Living by the Book
Illegal Gambling Operations Handle Millions of Dollars Every Month
From the Print Edition:
maduro issue, Winter 93/94
(continued from page 1)
Some bookmaking operations take horse bets, but most rely on frequently televised sports. In fact, popularity is directly proportional to the amount of television coverage. Hockey attracts few bettors; baseball, with its complicated odds, about twice as many, peaking during the World Series; basketball gets nearly twice as many gamblers as baseball, hitting a high during the NCAA championships and the NBA playoffs. But football, with its omnipresent seasonal broadcasts, easily generates the most action.
During the latter stages of football season, when bettor interest has peaked and betting addicts are chasing their losses, volume can pass $500,000 per weekend. Culminating with Super Bowl Sunday, easily the year's biggest wagering day, Bobby's office can process nearly $10 million in bets a year. Working on a 5 percent profit margin, minus minuscule "business" expenses (rent and eight phone lines with tape recorders attached to verify bets), this bookmaking operation could easily clear two-and-a-half times the U.S. president's annual salary.
But they don't. They make more.
The "old school" of bookmakers--the bartender at the corner saloon, the car dealer with a weekly poker game in his basement--earned their money strictly on commission. Winners were paid even money, losers paid 11-to-10, known as "the juice" or "the vig." Business was simple: collect $100 on the Bears and $100 on the Raiders and bookies were guaranteed to win $10. If their books got severely out of joint--$500 on the Cowboys, $180 on the Patriots--they simply "laid off" the imbalance to a "wholesaler," another bookie who takes larger wagers, and locked in their profits. Like any type of business where brokering is involved, the key to successful bookmaking by the old-school method was sheer volume. Bookies hoped for a betting line (the odds) that would induce equal wagering on both sides, results that made their customers winners one week and losers the next, and a never-ending stream of cash-rich players. Then they sat back and collected their 5 percent.
"We used to live in Harlem," one well-known professional poker player reveals. "Then my dad started making book. We moved to Long Island six months later."
The new breed of bookie, of which Bobby and his cohorts are prime examples, eschews the predictable, collect-your-commission-and-play-it-safe methodology. If the bookies of the past were strictly brokers, content to leave the gambling to their customers, then today's bookmaker is a trader who lives by the golden rule of making money: buy low and sell high.
"When I first started, I thought you always tried to keep your books perfectly balanced," Bobby explains. "No risk. Of course, there's much less reward. In our office, and I would say the majority of offices around the country, we don't try to balance our totals. Our feeling is, in the long run, the vig will take care of us."
In other words, most bookmakers are willing to gamble--with an edge. It's the same concept that keeps the lights shining on Las Vegas Boulevard. Some days the bookmaker will lose. In fact, about half the time. (Bobby's office lost nearly $100,000 during the first week of the NFL season.) But when he wins--again, roughly 50 percent of the time--he'll earn 11-to-10 on his wager. At this rate, the player must win his bet about 53.5 percent of the time just to break even. Thus there are more losers than winners, especially because most amateur sports bettors who win occasionally will continue to play until they lose. And because there is only a handful of bettors in the United States capable of consistently beating the odds over the long run, the bookie--thanks to the immutable laws of mathematics--must inevitably prosper.
The fact remains, though, that some players are long-term winners. Whether with the help of analytic computer programs or superior information networks or extrasensory intuition, they somehow beat the odds over the course of a season. This elite minority of bettors, who number maybe a dozen in the country, is known throughout the gambling world as the Smart Money. Unlike the $25-a-call charlatans who predict winners roughly 50 percent of the time, you won't find the Smart Money advertising 900-line tout services on cable television. Still, the bookmakers know who they are. And when one of their bets comes in, the bookies take heed.
"When we get a bet from, say, Clyde* in Las Vegas, our office goes nuts," Bobby explains. "Within 10 minutes we'll get dozens of players all going the same way as Clyde. People hear which way he's going, and they want to jump on the bandwagon. In that short period of time between Clyde's bet and all the other calls is when we make our money."
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