How to Legalize Sports Gambling Faster? Run a Sportsbook Like a Wall Street Brokerage

I have a firm distaste for “in this editorial” and “in this blog post”-style introductions. We’re not writing term papers here.

This time, though, a bit o’ formal exposition is probably called-for. I don’t want to tout an idea as all mine if someone else has already thought of it.

In this editorial (gag) you’ll find a suggestion that may already be realized at a dozen private exchanges in England. There might even be a retail sportsbook or 3 which have already put the notion into practice.

I’m only an expert on the sports betting sites of the free-range internet, not the ins-and-outs of pub gambling in the Kingdom. On the world wide web, sports bets are placed to win or lose – all or nothing. (And an occasional push.)

Bovada, MyBookie, BetOnline, and even our pals at FanDuel Sportsbook are not going to convert their business models based on the musings of a handicapper. However, as I hope to make abundantly clear, the upside for everyone in the industry could be massive if bookmakers started offering a new kind of betting line.

How to Run a “Stock Market” Style Sportsbook

Wall Street trading is a “glamor” industry, while sports gambling is considered low culture. That unfortunate stereotype is what leads to people being shamed, cast-out, or even jailed for betting on sports while others are cheered for gathering tips on which to wheel-and-deal shares of baby diapers, airplane brakes, and even frozen orange juice.

People do not need to be experts on 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. Hmm…sounds a lot like sports betting to me.

Sportsbook gambling is like stock trading, but with a catch. Bookmakers set up 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?

Sports Betting in the 22^nd Century: Everyone Wins Every Bet

Why, how could everyone “win” every single wager at a sportsbook? The bookie would go broke, and then there wouldn’t be a house to gamble against anymore. Right?

Hear me out. A given preseason win-total line for the Toronto Raptors might look something like this:

Toronto Season Win Total

Over (60.5) Wins (-105) / Under (60.5) Wins (-115)

Imagine viewing this style of market instead:

Over (65.5) Total Wins: (+500) minus wagered amount  

Over (60.5) Total Wins: (+125) minus wagered amount  

Over (55.5) Total Wins: (-200) minus wagered amount

Over (50) Total Wins (-500) minus wagered amount  

1-49 Total Wins (-5000) minus wagered amount

“Minus wagered amount” is important because the book would keep everyone’s wager for good, just like a stock broker keeps the money you pay for each share. Those transactions are permanent. But in exchange for keeping all money invested in the Toronto Raptors’ upcoming season, the betting book would pay out every “investor.” It would only be a question of how much. If the Raptors finished 1^st overall in the NBA, gamblers would earn a nice return-on-investment. But even if Toronto slumped, they’d still get something.

Just as when setting traditional lines (in which won bets always result in a payoff plus returned wager), odds managers to use computer analytics to set payout lines for every specific outcome. Each possible season-ending record might come with its own moneyline…all for the same betting market.

The sportsbook would still make money by tipping the scales 5% or 10% in its favor to help snare unwary gamblers. Or, a “Wall Street” style market might simply weigh the odds even-up, without “juice,” but charge a small fee to everyone who buys in. A sort of “manual vig” if you will. (It’s not as if stock brokers don’t charge fees to investors.)

But here’s the kicker – in a “progressive payoff” market there would be far fewer sad gambling tales and ruined stakes. In a futures betting system like the one shown above, fans could invest in team performances without fear of the all-or-nothing bust.

Those who would like to bet against the Raptors (somewhat comparable to buying “puts” on Wall Street) 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 will usually 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 offers an all-wagers-kept progression in which everyone gets paid-out based on how well the NFC team does? If the squad loses by 30 points, the bettors get a pittance, but on likeliest outcomes the gamblers get most of their money back.

On the bright side from the sportsbook’s POV, the house would not have to pay out 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.

Wait, wouldn’t that take away some of 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 profit per-consumer, or if some gamblers lost a little thrill, it would still be a good deal for both parties in the long run.

Putting Stock in the Public’s Perception

When politicians in 2020 are still going around saying things like “harms associated with online gambling,” we need every tool at our disposal for convincing people that responsible sports betting is OK.

Sports betting is among the least expensive hobbies that a responsible adult can have, but that old specter of the potential total loss of a stake can give even penny-wagering a spooky vibe. The goal should be to allow sportsbooks to profit – within reason – while protecting clients from those kinds of experiences.

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 win totals. Others could then invest more money at higher risk, but not risk of losing a big stake altogether. 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 true to an accurate pick, and compensate the book with its usual 5% or 10% or 15%. The only difference is that there would be more opting-out and less windfalls (and pitfalls) for both sides.

So 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. Retail sports betting could blossom everywhere in the world, and online books might finally be able to allow PayPal withdrawals and credit-card transactions in all time zones without pesky firewalls and restrictions.

Consider a cultural war that isn’t technically won yet – the cannabis legalization battle. Some social-conservative civic leaders appear to still think Reefer Madness was a documentary. But the fight began to be won when the media was pressured to ask, “which is more dangerous, alcohol or funny cigarettes?” Everyone who answered “funny cigarettes” was obviously wrong and realized just 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. 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 engineering company he’s got several grand sunk into – he probably couldn’t change-out parts on a Boeing or even replace a bow string. But if you ask an NFL gambler from Saginaw if she knows anything about the Detroit Lions? Hopefully you’ll have a chair and some good coffee. You might be in for a loooooong answer. Gamblers should be given credit for at least knowing the nuts and bolts of what they’re in on.

The only thing stopping more Americans from seeing sports betting for what it is – a form of stock trading – is that sportsbooks are still stuck offering only the traditional model of markets.

Hopefully, someday soon, bookmakers will realize that doing business in all 50 states is well worth making a few big changes.