There’s been a lot of talk on the Prescription lately regarding World Sports Exchange, our bookmaking hold, and how it relates to industry standards, both present and future. We appreciate the atmosphere of constructive criticism, and in that spirit we’d like to lay our cards on the table, address some problems we see in the industry, and discuss measures we might be able to introduce in the coming year.
Probably the greatest misconception is that the major bookmakers are gouging customers when their holds are actually pretty modest. One poster, for example, pointed to the “70-cent line” we posted for the Wimbledon Women’s final (-270 Serena/+200 Venus) as evidence. This makes us wonder if people really understand the nature of an odds ladder. We’ll save the math for another post, but if you know how to convert odds to percentages, you’ll find that, across the board, our tennis lines imply a hold of 5.9% to 6.7%, with an average of 6.4%. It doesn’t matter if it’s a “70-cent line” of –270/+200 or a “30-cent line” of –140/+110; the odds ladder is designed so the juice is always the same.
Our odds ladders are different for every sport, and the implied hold varies accordingly. In football and basketball it’s 4.4%; golf matchups are 4.8%, and for baseball it’s 2.0%, as we’re one of a handful of shops left that book baseball on a dime line. Most of our interactives are booked at a theoretical 4.0% to 5.0%, though in practice this is more like 1.0% since real-time betting can be so favorable to the player.
These are pretty competitive odds, and if you sum it all up, we came out ahead by a little more than 3.0% last year. Of course, operating, advertising, and legal expenses have to be factored in next, but here’s the kicker: banking and transaction costs amounted to a full 1.0% of the handle. Not 1.0% of the profit, but 1.0% of the handle. Not many people realize the massive fees that banks and credit card companies charge to move money, and World Sports Exchange has always picked up this tab for both customer deposits and withdrawals.
That means, unfortunately, that there’s not a lot of room to maneuver when it comes to giving money back to customers. Of course, some may point to deep-discount books that post numbers like –275/+265 on the Wimbledon final as an example that most books can do a little more. But you do the math: that’s booking at a 0.7% hold, which after the transaction costs, bonuses, etc., is booking for free or even at a slight loss. If the question is Why doesn’t World Sports Exchange book bets at a 0% hold, the answer is because there’s only one way for a book to do this and stay in business: gamble. That’s either directly, by using the house money to bet into other books, or indirectly, by posting extremely aggressive lines.
Our concern is that a quick round of price slashing is going to have a similar effect on the industry that the bonus wars had a couple of years ago. Books will be forced to undercut each other, literally start rolling the dice, and once their luck runs out, it’s Aces Gold all over again.
Our aim is to sustain a bookmaking model such that players don’t have to worry about whether we’re having a good or a bad football season in order to get paid. One idea we’ve been bouncing around focuses on the huge costs we incur from banks and credit card companies.
What if we asked customers to start paying for their own credit card transactions, and in exchange we returned that 1.0% to all our customers in the form of tighter lines? In other words (for anyone still struggling with the odds ladder concept), World Sports Exchange could book all the major sports at –108 instead of –110. This would give our customers the best of both worlds: rock-solid financial stability coupled with even better odds. The downside, of course, is the inconvenience caused to our customers, even those who seem compelled to send money back and forth on their credit cards on a daily basis.
Let us know what you think. Hopefully, we can generate some positive discussion on an issue that is certain to be affecting the entire industry.
Regards,
Haden
WORLD SPORTS EXCHANGE
Probably the greatest misconception is that the major bookmakers are gouging customers when their holds are actually pretty modest. One poster, for example, pointed to the “70-cent line” we posted for the Wimbledon Women’s final (-270 Serena/+200 Venus) as evidence. This makes us wonder if people really understand the nature of an odds ladder. We’ll save the math for another post, but if you know how to convert odds to percentages, you’ll find that, across the board, our tennis lines imply a hold of 5.9% to 6.7%, with an average of 6.4%. It doesn’t matter if it’s a “70-cent line” of –270/+200 or a “30-cent line” of –140/+110; the odds ladder is designed so the juice is always the same.
Our odds ladders are different for every sport, and the implied hold varies accordingly. In football and basketball it’s 4.4%; golf matchups are 4.8%, and for baseball it’s 2.0%, as we’re one of a handful of shops left that book baseball on a dime line. Most of our interactives are booked at a theoretical 4.0% to 5.0%, though in practice this is more like 1.0% since real-time betting can be so favorable to the player.
These are pretty competitive odds, and if you sum it all up, we came out ahead by a little more than 3.0% last year. Of course, operating, advertising, and legal expenses have to be factored in next, but here’s the kicker: banking and transaction costs amounted to a full 1.0% of the handle. Not 1.0% of the profit, but 1.0% of the handle. Not many people realize the massive fees that banks and credit card companies charge to move money, and World Sports Exchange has always picked up this tab for both customer deposits and withdrawals.
That means, unfortunately, that there’s not a lot of room to maneuver when it comes to giving money back to customers. Of course, some may point to deep-discount books that post numbers like –275/+265 on the Wimbledon final as an example that most books can do a little more. But you do the math: that’s booking at a 0.7% hold, which after the transaction costs, bonuses, etc., is booking for free or even at a slight loss. If the question is Why doesn’t World Sports Exchange book bets at a 0% hold, the answer is because there’s only one way for a book to do this and stay in business: gamble. That’s either directly, by using the house money to bet into other books, or indirectly, by posting extremely aggressive lines.
Our concern is that a quick round of price slashing is going to have a similar effect on the industry that the bonus wars had a couple of years ago. Books will be forced to undercut each other, literally start rolling the dice, and once their luck runs out, it’s Aces Gold all over again.
Our aim is to sustain a bookmaking model such that players don’t have to worry about whether we’re having a good or a bad football season in order to get paid. One idea we’ve been bouncing around focuses on the huge costs we incur from banks and credit card companies.
What if we asked customers to start paying for their own credit card transactions, and in exchange we returned that 1.0% to all our customers in the form of tighter lines? In other words (for anyone still struggling with the odds ladder concept), World Sports Exchange could book all the major sports at –108 instead of –110. This would give our customers the best of both worlds: rock-solid financial stability coupled with even better odds. The downside, of course, is the inconvenience caused to our customers, even those who seem compelled to send money back and forth on their credit cards on a daily basis.
Let us know what you think. Hopefully, we can generate some positive discussion on an issue that is certain to be affecting the entire industry.
Regards,
Haden
WORLD SPORTS EXCHANGE
