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Old 06-01-2009, 11:19 AM
Rogthedodger Rogthedodger is offline
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Default Is Parimutuel an Option for the Delaware Sports Lottery?...By Jay Graziani

Since the recent legalization of a sports lottery in Delaware, much speculation has arisen regarding what form such betting might take. A ruling Thursday by the state Supreme Court allowing straight betting has greatly widened the possible options.

The only indication thus far of the state's plans is a comment by the governor suggesting Delaware would attempt to install Vegas-style sportsbooks. But what works for private enterprise in Vegas is probably not the best model for a government-administered state "lottery", and the limited time remaining before the September start of the NFL season doesn't leave a lot of room for debate or new ideas.

A parimutuel system for Delaware's sports lottery has been raised as a possible option. Parimutuel differs from traditional "fixed-odds" betting in that the exact payout odds are not set in stone when a parimutuel bet is made. Instead, all wagers go into a betting pool, the house skims its vig from the top, and the remainder is distributed to the winners. Parimutuel betting presents a number of advantages and disadvantages when used for a sports lottery.

Consider a sports lottery offering $10 tickets on straight wagers and with a house take of 15% (probably close to what we can expect from a government-run parimutuel sports betting operation). For a Monday Night Football game of the Cowboys at the Giants, the sportsbook might receive 75 tickets picking the Giants to every 25 selecting the Cowboys.

Since there's $1000 in the wagering pool, the house takes its $150 cut and the remaining $850 is distributed to the winners. If the Giants win, each winning ticket is worth $11.30 ($850 split among the 75 winners). If the Cowboys win, each ticket is worth $34.

Examining the payouts demonstrates one major problem with parimutuel betting: the house vig is very tough to overcome. The odds on the Giants game described above, in sportsbook terms, are a pathetic -770/+240. For a 50/50 proposition, the equivalent odds after the house vig is considered would be -140. For a clientele used to dealing with -110 in Vegas (or even -105 offshore), this represents a very steep cost to placing wagers in Delaware. When taxes are considered (since sportsbooks will certainly be required to report winnings to the IRS), this becomes a very difficult game to beat, indeed.

Another disadvantage is that the precise payout odds are not known for sure until the event has started. The shifting odds inherent in parimutuel betting plays havoc with the minds of gamblers. Even the most recreational of bettors are a fickle folk, and they want to know exactly what their payout will be before they make the bet. Not knowing the return will lead to a lot of "but I should have won more"" griping and general customer dissatisfaction.

Parimutuel betting does have some advantage over fixed-odds for government-run gambling operations. First, it requires minimal input from a linesmaker. Payout odds are determined simply by the amount of money wagered on each team. Gamblers wager against each other and the "house" merely acts as a middleman, calculating odds and distributing winnings in exchange for a percentage of the overall wagering handle. So there is little for an incomptent lines manager to screw up (or surreptitiously manipulate to his own benefit).

Another advantage is that the "house" will rarely lose money in a parimutuel system, as their profit is guaranteed as a percentage take of the total wagering handle. The only way for the house to lose money on wagers is if a minimum win payout amount is required by law. In cases where there is an overwhelming favorite, the wagering pool may not contain enough money to pay out the minimum amount to all players who backed the favorite. But this is a rare case.

Parimutuel betting would probably not be advantageous to the players, who will be likely be betting at worse odds than offshore or with their local bookie. Such a system would quickly drive away profit minded high-limit sports bettors. But the target audience of the Delaware sports lottery is the everyday recreational gambler, and Delaware may be able to sell a parimutuel system to the general public if it's marketed correctly.

Parimutuel betting is more suited for sporting events with a field of competitors, like NASCAR or golf. For a parimutuel system to be most attractive to NFL bettors, it should offer both pointspreads as well as moneyline ("pick the winner") options. Moneyline bets tend not to attract a lot of action when there is a heavy favorite, and the introduction of the point spread was a major innovation in the growth of football betting. Offering pointspreads allows for close to even-money payouts, something that is generally attractive to recreational gamblers.

Also, offering moneyline wagering adds an extra feature, allowing large payout odds on multi-team underdog "exotics" (parlays). Using moneylines rather than point spreads will allow multi-team parlays heavy on the underdogs to get into astronomical amounts, and paying out on a few huge "jackpots" is great advertising. For totals, sportsbooks can set a "universal" total at 40, the approximate midpoint of NFL scores, and let the odds float from there. This will allow for even bigger jackpot values when totals of 32 and 56 start popping up.

Delaware can make parimutuel betting work to its advantage with a tote board sporting "exacta" and "trifecta" parlay payouts, daily doubles matching the 1 PM and 4 PM showcase games, and other lottery-style promotions. The sports lottery can drive a lot of business growth by following a Vegas casino-style marketing plan, even without the cooperation of the sports betting "whales".

Parimutuel betting may well be a viable possibility for Delaware, but implementation is everything. The right planning and marketing could lead to the next big innovation in sports betting, a model others might ultimately follow. But with government bureaucrats in control, the chances of this being implemented intelligently and efficiently are slim to none. Serious sports bettors should avoid getting their hopes too high for this Delaware experiment.

06-01-09
Jay Graziani
MajorWager.com
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http://www.majorwager.com/frontline-750.html
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Old 06-01-2009, 01:34 PM
OLD MAN OLD MAN is offline
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Quote:
Originally Posted by Rogthedodger View Post
Since the recent legalization of a sports lottery in Delaware, much speculation has arisen regarding what form such betting might take. A ruling Thursday by the state Supreme Court allowing straight betting has greatly widened the possible options.

The only indication thus far of the state's plans is a comment by the governor suggesting Delaware would attempt to install Vegas-style sportsbooks. But what works for private enterprise in Vegas is probably not the best model for a government-administered state "lottery", and the limited time remaining before the September start of the NFL season doesn't leave a lot of room for debate or new ideas.

A parimutuel system for Delaware's sports lottery has been raised as a possible option. Parimutuel differs from traditional "fixed-odds" betting in that the exact payout odds are not set in stone when a parimutuel bet is made. Instead, all wagers go into a betting pool, the house skims its vig from the top, and the remainder is distributed to the winners. Parimutuel betting presents a number of advantages and disadvantages when used for a sports lottery.

Consider a sports lottery offering $10 tickets on straight wagers and with a house take of 15% (probably close to what we can expect from a government-run parimutuel sports betting operation). For a Monday Night Football game of the Cowboys at the Giants, the sportsbook might receive 75 tickets picking the Giants to every 25 selecting the Cowboys.

Since there's $1000 in the wagering pool, the house takes its $150 cut and the remaining $850 is distributed to the winners. If the Giants win, each winning ticket is worth $11.30 ($850 split among the 75 winners). If the Cowboys win, each ticket is worth $34.

Examining the payouts demonstrates one major problem with parimutuel betting: the house vig is very tough to overcome. The odds on the Giants game described above, in sportsbook terms, are a pathetic -770/+240. For a 50/50 proposition, the equivalent odds after the house vig is considered would be -140. For a clientele used to dealing with -110 in Vegas (or even -105 offshore), this represents a very steep cost to placing wagers in Delaware. When taxes are considered (since sportsbooks will certainly be required to report winnings to the IRS), this becomes a very difficult game to beat, indeed.

Another disadvantage is that the precise payout odds are not known for sure until the event has started. The shifting odds inherent in parimutuel betting plays havoc with the minds of gamblers. Even the most recreational of bettors are a fickle folk, and they want to know exactly what their payout will be before they make the bet. Not knowing the return will lead to a lot of "but I should have won more"" griping and general customer dissatisfaction.

Parimutuel betting does have some advantage over fixed-odds for government-run gambling operations. First, it requires minimal input from a linesmaker. Payout odds are determined simply by the amount of money wagered on each team. Gamblers wager against each other and the "house" merely acts as a middleman, calculating odds and distributing winnings in exchange for a percentage of the overall wagering handle. So there is little for an incomptent lines manager to screw up (or surreptitiously manipulate to his own benefit).

Another advantage is that the "house" will rarely lose money in a parimutuel system, as their profit is guaranteed as a percentage take of the total wagering handle. The only way for the house to lose money on wagers is if a minimum win payout amount is required by law. In cases where there is an overwhelming favorite, the wagering pool may not contain enough money to pay out the minimum amount to all players who backed the favorite. But this is a rare case.

Parimutuel betting would probably not be advantageous to the players, who will be likely be betting at worse odds than offshore or with their local bookie. Such a system would quickly drive away profit minded high-limit sports bettors. But the target audience of the Delaware sports lottery is the everyday recreational gambler, and Delaware may be able to sell a parimutuel system to the general public if it's marketed correctly.

Parimutuel betting is more suited for sporting events with a field of competitors, like NASCAR or golf. For a parimutuel system to be most attractive to NFL bettors, it should offer both pointspreads as well as moneyline ("pick the winner") options. Moneyline bets tend not to attract a lot of action when there is a heavy favorite, and the introduction of the point spread was a major innovation in the growth of football betting. Offering pointspreads allows for close to even-money payouts, something that is generally attractive to recreational gamblers.

Also, offering moneyline wagering adds an extra feature, allowing large payout odds on multi-team underdog "exotics" (parlays). Using moneylines rather than point spreads will allow multi-team parlays heavy on the underdogs to get into astronomical amounts, and paying out on a few huge "jackpots" is great advertising. For totals, sportsbooks can set a "universal" total at 40, the approximate midpoint of NFL scores, and let the odds float from there. This will allow for even bigger jackpot values when totals of 32 and 56 start popping up.

Delaware can make parimutuel betting work to its advantage with a tote board sporting "exacta" and "trifecta" parlay payouts, daily doubles matching the 1 PM and 4 PM showcase games, and other lottery-style promotions. The sports lottery can drive a lot of business growth by following a Vegas casino-style marketing plan, even without the cooperation of the sports betting "whales".

Parimutuel betting may well be a viable possibility for Delaware, but implementation is everything. The right planning and marketing could lead to the next big innovation in sports betting, a model others might ultimately follow. But with government bureaucrats in control, the chances of this being implemented intelligently and efficiently are slim to none. Serious sports bettors should avoid getting their hopes too high for this Delaware experiment.

06-01-09
Jay Graziani
MajorWager.com
graziani@majorwager.com

http://www.majorwager.com/frontline-750.html
doesnt this make it a betting exchange and not a bookmaking operation???
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Old 06-01-2009, 01:47 PM
drunkguy drunkguy is offline
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Originally Posted by OLD MAN View Post
doesnt this make it a betting exchange and not a bookmaking operation???
not really

an exchange is when bettors place wagers against each other at fixed odds

Parimutuel is when everyone bets into a pool and odds are determined by the final proportion of money on each entrant
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Old 06-01-2009, 01:52 PM
Myron Myron is offline
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they do that now with pools as part of sportselect in canada.
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Old 06-01-2009, 02:02 PM
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Pure fantasy...but a betting exchange would be supercool as at least a part of what Delaware offered its patrons.

Imagine if every table had a hand held device on which you could do offers and acceptances in addition to autotote type machines that patrons lined up at and had thirty seconds to use (acceptances only)...as well as a few staffed windows for pure newbies. The state-operator scooped three percent and had no risk, bettors got better prices than at Vegas...Liquidity woudn't be a problem on NFL and featured college games...wow.

From the standpoint of someone who wants racing to do well I also like the idea of linking sports bets to horses. Let's say that the only currency you could bet with was a winning parimutual ticket. Think of the handle that would get run through the seventeen percent races in order to make 11-10 football bets.
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Old 06-01-2009, 02:42 PM
Hartley Hartley is offline
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Would you really bet on sports if you weren't sure what odds you'll get? That's one of the reasons horses are so much more popular in Europe, you can lock in the odds. Plus most bookmakers there now have best odds guaranteed - if the odds go up you get the new odds and if they go down you keep the odds you bet it at.
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Old 06-01-2009, 09:51 PM
drunkguy drunkguy is offline
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Originally Posted by Hartley View Post
Would you really bet on sports if you weren't sure what odds you'll get? That's one of the reasons horses are so much more popular in Europe, you can lock in the odds. Plus most bookmakers there now have best odds guaranteed - if the odds go up you get the new odds and if they go down you keep the odds you bet it at.
would you really lay -130 on 6 point teasers?

Would you really bet into -130/-130 prop lines?

People do every day

Never underestimate the stupidity of the public
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Old 06-01-2009, 11:33 PM
Brother Vig Brother Vig is offline
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Whatever way its done it WILL be a ripoff and unbeatable, count on it.
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Old 06-01-2009, 11:39 PM
YouGaming YouGaming is offline
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Default Great Topic...Close To My Heart

Quote:
Quote:

"Parimutuel betting is more suited for sporting events with a field of competitors, like NASCAR or golf. For a parimutuel system to be most attractive to NFL bettors, it should offer both pointspreads as well as moneyline ("pick the winner") options. Moneyline bets tend not to attract a lot of action when there is a heavy favorite, and the introduction of the point spread was a major innovation in the growth of football betting. Offering pointspreads allows for close to even-money payouts, something that is generally attractive to recreational gamblers.

Also, offering moneyline wagering adds an extra feature, allowing large payout odds on multi-team underdog "exotics" (parlays). Using moneylines rather than point spreads will allow multi-team parlays heavy on the underdogs to get into astronomical amounts, and paying out on a few huge "jackpots" is great advertising. For totals, sportsbooks can set a "universal" total at 40, the approximate midpoint of NFL scores, and let the odds float from there. This will allow for even bigger jackpot values when totals of 32 and 56 start popping up."


This is correct. For example, even in horse racing, certain betting options (show and/or place) may be taken off the board if the field is too small. The Giants vs. Cowboys in essence is a two-horse race. The 11/10, point-spread wager offer is likely superior. Pari-mutuel may also appeal to the government in general, since I don't think they are in favor of a wagering approach that could conceivably result in the house losing money, which can happen with a poorly-set line.

The money-line, exotic approach is interesting. I wonder if the state would just opt for parlays as it is easier for them to comprehend. I've been up close and observed some of these government lottery types...ahem...I won't say more.

What I'm trying to get going (have a couple of US Patents already) is pari-mutuel wagering on fantasy sports. So, think of swapping NFL players (QBs for instance) instead of horses and you get the picture. WPS and exotics all could be done. If you think of that as a "race," then you have a QB race, RB race, WR race, etc. That gets you the Daily Double, Pick 3, Pick 6, where like in horse betting, you can have carryovers which can accrue to a reasonable amount. And, since its pari-mutuel, you can leverage the same tote equipment that's already in place at the Delaware tracks, where the sports books will be located. My system works for wagering as well as contests. In the contest, everyone puts up the same entry fee and wagers with game currency, with ranking of punters based on the resulting game currency determining who wins prizes.

Anyway, a great topic!
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Old 06-02-2009, 12:33 AM
drunkguy drunkguy is offline
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welcome to major wager yougaming and thanks for the comments
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Old 06-02-2009, 01:24 AM
TheGuesser TheGuesser is offline
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Am I correct in thinking the Gov't of Deleware is going to hire an experienced Bookmaking firm like a Ladbroke's, Leroy's, Boyd Gaming, Cal Neva, etc to actually run this thing, rather than attempt to run it themselves and get killed? If so, there should be no problem with the 11-10 model.
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Old 06-02-2009, 11:02 AM
OLD MAN OLD MAN is offline
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If the pari-mutuel concept had any potential to be a real money maker, VEGAS and the BIG HOUSES offshore would have already embraced it....
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Old 06-02-2009, 09:24 PM
YouGaming YouGaming is offline
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Default Since you asked... :)

From TheGuesser:

Am I correct in thinking the Gov't of Deleware is going to hire an experienced Bookmaking firm like a Ladbroke's, Leroy's, Boyd Gaming, Cal Neva, etc to actually run this thing, rather than attempt to run it themselves and get killed? If so, there should be no problem with the 11-10 model.

Logical assumption, but here's what Delaware's actually looking for (taken from the RFP document):

It is required as a minimum that any Vendor submitting a Proposal fulfills the following qualifications:

1. One or more current clients, either governmental entities or private entities, to whom it has supplied a Sports Wagering System including central systems, sports book terminals, sports book network, and operations services;

2. Risk management operation as a bookmaker currently licensed to operate, and operating, sports books in the United States;

3. Technology system provider licensed to operate lotteries in the United States.


It's not a logical OR but a logical AND...1 & 2 are very well suited to the Ladbrokes' and Leroy's...it's the lottery licensing requirement that's a toughie. Hearing that likely Delaware may actually lean toward a lottery vendor since the Lottery will be running this. We'll see.

From OLD MAN:

If the pari-mutuel concept had any potential to be a real money maker, VEGAS and the BIG HOUSES offshore would have already embraced it....

As the original post from Rogthedodger describes, pari-mutuel wagering tends to work better with a field of multiple entrants. Typical sports matches are one team vs. one team, so a pari-mutuel wagering scheme, with a 15%-25% takeout, isn't likely as attractive as an 11/10 or money line wagering scheme.

Pari-mutuel wagering for horse and dog racing pulls in $15 billion in handle a year in the US, so it's got value, but again, the key is large fields. I don't have the research at hand, but the thinking is field sizes of 8 or more generate the best handle on a per race basis. You drop below 8, and wagering interest wanes. So, with regard to pari-mutuel on sports matches, I think OLD MAN has it right. If some other gaming concept that was pari-mutuel friendly, and was potentially lucrative, would LV be on it? Hard to say.

Many of you are likely well versed in the LV mindset, but like most industries, there's quite a bit of the "follow the herd" mentality. A bit like venture capitalists. They all will look at each other and ponder something new. Once the first makes a move, the others move so as to not get left behind. A bit odd, but that's what I've seen from my perspective.

I've got pretty far bootstrapping the enterprise. I just need the extra bit of cash to get the pari-mutuel web app coded and put up. I have looked at the standard tote companies -- they can do it, but you'll be amazed at how dated their technology is, with one exception. May be better (and cheaper) to start from scratch and get something that can be useful on a website, mobile handset, or portable to a terminal from the get go.

Anyway, my 2 cents!
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Old 06-03-2009, 01:03 PM
OLD MAN OLD MAN is offline
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LEROYS (LV) comes to mind. The dentist goes in and sets up everything up from soup to nuts. To my knowledge, he also started computerized betting in LV with CBS(COMPUTERIZED BOOKMAKING SYSTEMS). Another outfit out there is BRANDYWINE BOOKMAKING who runs LUCKYS race and sports operations, I believe mostly in northern NV.

btw....I think BRANDYWINE BOOKMAKING is incorporated in the state of DELAWARE...I could stand corrected....................
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Old 06-03-2009, 02:56 PM
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pari-mutuel will flop sooner than later, if that's the route they go.
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Old 06-03-2009, 08:09 PM
mirageburbank mirageburbank is offline
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Default PM wagering

Parimutuel is a very good option for Delaware, as well as other states once sports wagering is legalized.

The problem is not knowing what your payout is, but rather the high takeout on a two way proposition.

A 20 cent line is basically a 4.5 percent takeout. What has killed horseracing is the 17 to 30 percent takeout. Or more importantly, the high takeout on its matchups. If you remember during the breeders cup a few years ago, one horse would be 3-5 and the other 4-5 (or so) because they had a double digit takeout.

My opinion is that Delaware start with a 4 percent or so takeout which would make it better than Vegas and still give it an edge if NJ gains sports wagering.

There are many upsides, no games would fall on the number as everything would be a half. You could book multiple lines on every game if you want, but certainly you could put 2.5 and 3.5 on every game that was normally 3.

The pros would get involved whenever they had an advantage. Like Vegas now, most of the bets would come in the last minutes anyway.

RW
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Old 06-04-2009, 10:58 AM
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I agree with what ur saying mbank, but there is no way they only takeout 4 percent. They will be greedy, and thats what will make it a joke.
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Old 06-04-2009, 11:43 AM
OLD MAN OLD MAN is offline
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hire a RAZOR SHARP linemaker
hire a dead SHARP bookmaker
make them lay-110
lets see what happens.............

"lotteries" do lose money, but only on RARE occasions when a certain 3 digit or 4 digit number hits and they pay out more than they took in on that day
dont forget numbers are "cut off" to where you cant get a ticket on it
will they apply "STOP LOSS" to football where they are over loaded on certain
games and you go to the window to bet the GIANTS and the tell you
"sorry, no more bets accepted on the GIANTS, but youre welcomed to take the other team".
maybe theyll run with a price behind the spread...."yes sir, the GIANTS are
-9 -180 the take back on the EAGLES is +9 +130"

LOTTERIES ARE SET UP NOT TO LOSE MONEY
BOOKMAKING OPERATIONS CAN LOSE MONEY
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Old 06-05-2009, 10:28 PM
Brother Vig Brother Vig is offline
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[quote=OLD MAN;1562850]hire a RAZOR SHARP linemaker
hire a dead SHARP bookmaker
make them lay-110
lets see what happens.............

It will never ever happen sir, it will be unbeatable. count on it.
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