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A Sportsbook Run Like a Stock Exchange Would Revolutionize (and Legalize) the Industry

Stock Market Chart with Sports Balls
Out of the way and Anaheim Ducks. I’ve got an idea.

I have a long-departed relative who spent my childhood shaking his head dismissively and saying “Mmm-hmm, yeah, they’ve got those” in response to any talk of new ideas or inventions. How my family would laugh about trying to come up with some fictional new gadget to praise while speaking to him. “How about a 45-minute train to Pluto?” “MMM-HMM, yeah, they’ve got those!

I can feel his presence around me now. What I’m about to suggest is probably not at all an original idea. In fact, there are probably a dozen private exchanges in England (some fair, some sketchy) who already use the business model I’m going to lay out. So yeah…they’ve got these already.

But I’m only an expert on the major sports betting sites of the free-range internet, not the ins-and-outs of pub gambling in the Kingdom. At websites such as BetOnline you’re not going to find any of the style of market laid out in this blog post…at least not soon or often or to my knowledge.

MyBookie or BetOnline might withstand a brief down-turn in profit if they ever converted to it. However, as I hope to make abundantly clear, the upside for everyone in the industry would be massive if bookmakers started offering a new kind of line.

Sports Betting Idea: Legalization Through Compensation

Wall Street trading is considered glamorous, while sports gambling is considered low culture. That unfortunate tradition is what leads to people being cast-out or jailed for betting while others are cheered for gathering hot tips to wheel-and-deal shares of baby diapers, airplane breaks, and even frozen orange juice.

Obviously, folks do not need to be experts or enthusiasts in a product to invest in its company’s stock. But we still admire the hot-shot New York broker who speculates, goes all-in, and sees the hard work pay off in a jackpot of earnings.

Speculating. Going all-in. Waiting for an outcome to find out if you’re richer or poorer.

Hmmmmm. What does that remind you of? Let’s think real hard. Maybe a demonstration, a diagram, or even a puppet show would help put this all together.

Sports gambling is stock trading, but with a catch. Bookmakers set up all-or-nothing scenarios in which clients are forced to risk 100% of a bet to receive 100% of the payoff on a winner. Asian Handicaps in soccer play with that notion a little bit. But when a stockbroker loses out, it means her stocks went from $50 to $25 per share while she held on to them. She still has half of her liquid assets. The winning gambler may have a super-sized stake after their season-prop pick wins the MVP award, but if somebody else wins it, all of the original “assets” (as in, the $ amount of the wager) are gone.

What if it didn’t have to be that way? What if the sportsbook ran more like a stock market?

Everyone’s a Winner

A typical preseason win-total line for the NBA’s Golden State Warriors might look something like this:

Golden State

  • Over (68) Total Wins (-105)
  • Under (68) Total Wins (-115)

Now imagine it looking like this instead:

Golden State Win-Total Payoff Chart (All Wagers Apply)

  • Over (70) Total Wins: (+400)
  • Over (65) Total Wins: (-105)
  • Over (60) Total Wins: (-200)
  • Over (50) Total Wins (-500)
  • 1-49 Total Wins (-10000)

That’s not a bunch of separate betting lines. It’s just a bunch of separate payout odds. All bettors in the market gamble on the same thing – the Golden State Warriors. Nobody has to pick an O/U win total in the usual binary fashion. They’re just putting stock dollars in the Warriors.

If you wager $100, and Golden State wins 70+ games, then your payoff is handsome at $400. If you wager $100 and Golden State has a typical year with 65+ regular season wins, then it’s essentially a push minus the 5% house fee. If the club suffers through a season below its usual magnificent standards, then the bettors don’t get a lot back on their investments…but they still get something.

It would be easy for odds managers to work with a computer to set specific payout lines for every specific outcome. Every possible season-ending record would come with its own moneyline…all for the same betting market.

Note that the sportsbook still weighs the odds in its favor. A site would be likely to make money on the above market at the odds listed, because even the mighty Warriors don’t tend to win 70+ games in a season. The only risk for the bookmaker is if the Warriors have a fantastic campaign and threaten to break their own record of 73 wins set a few years ago.

But in a “progressive-payout, one market” futures betting system like the one shown above, fans could invest in clubs and schools’ performances without a deathly fear of the all-or-nothing bust.

Paying the Bookie While Avoiding the Sting

Those who would like to bet against the Golden State Warriors in a given season could be offered a “reverse” line with the odds weighted appropriately. However, the beauty of the “stock market” system would lie not only in team futures but in almost every style of bet we take for granted as all-or-nothing.

For instance, a sportsbook might offer a set of winning-margin proposition odds on the Super Bowl. If the NFC representative wins by 10 to 15 points, the payoff is (+1000), if 16 to 20 points, (+2000), and so on, based on the circumstances and the expected straight-up outcome. But despite the promise of hefty payoffs on winners, those prop markets promise only the removal of bills from your wallet when the score doesn’t fall exactly within the bracket.

What if the book offered a progression in which everyone gets paid-out based on how well the NFC team does? If the squad lost by 30 points, the bettors would get a pittance, but on most of the likeliest outcomes the gamblers would at least get most of their money back.

Nor would the bookie have to pay out those massive sums on (+5000) prop-outcome bets if the final score was funky. The site would only lose out if a triumphant team’s “investment” action outweighed that of its “reverse” line…or of its downed opponent.

Wouldn’t that take away the “thrill” of sports wagering? Sure, especially in the single-game scenario. But there’s no reason betting sites can’t offer their “Wall Street” lines alongside the regular ones – it’s not a binary choice any more than the new style of betting would create one.

And if sites did lose a little money, or if unaware gamblers lost a little thrill, it would be well worth it for both parties in the long run.

Potential Aid in the Legalization Fight

In a landscape in which politicians are still going around saying things like “the harms associated with gambling,” we need every tool at our disposal for convincing people that responsible sports gambling is OK (and in truth, one of the least-costly hobbies an adult can have).

I’d be in favor of betting sites going even farther with the Wall Street concept. What if you had the option to “sell back” your team stock during a season that was headed south? As bettors sold their futures back to the market for a % of what they put in, the payout lines would lengthen for smaller and bigger win totals. Gamblers who speculate that the team is ready to turn things around could then invest more money at higher risk – not risk of losing a big stake necessarily, but risk on the field of play as the club’s slump threatened to continue.

In the end, the team would satisfy everyone’s wheeling-and-dealing with a fair payoff on all predicted outcomes, reward brave bettors who stayed in until the end with an accurate pick, and compensate the book with its usual 5% or 10%. The only difference is there would be more opting-out and less windfalls (and pitfalls) for both sides.

Again, why would a sportsbook go through the trouble of creating a season-long, interactive, “live” betting exchange with business flowing both directions? Because by imitating the stock market, Las Vegas and London would get a potentially Earth-moving boost in public relations.

Think of the cannabis legalization battle. The public – and its elected leaders – still aren’t 100% on board. Some of them even still think Reefer Madness was a documentary. But the fight began to be won when the media was forced to ask, “which is more destructive, alcohol or funny cigarettes?” Everyone who answered “funny cigarettes” was obviously wrong and realized that as it escaped their lips.

Progressive payout lines and “sell-back” options would make bettors look sharper and more grounded in reality than stockbrokers, who, by the way, charge % fees for their services just like bookies do. The fundamentals are already in place for this 2 + 2 = 4 realization to hit America like a ton of bricks.

Ask a stock investor about that aircraft company he’s got several grand sunk into – he probably couldn’t change-out a Boeing or even a bow string. Ask an NFL gambler from Saginaw if she knows anything about the Detroit Lions? Hopefully you’ll have a chair to sit down in and some good coffee.

The DIY Wall Street Model of Sports Betting

The day is probably far in the future when online sportsbooks will offer gamblers all of the options I’ve outlined above. But the good news is that sports bettors can use tactics and techniques to create their own “stock market” flow of investment and earned capital.

Remember that a whole bunch of small bets can add up to one big investment over time. The bettor does get a return on that cost – it’s just a question of whether it’s a plus or minus ROI.

My favorite method of diversifying the portfolio, so to speak, is taking out “spare change” futures bets on upstart teams in pro soccer, hockey, and March Madness. It’s like putting $10 each on a bunch of risky stocks, knowing that the companies can either fold or turn into Starbucks someday.

Too bad the “Starbucks” of the NFL is already at a rather short futures line for next season’s Super Bowl. But we all have The Hoodie to thank for that.