Super Bowl Lines

Success With Price Per Head (Small Sportsbook Success)

2005-06-22T07:49:00.000-07:00

Case Study in Small Sportsbook Success via Use of Price Per Head (PPH) Software Written and Owned by V.O. Group, S.A., the most successful offshore sportsbook in Costa Rica.

Price Per Head vs. Small Sportsbook Operation

Featuring Dalton Wagner, Founder V.O. Group, S.A.

As Founder and Proprietor of V.O. Group, S.A., Dalton Wagner has the reputation of being the most innovative operator in offshore gaming. His most recent innovation has allowed small sportsbooks to outsource their complete operation to V.O. Group, S.A. while focusing completely on marketing. With formidable competition, Mr. Wagner founded V.O. Group, S.A. in 1998. While most companies formed that late failed, V.O. Group, S.A. has become one of the top 10 operators offshore (as measured by AnteUp; Gambling Online Magazine; Poker Player Magazine; and Many other Publications).

Playing Poker Online Magazine: Recently we have been told that V.O. Group, S.A. is now allowing small sportsbook operations to outsource the complete writing of their business to your organization. How is this possible?
Wagner: The situation you speak about is 100% true. However, has only happened one time in our history.

Playing Poker Online Magazine: Can you be more specific?
Wagner: When an offshore sportsbook starts, in 99% of all cases it will fail in the first 24 months of operations given the current market conditions. Examples are everywhere from The Dunes, Platinum, Super Sports Book, etc. It happens every single year. In the past, large sportsbooks like MVP Sportsbook or V-Wager.com would swoop in and try to save the books via financial help or simply buy them at a low price. Well, V.O. Group, S.A. now offers another more innovative solution.

Playing Poker Online Magazine: OK. You’ve got me, explain!
Wagner: We write business for onshore bookmakers and agents charging them a simple price per head per week. This price takes into consideration our considerable economies of scale and a small profit margin. In the case you are speaking of, instead of buying the sportsbook for a low cost that basically sent the owners home broken hearted and with empty pockets, we cut them a deal where they could focus on marketing and leverage off of our economies of scale. Simply put, we took over writing their business for them, and they now focus their limited resources on marketing 100% of the time.

Playing Poker Online Magazine: That sounds like snake oil. How exactly would that work?
Wagner: We don’t sell snake oil. The facts speak for themselves. When V.O. Group, S.A. opened it’s doors in 1998 the market was different. You could recruit players, write their business, and make a profit in years one, two and three. With the current market conditions, there is NO WAY a start up credit or post-up book can be profitable in year one, two or three without 2,000 head a week in business. That is the theoretical breakeven point. If you are writing less than 2,000 head a week, you can double or triple your net earn by letting V.O. Group, S.A. write your business.

Playing Poker Online Magazine: OK. That makes sense because in 1998 and 1999, it was cheaper to find a new client. Is that where the difference in earnings comes from?
Wagner: The fact is yes, that is where the difference is. But, that is not our selling point. Our selling point is that if you stop worrying about writing business and let us do it, you can focus on marketing – which is the key to the success of an online sportsbook. And, that is the simple fact for credit bookmaking, post-up bookmaking and future success in this industry. As long as you think ‘beating the clients’ is the key, you are limiting your business. Let our company worry about that – and, you find clients. Spend your time finding clients and you will make money.

Playing Poker Online Magazine: The theory is sound, but what about the facts?
Wagner: The owners of the sports operation in question do not want me to be specific about whom they are. But, let me simply say that when we took over their operations, they could not even make the post-up money good. Now they have $1.4 million in the bank. So, yes, the facts do follow the theory.

Playing Poker Online Magazine: Wow! That is incredible. Can any poker room, casino, racebook or sports book do this with V.O. Group, S.A.
Wagner: Yes. We have programs for all online products except for bingo. And, by 2006 we should be able to offer options for even bingo operators..

Playing Poker Online Magazine: So how does a bookmaker or current operation learn more about outsourcing their operations to V.O. Group, S.A.?
Wagner: Simply go to any of the V.O. Group, S.A. sites to learn more. I suggest starting at www.BettorsNet.com or calling 1-877-512-1001 or emailing agents@bettorsnet.com to get more information.

Article Note: The situation in this Case Study is a true case, however may not be representative of your situation. All situations are different and therefore may result differently.

Success With Price Per Head (Agent Success)

2005-06-20T08:25:00.000-07:00

Case Study in Agent Success via Use of Price Per Head (PPH) Software Written and Owned by V.O. Group, S.A., the most successful offshore sportsbook in Costa Rica.

Price Per Head vs. Dollywood Sportsbook

Featuring Dalton Wagner, Founder V.O. Group, S.A.

As Founder and Proprietor of V.O. Group, S.A., Dalton Wagner has the reputation of being the most innovative operator in offshore gaming. His most recent innovation involves the direct attack upon the Onshore Bookmaking market via the unique value proposition of actually partnering with Bookmakers and Agents onshore (as opposed to attempting to steal their business). With formidable competition, Mr. Wagner founded V.O. Group, S.A. in 1998. While most companies formed that late failed, V.O. Group, S.A. has become one of the top 10 operators offshore (as measured by AnteUp; Gambling Online Magazine; Poker Player Magazine; and Many other Publications).

Online Gambling: The ‘buzz’ in offshore gambling appears to be focusing on only two subjects as of late, including: Poker and Your Price Per Head Offering. What exactly is Price Per Head and Price Per Head Agency?
Wagner: As you know, one market that a post-up sportsbook has historically been unable to attack is the huge market of bettors that have been betting with their local guy for years (local guy = agent or corner bookie). The reason this market exists is the personal relationship that an onshore bookie or agent has with his clients. Sportsbooks have attempted to educate the player and lure him away from the local bookie, however V.O. Group, S.A. has decided to take another tact. Via our Price Per Head software written by Matthew Wilson, we have been able to PARTNER with onshore bookies or agents with our Price Per Head Agency Relationship.

Online Gambling: OK. Be more specific. How does a Price Per Head Agency Relationship Work?
Wagner: Price Per Head Agency is based on the very fair and equitable agreement between an onshore bookie and an offshore bookmaker. The deal is based on the onshore bookie recruiting players and the offshore bookmaker setting lines, writing the business and handling all accounting for the onshore bookie. And, all the onshore bookie does is simply pay the offshore bookmaker an agreed upon price per head per week.

Online Gambling: So, opposed to paying the offshore bookmaker a percentage, they simply compensate them a fixed price.
Wagner: Absolutely. The fact is that offshore sportsbooks have been gouging the onshore bookie or agent for years. Our offering stops that action in it’s tracks.

Online Gambling: Gouging! That is a pretty strong comment. Can you back that up?
Wagner: Let me give you an example…and, you judge for yourself. The example of Jeff W. in San Jose, California comes to mind. Jeff contacted V.O. Group, S.A. in early October 2004 when he was writing 72 head of business making an average of 12 wagers a week of $152. Rather, his turnover per client was an average of $1,824.00 a week. Via his agreement with a sportsbook we will call Dollywood, he was splitting his earnings 50/50. Once he shifted the business through BettorsNet.com, he was paying $30 a head a week. So, would you call this gouging?

Online Gambling: Actually, the numbers sound good. But, I have to admit, I am not sure. Can you help me understand better?
Wagner: That is very good answer. Let me simply do the math for you to illustrate the facts, and then you will have a much clearer set of information to deal with. If your average player bets $1,824.00 a week on just straight bets, you should have a minimum hold of 4.5% (parlays, teasers and props have a MUCH HIGHER HOLD). So, that means you should make $82.08/person ($1,824.00 x 0.045). Then, multiply this by the number of head equals a theoretical earn of $5,909.76 ($82.08 x 72). So, this means he would make $2,954.88 per week and Dollywood would make $2,954.88 per week.

Online Gambling: Well, $2,954.88 per week sounds pretty strong if you ask me How does this compare to his using BettorsNet.com?
Wagner: When Jeff started using BettorsNet.com, we simply charge him $30 a head a week. Rather, $30 times $72 is $2,160.00, representing a savings of $794.88 a week, or $41,333.76 a year.

Online Gambling: So, by Jeff W. switching to V.O. Group, S.A. or BettorsNet.com he was able to make an extra $41,333.76 a year?
Wagner: No. Actually, he made $25,000 in the first three months because most of his players are far worse than the theoretical averages. Almost every one of his players bet a proposition or a teaser or a parlay at least once a week. And, holds on those bets are far greater than 4.5%. On top of that, his players also play in our racebook and casino losing much, much more than 4.5%.

Online Gambling: Oh, I see. If he would have used Dollywood, he would have simply split more profit with them. But, via BettorsNet.com, he was able to keep 100% of the extra earn because he had already compensated you for the $30/head.
Wagner: That is exactly correct. Jeff W. came down in January 2005 and I took him sail fishing. It is the first time I ever had a client pay my bill. Why? Because, and realize I am quoting here, Jeff states that I will make him an extra $100,000 this year alone.

Online Gambling: Wow! That is incredible. I bet large credit sportsbooks, like Dollywood, are quickly becoming unfavorable of your new product.
Wagner: Yes. They hate our new software offering! But, that is what you get when you take advantage of your clients or partners as they have. And, as far as I am concerned, credit shops with Agent Split Agreements have simply NOT been treating their partners fairly and now they will pay the bill.

Online Gambling: I must say, I agree that if your numbers are even close to correct, it appears that the credit shops that split the earn ARE GOUGING AGENTS AND ONSHORE BOOKMAKERS.
Wagner: Well, the facts speak for themselves. And, I am glad you see the facts for what they are.

Online Gambling: Is there ever a case where an onshore bookie or agent should opt for a split as opposed to a Price Per Head Agency agreement?
Wagner: Absolutely Yes. If you are starting up a new book, or if you need financial backing because you are not strong enough to support a losing week - then, you should opt for a split. The best way to judge this is simply look over your figures for the last year. Could you afford to pay out the worst week you had without going broke? If you answer yes – then, you should opt for PPH. If you could NOT afford to pay it, then you should opt for a split or not be in business at all.

Online Gambling: So how does a bookmaker learn more about this?
Wagner: Simply go to any of the V.O. Group, S.A. sites to learn more. I suggest starting at www.BettorsNet.com or calling 1-877-512-1001 or emailing agents@bettorsnet.com to get more information.

Article Note: Any assumption that “Dollywood” is related to “Hollywood Sportsbook” or “BetHollywood.com” or “BetAtHollywood” or “Hollywood International” is the assumption of the reader and not the responsibility of Gambling Online Magazine.

Innovation In Bookmaking

2005-06-14T08:03:00.000-07:00

Q & A with
Dalton Wagner, Founder V.O. Group, S.A.

As Founder and Proprietor of V.O. Group, S.A., Dalton Wagner has the reputation of ferreting out new markets and attacking while other companies sit on their hindquarters and watch. One market that has always eluded offshore bookmakers is the ‘guy who likes dealing with his credit bookmaker’. Typically this market has been untouchable for the offshore bookmaker, but NOT for Dalton and V.O. Group, S.A. We had an opportunity to catch up with Dalton Wagner on his last visit to Panama.

Vegas Offshore: Tell us about this new product that you are calling your Price Per Head Agency Relationship.
Wagner: As you know, one market that a post-up sportsbook has historically been unable to attack is the huge market of bettors that have been betting with their local guy for years. The reason this market exists is the personal relationship that an onshore bookie has with his clients. Sportsbooks have attempted to educate the player and lure him away from the local bookie, however we have taken another tact. We have partnered with local bookies around the world to make their offering better and more valuable.

Vegas Offshore: So instead of attacking the local guy, you actually approach him with your offer?
Wagner: Exactly. The fact is that the relationship is the last thread holding clients to a local guy. Yes, there is the fact that the local guy extends credit, but with bonuses and promotions we can overcome that offering. The key is the relationship.

Vegas Offshore: I’m confused, please explain.
Wagner: As you know, the onshore bookmaking market has lost steam to the offshore providers like V.O. Group, S.A. The reason is that the offerings that I can provide are far superior to those that any onshore bookmaker can offer. The PPH concept is based on allowing the onshore bookmaker to provide his clients my offerings on a purely anonymous basis via an online automated tool. Rather, by signing up with my PPH service, an onshore bookmaker can compete with all offshore sportsbooks on equal footing offering 24-hour wagering, 365 days a year. All the bookmaker does is use an online system to assign PINs and PASSWORDs and pay me a small fee per week for the service.

Vegas Offshore: Wait a minute. So, this means that a small time operator in Cleveland, Ohio can offer all the same things that V.O. Group, S.A. does without making the multi-million dollar investment?
Wagner: Now your catching on. For as little as $25 per head per week, a guy in Ohio can compete with the biggest sportsbooks in the world. And, better yet, never answer another wagering phone call again.

Vegas Offshore: OK, I get it. They use your automated tool to drive their clients to your software online, and they simply pick up the figures at the end of the week.
Wagner: Exactly correct with one exception. Their clients can bet on the phone via our call center staffed with 250 people OR bet online. Again, they have access to all of the offerings V.O. Group, S.A. provides including call center access, client services and technical support.

Vegas Offshore: Is the PPH product only based on sports wagering?
Wagner: Very good question. The answer is no. We actually have the ability to offer clients two (2) casino products including blackjack, baccarat, slots, 3 card poker, roulette, etc. And, clients may also bet on horses at over 350 tracks worldwide.

Vegas Offshore: Wow! That truly is incredible. So, a bookie that has one client can compete with the likes of MVPsportsbook.com on equal footing?
Wagner: Exactly correct. But, there are two keys to the success of the product launch. The first is being able to compete head to head with the biggest sportsbooks in the world. But, arguably the most important factor is that since the onshore bookie no longer has to answer phones or track plays, he can spend all of his time picking up new clients, NOT writing bets.

Vegas Offshore: I remember that in a prior interview you had stated that the key is not winning, but finding more losers.
Wagner: An embarrassing quote, but true. Amateur bookmakers think that the key is to beat the clients you have. That is a huge mistake. The key to getting rich as a bookmaker is finding a new client every single day of the year. The numbers take care of themselves, the key is to get more and more people playing. That is the TRUE BEAUTY of the PPH software and agency relationship.

Vegas Offshore: Do you have any success stories to tell?
Wagner: I have many, but will tell you one that emphasizes what the PPH program can do. I have a bookmaker that has been working out of San Antonio, Texas for 10 years. The guy has historically made $200,000 a year from his 25 or 30 players. He was introduced to our product in July 2004, and today he is writing over 185 clients. The ability to outsource answering calls and writing tickets to us has allowed him to grow his business 600% and his revenue over 1000%.

Vegas Offshore: Why did his revenue grow more than his business? Is it because your lines are sharper than his?
Wagner: There you go again. That is the obvious mistake that everyone makes. Again, don’t worry about beating the clients. Worry about getting more clients to play. But, to answer your question directly, the ability for his clients to play in the casino, play 24 hours a day, play games/halves/quarters, props, etc. is where the extra revenue comes from. Our lines might be sharper, but the advantage is more clients betting more often.

Vegas Offshore: How many bookmakers do you currently work with?
Wagner: We are writing business for over 250 bookmakers now. Some represent groups as small as 2 or 3; and others represent groups as large as 500. Again, remember the key is finding as many clients as possible. If you get to where you are writing 15 clients or more, it is almost impossible to lose for an extended period of time.

Vegas Offshore: So how does a bookmaker learn more about this?
Wagner: Simply go to any of the V.O. Group, S.A. sites to learn more. I suggest starting at www.BettorsNet.com or calling 1-877-512-1001 or emailing agents@bettorsnet.com to get more information.

State of the Offshore Gaming Industry

2005-06-13T10:10:00.000-07:00

Q & A with
Dalton Wagner, Founder V.O. Group, S.A.

As Founder and Proprietor of V.O. Group, S.A., Dalton Wagner has the reputation of making one-dollar work like three in online marketing. With formidable competition, Mr. Wagner founded V.O. Group, S.A. in 1998 and has quickly risen to be one of the largest offshore operators in the world with over 50,000 active clients. We had an opportunity to catch up with Dalton Wagner on his last visit to Antigua.

Vegas Offshore: This year has been interesting for V.O. Group, S.A. and the offshore industry as a whole (advertising changes, etc.). How do you feel about the industry at the current time?
Wagner: I feel the industry is as strong as it has ever been. We are still finding that our advertising is bringing us new clients at an ever-growing rate. Some competitors are complaining that the crimp on advertising is affecting the industry, but we are not seeing this trend. Consolidation within the industry has begun, and I am sure you will continue to see smaller competitors gobbled up, and medium to larger companies merging. The weaker will go by the wayside.

Vegas Offshore: What about the rumors of V.O. Group, S.A. being bought?
Wagner: I am glad you used the term 'rumors'. The fact is that in July 2004 three suitors approached V.O. Group, S.A. because of our record-breaking profit year. In two of the cases we did see 'value' in a merger/relationship. However, at the end of the day, we could not come to terms that were agreeable on both sides. At this time V.O. Group, S.A. stands independent. And, we are happy being independent, profitable and growing.

Vegas Offshore: It is rumored that Bet On Sports (PLC; BSS.L) was one of the suitors. Is that true?
Wagner: There were three suitors that approached V.O. Group, S.A. And, in all cases confidentiality agreements were signed. For this reason, I cannot confirm or deny who any of the potential suitors were. What I can tell you is that one was a major sportsbook player, one was a major casino player and two were PLCs. I doubt that helps.

Vegas Offshore: Well, if Bet On Sports was involved, I bet you are happy you weren't involved in their November 24, 2004 stock debacle.
Wagner: The Bet On Sports stock debacle was an over-reaction by the market in my opinion. In one day you saw their stock drop 50% in value. And, the reason was poor performance in a very short period. If you looked at the other publicly held offshore gaming companies, you saw the same thing, just not as drastic as with BSS.L. Simply put, I know the founder of Bet On Sports, I know the management of Bet On Sports, I know the staff at Bet On Sports and I would not hesitate to invest in Bet On Sports. They were, and still are, undervalued in my opinion. They are a great competitor and a great company. I wish I had some of their stock at the new adjusted price. I just don't see how you can lose.

Vegas Offshore: It is rare to hear the 'competition' speaking so highly of a major competitor. Why would you do so?
Wagner: Simple. Bet On Sports is a great company. And, I am sure they would tell you the same about V.O. Group, S.A. The fact is, that there are companies out there that make our industry stronger. And, ones that make it weaker. Bet On Sports and V.O.Group, S.A. strive to make our industry stronger and more legitimate on a daily basis (as do BetCris.com; BoDog.com; etc.). What kind of ambassador for the industry would I be if I downplayed a 'good' competitor like Bet On Sports for my own benefit?

Vegas Offshore: If Bet On Sports did approach you, would you consider a merger?
Wagner: I like being independent. But, simply put, NEVER say NEVER.

Vegas Offshore: What of the rumors that you are looking at Panama as a potential relocation site?
Wagner: Our operation currently has offices in Costa Rica, Antigua and Belize. In Costa Rica we currently have over 400 employees. With employment costs in Costa Rica on the rise, the burden of Caja and the ever-changing political climate, we have looked at several alternative locations. One of the most desirable is/was Panama. However, due to the massive failure of BetPanAm.com and the political debacle involving their past gaming commission, we have decided to stay put for the current time. I think it is very safe to say that our primary location will be Costa Rica for the next 5 years. Pending any crazy licensing or governmental changes.

Vegas Offshore: I have visited your office in Antigua, however had no idea that you employed 400 individuals in Costa Rica. Why do you need such a large staff?
Wagner: Our industry has a reputation for being lazy and getting by on a shoestring budget. Most sportsbooks, casinos, racebooks and poker rooms answer phones when it is convenient and buy computers when the ones they are operating blow-up. Most are simply embarrassing to the legitimate operators. To run an operation like ours, servicing 50,000 bettors, you need lots of space, a 1st rate phone system, fiber and satellite phone and Internet backups, IT professionals, accounting professionals, etc. V.O. Group, S.A. is currently located in 35,000 square feet of space, operating 24-hours a day, 365 days a year, and we are busting at the seems. At the current time, we are negotiating to buy the building next to us for future expansion. I think we will employ 600 people come this same time next year.

Vegas Offshore: I have noticed that you are still branching into other products. How has this strategy worked for V.O. Group, S.A.?
Wagner: In 1998 we started with our sports product. We then branched into the casino product. In 2001 and 2002 we opened several major race books and poker rooms. The fact is that we are profitable in all products. However, our core product, and hub for our advertising, is focused on the sports product. The strategy has worked, but we will not desert our core product. You can look for our re-launch of interactive betting in early 2005 and bingo in mid 2005.

Vegas Offshore: What other changes do you see in 2005 for V.O. Group, S.A.
Wagner: I think you will see V.O. Group, S.A. work more on our Internet interface to make it more gamer-friendly; you will see our company move into land-based gaming; and you will see us acquire two or three smaller competitors. Rather, you will see what you have always seen, expansion.

Vegas Offshore: What other changes do you see in 2005 for the industry as a whole?
Wagner: The strong will get stronger. The weak will get weaker. And, the acquisition race will be on.

How Much Should a Bookmaker Expect to Make with PPH

2005-03-14T07:14:00.000-08:00

Q & A with Dalton Wagner, Founder V.O. Group, S.A.

Dalton Wagner, Proprietor of V.O. Group, S.A. has recently found himself one of the most popular interviews in the offshore sportsbook industry. The reason is his new Price Per Head Agency offering for Onshore Credit Bookmakers. We had an opportunity to catch up with Dalton Wagner and discuss the issue on his last visit to St. Kitts.

Vegas Offshore: Last time we talked you mentioned that your Price Per Head offering was growing beyond your wildest dreams. How is it doing now?

Wagner: Our Price Per Head software allows onshore bookmakers to make more than they have ever dreamed. For this reason, the product is growing faster than we could have ever imagined.

Vegas Offshore: Can you be a little more explicit?

Wagner: We wrote the software offering with input from two bookmakers 24 months ago. Today, we have over 500 bookmakers using the software writing business for over 20,000 clients a week, generating over $500,000 in revenue on a weekly basis in football season.

Vegas Offshore: That is incredible. For you to grow that fast, bookmakers must simply love the product.

Wagner: Yes, bookmakers love the product. Not only does it take the burden of answering phone calls and doing accounting away, but it also allows bookmakers to insulate themselves from legal issues and market their product more aggressively. We have literally 50+ examples bookmakers that are writing hundreds of clients with our software. Can you imagine how they could have done that without us?

Vegas Offshore: The largest onshore bookmaker I have ever met wrote 300 clients and had a staff of 10 clerks on football Sunday. Who is your largest onshore bookmaker?

Wagner: I obviously can’t reveal identities, but I can tell you that she is writing 750 head a week on average and employees nobody.

Vegas Offshore: You have a bookmaker working with you that writes over 750 head a week, what do you think she makes annually?

Wagner: I know exactly what she makes. Let’s just say it is well over a million a year.

Vegas Offshore: How many bookmakers do you currently work with?

Wagner: We are writing business for over 250 bookmakers now. Some represent groups as small as 2 or 3; and others represent groups as large as 750.

Vegas Offshore: Anything else you would like to add?

Wagner: Sure. If you’re a bookmaker onshore, call us or visit us online to learn how to save money and/or grow your business beyond your wildest dreams. The service is modestly priced, and we have never had a disgruntled user. The value proposition is simply huge for any bookmaker.

Vegas Offshore: So how does a bookmaker learn more about this?

Wagner: Simply go to any of the V.O. Group, S.A. sites to learn more. I suggest starting at www.BettorsNet.com or calling 1-877-512-1001 or emailing agents@bettorsnet.com to get more information.

Innovation In Bookmaking

2005-03-08T08:45:00.000-08:00

Q & A with Dalton Wagner, Founder V.O. Group, S.A.

As Founder and Proprietor of V.O. Group, S.A., Dalton Wagner has the reputation of ferreting out new markets and attacking while other companies sit on their hindquarters and watch. One market that has always eluded offshore bookmakers is the ‘guy who likes dealing with his credit bookmaker’. Typically this market has been untouchable for the offshore bookmaker, but NOT for Dalton and V.O. Group, S.A. We had an opportunity to catch up with Dalton Wagner on his last visit to Panama.

Vegas Offshore: Tell us about this new product that you are calling your Price Per Head Agency Relationship.

Wagner: As you know, one market that a post-up sportsbook has historically been unable to attack is the huge market of bettors that have been betting with their local guy for years. The reason this market exists is the personal relationship that an onshore bookie has with his clients. Sportsbooks have attempted to educate the player and lure him away from the local bookie, however we have taken another tact. We have partnered with local bookies around the world to make their offering better and more valuable.

Vegas Offshore: So instead of attacking the local guy, you actually approach him with your offer?

Wagner: Exactly. The fact is that the relationship is the last thread holding clients to a local guy. Yes, there is the fact that the local guy extends credit, but with bonuses and promotions we can overcome that offering. The key is the relationship.

Vegas Offshore: I’m confused, please explain.

Wagner: As you know, the onshore bookmaking market has lost steam to the offshore providers like V.O. Group, S.A. The reason is that the offerings that I can provide are far superior to those that any onshore bookmaker can offer. The PPH concept is based on allowing the onshore bookmaker to provide his clients my offerings on a purely anonymous basis via an online automated tool. Rather, by signing up with my PPH service, an onshore bookmaker can compete with all offshore sportsbooks on equal footing offering 24-hour wagering, 365 days a year. All the bookmaker does is use an online system to assign PINs and PASSWORDs and pay me a small fee per week for the service.

Vegas Offshore: Wait a minute. So, this means that a small time operator in Cleveland, Ohio can offer all the same things that V.O. Group, S.A. does without making the multi-million dollar investment?

Wagner: Now your catching on. For as little as $25 per head per week, a guy in Ohio can compete with the biggest sportsbooks in the world. And, better yet, never answer another wagering phone call again.

Vegas Offshore: OK, I get it. They use your automated tool to drive their clients to your software online, and they simply pick up the figures at the end of the week.

Wagner: Exactly correct with one exception. Their clients can bet on the phone via our call center staffed with 250 people OR bet online. Again, they have access to all of the offerings V.O. Group, S.A. provides including call center access, client services and technical support.

Vegas Offshore: Is the PPH product only based on sports wagering?

Wagner: Very good question. The answer is no. We actually have the ability to offer clients two (2) casino products including blackjack, baccarat, slots, 3 card poker, roulette, etc. And, clients may also bet on horses at over 350 tracks worldwide.

Vegas Offshore: Wow! That truly is incredible. So, a bookie that has one client can compete with the likes of MVPsportsbook.com on equal footing?

Wagner: Exactly correct. But, there are two keys to the success of the product launch. The first is being able to compete head to head with the biggest sportsbooks in the world. But, arguably the most important factor is that since the onshore bookie no longer has to answer phones or track plays, he can spend all of his time picking up new clients, NOT writing bets.

Vegas Offshore: I remember that in a prior interview you had stated that the key is not winning, but finding more losers.

Wagner: An embarrassing quote, but true. Amateur bookmakers think that the key is to beat the clients you have. That is a huge mistake. The key to getting rich as a bookmaker is finding a new client every single day of the year. The numbers take care of themselves, the key is to get more and more people playing. That is the TRUE BEAUTY of the PPH software and agency relationship.

Vegas Offshore: Do you have any success stories to tell?

Wagner: I have many, but will tell you one that emphasizes what the PPH program can do. I have a bookmaker that has been working out of San Antonio, Texas for 10 years. The guy has historically made $200,000 a year from his 25 or 30 players. He was introduced to our product in July 2004, and today he is writing over 185 clients. The ability to outsource answering calls and writing tickets to us has allowed him to grow his business 600% and his revenue over 1000%.

Vegas Offshore: Why did his revenue grow more than his business? Is it because your lines are sharper than his?

Wagner: There you go again. That is the obvious mistake that everyone makes. Again, don’t worry about beating the clients. Worry about getting more clients to play. But, to answer your question directly, the ability for his clients to play in the casino, play 24 hours a day, play games/halves/quarters, props, etc. is where the extra revenue comes from. Our lines might be sharper, but the advantage is more clients betting more often.

Vegas Offshore: How many bookmakers do you currently work with?

Wagner: We are writing business for over 250 bookmakers now. Some represent groups as small as 2 or 3; and others represent groups as large as 500. Again, remember the key is finding as many clients as possible. If you get to where you are writing 15 clients or more, it is almost impossible to lose for an extended period of time.

Vegas Offshore: So how does a bookmaker learn more about this?

Wagner: Simply go to any of the V.O. Group, S.A. sites to learn more. I suggest starting at www.BettorsNet.com or calling 1-877-512-1001 or emailing agents@bettorsnet.com to get more information.

March Madness $1 000 000 brackets contest

2005-03-02T09:41:00.000-08:00

Pick the winners for all March Madness games and win $1 000 000.

MVP Sportsbook is once again sponsoring this contest that is fast becoming a tradition in the online gambling industry.

Once you sign up with MVP Sportsbook you get a free entry for the contest. All you need to do is fill out your bracket for the whole tournament. Once the Madness is over you are awarded prizes according to the amount of winners you picked.

There is a $1 000 000 grand prize for picking all winners, but there are also thousands of dollars for other winners. It all comes down to how many winners you picked.

But you need to hurry up, all entries for the contest need to filled out before March 17, the day before the action starts for March Madness 2005.

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Bookmakers! Read Below To Earn More Cash Than Ever

2005-02-28T07:36:00.000-08:00

Bookmakers!
Read Below To Earn More Cash Than Ever

Are you a onshore bookmaker that wants to Minimize Legal Exposure, Increase Potential Profits, Spend More Time Enjoying the Money You Are Making, and Grow Your Business Beyond Your Wildest Dreams? If you answered ‘YES’ to one or all of these questions, then you need to look at a Price Per Head Agent Relationship with our company.

The concept of a Price Per Head Agent Relationship is based on you, the onshore bookmaker, paying our company a service fee to offer the same services that we offer to thousands of clients (on an anonymous basis).

For the first time, you will be able to offer Internet and Phone access to Sports, Horse and Casino (2 casinos) wagering to all your current clients (via a simple PIN and PASSWORD betting system). No longer do you have to compete with offshore sportsbooks and lose clients. YOU WILL BE ABLE TO OFFER EVERYTHING THAT THEY OFFER!

We are Licensed to offer bookmaking services.

We have been in business for 7 years.

We write business for 15,000 clients daily.

We are open 24-hours a day, 7-days a week, 365 days a year.

We have over 500 operators standing by to make you money!

Take advantage of our $5,000,000 USD investment to make your services better than ever. No longer will you have to answer calls all Saturday and Sunday. No longer will you have to lose clients to the offshore bookmakers. No longer will you have to worry about having your door kicked in by the authorities. Now you can compete with the Big Boys! You will simply sit back, watch the games, and earn more than ever before.

To learn more, go to our website, and click on ‘Agents’. If you prefer to use a white-labeled site without bonus and promotional text, visit www.BettorsNet.com for more information.

We look forward to being your service provider.

Call 1-888-333-6914 for more information.

State of the Offshore Gaming Industry

2005-02-22T10:05:00.000-08:00

State of the Offshore Gaming Industry

Q & A with

Dalton Wagner, Founder V.O. Group, S.A.

As Founder and Proprietor of V.O. Group, S.A., Dalton Wagner has the reputation of making one-dollar work like three in online marketing. With formidable competition, Mr. Wagner founded V.O. Group, S.A. in 1998 and has quickly risen to be one of the largest offshore operators in the world with over 50,000 active clients. We had an opportunity to catch up with Dalton Wagner on his last visit to Antigua.

Vegas Offshore: This year has been interesting for V.O. Group, S.A. and the offshore industry as a whole (advertising changes, etc.). How do you feel about the industry at the current time?

Wagner: I feel the industry is as strong as it has ever been. We are still finding that our advertising is bringing us new clients at an ever-growing rate. Some competitors are complaining that the crimp on advertising is affecting the industry, but we are not seeing this trend. Consolidation within the industry has begun, and I am sure you will continue to see smaller competitors gobbled up, and medium to larger companies merging. The weaker will go by the wayside.

Vegas Offshore: What about the rumors of V.O. Group, S.A. being bought?

Wagner: I am glad you used the term 'rumors'. The fact is that in July 2004 three suitors approached V.O. Group, S.A. because of our record-breaking profit year. In two of the cases we did see 'value' in a merger/relationship. However, at the end of the day, we could not come to terms that were agreeable on both sides. At this time V.O. Group, S.A. stands independent. And, we are happy being independent, profitable and growing.

Vegas Offshore: It is rumored that Bet On Sports (PLC; BSS.L) was one of the suitors. Is that true?

Wagner: There were three suitors that approached V.O. Group, S.A. And, in all cases confidentiality agreements were signed. For this reason, I cannot confirm or deny who any of the potential suitors were. What I can tell you is that one was a major sportsbook player, one was a major casino player and two were PLCs. I doubt that helps.

Vegas Offshore: Well, if Bet On Sports was involved, I bet you are happy you weren't involved in their November 24, 2004 stock debacle.

Wagner: The Bet On Sports stock debacle was an over-reaction by the market in my opinion. In one day you saw their stock drop 50% in value. And, the reason was poor performance in a very short period. If you looked at the other publicly held offshore gaming companies, you saw the same thing, just not as drastic as with BSS.L. Simply put, I know the founder of Bet On Sports, I know the management of Bet On Sports, I know the staff at Bet On Sports and I would not hesitate to invest in Bet On Sports. They were, and still are, undervalued in my opinion. They are a great competitor and a great company. I wish I had some of their stock at the new adjusted price. I just don't see how you can lose.

Vegas Offshore: It is rare to hear the 'competition' speaking so highly of a major competitor. Why would you do so?

Wagner: Simple. Bet On Sports is a great company. And, I am sure they would tell you the same about V.O. Group, S.A. The fact is, that there are companies out there that make our industry stronger. And, ones that make it weaker. Bet On Sports and V.O.Group, S.A. strive to make our industry stronger and more legitimate on a daily basis (as do BetCris.com; BoDog.com; etc.). What kind of ambassador for the industry would I be if I downplayed a 'good' competitor like Bet On Sports for my own benefit?

Vegas Offshore: If Bet On Sports did approach you, would you consider a merger?

Wagner: I like being independent. But, simply put, NEVER say NEVER.

Vegas Offshore: What of the rumors that you are looking at Panama as a potential relocation site?

Wagner: Our operation currently has offices in Costa Rica, Antigua and Belize. In Costa Rica we currently have over 400 employees. With employment costs in Costa Rica on the rise, the burden of Caja and the ever-changing political climate, we have looked at several alternative locations. One of the most desirable is/was Panama. However, due to the massive failure of BetPanAm.com and the political debacle involving their past gaming commission, we have decided to stay put for the current time. I think it is very safe to say that our primary location will be Costa Rica for the next 5 years. Pending any crazy licensing or governmental changes.

Vegas Offshore: I have visited your office in Antigua, however had no idea that you employed 400 individuals in Costa Rica. Why do you need such a large staff?

Wagner: Our industry has a reputation for being lazy and getting by on a shoestring budget. Most sportsbooks, casinos, racebooks and poker rooms answer phones when it is convenient and buy computers when the ones they are operating blow-up. Most are simply embarrassing to the legitimate operators. To run an operation like ours, servicing 50,000 bettors, you need lots of space, a 1 st rate phone system, fiber and satellite phone and Internet backups, IT professionals, accounting professionals, etc. V.O. Group, S.A. is currently located in 35,000 square feet of space, operating 24-hours a day, 365 days a year, and we are busting at the seems. At the current time, we are negotiating to buy the building next to us for future expansion. I think we will employ 600 people come this same time next year.

Vegas Offshore: I have noticed that you are still branching into other products. How has this strategy worked for V.O. Group, S.A.?

Wagner: In 1998 we started with our sports product. We then branched into the casino product. In 2001 and 2002 we opened several major race books and poker rooms. The fact is that we are profitable in all products. However, our core product, and hub for our advertising, is focused on the sports product. The strategy has worked, but we will not desert our core product. You can look for our re-launch of interactive betting in early 2005 and bingo in mid 2005.

Vegas Offshore: What other changes do you see in 2005 for V.O. Group, S.A.

Wagner: I think you will see V.O. Group, S.A. work more on our Internet interface to make it more gamer-friendly; you will see our company move into land-based gaming; and you will see us acquire two or three smaller competitors. Rather, you will see what you have always seen, expansion.

Vegas Offshore: What other changes do you see in 2005 for the industry as a whole?

Wagner: The strong will get stronger. The weak will get weaker. And, the acquisition race will be on.

Revenue Share vs. PPH Agency

2005-02-16T14:04:00.000-08:00

Revenue Share vs. PPH Agency

Q & A with

Dalton Wagner, Founder V.O. Group, S.A.

Dalton Wagner, Proprietor of V.O. Group, S.A. has recently found himself in the middle of a controversy between Revenue Sharing Sportsbooks and his Price Per Head Agency Concept. We had an opportunity to catch up with Dalton Wagner and discuss the issue on his last visit to Curacao.

Vegas Offshore: We hear that the Price Per Head offering you launched several months ago has landed you in some hot water?

Wagner: Yes, it appears that my Price Per Head Software offering has been a little too popular with onshore bookmakers and it is making my competition a little upset.

Vegas Offshore: Can you be a little more explicit?

Wagner: Several offshore bookmakers have lost relationships with their agents because my Price Per Head offering has lured them away and toward my offering. Specifically, several of the largest credit sportsbooks in Costa Rica have lost packages to me in the range of 500-1000 head apiece. And, they are not happy about it.

Vegas Offshore: Why are so many people leaving their agency relationships with credit sportsbooks?

Wagner: Well, in the old days an offshore sportsbook might partner with an onshore bookmaker. The deal was based on the onshore bookmaker finding the business and the offshore operator writing it and doing the accounting for a fee. The deal was typically 50%/50%. However, with my Price Per Head offering, I can offer the same offerings, but only charge the onshore bookmaker a nominal fee for using my service. The fact is that 50% is simply too much to charge an onshore bookmaker. I charge bookmakers a flat fee based on the number of head I am writing and let the bookmaker keep the rest of the money.

Vegas Offshore: Wait a minute. How can you afford to write the business for a simple fee when it historically cost 50%.

Wagner: The simple fact is that 50% of the revenue is ridiculous. I can charge a fee as little as $25 per head, per week and allow a client to have access to sports wagering, casino wagering and horse wagering – and, make a profit. Furthermore, we have written a software interface that allows agents onshore to manage their clients limits, run reports, etc. from any computer in the world. The offering is robust, efficient and simple to use. And, unfortunately for offshore sportsbooks that share in revenue, agents and bookmakers simply love it.

Vegas Offshore: Is the PPH product only based on sports wagering?

Wagner: No. We actually have the ability to offer clients two (2) casino products including blackjack, baccarat, slots, 3 card poker, roulette, etc. And, clients may also bet on horses at over 350 tracks worldwide.

Vegas Offshore: How many bookmakers do you currently work with?

Vegas Offshore: Anything else you would like to add?

Vegas Offshore: So how does a bookmaker learn more about this?

Wagner: Simply go to any of the V.O. Group, S.A. sites to learn more. I suggest starting at http://www.bettorsnet.com/ or calling 1-877-512-1001 or emailing agents@bettorsnet.com to get more information.

The Super Bowl Lines:

2005-01-21T13:14:00.000-08:00

The Super Bowl Lines:

PITTSBURGH -- The Steelers meet the defending champion New England Patriots in the AFC championship game at 6:30 p.m. Sunday at Heinz Field, and the winner moves on to Super Bowl Lines XXXIX.

New England has won two of the past three Super Bowl Liness, while the Steelers have gone without a title since 1980.

Early betting lines have the Patriots as a three-point favorite Sunday. "They're on top. Until somebody beats them, they should be favored," Steelers coach Bill Cowher said at his weekly press conference Tuesday.

GAME TIME:
Sun, 6:30 pm

Pittsburgh beat New England 34-20 on Oct. 31, behind two touchdown passes from Ben Roethlisberger to Plaxico Burress, a third score by Jerome Bettis, and 125 rushing yards from Duce Staley.

But things are different this time. New England's star running back, Corey Dillon, who gained 1,635 yards and scored 12 touchdowns this season, is back at full strength. He missed the October game with a thigh injury.

"We know him well from playing against him all those years in Cincinnati (when Dillon was with the Bengals)," Cowher said. "We have a lot of respect for him. He gives them another weapon."

What about the so-called "gloves controversy?"

Roethlisberger wore gloves to protect his hands from sub-freezing temperatures in the Steelers' first playoff game against the New York Jets. He threw two interceptions, one of which was brought back for a New York touchdown.

"I'm not going to tell him what to do in regards to that. Just throw the ball to the receiver, with or without a glove," Cowher said.

Talk-show callers have latched onto the glove debate, mostly because of Roethlisberger's poor performance and partly due to a pregame report that fueled speculation about a sore thumb, but the quarterback was not included on Cowher's injury report Tuesday.

"Everyone's worried about his thumb. I didn't even know anything about his thumb," Cowher said. "He said it (the glove on his throwing hand) wasn't fitting right.

"If a guy's open, throw it to him, whatever that entails you wearing."

Seemingly amused by the whole issue, Cowher said things tend to get blown out of proportion in the playoffs.

"I'm not going to overanalyze it," he said. "Certainly, there are some choices he (Roethlisberger) made that he'd like to have back.

"It was what it was. We overcame it and we're moving on. We're not going to change our approach that got us to where we are today."

Back in October, the Steelers ended the Patriots' 21-game winning streak and spoiled their unbeaten record. Now, the Pats are looking to return the favor to Roethlisberger, who hasn't lost in 14 games as a starter.

"(New England's) Tom Brady is a playoff type of quarterback. He finds ways of getting it done," Cowher said. "He has all his receivers healthy. This is a very explosive offense."

------------
Injury Report:

Running back Verron Haynes (knee), linebackers Kendrell Bell (groin) and Clark Haggans (groin), wide receiver Antwaan Randle El (toe) and cornerback Deshea Townsend (hand) are all probable for Sunday.

An Examination of super bowl lines

2005-01-13T10:16:00.000-08:00

An Examination of super bowl lines Wagering -----------------------------------------------------------------------
Page 2 1On “Arbitrage” and Market Efficiency: An Examination of super bowl lines Wagering Abstract: For several decades researchers have searched for possible inefficiencies in sports gambling markets. Most profitable strategies have failed to produce profits over the long run. The one consistently profitable strategy that has been studied extensively involves taking advantage of differences between contracts offered in different gambling markets. The main purpose of this paper is to explain why and how these differences affect profitability of wagers. Loosely defining these opportunities as “arbitrage”, this paper examines the circumstances under which inter-market gambles in the super bowl lines can be made with an expected profit. Of course, it is expected that as with all arbitrage opportunities, such circumstances are expected to be rare and short-lived. --------------------------------------------------------------------------------Page 3 2On “Arbitrage” and Market Efficiency: An Examination of super bowl lines Wagering Pankoff(1968) was the first to test the efficient markets hypothesis for sports gambling markets, and found little evidence of inefficiency in super bowl lines markets. A search for strategies that can “beat the market” ensued, and though researchers appear to report cosuper bowl linesicting results, a pattern of regularity has emerged over time. Most findings of inefficiency appear to fall in one of three categories: 1) Ex Post data mining resulting in probable type I errors 2) Risk neutral strategies against risk averse (or risk loving) bettors 3) Taking advantage of different super bowl lines or lines offered by different bookmakers Over time, the only profitable strategies proposed in the literature that have been shown to remain profitable in out of sample tests fall into category 3, where a bettor finds an “advantage”. Such advantages involve choosing the best super bowl lines or lines offered from among several bookmakers. These advantages were found to be profitable in papers by Vergin and Scriabin (1978), Tryfos et. al. (1984), and Badarinathi and Kochman (1996), as well as other authors in the economics literature. However, no previous research has examined these advantages in detail, explaining why these advantages result in profitable opportunities. This paper explains the theoretical and empirical underpinnings of such advantages, and proposes a method for exploiting them(if they can be found to exist). We construct pairs of bets that can loosely be termed arbitrage: buying and selling contracts in different markets that have either an expected (when betting using lines) or guaranteed (when betting in super bowl lines) profit. --------------------------------------------------------------------------------Page 4 3We begin with a brief discussion of several examples of research in each of the above categories. In Section 2 we will describe why different bookmakers often offer different lines or super bowl lines. Section 3 briefly introduces vocabulary and the structure of the super bowl lines wagering market. Section 4 will suggest a method for taking advantage of different lines offered by bookmakers. Section 5 examines recent data from the super bowl lines and finds the necessary conditions for profitable wagers. Sections 6 and 7 discuss and extend the results. Section 8 derives the necessary conditions for profitable wagers in super bowl lines between two markets, followed by the Conclusion (Section 9). 1. Previous work on betting While in 1998 $2.3 billion was spent on legal sports gambling in Nevada, it is estimated that between $80 and $380 billion was spent gambling on sporting events illegally(Macy 1999).1The sheer relative size of the illegal market to the legal one makes it clear that simply focusing on the legal market alone fails to capture the complete picture. However, as evidenced by the huge range of estimates of the size of the illegal market, little can be said with certainty. We are severely limited in our ability to study these illegal markets, so most authors focus on the “Vegas line”. Many authors have tried to construct betting strategies for the super bowl lines market that have a positive expected return, attempting to uncover inefficiencies in Vegas lines. Type I Errors? Most of these studies search historical data using a large number of strategies. Often without a guiding theoretical basis, the data are searched for possible profitable wagers that would have won more than2111of the time. The tested strategies range fromthe simple [bet on the underdog (Vergin and Scriabin 1978), bet on(against) teams that --------------------------------------------------------------------------------Page 5 4consistently beat(lose to) the point spread (Sturgeon 1974)] to the complex [using regressions to predict winners (Zuber, Gandar, and Bowers 1985, Osborne 2001)]. Most findings of inefficiencies in markets have been found to be sample specific, implying that the researchers may have committed type I errors. Researchers should always be mindful of this possibility for error, although discussion of type I errors is extremely rare in this literature. In studying gambling market efficiency, setting an alpha = .05 means that for every 20 strategies tested, we expect that one will appear profitable even when the market is truly efficient. Of course when many hypotheses are tested, more type I errors will likely occur. For example, after testing 15 hypotheses, Gandar et al (1988) find one profitable strategy with alpha = .05. Woodland and Woodland (2000) test 48 hypotheses, and reject 7 at alpha = .10. The numbers of profitable strategies found are similar to (but slightly greater than) what one would expect to find when, in fact, no profitable strategies exist. Little can be done to ameliorate this problem in practice2, however authors should use caution when interpreting results. For example, when Badarinathi and Kochman (1996b) test 116 hypotheses, and reject 7 at alpha = .05, they correctly conclude that the findings of inefficiency are likely to be spurious. Risk Preference Several authors, most notably Woodland and Woodland (1991) have examined the effects of risk aversion on bettors. Bettors are often risk loving, evidenced by making wagers with negative expected values, and betting on teams with which they have an emotional connection. Consistent with this proposition, several authors have found that racetrack bettors overbet longshots (e.g. Asch, Malkiel, and Quandt 1982). --------------------------------------------------------------------------------Page 6 5However, Woodland and Woodland (1994) find weak support for the opposite case in baseball. When focusing on wagering in football, risk aversion plays little part because when betting using point spreads, each wager has approximately even super bowl lines of winning. On the other hand, risk loving behavior actually drives the main premise of this paper. Because bettors tend to bet heavily on the local favorite, regional differences between lines may appear. Sometimes these differences can give a bettor an advantage. Finding an Advantage: Differing Lines Picking a strategy (such as betting the underdog) AND obtaining an “advantage” in a local bookie’s line relative to the Vegas line is one tactic that has appeared profitable in many studies over many samples (e.g. Vergin and Scriabin 1978, Tryfos et. al. 1984, Badarinathi and Kochman 1996). For example if a betting rule suggests that you should bet on Team A, and the Vegas line indicates that Team A is favored by 5 points, only bet on Team A if you can find a line of 4, 3.5, or 3 in another market. This is referred to as finding an advantage of 1, 1.5, or 2 points, respectively. Vergin and Scriabin, Tryfos, and Badarinathi and Kochman obtained winning percentages of 60.59, 59.26, and 56.03 in three different samples when betting on underdogs, assuming one could obtain a two-point advantage. As will be shown, the essential element is not the strategy itself, but the size of the advantage obtained. The key element is finding different lines or super bowl lines offered in different markets. Though these transactions do not obviously lend themselves to being called arbitrage (because profit is not certain), they come very close to meeting the definition supplied in the MIT Dictionary of Modern Economics(1986): --------------------------------------------------------------------------------Page 7 6arbitrage. An operation involving the simultaneous purchase and sale of an asset (e.g. a commodity or currency) in two or more markets between which there are price differences or discrepancies. The arbitrageur aims to profit from the price difference; the effect of his action is to lessen or eliminate it. Some readers may quibble with whether or not the transactions described in this paper constitute arbitrage; I implore the reader to forgive my loose usage of the word. 2. Different super bowl lines for the same game One large factor that differentiates gambling from other financial markets is that gambling on sporting events is illegal everywhere in the U.S. except Nevada. This fact likely causes inefficiencies in the market due to separation of local, illegal gambling markets and increased information costs. Vergin and Scriabin discuss the importance of getting the “best” super bowl lines or lines possible when placing bets. They note that the point spreads often change two to three points after they are initially published in Las Vegas, and usually vary across cities. Regardless of your strategy, it is important to make sure that you select the most favorable line or super bowl lines, increasing your expected profits. Rosecrance(1988) describes a typical betting day at Lake Tahoe: Bettors frequently get together ... to compare numbers (super bowl lines or points offered by the various sports books) and to discuss wagering opportunities with other regulars. Some call acquaintances in Las Vegas or Reno to check the numbers being offered in those locations. An example of such a difference occurring was the 1969 Super Bowl, where the Colts were favored over the Jets by 20 in Baltimore, but only by 17 in New York (Merchant 1973, p. 41). The fact that different terms are offered on the same event brings up an interesting question: Since spreads differ across space, and also change --------------------------------------------------------------------------------Page 8 7over the time before a game starts, what are the conditions necessary to find profitable opportunities to bet across markets?3. A primer for the risk averse In order to be concrete, we now give an introduction to this market and define some terms. A bookmaker, or bookie is one who accepts bets from individuals. These individuals normally serve a limited geographic area because of legal restrictions. When a bookie accepts a bet, it is a contract as follows: The bookie sells the buyer n units of a contingent claim such that if team A scores more than x more points than team B, the buyer wins $n. If team A scores less than x more points than team B, he loses $(1+v)n. If team A scores exactly x more points than team B, the purchaser does not win or lose any money (a push). Let’s call the type of bet just described a bet on team A. The variable x is often called the line or the spread. A favored team must win by more than x points to win a bet on that team, and conversely an underdog must lose by fewer than x points (or win outright) in order to win a bet on an underdog. Thus let x be positive if A is favored to win, and negative if A is the underdog. Local bookies will increase or decrease the line to try to keep the amount bet equal on each side, with the goal of taking no personal risk. However, when a bet is made, it is “locked in” at the x given at that time. The variable x can either be an integer, in which case pushes are possible, or non-integer (e.g. 3½) where ties are impossible. If too many bets on team A are being bought, by increasing the amount x the bookie can make bets against team A look more attractive (by increasing the probability that a bet on team B will win). Bookies normally try to act as a broker between bettors, and profit only from their commission, v. --------------------------------------------------------------------------------Page 9 8The variable v is called a vigorish(vig). This is a percentage (usually 10%) added to all losing bets as a commission.3This is where the bookie makes most of his income, and for now we will assume that this is his only income. Of course, the bookie can strategically choose to bet against his customers, as opposed to simply acting as a broker. Strategic actions by bookies will not be considered in this paper. 4. On arbitrage opportunities Because most bookies serve only a small geographical area, regional demand differences (and lack of information) may generate different spreads in different markets. Whenever a wedge in prices between markets occurs, there may be the opportunity for arbitrage between them. A simple example will make arbitrage in these markets more clear. Suppose that Miami is better than Denver, and everyone believes it (even the fans of Denver). Also suppose that the fans of each team demand bets on their team more than other consumers. In equilibrium, suppose that the line in Miami is 10 points and in Denver it is 5 points. If we buy n units of “bet on Miami” in Denver and n units of “bet on Denver” in Miami, we will see one of the following five outcomes ex post: I. In region I to the left of zero, Miami loses the game. Just to the right of zero, Miami wins, but just barely. So, we will win our bet on Denver and lose our bet on Miami. Our payoff is (n - n(1+v)) = -vn. II. In region II we win both bets. Miami wins by more than 5, and Denver loses by less than 10, winning both bets. Our payoff is (2n). III. Region III is similar to region I, winning our bet on Miami, and losing our bet on Denver. Our payoff is -vn. IV & V. The score could also be exactly a 5 or 10 point win for Miami. In the case of the 5 point differential, we win our bet on Denver and have a “push” on Miami. So, in these cases we simply win n. Fig. 1 here --------------------------------------------------------------------------------Page 10 9In order to make money in this above scenario, the probability that the score is in the arbitrage region or equal to one of its boundaries must be p* and psuch that: vnppnpnp)*1()2(*)(−−>+(1) where p is the probability that the difference in scores equals one of the lines, and p* is the probability that the difference falls within the two lines. If we assume for a moment that the points are distributed continuously, so that p = 0, thenvvp+>2*(2)If the vig is the customary 10%, then p*, the probability we win both bets, must be at least 4.76%. Of course, these unrealistic simplifying assumptions are only for illustrative purposes; a more realistic derivation follows in section 5.When Pankoff(1968) analyzed the distribution of actual super bowl lines game outcomes around the Vegas line using 1956-1965 data, he found a standard deviation of 15.58. Stern(1991) analyzed the accuracy of point spreads using super bowl lines data from 1981, 1982, and 1984. He found that distribution of the difference between actual game outcomes and point spreads was not significantly different from a normal distribution with mean zero and a standard deviation of 13.86. Using data from 1997 and 19984(473 games) and Las Vegas lines, we found that the standard deviation was 12.91 (Figure 2), and the data are still approximately normal with mean zero.5It is interesting to note that the Las Vegas lines seem to be more accurate in more recent data, less varied from the actual game outcomes. A more detailed exploration and explanation of this apparent trend would be an interesting addition to the literature. Are lines more accurate because Fig. 2 here --------------------------------------------------------------------------------Page 11 10of more efficient markets, or are the average score differences becoming lower, making them easier to predict? The unbiasedness of the Las Vegas lines as seen from the zero mean is also as expected, suggesting that the Vegas line is an unbiased estimate of true game outcomes. However, as the variance decreases, the difference in observed lines required to generate a sufficient p* decreases. Continuing with the simplification in equation (2), using Stern’s estimate would require a minimum difference in the lines of 1.65 points to break even, whereas the more recent estimate requires only 1.54. Because we are constrained by ½ point intervals, this means that a with a two pointdifference between markets, one could expect to make money. If we suppose that an unbiased point spread is announced, and observe the line move up by one point in one market, and down by one point in another, then we would have a positive expected payoff from arbitrage. However, the above analysis is an unjust simplification derived in order to introduce the reader to the issues. Because ties and ½ point lines sometimes affect the probabilities substantially, we now offer a more accurate solution to our arbitrage problem.5. A more formal treatment Suppose that there is some true discrete distribution of x, f(x). Let Xbe the expected value for a given game, which bookies know. Suppose that bookies are acting merely as brokers, and market forces drive a wedge between the lines in two local markets to xAand xB, with xA< b =" 1,"> B2 ≥ 1, then we can choose bets: (1+c)n1 to win (B1 - c)n1 (7) (B2 + c)n2 to win (1- c)n2 (8) We place one bet on the underdog, and place that bet in the city with the higher payoff(B1). We also place one bet on the favorite, and place that bet in the city where it is cheaper to place the bet(B2). We must choose n1 and n2 so that each bet will win us $1 plusthe amount of the other bet that we will lose. This fact gives rise to the following two equations: ()()B c nB c n11 122−= ++(9) ()()12 1 11−= + +c nc n(10) The first equation states that our winnings from our bet on the underdog must equal $1 plus the amount that we bet on the favorite. The second equation states that our winnings from our bet on the favorite must equal $1 plus the amount that we bet on the underdog. Solving these two equations simultaneously for n1 and n2 gives: nBBBc CBCBnBBBc cBcB11112 22121212 221=+−− −−=+−− −−,(11) The opportunity for profitable arbitrage will exist when n1 and n2 are positive. This simply puts conditions on B1 and B2 such that the denominator is positive. We have constructed the bets assuming that B1 is larger than B2. How much larger it must be is given by the denominator: BBc cBcB12 221 0−− −−>(12)or: --------------------------------------------------------------------------------Page 19 18BBc cBc12 221>+ +−(13)The difference in super bowl lines necessary is increasing in c. If c is zero, then B1 need only be slightly larger than B2. Woodland and Woodland(1991) found that on average, c is about .05.13Making this assumption, then: 053.121053.11+>BB(14)A graph of this relationship is depicted in Figure 3. For example, if we observe the super bowl lines of 4 to 1 and 3.5 to 1 for the same game, a bettor could make as much money as he liked, with certainty. Of course, such bets are restricted by a bettor’s available funds as well as the willingness of a bookie to take the bet. In this case, the .5 difference in super bowl lines is barely over the critical difference of .487. Using equation (11), we would need to buy 180 bets on the underdog, and 200 on the favorite. Thus, the total amount needed to win $1 with certainty is $899. However, if we see super bowl lines of 4 to 1 and 3 to 1, this amount decreases to $35.36. 9. Conclusion As Gray and Gray (1997) point out, “The existence of consistent statistical biases in point spreads is not, in itself, evidence of inefficiency. In the strict sense, market inefficiency requires that trading strategies can exploit biases to earn consistent profits.” In other words, retrospectively rejecting a null hypothesis does not imply that gambling markets are inefficient. While many different strategies have been tested on super bowl lines market data, very few have measured up in out of sample tests. These few Fig. 3 here --------------------------------------------------------------------------------Page 20 19successful rules are not evidence of inefficiency in the national market per se, but take advantage of differences between smaller, local markets. This paper has shown that in some clearly observable cases, the gambling market is subject to arbitrage of a sort, buying two bets in different markets when at worst one will be lost, and perhaps both will be won. The main reasons this may occur are because of market separation, local bookmakers trying to act as brokers between gamblers, and the tendency of local gamblers to bet on the local team. Unlike well-organized markets, gambling must often occur in a thin, spatially separated market due to its illegality. Just how often arbitrage opportunities occur is an empirical question which may never have a good answer, due to the lack of data on these small markets. One might expect that as the gambling market on the internet becomes a larger share of the market, arbitrage opportunities may appear less frequently. Even if this is the case, as the local bookie’s market becomes thinner, the internet may open up even more opportunities as discussed in this paper. While arbitrage across markets was shown to be low-risk, it is also understandably costly because of information and other transaction costs. However, bettors can much more simply bet one side of the arbitrage whenever one sees a difference of one or more points between any local line and the Las Vegas line. It was shown that the lines in recent years are better predictors of the actual outcome of a game than in previous years. If this is a continuing trend, the methods discussed will become even more profitable. Whether or not the type of arbitrage highlighted in this paper measures up to an inefficiency in the market is left up to the reader’s judgment. --------------------------------------------------------------------------------Page 21 20References Asch, P., Malkiel, B.G., and Quandt, R.E. (1982). Racetrack betting and informed behavior. Journal of Financial Economics, 10, 187-194. Badarinathi, R. and Kochman, L. (1996a). Football betting and the efficient market hypothesis. American Economist, 40, 52-55. Badarinathi, R. and Kochman, L. (1996b). Market efficiency and National Football League betting totals. Arkansas Business and economic Review, 29(2), 10-13. Gandar, J., Zuber, R., O’Brien, T. and Russo, B. (1988). Testing rationality in the point spread betting market. Journal of Finance, 43, 995-1008. Gray, P. K., Gray, S. F. (1997). Testing market efficiency: Evidence from the super bowl lines sports betting market. Journal of Finance, 52, 1725-1737. Macy, R. (1992). Ban on college sports betting could cost state books millions. Las Vegas Review-Journal, May 18, D-8. Merchant, L. (1973). The National Football Lottery (Holt, New York). Osborne, E. (2001). Efficient markets? Don’t bet on it. Journal of Sports Economics, 2, 50-61. Pankoff, L. D. (1968). Market efficiency and football betting. Journal of Business, 41, 203-214. Pope, P. F. and Peel, D. A. (1989). Information, prices, and efficiency in a fixed-super bowl lines betting market. Economica, 56, 323-341. Rosecrance, J. D. (1988). Gambling without Guilt: The Legitimization of an American Pastime (Brooks/Cole, Pacific Grove, CA). Stern, H. (1991). On the probability of winning a football game. The American Statistician, 45, 179-183. Tryfos, P., Casey, S., Cook, S., Leger G., Pylypiak, G. (1984). The profitability of wagering on super bowl lines games. Management Science, 30, 123-132. Vergin, R.C. and Scriabin, M. (1978). Winning strategies for wagering on National Football League games. Management Science, 24, 908-818. Woodland, B. M. Woodland, L. M. (1991). The effects of risk aversion on wagering: Point spread vs. super bowl lines. Journal of Political Economy, 99, 638-653. --------------------------------------------------------------------------------Page 22 21Woodland, B. M. Woodland, L. M. (1994). Market efficiency and the favorite-longshot bias: The baseball betting market. The Journal of Finance, 49, 269-279. Woodland, B. M. Woodland, L. M. (2000). Testing contrarian strategies in the National Football League. Journal of Sports Economics, 1, 187-193. Zuber, R.A., Gandar, J. M., Bowers, B. D. (1985). Beating the spread: Testing the efficiency of the gambling market for National Football League games. Journal of Political Economy, 93, 800-806. --------------------------------------------------------------------------------Page 23 22Figure 1: Five possible outcomes from an arbitrage using different point spreads of Miami favored by 10 and Miami favored by 5 points. In regions I and III, we win one bet and lose one bet. In region II, both bets are won. If the outcome is that Miami wins by exactly 5 or 10 points, we win one bet, and neither win nor lose the other. The Five Possible Outcomes With Two Bets(Miami -Denver) 0 5 10I I IV II V III --------------------------------------------------------------------------------Page 24 23010203040506070Center of BinDistribution of Actual Game Outcomes - PointspreadFrequency121292225394743686755272114962112-36 -32 -28 -24 -20 -16 -12-8-4048121620242832364044Figure 2: Histogram showing the distribution of game outcomes relative to the spread (Actual Game Point Differences - Las Vegas Line) for 1997 and 1998 seasons. The sample mean was -.23, standard deviation 12.91. A goodness of fit 2ℵ test could not reject the assumption that the data come from a normal distribution with mean 0, standard distribution 12.91. --------------------------------------------------------------------------------Page 25 24R elatio n sh ip B etw een O d d sN ecessary fo r P ro fitab le A rb itrag e Figure 3: The relationship between super bowl lines necessary for profitable arbitrage assuming a 5% average commission rate. --------------------------------------------------------------------------------Page 26 25Payoff Table for Arbitrage on Different Lines Number of points moved (up) in city A 0 .5 1 1.5 2 2.530 -0.097 -0.066 -0.032 -0.001 0.032 0.063 0.096 .5 -0.035 -0.012 0.029 0.063 0.094 0.127 1 0.033 0.063 0.097 0.128 0.161 1.5 0.094 0.128 0.158 0.191 Number of points moved (down) in city B 2 0.161 0.192 0.225 Table I :Expected payoffs (profit) from risking $1.10 in each of two cities in order to win $1. For example, is the line moves up one point from the initial line in city A, and down 1 point in city B, the expected profit would be 3.3 cents.--------------------------------------------------------------------------------Page 27 26Notes: 1Many studies have been done estimating the amount of illegal gambling. For a review of these studies, see Rosecrance(1988), Ch. 6. 2Two possibilities are reducing alpha, or multiplying p-values by the number of tests performed(Bonferroni approach). Both approaches will increase the probability of a type II error, however. 3Bookies also sometimes change the vig to 5% or 15% to encourage or discourage bets on a certainteam. 4Data was from Marc Lawrence's Playbook, a retrospective view of football statistics published yearly. 5An F test determined that the variance has decreased from Stern’s estimate (p=.0486). A chi-square test on the more recent data was unable to show that the data are different from a normal distribution with mean zero and standard deviation 12.91 (p=.277). 6The notation summing from “XA+ to XB-” means “all possible score differences in between xAand xB”. 7Finding the area under the normal curve surrounding each possible outcome over a range of one. For example, the probability of the game score being equal to the stated line is the area under the normal curve from -.5 to +.5. 8That is, if we make the simplifying assumption that lines will still move at the same magnitude. 9If we assume that a low scoring, defensive team averages scoring µ points with standard deviation σ, it might make sense to think that a team scoring 2µ points on average might have a standard deviation of 2σ, ceteris paribus. 10For a given, positive expected return. 11We will continue to use Woodland and Woodland’s notation describing an super bowl lines bet. The reader should note that while super bowl lines bets are actually made in a different form, super bowl lines bets can easily be converted into one using this notation. 12Some consolidation in this market has occurred since Pope and Peel wrote their paper. 13As Woodland and Woodland(1991) point out in footnotes 2 and 3, a rough average commission for football is (was) .05, however, the rate of commissions for super bowl lines bets tend to rise as the super bowl lines rise. Recently, it is very common to see higher commission rates.

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