leaves very little room for profit.

I don't beleive in the long run that books will make money offering -105 with all the staffing, marketing and operational costs involved.

Why do you think the likes of betehorse who aren't taking any risk on the exchange don't reduce their commissions - because you can't make any money at lower commissions.

Sure, there may be some aggressive plays by stronger books like Pinnacle at -105, but this can't last forever. Enjoy it while you can -110 is on its way back!

 

[drunkguy]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by valueman:
I am more of the opinion that low-vig books will fall as the mathematical model for low vig leaves very little room for profit.

I don't beleive in the long run that books will make money offering -105 with all the staffing, marketing and operational costs involved.
<HR></BLOCKQUOTE>

This is like saying Wal-Mart will go under because they offer everything cheaper than competitors. The issue is that VOLUME has to be considered in relation to profit "per item".

If Wal-Mart makes $0.01 per item sold and your corner store makes $1.00 per item sold, does that mean your corner store is more profitable? Not if Wal Mart is selling billions more units...

Additionally, costs of doing business have to be relaxed in the internet era, as you no longer need as many clerks to answer phones, etc. Automation can cut a lot of overhead. Pinnacle does fairly little in terms of marketing, perks, etc.

There is profit to be found in -101 vig, if the volume is infinitely large...

 

[bulldog77]

Fezzik: Are you saying the house has to just sit and take it from the sharps at 21? Barrings happen every day and happen ocasionaly to ant good counter.

 

[valueman]

drunk guy - which planet are you on?

Comparing selling cans of fruit to a sportsbook and the inherent errors in pricing an event is childish and foolhardy to say ther least. Agreed theoretically there is profit if a sportsbook can run a balanced book - you obviously haven't been a bookmaker to know that never happens.

I ran a book for over 8 years - almost solely on horse racing - the average over round was about 20%. Does that mean I should make 20% profit? - I was closer to 12% - the bettor will always beat the odds by a bit - by how much is debatable and -105 doesn't leave that much room once the bettor eats into that small margin.

Don't underestimate the costs involved in running a sportsbook either - marketing, staffing, information feeds etc are not cheap. Run your own business for a while and you'll not talk from a theoretical or child perspective - this is the real world matey!!

 

[SportSavant]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> the bettor will always beat the odds by a bit<HR></BLOCKQUOTE>

feel that this statement is flawed...the average gambler would lose everything even if you gave them +101 due to demons such as discipline, Money managemente etc etc

 

[valueman]

Ask ANY sportsbook, ANYWHERE in the world - THEY NEVER MAKE THE THEORETICAL OVER ROUND.

If a monkey could break even by picking just over 51% winners at -105 then surely the shrewd customer eats into that. Assuming there is a balance between monkey bettors and shrewd ones, the inherent breakdown of customers itself ensures that it is impossible for sportsbooks to win the theoretical over round - will always be less over a long period - FACT!

Given that -105 leaves very little margin for profit once this is eaten in to - I do not think this a sustainable business model long term - sure it has many advantges in capturing market short term and building up a more diverse client base but long term you will not see low low vig ac**** the board. Even the exchanges that go to very low commissions won't survive. I will agree with drunk guys earlier comment that exchanges are the future but i don't see the ones offering reduced commissions (1-3%)doing so for more than trial periods if they want to survive - they won't make money.

We are in the most competitive betting market of all time where hundreds of sportbooks and exchanges have sprung up, trying to capture our elusive dollar and this competition has made it as easy as its ever going to be to make a profit. Any one not making a profit who is betting strictly to do so should look at themselves very carefully and think of another pastime - WE ain't never had it so good and this won't be the future.

The weak will fall and competition will wane and the ones with the strong business models, effeciencies will survive. Maybe -107 will survive long term but -105 won't (selected markets excepted)