Sunday, February 1, 2015

Business is great at the books in Nevada

On this snowy Super Bowl Sunday, let's take a look at a certain industry that's coming off a strong 2014- the sports gambling business. It's telling that sports betting has gotten mainstreamed enough that now has its own gaming industry writer, David Purdum, and there's even ESPN Chalk, which goes over betting lines, poker, and related gambling.

Purdum had an interesting column this Friday reviewing 2014's year-end report to Nevada Gaming Control, and it shows that the sports book business is very good.
The state's 187 sportsbooks won $227.04 million off of the $3.9 billion wagered on sports in 2014. Both amounts are all-time records, according to Nevada Gaming Control.

Football, per usual, carried the load. The sportsbooks won $113.73 million on college and pro football in 2014, a giant 40.73 percent increase from 2013. Overall, $1.74 billion was bet on football in 2014, (actually, closer to $1.75 billion) $12 million more than in 2013. Nevada Gaming Control does not track pro and college football separately, but sportsbook managers estimate the NFL accounts for around 55-60 percent of their annual football handle.

The year got off to a big start, with the books winning a record $19.6 million on Super Bowl XLVIII between the Seattle Seahawks and Denver Broncos. It continued into this season. From September through December, the books are up $98.16 million on football.

Purdum's article quotes a research analyst from Nevada Gaming Control (now THERE'S a cool bureaucratic job!) as saying that the state's sports books have taken in record profits the last three years, and that betting volumes have been up each of the last five. And that doesn't count all the extra money that these casinos are making off of lodging, food, drink, clubbing, and related amenities that you inevitably shell out for in Vegas, Reno, and wherever you want to game in the Silver State.

Nevada Gaming Control heavily regulates and reports on all forms of gambling, and the state of Nevada gets some of these profits to help run governmental operations (which is part of the reason they can get away with no state income tax). The information then comes out in monthly reports, such as the December one that came out last month that Purdum reported on, and it breaks down the gambling stats any way you like. Give it a click and see what stats you want to check out, including the type of sport being bet on, which type of table game takes in the most for the casinos (it's baccarat), and that penny slots are much tighter (10.1% profit) than the $25 dollar ones (4.5%).

On the sports betting side, I imputed the amount of money bet on the "win total" (profit) for the book, and the numbers broke down as follows for 2014.

Sports betting stats, Nevada 2014
Football - $1.75 billion bet, $113.73 million profit- 6.5% "win total"
Basketball- $1.11 billion bet, $54.2 million profit- 4.9% "win total"
Baseball- $721.8 million bet, $21.3 million profit- 2.95% "win total"
Parlays- $57.8 million bet, $21.3 million profit- 36.8% "win total" (!)
Other- $267.0 million bet, $16.5 million profit- 6.2% "win total"

"Other" seemed to have a bigger year in 2014, and I'm guessing that was related to soccer's World Cup, which you'd think would attract some new action. But as Purdum's column notes, sports betting profits are very small compared to the $4.15 billion that table games take in from casinos, and the nearly $6.75 billion for slot machines (including $2.6 billion from penny slots!).

There are a couple of other interesting notes in sports betting news that have come up in recent days. One includes U.S. Sen. John McCain signaling that he'd be OK with expanding sports betting on individual games to states outside of Nevada. It may be one of the few good things to come out the GOPs taking the Senate, since Nevada's Harry Reid can't protect his home-state's growing industry by blocking as many gambling bills now that he's not Majority Leader. Likewise, it's hardly a coincidence that McCain comes from neighboring Arizona, which features plenty of short, cheap flights and buses from Phoenix and the rest of the state to Vegas.

Also, there's some big news from the books over the last few days that have moved today's Seahawks-Pats line.
Big, influential money on the Seattle Seahawks showed up Saturday in Las Vegas, causing sportsbooks to adjust the Super Bowl point spread heading into game day.

The MGM, Caesars, Westgate, Golden Nugget, South Point, Station's and CG Technology sportsbooks moved the line from New England minus-1 to pick 'em Saturday, as money poured in on the Seahawks. Most books reported still having more money on the Patriots, but the gap was narrowing.

"We're taking more bets on the Patriots, but the more substantial money has been on the Seahawks," Jason Simbal, vice president of risk for CG Technology, said Saturday. "What we've been seeing lately is for every two-, three-, four- or five-hundred dollar bet that comes in on New England, we'll then take a five-figure bet on Seattle."
But because the big early money was on the Pats, especially when the line opened at Seattle -2.5, it still means that Vegas books want a Seahawks win, because that would mean a nice profit for those guys, just like in last year's game.

It's what makes Gov Walker's positioning as a "free market" guy all the more bullshit when you look at his refusal to grant the Menominee a gaming license in Kenosha last week, because there are few businesses more transparent and free-market than a casino. And this is especially true on the sports betting side, where not only are the lines supposed to reflect true supply and demand regarding opinions on how the game will go, but the winnings and bets are tracked and players monitored, with any distortions like point-shaving being revealed due to odd betting patterns. Sure a lot more legitimate than the insider-information plagued stock market....or the "no-strings attached" mentality of handouts from WEDC.

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