Scandal Erupts In Unregulated Online World of Fantasy Sports 174
HughPickens.com writes: Joe Drape and Jacqueline Williams report at the NYT that a major scandal is erupting in the multibillion-dollar industry of fantasy sports, the online and unregulated business in which an estimated 57 million people participate where players assemble their fantasy teams with real athletes. Two major fantasy sports companies were forced to release statements defending their businesses' integrity after what amounted to allegations of insider trading — that employees were placing bets using information not generally available to the public. "It is absolutely akin to insider trading. It gives that person a distinct edge in a contest," says Daniel Wallach. "It could imperil this nascent industry unless real, immediate and meaningful safeguards are put in place."
In FanDuel's $5 million "NFL Sunday Million" contest this week, DraftKings employee Ethan Haskell placed second and won $350,000 with his lineup that had a mix of big-name players owned by a high number of users. Haskell had access to DraftKings ownership data meaning that he may have seen which NFL players had been selected by DraftKings users, and by how many users. In light of this scandal, DraftKings and FanDuel have, for now, banned their employees from playing on each other's sites. Many in the highly regulated casino industry insist daily fantasy sports leagues are gambling sites and shouldn't be treated any differently than traditional sports betting. This would mean a high amount of regulation. Industry analyst Chris Grove says this may be a watershed moment for a sector that may need the legislation it has resisted in order to prove its legitimacy. "You have information that is valuable and should be tightly restricted," says Grove. "There are people outside of the company that place value on that information. Is there any internal controls? Any audit process? The inability of the industry to produce a clear and compelling answer to these questions to anyone's satisfaction is why it needs to be regulated."
In FanDuel's $5 million "NFL Sunday Million" contest this week, DraftKings employee Ethan Haskell placed second and won $350,000 with his lineup that had a mix of big-name players owned by a high number of users. Haskell had access to DraftKings ownership data meaning that he may have seen which NFL players had been selected by DraftKings users, and by how many users. In light of this scandal, DraftKings and FanDuel have, for now, banned their employees from playing on each other's sites. Many in the highly regulated casino industry insist daily fantasy sports leagues are gambling sites and shouldn't be treated any differently than traditional sports betting. This would mean a high amount of regulation. Industry analyst Chris Grove says this may be a watershed moment for a sector that may need the legislation it has resisted in order to prove its legitimacy. "You have information that is valuable and should be tightly restricted," says Grove. "There are people outside of the company that place value on that information. Is there any internal controls? Any audit process? The inability of the industry to produce a clear and compelling answer to these questions to anyone's satisfaction is why it needs to be regulated."
Ethan? (Score:3)
I read that as Eddie Haskell first time through.
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I read that as Eddie Haskell first time through.
You look lovely today Mrs. Cleaver.
Re:Ethan? (Score:5, Interesting)
How this is not considered gambling I will never understand. If you bet on teams to win (thereby playing, through the odds, with or against every other bettor), that's sports betting and therefore gambling. If you bet on individual players and play against every other bettor, it's somehow not gambling?
(It's also the same model as the online poker sites which were banned...)
Either it all should be legal or all illegal. I'm not taking a position on that, but if I worked at one of these companies, I wouldn't be getting too comfortable in my current environs.
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It's not illegal gambling because UIGEA (the federal anti-online gambling law) specifically exempts it.
https://www.law.cornell.edu/us... [cornell.edu]
(1) Bet or wager.— The term “bet or wager”— ... ...
(E) does not include—
(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or
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(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions
How is picking your NFL fantasy team members from the rosters of existing NFL teams not basing your team on the membership of an actual team? If Brees is on a team and the only reason you can pick him is because of that, then you've based your team on the membership of existing teams.
What this exclusion would apply to is a fantasy league where you can pick past players, like Johnny Unitas or Brett Hull (for NHL).
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It's saying that the fantasy team's membership can't be based on the membership of a current team. The idea is to prevent people essentially from betting on the Red Sox to beat the Yankees by having a "fantasy" league where one team's members are the current Red Sox, and another's are the current Yankees, and so on.
It's a dumb law, but it's the law.
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It's saying that the fantasy team's membership can't be based on the membership of a current team.
Yes, I even quoted where it says that.
If you cannot pick Drew Brees as your fantasy quarterback unless he's a member of an existing NFL team, then your team roster is based on the membership of current NFL teams. It doesn't say you are exempt unless you are betting on a team as a whole.
The idea is to prevent people essentially from betting on the Red Sox to beat the Yankees by having a "fantasy" league where one team's members are the current Red Sox, and another's are the current Yankees, and so on.
As someone who is smart enough to avoid wasting money on this, I'll assume that your legal honest ethical fantasy sports betting -- I mean non-betting -- sites prohibit in some way picking a fantasy team composed of mem
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Yes it does--the italicized above is a direct quote from the federal law that banned online gambling (the UIGEA). Fantasy sports are exempted per se, regardless of whether or not skill is involved.
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There's a severe difference between a whole fantasy football season of managing a team with a prize at the end for the best overall performance, and placing simple one-game cash bets on individual players.
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Yes, placing one-game cash bets on individual players would violate (ix)(III)(bb):
(III) No winning outcome is based—
(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or
(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.
As far as I know, neither of these sites allows such bets (by design, to skirt the law).
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Well, I suppose we will have to hold a mock trial to decide this case.
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Why the "jackass" in reply to what looks like a reasonable posting? Do you have some kind of history with the OP, or am I missing something?
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With sports teams you can compile enough information to make an educated guess about which teams have an advantage. No matter how much historical data you compile on an individual player, there is no way to predict within a reasonable margin how well they will perform from week to week.
How are individual players unpredictable but teams predictable? The team is comprised of 46 players. If you can't even predict the performance of one player, how can we say that you can predict the performance of a combination of 46 of them?
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You apply a subset of Psychohistory.
Hari Seldon was a genius.
https://en.wikipedia.org/wiki/... [wikipedia.org]
Kil them with fire. (Score:2)
I am so fucking sick and tired of seeing commercials for fan duel, draftkings, and whatever the fuck the other one is every 15 god damned minutes on my tv.
Outsider (Score:5, Interesting)
Re:Outsider (Score:5, Insightful)
Still insider trading as he had access to data that the public doesn't.
Re:Outsider (Score:4, Interesting)
Actually, the public does have access to that data. They just choose not to do the work necessary to gather it.
If I understand correctly, the person in question made the assumption that the players who were picked by the most people were probably the best players, and that an optimal team would contain those players. This turned out to be correct, though it was not necessarily so. He got that information by looking at the private data of users of his site. That's certainly a violation of the users' trust, which makes it ethically (and maybe legally) wrong.
Insider trading is illegal because it involves making money by knowing secret information that would materially affect the performance of a security if known. Ignoring the fact that the information, if known, would materially affect the number of people choosing particular players, and thus the maximum possible gains, it would not affect the fundamental performance of the player—how many points they make, running yards, etc.—so it isn't really in the same category.
Besides, anyone in the general public could get that same information with enough effort by taking a poll of fantasy football players and aggregating the results. If anything, that would likely result in a more statistically accurate result, because you'd be taking a random sampling of players on every site rather than only the players who happen to play on a single site.
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The data they are accused of using is the popularity of the various players on their own site. They can reasonably predict that similar "claim" percentages are on the completing site.
The sites don't list that, for example, 75% of the people on the site have Tom Brady on their teams. The insiders would know this, and would adjust their own picks based on that knowledge.
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Leaving aside the fact that the second sentence is grammatically shit, you're talking bollocks.
If the industry is close to an oligopoly, then inside information on one still gives clues about the others.
For example, if I worked for VW and had advance knowledge of the emissions shenanigans I could shorted VW or I could have bought into BMW and/or Mercedes.
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You don't understand what insider trading is. I doubt you've ever even bought stocks. Insider trading has a VERY strict definition within the law, so strict in fact that insider information passed 2 degrees away from the source which resulted in a prosecution was recently thrown out by the supreme court because it didn't meet the material rewards test the law requires.
This isn't insider trading. It's filthy and dirty and throws the whole industry into disrepute but it's not currently illegal. Though if the
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Actually, since the information they have is essentially the same, it's more like a slot machine tech working at one casino making slot bets at another. There's still a chance that the guy will lose, but his odds are way better than most, especially if he knows of certain bugs in certain machines and can leverage them.
It's a big reason why folks like the Nevada Gaming Commission demand that technicians not gamble at all (IIRC, it came in the wake of a technician exploiting a bug by way of a palmed magnet ba
Re:Outsider (Score:5, Insightful)
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Except market research is an indirect and often flawed amount of knowledge. It's also generally based on data sources generally available to the public.
Here the knowledge is a more direct representation of the needed data. You are betting according to the very straightforward assumption that all popular 'fantasy sports' sites have similar behavior among their members. Essentially, those with access to one site's membership data knows the odds to payoffs of a typical site, while the rest of the participan
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Fantasy sports leagues are boring as hell. But I design financial systems, and I find cheating fascinating. :)
In a betting system (horses, sports, etc...) you have to base your bets on your own external information (scores, statistics, etc...) and possibly with some help from the betting system itself (300-to-1 odds indicate that this is a long shot).
However these guys had access to the betting information from other players -- in greater detail than the externally stated odds. The articles don't say how
Incredible (Score:5, Funny)
It's genuinely astounding just how little I care about this. My lack of interest probably couldn't be measured even with the most sensitive scientific equipment.
I'll just sit back and let others who have some stake or interest in it do all the shooting and flaming and arguing. Carry on!
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Re:Incredible (Score:5, Funny)
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Better that way. Once you know it, you can't un-know it...
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I'm still not clear on what a Kardashian is. Some kind of expensive salad, I think.
Trust me, unless you're into gigantic butts, you're not missing anything.
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Me? I'd rather shave my bodyhair than have anything to do with these "athletic" hobbies.
Same here...I've never been into sports or athletics (skydiving doesn't really count and that was eons ago) and the idea of getting involved with online "sports" just seems silly to me.
But hey, each to their own.
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I have no interest in major league sports, but the idea of writing an algorithm that tracks top fantasy football players' decisions and tries to create a team based on that meta-information sounds really cool to me. It would be really neat to see how successful it could be while knowing nothing at all about the game itself.
PT Barnum (Score:3, Insightful)
While there is debate regarding the authenticity of the quite, PT is attributed with "There is a sucker born every minute." Gambling is for the majority is simply a fools game. I know one professional gambler, and the only game they play is poker and only face to face with cash pots. Think long and hard about all of the reasons why that would be...
Sorry if you were suckered or know someone that did.
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Agreed. The only machine-type game that has any kind of consistent hope is playing odd/even on a roulette wheel with a single "0", which gives you a 48.6% (or so) chance of winning (a "00" on the wheel drops your chances to to 47.4%). Any other game that uses a machine will only get worse from there.
At least with single-deck poker (and no card-counters) you have some sort of chance... but only if you know what you're doing and are more skilled than your opponents.
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In blackjack it lets you shift the odds away from the house and towards yourself. Casinos don't like the odds favouring the punters.
I believe most casinos tolerate card counting though, as most people cock it up, negating the benefits and thus generating additional income for the house.
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Card counting is against the house rules, not normally or necessarily against a player's rules. The house/casino ban card counting because it does tip the odds in the counter's favor. Why do you think that the house uses machine shuffled 5+ decks to deal from? Simple, if you can count the cards you increase your odds. In two decks if you are showing a ten and most of the other tens have been played with very few 2-9. It's also easy to track 16 cards to know how many valued 10 have been played. So the
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Why anyone would gamble online is beyond me. You can't really know what's going on at the other end, and trusting that the site is playing straight with you seems adorably naive at best, and utterly imbecilic at worst.
I know a woman who gambled away $40,000 at online poker, and I always marveled at how incredibly gullible and trusting she was. Going to a real casino is bad enough, but online? That's just asking to be fleeced.
sports betting is safe online it's not like they c (Score:2)
sports betting is safe online it's not like they can have a rigged RGN brake aaron rodgers arm just before he makes the wining pass in a game where they are under dogs and sportsbet.com does not want to pay out.
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You are mostly correct, but that is the nature of poker. Poker professionals pay the house for the tables if they pay at all. Casinos can draw some large crowds from high stakes games, so often give the pros free time, food, and booze to play. The house usually gets a cut of the pots when people cash out. Poker players play against each other, and the game is as much psychological as it is the luck of the cards.
The reason he won't play anything else is because the House always wins the games they run.
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Poker isn't gambling - it's a game of skill. Put another way, if poker is gambling then so is capitalism.
Gambling requires a game of pure chance, which means that the player has no way to effect the outcome.
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Either the companies will fix this, or (Score:2)
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Either the companies will fix this, or the market will. If guys from Fanduel are winning big by playing at Draftkings and vice versa, no one who is not in the know will play.
Only if they're found out. Who knows how many DraftKing and FanDuel employees have been using this strategy? This kind of scam can be very hard for the users to detect so you end up with a lot of people getting scammed and legitimate businesses with no easy way to distinguish themselves from the crooked businesses.
Plus there's an externalization problem, it's the FanDuel users that were harmed by the actions of the DraftKing employee. Those two are big enough to cooperate in keeping their employees playing
Free market solution (Score:2)
Now some News for Athletes (Score:2)
The headline contained the word "fantasy."
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Always someone that knows more than you do (Score:2)
If you go into a casino expecting the house to be fair, or your opponents not to have procured every edge you're a fool.
If it wasn't knowledge of the ownership patterns, it would have been something else, like health information to the old school fixing or shaving.
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If you go into a casino expecting the house to be fair, or your opponents not to have procured every edge you're a fool.
Yes, yes, and yes.
Casinos aren't in business to let you win any more than insurance companies are in business to pay claims.
Are there anti-gambling laws anymore? (Score:2)
It seems like this is the first year I have actually seen fantasy sport company propaganda and it is EVERYWHERE I look.
Obviously it is a huge industry with millions to throw at advertising. But how is it not gambling again?
Do we still have anti-gambling legislation? Not that I really care. If you want to throw away your money, by all means, go ahead. I just thought that places like Atlantic City and Las Vegas existed because they were bastions where gambling was legal.
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They aren't betting on sports... They are betting at FANTASY sports. That's totally different! Kind of like how bingo isn't gambling because the church does it.
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BINGO!
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They got shut down when Congress passed anti-online-gambling legislation in the form of UIGEA. It specifically says that fantasy sports of this sort are exempt:
https://www.law.cornell.edu/us... [cornell.edu] ... ...
(1) Bet or wager.— The term “bet or wager”—
(E) does not include—
(ix) participation in any fantasy or simulation sp
these two firms will go under (Score:2)
but this type of gambling will continue
the NFL got a specific carve out for this crap when sheldon adelson and other las vegas oligarch assholes got online gambling in the usa shut down a few years ago as threat to their business (welcome to capitalism! aka, cronyism, but this is what most american morons don't understand about unregulated "capitalism"... also amazing that adelson donates to republicans, you know "free enterprise, get government out of business"... lies the poor morons believe for some reas
Betting on the weight of Steven King's next dump (Score:2)
So everyone come check out http://scaryturdbetting.com/ [scaryturdbetting.com] and give me all your money.
And this is a surprise, why? (Score:2)
.
How in the world would anyone expect anything but this type of scandal to occur?
I'm confused (Score:2)
How is this not the same as placing bets on real sports?
Betting is betting.
How is it any different that an online casino? Apart from the online casinos locating themselves in countries with lax gambling laws. These are American companies operating in America.
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Because the law banning online gambling specifically exempts fantasy sports. See (1)(E)(ix) here: https://www.law.cornell.edu/us... [cornell.edu]
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I don't believe that the link answers his questions:
"How is this not the same as placing bets on real sports?"
"How is it any different that an online casino?"
Yes, I read the law in the link. It shows the "what", not the "why".
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The why is because the NFL and other sports leagues didn't want it banned and got congress to deliberately exempt it. It's not illegal because Congress said it isn't.
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Ok, so I've never played fantasy sports so I had no idea how it worked.
Reading that, it's basically like playing the lottery. Instead of picking numbers you pick players. The outcome is based solely on the stats of the players in each team.
Makes sense now. It's a tough one though, since they're not betting. They're paying a fixed entry fee that doesn't determine how much they could win.
It's not strictly a lottery because it's not based on chance, but an algorithm and the selection of other players.
It makes
And then they came for your dreams (Score:2)
"Scandal Erupts In Unregulated Online World of Fantasy Sports"
The title implies that fantasies should be regulated. Wow! What a bizarre totalitarian notion. What next, your dreams?
Seriously... what info? (Score:2)
Years ago i ran a small fantasy league for me and some friends, and i did pretty good each year. In a sense i did have information others didn't, but only becau
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This is exactly what I thought too and wondered if I missed something. It'd be like picking your fantasy team solely based on average draft position. Yeah you get to see who's hot, but there little guarantee that it will matter much.
Maybe FanDuel and DraftKings needs to ban contestants from using fantasy game stat prediction sites too???
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let the market sort it out (Score:2)
Regulation is anti-business. people are good and won't do things like this. Let the market sort it out. /s
Scandal free entertainment via pro sports? (Score:2)
Anyone who gambles on line (Score:2)
is an idiot and deserves to lose all their money.
Here's a hint: if there's money involved, someone will or already has figured out how to cheat.
Here you go... (Score:4, Insightful)
The only fantasy football you'll ever need. [zenseeker.net]
It's Gambling (Score:2)
"Fantasy Sports" (Score:2)
Send them to fantasy prison!! (Score:2)
We need to establish a fantasy grand jury to get to the bottom of this immediately! If anyone is breaking the law, they need to be doing hard time in fantasy prison!
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"Fantasy Prison"!
Let's see, one can choose from the various prisoner numbers in all the jails and prisons. One can bet on if they'll get parole, or get into trouble, or...
bbl, I have a business plan to write up.
Regulation was a long time coming (Score:2)
Sports are regulated. Sports betting is regulated.
eSports WILL be regulated. Fantasy sports betting WILL be regulated.
It's a sign of maturity when regulation comes down. This is a milestone, though the existing model will be shaken up. Great lecture from PAX on the subject:
https://www.youtube.com/watch?... [youtube.com]
Data Mining Bonanza (Score:2)
With any reasonable data mining, these middlemen will be able to figure out which players are ready to play and which are not. Their customers are not anonymous and their relationship to NFL teams ought to be mappable.
This ought to provide the principals of these gambling businesses quite an edge in betting on real games.
What a load of bullshit this is (Score:2)
*anyone* who has played a field sport of any kind will tell tell you it's about what the team can do, not what a team of egos can do. All to often you can take a bunch of top athletes and put them in a team and the team dynamic is created by the interactions between them. It's completely different from the environment that makes them the player they are.
The only people who would bet on this crap have never played sport in their life or want to make a killing on knowing the results and gambling on a sure th
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So what "insider" information would the employee have?
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This has been not explained well, so here's my try: to win big money, you do NOT try to maximize your expected score, you maximize your chance of taking one of the top spots, because those pay big. Given that everybody has their complete pick of all the players (ignoring salary cap), the strategy is to pick at least some players that do well that nobody else has picked. So if you know who the other players do NOT have, you can find a few of those that you have some hope might suddenly have a big week and
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A lot of people misunderstand how bookies set odds. As you point out, it is about popularity, not expected winners. An ideal book with 80% betting on team A would be something like 1:8 odds for A and 7:2 odds for B. Then if $8,000 is bet on A, and $2,000 is bet on B, then if A wins, the bookie pays out $1,000 to the winners (who bet on A) and collects $2000 from the losers, netting a positive $1,000. If B wins, the bookie pays out $7,000 to the winners (who bet on B) and collects $8,000 from the losers, als
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it is generally pretty likely that the implied probabilities determined by a balanced book are pretty good representations of the actual probabilities of the team success.
unless its a local team.. in which case the betting is so lopsided that balancing the action results in such extreme odds that few bettors wish to place any wagers on either side, because they are fans and wont bet against "their favorite team" no matter what the odds. ..in these cases the local bookie gets in touch with a bookie local to the other team and they pool up the action so that the odds they need to offer arent so extreme.
Re:Draft Kings (Score:5, Informative)
njnna is right - the bookie doesn't lose his shirt under any circumstances. When you bet on sports you're not really betting against the bookie; you're betting against the other bettors. The bookie is making money because the winners are getting paid less than they would if the bets were mathematically fair. Let's say you had a friendly bet with a buddy over a game. Between you you've decided one team is twice as likely to win. So you bet two dollars, your buddy bets one dollar, and the winner takes all three dollars. Assuming you've judged the odds of the sports outcome properly, this is a mathematically fair bet - if you made it a million times you wouldn't win or lose money (compared to the amount you've bet, anyway).
Now change the scenario and say a third party is acting as a bookie. The bookie offers you 3:8 odds (instead of 1:2) and he offers your buddy 7:4 odds (instead of 2:1). You still bet two dollars, and your buddy still bets one dollar. This time, though, the winner gets $2.75, and the bookie pockets a quarter. Notice he pockets the quarter no matter which team wins. This bet isn't fair, mathematically speaking. If you and your buddy make it a million times you'll both be broke and the bookie will have all your money. This is why you can find bookies everywhere you go, regardless of legality :)
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You can't cheat an honest man.
Oh yes you can.
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A man who's honest with himself knows he's not going to get something for nothing, and walks away.
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I know, let's let the mafia regulate this line of business....
Good idea. My understanding is that they have very high ethical standards which are stringently enforced.
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It's unethical to leave the fool with his money.
PT, is that you?