I was trained as an economist, so when I think of sports betting, I think of markets. I also appreciate that markets work, for better or for worse.
I have also spent appreciable time in my life involved with sportsbooks, and I understand that when there are market imperfections, there can be opportunities for profit by people who are aware of the imperfections. In fact — and many do not understand this — it is more important to understand market imperfections in betting sports than it is to understand sports in betting sports.
There are a great many things that cause imperfections in betting markets in the long run, short run, and market period. These include limits to the entry of betting suppliers, poor or uneven information channels, irrational brand loyalties to teams (consumer irrationality), collusion among suppliers, government intervention, disparate cost conditions among suppliers, and so on.
A noteworthy market imperfection is when the fix is in. Here we have market participants dealing with different streams of information, with the most valuable piece of information being that a participant will work to shape an event’s outcome. This has a long history in boxing, where back in the day, it was often suggested that the only thing on the square was the ring. A boxer could either be bribed or threatened — and bad things would happen to him or his family if he failed to perform. Worse things would happen if he talked.
Because of the large amounts of money bet on sports, in both regulated and unregulated environments, there are material rewards available to a person or group of people who know the outcome of an event before the event — or who can materially shift the probability of an event’s outcome. Through time, there have been increased efforts to ensure that the event is decided on the field of play, so to speak, rather than through some untoward actions. This is the area of sports integrity.
The betting universe was made from Stardust
Little did I know it then, but I was involved in the early days of sports betting integrity. I was the VP of Casino Operations at the Stardust Hotel & Casino — and at the time, the Stardust was a legendary player in the sports betting world. Many legacy issues were involved in creating this status for the Stardust, and Scott Schettler was the primary reason for maintaining that status. Scott ran the book, and as VP of casino ops, I had responsibility for Scott and his crew. More importantly, I was honored to be in the same building with them.
One of the signature items of the Stardust was a bank of pay phones along the outside wall by the race and sportsbook entrance. I believe there were 11 phones. Those pay phones were the highest revenue-producing pay phones in the United States. We bragged that we made the line for the U.S., and this was basically true. We also booked serious bets.
Not only did we have every serious player who could get their money to the Stardust firing at our numbers, but I was always amazed at the casino executives in Las Vegas who were getting down with us. There were times when there would be more casino executives in the Stardust than one would find at a gaming conference, all wanting to bet. When it came to booking, we were the real deal, 24/7.
An important detail about the Stardust was that there was a great deal of experience behind the counters. I would guess the average among sportsbook employees exceeded 10 years. They also communicated well with one another and up and down the book’s organizational structure. Moreover, many of them were players. They knew betting, and they knew numbers. They also watched numbers. Most importantly, there was little that Scott had not seen, heard, or done. The dude had betting in his DNA.
Every now and then, something would get our attention. The crew might start talking about it, and all eyes would begin to watch it. If it continued to attract attention, somebody would get on the phone and start calling around to a few key books we trusted within the Nevada market. We would also call the Roxy’s of our world, including noted oddsmaker Roxy Roxborough.
We were looking for insight, and we were looking for insight quickly. People used to walk into our store with briefcases, and we didn’t want to limit a briefcase unnecessarily. We always looked for reasons to take a bet, not to refuse it. If you can imagine such a thing, we also had big players who would work to deceive us, making this all even more confusing. If the numbers then continued not to make sense to us, and others, we would get on the phone, and this series of calls was not to other books.
The decision to pick up the phone and elevate the issue was easy for me. If our folks were uncomfortable with what was happening, that was enough. I had that much faith in our people — especially Scott and his network. They were not anxious or skittish, but they did have great instincts and wanted to protect the store.
Diplomacy and the bureau
Our first call would be to the Nevada Gaming Control Board. This was mainly for diplomatic reasons. First and foremost, the gaming board really did not understand betting at a granular level. Plus, they complained about things whenever they came to our store, and I was getting very tired of that.
Moreover, we could not take bets on Nevada teams at this time, so the game we were concerned with was, by definition, out of state. The board’s jurisdiction ended at the state border. In short, they were not too useful. The board always wanted to have this long conversation about what was wrong, and all we knew was that something didn’t seem right. We would then mention that we were calling the FBI.
As a testament to our size and importance in the betting world, the FBI field agent always took our calls or immediately got back to us. The FBI knew who we were and took us seriously. We would identify the game and what we knew about the money. We would tell the agent what it looked like to us. Then, we were thanked, and the conversation was over.
One of the funnier incidents with the FBI was when I put a call in, and I heard the agent’s beeper go off about 20 feet away. The dude was in the building. Only at the Stardust.
As an aside, it was never the case that the FBI shared anything with us. The FBI may have had questions, and we would answer them, but they never volunteered or shared information with us. And that is how it should be. I have had a number of dealings with the FBI over the years, and the agency representatives were always very professional and kept their mouths shut. I always admired that, and visiting with them made me comfortable because of that.
Once we gave what we had to the FBI, we were done. This isn’t the most exciting end to the story, but it was the end of the story for us. That is how sports integrity worked. It was elevated to the FBI — a group with unquestioned authority, a vast network, and various important tools, including wiretaps, informants, existing investigations, and the like. We saw our job as getting the best information to them on a timely basis. Then our job was over, and we went back to managing our numbers.
How things are done today
In visiting with Matthew Holt, president and founder of U.S. Integrity, I described all of the above. This was how sports integrity worked before there was really such a thing as sports integrity. Matt suggested that the mode was similar to today’s integrity efforts, while admittedly, there has been huge growth in the number of people involved in sports integrity and a substantial introduction of sophisticated technology.
As Matt described it, someone in the integrity network becomes uncomfortable with a situation. This information is shared and analyzed; if concerns still exist, it becomes part of a larger conversation. If concerns still exist in the context of this larger conversation, it is elevated to warnings going out to betting providers and/or communications with law enforcement and sanctioning entities.
See how easy that is?
The difference was that back in the day, a small group of folks behind a betting counter first became concerned, whereas, with Matt, it could be any number of folks spread all across the entire planet. I knew who our people were, for we all worked in the same building, whereas with Matt, all he sees is the data flowing into his offices from all kinds of different environments encompassing huge geographic areas.
When we picked up the phone to call around to the other players in the betting network, it was just a few calls to visit with the folks whose opinions we respected, whereas Matt and his people have to electronically harvest data and insights across a vast betting ecosystem. Moreover, we knew whom we were talking to — we may have worked with them at some time, knew them from around town, or were otherwise familiar with who they were. Not so with Matt. Thousands of people are across his networks, and anyone may possess the insights needed at any particular moment.
A young, expanding information ecosystem
What Matt has built is really remarkable. It is an incredibly large network with a variety of different sources of potential input designed to enhance sports integrity — and it is gaining traction and scoring some victories. And the institution Matt, his team, and investors have built is a critical component of a vibrant betting industry because, without this piece, the sustainability of the industry is threatened. It is that important.
In the earlier discussion on the Stardust, I noted the incredible importance of the experience of Scott Schettler. He knew betting. Not just the words and the catch phrases, but he knew betting. So, too, it is with Matt Holt. Matt earned his chops in a reasonably rough-and-tumble betting environment, and having this legacy is a critical component in enhancing the probability of the success of the integrity movement in the United States.
At the Stardust, our cast of actors in the integrity drama was somewhat limited. With Matt, it is basically infinite, and each increase in a participant dramatically impacts the complexity of the model, and Matt is aggressively working to increase the size of that model. It is a significant and important task.
A huge difference between then and now is that at the Stardust, our people had been behind the counter for a long time. This not only meant that they had the technical understanding necessary to operate in the betting world, but they also understood the culture, and they had developed instincts.
The rapidly expanding U.S. betting world is very young, and while Matt can recruit top-notch technical people, it will be harder for him to attract and retain top-notch betting people. This may be my old-school roots, but I believe that the best approach to the integrity issue goes beyond technical relationships and drifts into the murkier areas of culture and instincts. Matt will have to work to find these assets, for they are rarer. That will simply take time, and the whole ecosystem needs to mature and acquire knowledge and insights. One thing is clearly evident — Matt Holt is building an incredible foundation.
Never underestimate Matt’s challenge. An attendant in a college football locker room who is responsible for providing towels can acquire information about a player’s injury that can prove important in shaping the reality of a game — and this can be some incredibly valuable information within the betting world.
Somehow or other, Matt needs to find this. The good news is that he is working on it.