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The Ins and Outs of Sports Betting, and Where It’s Going in the Modern World
Picture this: you’re hanging out with friends, having a drink or two, and you’re watching sports. But you and your friends aren’t just watching. You’re hooting and hollering for these teams that you normally wouldn’t care too much about. It’s not due to anyone being drunk or going crazy; it’s because you all have money on the line. This increased excitement from having “skin in the game” is just one part of why people love sports betting so much. Although many people imagine sports bettors just being young, immature males, the American Gaming Association's 2019 study shows that 39% of adult Americans are current or potential future sports bettors.
With the onset of more and more advanced technology, sports betting is experiencing rapid changes in the 21st century, and new states are legalizing online gambling every year. But as with any kind of gambling, things are not always bright and rosy. This is not a recommendation to begin betting on your favorite teams, but simply an educational resource about the world of sports betting. As someone who has been surrounded by sports bettors for years, I’ll walk you through exactly how it works, why people love it, and where it’s heading in the future.
How Does Sports Betting Work?
Like any topic, sports betting can be extremely complex if you dive deep enough. But I’ll just be running you through the basics so you can understand the conversation while in the company of sports bettors. Bookmakers, or bookies, set the odds and collect the bets for a game. In the pre-Internet days, this started out very simply with only a few odds set on the most popular games. But with the rise of online gambling, gaming establishments had to cater to a more global audience and started offering odds on many more events (Moya, 2012). Nowadays, people can bet on nearly every facet of a game, like which team will win, how many points will be scored, who will score first, and even individual player stats.
In California, it is still technically illegal to use online gambling services such as Draftkings. So people have to resort to their own bookies. Often, there is some kind of app they can use to lock in bets or some bookies just accept bets through text (with odds that are set by the legitimate sportsbooks). Then the bookie (usually someone’s friend of a friend) will act as the house. This means that after you place a bet through app or text, they’ll be in charge of paying you if your bet hits, or collecting the money you lost if it doesn’t. If you’re asking yourself what holds people accountable in this informal system, the only real answer is the honor code. If people lose their bookies’ trust, they won’t be able to place any more bets with them, and a bookie that doesn’t pay out will lose all their bettors. As with any form of gambling done in casinos (sports gambling is legal in casinos in Vegas), the odds are always set to favor the house in the long run. So a bookie needs to have enough capital to sustain any short-term losses, but should be profitable with enough bets in the long run.
The picture above shows how betting odds are seen online. In this example, the Celtics have a spread of -3.5 points, so they are favored to win. If you bet on them to cover the spread, they must win by 4 or more points for your bet to hit. Conversely, if you bet on the Raptors to cover their spread, if they lose by less than 4 points or win, they have covered their spread as well. If you think the Celtics will win, but by less than 4 points, you can make a moneyline bet. This is what people traditionally associate with sports betting, and is just a bet on who will win the game. Since betting the moneyline is less risky than the spread, the return will be lower.
The odds are shown with a plus or minus sign. The minus means that's how much money must be bet to win $100. So if you bet the Celtics to cover their spread, the -110 means you’d have to bet $110 to win $100. The plus means that much would be won on a $100 bet. So if you bet on the Raptors to win the moneyline, their odds of +145 means you’d win $145 with a $100 bet. Finally, the far-right bet shown in the picture is betting the over-under. This refers to the total points scored in the game, which is 209.5 in the example. If you bet the over, you bet hits if the teams score a combined 210 points, and the under would hit if they scored 209 or less. If the over-under or spread were set at a full number (like 4 points instead of 3.5 for the spread), it would be a “push” if the Celtics won by 4 points, and the bettor would simply get their money back (Moya, 2012).
Why Do People Love Sports Betting?
At its core, gambling is about fun. Once people get a taste of the gambling rush, this can lead to gambling addictions, but it starts out as fun. Kevin Loria of Business Insider points out that any kind of gambling win, especially ones where you use your knowledge to “predict” the future “activates the reward-circuit in the brain [and] releases dopamine." Even when people have near-misses, this releases a similar brain reward-circuit, so it can still feel good to come close and reinvigorates the gambler to bet again (Loria, 2015). Even if people already enjoy watching a sport, having “skin in the game” makes them even more interested, and betting with friends leads to a strong sense of camaraderie. And I have seen in these times of COVID-19, how sports betting can be a way to spice up the humdrum of everyday, quarantine life.
Where is Sports Betting Headed in the Future?
The graphic below illustrates which states have legalized online gambling.
Only 36% of states have legalized sports betting (Baker, 2020). However, the train for legalization has picked up steam since 2018, when the Supreme Court found the federal law banning sports betting to be unconstitutional. It’s now open to individual states to decide legality for themselves, and the case is pretty compelling. Baird Fogel of Lexology estimates that “$150 billion was wagered illegally in US sports betting in 2019, with predictions that it could grow into a $400 billion market now that it is legal in some states." It’s only a matter of time until California gets on board, and resorting to illegal bookies will be a thing of the past. When that day comes, hopefully you can responsibly win some money, and maybe even give a cut to that guy from college who first introduced you to sports betting!
References:
Baker, Kendall. “The States That Have Legalized Sports Betting.” Axios, 13 Dec. 2019, www.axios.com/sports-betting-legalized-what-states-4a26bb27-d88f-4adf-a908-6e10441ed855.html.
Fogel, Baird. “The Future of Sports Betting.” Lexology, 13 Feb. 2020, www.lexology.com/library/detail.aspx?g=cdcc72d2-188e-441b-83f7-f0d8aa826fe4.
Loria, Kevin. “Why We Bet on Things like Fantasy Sports When the Odds Are Against Us.” Business Insider, Business Insider, 6 Oct. 2015, www.businessinsider.com/fantasy-football-psychology-gambling-betting-2015-10.
Moya, Fabian. “Statistical Methodology for Profitable Sports Betting.” Simon Fraser University, 2012.
“Sports Betting Consumer Study.” American Gaming Association, 27 Mar. 2019, www.americangaming.org/resources/sports-betting-consumer-study/.
Hi Ryan, I really enjoyed your article on sports betting especially me being a huge sports fan, I never really knew how sports betting worked. I liked how you laid out your article by first explaining what sports betting is and then finishing it off by talking about the future of it. I liked how you used a specific example to explain how sports betting actually works and walking the reader through it! I also think you used a good number of sources throughout the article.
ReplyDeleteReally great piece, Ryan. Legal betting has definitely been making headway in recent years, so it's a really well-timed topic. I've been known to wet the beak from time to time, and even knowing how lines work, I didn't feel bored or lectured-to while reading this. You use your sources really well, but I think you could add some quotes from professional bettors or line-setters. One last note- you hit the nail on the head that bookies are always some strange friend of a friend. Also, life's too short to bet the under. Great work, looking forward to seeing the finished product.
ReplyDeleteHey Ryan, I enjoyed your post. Like Pedro, I am also a big sports fan but I never understood how betting worked. All I would see is a negative number for a team and I would know that team is favored to win. You go in depth and really explain the ins and outs of sports betting to make it understandable to a person like myself who knows nothing. You used a good number of sources as well, so I think you are covered expert opinions; good job!
ReplyDeleteHi Ryan, this is a fascinating topic! I never really understand how sports betting works or know anything about it. I thought it's just a lucky guess. However, after reading your article, there seems to be a lot more than just "luck." I especially like your last section when you include the future of sports betting. I think with all the citations you included, your article is great! I look forward to reading your final version of sport betting!
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