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April-30-2009,
The Daily Grind of Sportsbetting: It Ain't as Easy as it Used to Be...By Jay Graziani

About a decade ago, in the heyday of the online gambling industry, would-be sharps seemingly sprouted from the woodwork. Banking a little coin through internet gambling was easy back then; making enough to support oneself was maybe a bit harder. But a relatively intelligent player could grab his fair share of the gambling pie with just a little bit of effort.

There were plenty of "outs" for players to pick up quick bonuses and loose lines, and anyone with access to the Don Best screen could pull in a decent side income just chasing steam, grabbing middles, and hammering slow-moving numbers. And if you got booted for being an undesirable, a steam-chaser or bonus whore? Just move on to the next shop, as new bookmakers were popping their heads up nearly daily.

Nowadays, it's significantly harder for a part-timer to pull in even a meager income consistently. While there are many possible reasons for the decreased profitability of online sportsbetting, a few significant ones stand out:

A more efficient market. Sports markets were once widely spread out, with little cross-talk between bookies. No matter how sharp a particular guy in Florida was, his betting activity had little effect on someone using a different bookie in New York or Los Angeles, especially on game day, where the morning paper was as good a source of lines as anything else. Lines were essentially static outside of Las Vegas. Even at the beginning of the internet age, things were spread out enough that real-time scalps and middles could be found. Now, all bets are essentially fed into the same global market, and sharp action can send ripples throughout the entire industry within seconds. The emergence of betting exchanges has made the sports markets even more interconnected, and the global reach of the internet has brought even more players into the mix. What all this means is increased competition for the best lines and, ultimately, tighter lines that are harder for the average player to beat.

A consolidated sportsbetting industry. At the peak of the industry there were dozens of different sportsbooks open for business, all with bonuses and their own set of lines. Even "clone" books would often be caught with their pants down on a big line move. Now, the power is consolidated in the hands of much fewer players, as the small fish got eaten up after the U.S. gambling crackdown. Less competition means fewer amenities for the players, which is one reason for the recent lack of bonuses, reduced juice, and other incentives. It also means less opportunity for line-shopping, a key factor in winning at sports gambling.

More efficient sportsbooks. Not only are there fewer sportsbooks, the ones that are left are leaner and meaner. They know how to manage lines, handle bonuses, and deal with sharp players. The books that have survived are going to make you work harder to take a profit away from them. They move their lines rapidly, they keep their thumbs on bonuses, and are quick to limit players who are too sharp for their liking. In other words, today's sportsbooks, unlike their predecessors, aren't giving anything away.

Easier access to stats and information. The internet is the greatest media tool in history, providing access to nearly limitless information at the click of a mouse. This information includes historical scores and lines, game and player stats, and reams of other statistical trivia. Anyone with the time and motivation to research an angle now has the power to do so. Spreadsheet and database software, with some versions available for free, have given novices the number-crunching power once reserved for mathematicians. And the advent of internet billboards and other online social networks have allowed knowledge to spread at an unprecedented pace. All of this makes for more-informed gamblers, and that translates into more accurate betting lines.

Increased statistical research. We see more and more sportsbetting-themed research coming out of economics and finance departments at universities, such as those by Prof. Justin Wolfers that have at times found a degree of notoriety. You might argue that not a lot of people read those papers, especially the more obscure ones, but it doesn't take a whole lot of smart money to move lines nowadays. In the widely-connected sports market that exists today, this newly discovered information can work its way into the lines quickly.

No matter what the reason, it sure seems a lot harder to grind out a side income betting sports nowadays. And don't expect it get easier. Ever. If legalized/regulated, the requisite taxes will squeeze the last drops of profit out of the industry, and the nature of the regulation process would mean more power consolidated among even fewer sportsbooks. If left unregulated, the industry is unlikely to ever achieve the same level of magnitude without coming under even more intense government regulation and policing.

Of course good handicappers, those that can make a line better than the oddsmakers, will always find a way to make money. But at some point, even for them, the tighter markets may not provide a good enough return on investment to justify the workload.

04-30-09
Jay Graziani
MajorWager.com
graziani@majorwager.com

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