Bet on the 2005 Superbowl

Success With Price Per Head (One Agents Story)

2005-06-21T10:53:00.000-07:00

Success With Price Per Head (One Agents Story)

Case Study demonstrating one agents 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. One Agents Old 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 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).

Sports Betting Business: 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.

Sports Betting Business: You called us with a specific Success Story that you said Had To Be Told Immediately! What in the heck could be so important?
Wagner: As the industry knows, we have been pushing Price Per Head Agency for a while now. We have a story that has to be told…it is that simple!

Sports Betting Business: OK. Go ahead and tell the story!
Wagner: The story starts with a gentleman named Paul Harris in Austin, Texas who is was a small town bookmaker making $250,000 a year in income.

Sports Betting Business: I already see where this is going. Now you are going to tell me of how V.O. Group, S.A. leveraged your PPH software and relationship with Paul to make him 30% or 50% more. Right?
Wagner: No, that is not the story at all. While 50% would truly be something to celebrate, it does not compare to this story!

Sports Betting Business: Stop already. Tell the story.
Wagner: Mr. Harris contacted V.O. Group, S.A. through our BettorsNet.com brand in August 2004, right before football season. After three phone calls we switched his 75 players from playing through his cell phone to playing via our website and call center. And, with the increased availability to the product, more offerings, and all the other items BettorsNet.com brings, guess how much Paul made?

Sports Betting Business: Well, since you did not bite on 50% more, I will say 100% more. But I doubt it!
Wagner: Yea, I doubt it too. How about 350% more. That’s right! I just ran the reports for Paul Harris and up to February 1, 2005, Paul has made $750,000.00.

Sports Betting Business: Wait, $750,000 is a hell of a lot more than 350% more. Isn’t it?
Wagner: Actually, if you take into consideration the decline we will see after the end of March Madness, he should easily make $1,200,000 this year. But, I didn’t want to overstate the facts!

Sports Betting Business: Are you telling me that by having you take the phone calls and do the accounting for Mr. Harris you made this difference in his life?
Wagner: That is exactly what I am saying!

Sports Betting Business: Was he that bad of a bookmaker?
Wagner: Well, I think we are better – but, he was fine. The increase doesn’t come from us beating his players more than he did. The increase comes from the product being available 24 hours a day and our company having more offerings. And, the secret ingredient helps too!

Sports Betting Business: Oh, I see. Instead of having his cell on for a few hours a day, you put the product in front of his clients all day and night for the buying. I see. But, what is the ‘secret ingredient’?
Wagner: The availability will make a person 100% more over night. But, the secret ingredient made the difference for Mr. Harris. And, the secret ingredient is TIME.

Sports Betting Business: OK, I am lost again. What does that mean?
Wagner: Paul Harris used to set lines, answer phone calls, watch games, grade wagers and keep figures. He did it so well, and so often he already lost his girlfriend. He simply spent all of his time operating as a bookie. When we took over, he became a RECRUITER. All Paul does now is sit in bars and recruit business. We write the business, and Paul grows his business daily. That is the secret ingredient.

Sports Betting Business: Ah, I see. He no longer spends time on the items that cost time and money…he spends his time on what makes him money – recruiting players!
Wagner: Christ! Your brilliant! It typically takes a bookmaker or agent about 3 months to figure that out. But, you, like Paul Harris already figured it out. You recruit, and I will beat them. Therefore the only thing that matters is getting more clients. The more you get, the more you will make.

Sports Betting Business: Of course I get it. That’s the Las Vegas model. Build in an edge and then find as many people to bet against the edge as possible. It’s simple!
Wagner: You sure make it sound simple. But, most bookies are stuck in the mode of trying to ‘beat the players’. The fact is that all you have to do is get a new client or two every day and you will be a millionaire over night. Simply ask Paul Harris who is on campus at University Of Texas recruiting players on 6th Street right now.

Sports Betting Business: So how does a bookmaker or agent 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

2005-06-13T10:25:00.000-07:00

Innovation In Bookmaking
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

2005-06-13T09:05:00.000-07:00

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 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.

Revenue Share vs. PPH Agency

2005-03-14T08:01:00.000-08:00

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

Dalton Wagner, Proprietor of V.O. Group, S.A. has recently found himself 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?

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: 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.

How Much Should a Bookmaker Expect to Make with PPH

2005-03-08T06:49:00.000-08:00

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?

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.

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2005-03-02T09:21:00.000-08:00

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Innovation In Bookmaking

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

Innovation In Bookmaking
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?

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.

Bookmakers!

2005-02-22T11:06:00.000-08:00

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State of the Offshore Gaming Industry

2005-02-16T10:45:00.000-08:00

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.

bet on the superbowl 2005 XXXIX bet on the superbowl 2005 ODDS: AFC AND NFC TEAMS

2005-01-21T13:49:00.000-08:00

bet on the superbowl 2005 XXXIX bet on the superbowl 2005 ODDS: AFC AND NFC TEAMS

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Superbowl : Winner
Monday, 31 January 2005
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Bookmaker bet on the superbowl 2005 Exchange
New England Patriots 13/8

Pittsburgh 5/2
2.85/1

Philadelphia Eagles 3/1

Atlanta Falcons 7/1
7.6/1

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New England beat the Indianapolis Colts 20-3 in the AFC divisional play-off. The win sends the defending bet on the superbowl 2005 champions into the AFC championship game for the third time in four years.

The Patriots will play Pittsburgh who scraped through against New York Jets in overtime. The Steelers were fortunate not to be knocked out when the Jets missed a field goal in the final seconds of regulation time.

Whoever wins the AFC Championship game will undoubtedly be favourite to win Superbowl. New England are currently favourites with the majority of firms, although Paddy Power look to have taken a small chance offering a best price 7/4.

The NFC Championship game will be contested by Atlanta and Philadelphia. The Falcons powered past St.Louis Rams with over 300 yards rushing, while the Eagles took care of Minnesota Vikings despite being without Terrell Owens.

This will be the fourth year running that Philadelphia Eagles will play in the Championship game. The past three times has ended in defeat. The best price available on the Eagles is 3/1 at VC Bet.

Finally it is worth mentioning that whatever happens to Atlanta next weekend, the readaBet.com coffers are guaranteed a decent boost. The Falcons were a recommended buy on the Sporting Index 100 Index at 25 (Winner 100pts, Runner-Up 75pts, Conference game 50pts). The current quote is 59-62.

A decision on whether to close out before next Sunday will be made later this week. Atlanta are considered the 7/1 outsiders to win in Jacksonville on February 6th.

Using Past Performance to Predict superbowl Outcomes

2005-01-13T08:28:00.000-08:00

Using Past Performance to Predict superbowl Outcomes:A Chartist ApproachMarch 1997This Revision: April 1997

Abstract

A simple approach to predicting outcomes of National Football League games is demonstrated inapplications to the 1995-96 and 1996-97 seasons. The approach amounts to a chartist strategy: it involvesestimating team-specific probit models for predicting success or failure versus point spreads, using asexplanatory variables own and opponent performance versus the spread in the previous week. Variousstrategies which trigger bets as functions of predicted probabilities of success are found to be profitable.Intraweek movements in betting lines are also found to be useful explanatory variables. The findingsreflect negatively on the efficient markets hypothesis

Page 2 1Using Past Performance to Predict superbowl Outcomes:A Chartist ApproachDavid N. DeJongI. IntroductionIn setting point spreads on sporting events, gambling houses attempt to equate the flow of bets onboth sides of the spread. Because bettors must risk $11 to win $10 (i.e., they must pay a ten-percentvigorish on losing bets), this point-setting rule ensures a profitable outcome for the house regardless of theoutcome of the contest (with the exception of ties). Initial spreads issued by the house can thus beinterpreted as “forecasts of the forecasts of bettors”. Early movements in the spreads typically reflectinaccuracies in houses’forecasts; subsequent movements typically reflect the arrival of new information(e.g., injury updates); and differences between closing lines and final scores reflect forecast errors on thepart of bettors.The efficient markets hypothesis, applied to the gambling market for National Football Leaguegames, holds that point spreads are the best unbiased forecasts of actual outcomes. Under this hypothesis,it should not be possible to use past performance against the spread to predict future success or failure: tothe extent that it is relevant, information regarding past performance should be embodied in current pointspreads. The hypothesis does not seem to hold in this setting: using what amounts to a simple chartisttechnique, I demonstrate profitable strategies for predicting outcomes of superbowl games.The technique I employ involves estimating team-specific probit models for predicting success orfailure versus point spreads. The models use as explanatory variables own and opponent performanceversus the spread in the previous week, and movements in betting lines observed during the course of theweek. Various strategies which trigger bets as functions of predicted probabilities of success are found tobe profitable when applied to data from the 1995-96 and 1996-97 seasons. Due to the ten-percent vigorishcharged by the house on losing bets, a success rate of 52.38 percent is required to break even. Thestrategies I consider have success rates ranging from 58 to 63 percent; these rates significantly exceed thebreak-even rate, both in an economic and statistical sense.Several previous studies have examined the efficiency of superbowl point spreads issued by Las Vegas betting houses. This work generally reflects positively on the efficiency of these spreads. Pankoff (1968)regressed winning margins on point spreads and a constant and found no exploitable biases using data fromthe 1956 - 1965 seasons, and Stern (1991) showed that differences between winning margins and pointspreads measured from 1981 - 1986 are approximately normally distributed with zero mean and variance

Page 3 2of 14.1Vergin and Scriabin (1978) reported finding 23 strategies among 70 competitors that generatedwinning percentages significantly greater (statistically) than 50 percent over the 1969 - 1974 seasons.However, Tryfos et al. (1984) showed that only three of these strategies were profitable after takingvigorish into account: i.e., only three strategies had success rates significantly greater than the break-evenrate.2Finally, Zuber et al. (1985) reported a 59-percent success rate using a strategy based on predictionsgenerated by a regression equation which models point spreads as a function of “fundamentals” such asnumber of wins per team, yards rushed, etc. The model was estimated using data from the first eight weeksof the 1983 season, and was then used to predict point spreads over the remaining eight weeks of theregular season. Discrepancies between actual and predicted point spreads were used to trigger bets; usinga discrepancy of 0.5 points or more as a trigger, 60 of 102 bets turned out to be winners. But while theauthors noted that this success rate is significantly greater than 50 percent, it is not significantly differentfrom the 52.38 percent break-even rate (the p value associated with this test is 0.17 -- see Section IV fordetails on this test).In sum, the literature on superbowl point-spread behavior has generally supported the efficient marketshypothesis; here, the hypothesis is cast in a less favorable light.II. The dataThe data I consider are superbowl point spreads and winning margins for the 1995-96 and 1996-97seasons. Point spreads are Las Vegas betting lines as reported by the Associated Press; they were gleanedfrom the Pittsburgh Post-Gazette (P-G). Opening spreads are defined as the first available publication ofspreads for upcoming contests. Closing spreads are defined as those published on game day. Differencesin closing and opening spreads are defined as line movements.In the 1996-97 season, on which I concentrated initially, the P-G published opening lines onMonday.3A histogram of line movements observed over the course of this season is illustrated in Figure1a. Line movements were observed for 61 percent of all games played; 52 percent of these movementswere by a mere 0.5 points. Such movements, though subtle, seem important. For example, consider the1The means and standard deviations observed for the 1995-96 and 1996-97 seasons are (-0.9, 12.5) and (-0.43, 13).2The profitable strategies amount to the location of cross-country arbitrage opportunities; they involve findingdiscrepancies in point spreads offered by bookmakers around the country on underdogs of five points or more.Badarinathi and Kochman (1996) found only one of these strategies to be profitable over the 1984 - 1993 seasons:bet on an underdog of five points or more if a two-point discrepancy can be found in favor of the underdog. Theyreport a 56-percent success rate using this strategy.3Over the course of the season, 18 games were listed on Monday as NL (no line). This typically occurred forgames in which there was sufficient initial uncertainty about the status of one or more key players that bookmakers

Page 4 3spread on the Super Bowl, which opened at 13.5 in favor of Green Bay the day after the championshipgames, moved to 14 the following day, and did not move from that point forward. Bookmakers werewilling to risk the possibility of a tie versus the spread in making this adjustment, a risk they did not facegiven the opening spread. So the value of this minor adjustment must have outweighed the risk of a tie,which was in fact realized: Green Bay won by exactly 14 points, an outcome that, according the toAssociated Press, resulted in a decrease in winnings for Nevada bookmakers of approximately $5 millionfrom the previous year. (Source: P-G, February 1, 1997.)In the 1995-96 season, the P-G did not publish point spreads on Monday, so “opening” spreadswere not available from this source until Tuesday at the earliest.4This delay matters: the histogram of linemovements observed for the 1995-96 season illustrated in Figure 1b clearly contrasts with that illustratedin 1a. In the 1995-96 data, line movements were observed for only 51 percent of the total games played,and a χ2test of the null hypothesis that the two histograms were generated by the same underlyingdistribution rejects the null at the six-percent significance level. Initially, I found this difference in data setsdisappointing, because it prevents a clean comparison of the forecasting performance of my procedureacross data sets. However, this difference does enable a rough breakdown of line movements into errors inhouses’forecasts of the forecasts of bettors, and movements in response to new information. Assumingthat the former error is embodied only in the 1996-97 data, it follows that the ten-percentage-pointdifference in line movements observed across data sets is attributable to houses’forecast errors. Thisattribution is of course only an approximation, but it does suggest that houses are quite adept in forecastingbettors’forecasts.Distributions of differences between winning margins and closing spreads observed over the twoseasons are illustrated in Figure 2. These distributions are quite similar. As noted above, the means andvariances computed over the 1996-97 season are -0.43 and 13; corresponding figures for the 1995-96season are -0.9 and 12.5. Moreover, a χ2test of the null hypothesis that the two histograms weregenerated from the same underlying distribution fails to reject the null at virtually any significance level.While these histograms do not indicate obvious profit opportunities, the next section presents a simpleapproach for their discovery.were unwilling to issue a spread. I included data on these games in my sample, but their exclusion yields similarresults.4I considered these data only after completing my analysis of the 1996-97 data; I did this to check the robustnessof my findings for the 1996-97 data.

Page 5 4III. Charting successMy goal in evaluating the efficiency of superbowl betting lines was to determine whether a simplebackward-looking model was capable of outperforming Las Vegas spreads. In my view, the harder I had tosearch for an effective model, and the more complicated was the resulting model, the weaker would be theevidence (if any) I uncovered against efficiency. My search was a short one: the first set of team-specificmodels I considered yielded strong evidence against efficiency. The following subsection providesbackground for my choice of models; the subsequent subsection provides technical details.BackgroundAs an avid participant in recreational office pools (for entertainment only, of course), I have longrelied on past performance to guide my weekly selections.5This has yielded mixed results: every year, itseems that some teams treat me well, while others wipe me out. Looking back at the 1996-97 superbowl seasonsuggested an explanation for this: many teams experienced extended streaks over the course of the season,thus rewarding my tendency to bet for last week’s winners, and against last week’s losers; at the sametime, many others whipsawed over extended periods (e.g., won-lost-won-lost...), thus punishing mytendency.6(Explaining why such patterns coexist is difficult. Extended streaks could reflect adaptiveexpectations on the part of bettors; and whipsawing may be a manifestation of overshooting driven by anaggregate tendency to favor last-week’s winners; but the compatibility of these explanations seemstenuous.) It occurred to me that different backward-looking models seemed appropriate for different teams.It also occurred to me that a formal statistical model had the potential to outperform my eyeball approach.Besides past performance, I have also paid attention to line movements in making my weeklyselections. The pool I participate in revolves around opening spreads, so I have interpreted line movementsas signals of bargains generated by the market. I have found these signals valuable in competing againstopening spreads; in specifying my team-specific models, I decided to investigate whether the signals wereuseful in competing against closing spreads as well.The modelsSince the outcome of a bet against the house can be thought of as a dichotomous random variable(equaling 1 if the bet wins and 0 if it loses), logit or probit models seemed well suited for fitting and5I blame genetics: my father was a dyed-in-the-wool chartist.6Notable teams in the former category were Indianapolis (eight-game losing streak); Green Bay (seven-gamewinning streak, five-game losing streak); and Carolina and Pittsburgh (six-game winning streaks). Notable teams

Page 6 5forecasting in this application. Given Stern’s (1991) results on normality, I chose probit specifications, butlogit specifications yield similar results. For the reasons given above, I estimated separate models for eachteam; the models consisted of a constant and three explanatory variables: own and opponent differences inwinning margins and closing spreads from the previous game, and intraweek line movements. (I includedonly one lagged difference to keep the models simple, and to maximize the length of the forecasting windowafforded by their use.)I employed a dynamic forecasting algorithm in using these models to generate predictedprobabilities of winning. The first set of probabilities I generated were for week eleven of the regularseason; the models used to generate these probabilities were estimated using data observed over theprevious ten weeks.7I then reestimated each model by updating the explanatory variables to include week-eleven observations, and generated a second set of probabilities. I repeated this process for the remainderof the season, including the playoffs and Super Bowl.Before describing the algorithms used to process the resulting set of probabilities, two notes are inorder. The first concerns the choice of the initial ten-week estimation window. Other choices are certainlypossible, and one faces a clear tradeoff in choosing this width: shortening the window yields forecasts forearlier weeks, at the cost of a loss of observations available for estimating the models used to generate theearlier forecasts. The Washington Redskins are responsible for my choice of a ten-week window: I had towait ten weeks before I could estimate their model, because their first eight dependent observationsconsisted of seven wins (speaking of streaks) and one bye week. I could have started forecasting in weekten by ignoring Washington and focusing on the remaining teams (doing so would have resulted in a fiveand two record for my leading algorithm in week ten), but I decided to begin in week eleven so that allteams could be treated symmetrically. The second note concerns the use of the dynamic updating algorithmused for reestimating the forecasting models. Use of this algorithm turned out to provide little value addedover the use of the original models (estimated over the first ten weeks) over the entire forecasting horizon:it generated only one additional win, a result which speaks well for the stability of the models.Use of these team-specific models yielded two predicted probabilities of success for each game:one for each contestant. I considered two strategies for triggering bets as functions of these probabilities.The first I will refer to as conservative: bet on a team if the predicted probability generated by its model isgreater than 0.5, and the probability generated by its opponent is less than 0.5. The second I will refer toin the latter category were New England and San Francisco (nine-week whipsaw streaks); and Denver and Seattle(six-week whipsaw streaks).

Page 7 6as aggressive: bet on a team if the predicted probability generated by its model is greater than theprobability generated by its opponent’s model.In order to assess the marginal value of the information embodied in intraweek line movements, Igenerated a second set of predicted probabilities by dropping line movements as explanatory variables inthe probit models, and repeating the process described above. So I considered a total of four bettingstrategies: conservative and aggressive, with and without incorporating line movements. The performanceof these strategies is discussed below.IV. Beating the houseAs mentioned above, I initially applied my betting strategies to the 1996-97 season, and thenapplied them to the 1995-96 season to examine the robustness of my original findings. Table 1, fashionedafter Zuber et al.’s (1995) Table 2, illustrates the payoffs generated by the four strategies I considered bypresenting the results of a gambling simulation conducted for each strategy over the 1996-97 season. (Tosave space, simulation results obtained for the 1995-96 season are not tabled, but are summarized in thetext.) The simulations involve betting $11 each time a bet is triggered. For each strategy, weekly wins andlosses are reported, along with weekly and cumulative amounts bet, net winnings, and net returns. (Betsplaced on games that resulted in ties are treated as nonbets.)Consider first results obtained by including line movements as explanatory variables. Over the1996-97 season, the conservative strategy had a 65.4-percent success rate, triggering 52 bets which netted$142 in net winnings (a 24.8-percent net rate of return). The aggressive strategy had a 58.4-percentsuccess rate, triggering 113 bets and netting $143 in winnings (an 11.5-percent net rate of return). Similarresults were obtained over the 1995-96 season: the conservative strategy had a 60.1-percent success rate(31 wins, 20 losses) and generated a 16-percent net rate of return, while the aggressive strategy had a 58-percent success rate (62 wins, 45 losses) and generated a 10.6-percent net rate of return. Weekly netreturns exhibited high volatility over the course of the season, but cumulative net returns settled down quitequickly (approaching their ultimate levels within four to five weeks).Consider now the results obtained by excluding line movements as explanatory variables. Thesuccess rate of the conservative strategy fell by five percentage points in the 1996-97 season, and the netrate of return it generated fell to 15.4 percent. The success rate of the aggressive strategy fell by threepercentage points, and its net rate of return fell to 5.5 percent. The exclusion of line movements in the7Typically, this estimation window yielded eight dependent observations by week ten: one observation was lostdue to the use of lagged results as explanatory variables, and another was often lost because most teams enjoyed abye week during this period.

Page 8 71995-96 data set resulted in decreases in success rates of five and four percentage points for theconservative and aggressive strategies, and decreases in net rates of return to 7.2 and 2.3 percent. So inboth data sets, the information content of line movements seems valuable: exclusion of these movements asexplanatory variables is costly.Information concerning the statistical significance of these findings is provided in Table 2.Classical and Bayesian measures of significance are reported. The Classical measures involve tests of thenull hypothesis that the success rates reported above are significantly greater than 50 and 52.38 percent(i.e., the pure-chance and the break-even rates). These tests are conducted using Z statistics (differencesbetween realized wins and wins expected under the null, measured in standard-deviation units computedunder the null); critical values of the Z statistics are obtained using the normal approximation to thebinomial distribution. In the table, Z1 denotes the test statistic computed for the pure-chance rate, and Z2denotes the statistic computed for the break-even rate; the statistics were used to assess the season-specificand overall performance of each betting strategy. The Bayesian measures of significance are posteriorodds ratios in favor of the null hypothesis that the winning percentages generated by each betting strategyare 55 percent, versus alternative hypotheses of 50- and 52.38-percent. The odds ratios were generatedusing the binomial distribution, and were computed using even prior odds.Two features of Table 2 are particularly noteworthy. First, the two-year performances of both theconservative and aggressive strategies, applied to the predicted probabilities generated by the models whichtake intraweek line movements into account, provide sufficient evidence to reject both the pure-chance andbreak-even hypotheses. The conservative strategy generated 65 wins in 103 bets over this period -- a 63.1-percent success rate -- which leads to a rejection of the break-even hypothesis at the 3-percent significancelevel. Moreover, the posterior odds against the break-even rate are 2.8 to 1 in this case. Identical odds areobtained for the aggressive strategy, which generated 128 wins in 220 bets over this period, a 58.2-percentsuccess rate (the break-even null is rejected in this case at the nine-percent significance level). Second, thevalue of considering intraweek line movements is again in evidence in Table 2. Exclusion of thesemovements leads to reductions in success rates over the two-season period of 5 and 4 percentage points forthe conservative and aggressive strategies. As a result, posterior odds against the break-even rate areapproximately cut in half for each strategy, and the null hypotheses that the success rates of these strategiesare equal to the break-even and pure-chance rates cannot be rejected at the ten-percent significance level.

Page 9 8V. If you’re so smart...Wait until next year. Publicizing the performance of this simple, easily adoptable procedure nowaffords a truly challenging future test of market efficiency: if the procedure becomes well known andcontinues to succeed, the efficiency of the superbowl gambling market will be cast further in doubt. In addition,I will have a satisfying answer to the question: If you’re so smart, why aren’t you rich?

Page 10 9ReferencesBadarinathi, R. and L. Kochman (1996), “Football Betting and the Efficient Market Hypothesis,” TheAmerican Economist 40: 52-55.Pankoff, L. (1968), “Market Efficiency and Football Betting,” Journal of Business 41:203-214.Stern, H. (1991), “On the Probability of Winning a Football Game,” The American Statistician 45: 179-183.Tryfos, P., S. Casey, S. Cook, G. Leger, and B. Pylypiak (1984), “The Profitability of Wagering on superbowlGames,” Management Science 30: 123-132.Vergin, R.C. and M. Scriabin (1978), “Winning Strategies for Wagering on National Football LeagueGames,” Management Science 24: 809-818.Zuber, R.A., J.M. Gandar, and B.D. Bowers (1985), “Beating the Spread: Testing the Efficiency of theGambling Market for National Football League Games,” Journal of Political Economy 93: 800-806.

Economists explore superbowl superbowl betting markets as prediction tools

2005-01-13T08:22:00.000-08:00

Economists explore betting markets as prediction tools During a highly charged week in Washington, D.C., last July, a research project sponsored by the Department of Defense sparked a furious outcry from prominent politicians and was then hastily axed by the Pentagon. The project, known as the Policy Analysis Market (nfl), was to have been a market in which participants could betting on Middle East events, say, the gross domestic product of Syria in coming years or the political instability of Iran. The project's developers, however, had made a public relations faux pas. On their Web site, they invited participants to suggest additional topics for markets and speculated that those suggestions might include terrorist attacks and political assassinations. Critics labeled the project a "terrorism futures market" and denounced it as morally repugnant and grotesque. Within the week, , the official heading the office sponsoring the project, had announced his resignation, and the department had cut off funds not just for the nfl project, but also for all of its research into markets as prediction tools. On the face of it, having people betting on disasters sounds downright appalling. However, the core idea of the project rests on solid scientific foundations. Studies over a 20-year period have amassed a wealth of evidence that under the right circumstances, carefully designed markets can be among the most effective prediction tools. Economists have found, for instance, that orange juice futures predict the weather in Florida betting than conventional weather forecasts do. And on the day the space shuttle Challenger exploded in 1986, Wall Street traders correctly guessed within minutes of first hearing the news which of the four main suppliers had provided the faulty part, whereas a blue-ribbon panel of experts took months to come to the same conclusion. Markets, such as the New York Stock Exchange, distill the collective wisdom of millions of individuals into a single statistic, and they do so with amazing efficiency. In contrast to other information-gathering institutions, such as committees and polls, markets require participants to put hard dollars behind their opinions. What's more, markets reward the people who are right, not those who lie convincingly or are loudest or most aggressive or who have the longest string of titles after their name. "In a market environment, people who don't know anything will lose on average and will take the hint and go away," says Robin Hanson, an economist at George Mason University in Fairfax, Va. and a consultant for Net Exchange, the San Diego company that was to have run nfl. Some markets have been engineered for the express purpose of providing forecasts on matters beyond the price of commodities. The Hollywood Stock Exchange, a Web-based virtual market that makes predictions about Hollywood stars and movies, correctly guessed 35 of last year's 40 Oscar nominees in the main categories. For more than a decade, an academic project called the Iowa Electronic Markets has predicted the outcomes of presidential races bettingter than 75 percent of the polls do. And in a recent trial, a market specially designed to predict sales of Hewlett-Packard products performed bettingter than the company's internal sales forecasts did. Some economists hold that such markets could be used to assess potential consequences of policy decisions by a government, corporation, or other institution. "Different people know different things about the consequences of social policies, and to make good decisions, we have to pull all that information together," Hanson says. "The market technology has enormous potential to help us address the most important questions we think about." Market wind tunnels To get a sense of how future-predicting markets operate, consider the Iowa Electronic Markets, which is based at the University of Iowa in Iowa City. Suppose two candidates, A and B, are facing off. Anyone can enter the market by putting some money into the pool; for each dollar an investor puts in, he or she receives two contracts, one of which will pay $1 if candidate A wins, and one of which will pay $1 if candidate B wins. Once contracts are in circulation, participants can buy and sell them to each other at a trading Web site. If the going rate for a candidate A contract is 53 cents, for instance, then the market as a whole thinks candidate A has a 53 percent chance of winning. Once the election results come out, participants cash in their winning contracts from the pool—the more contracts of the winner they have, the more money they make. In addition to these winner-take-all markets, the Iowa project runs markets in which participants can betting on what share of the vote each candidate will receive. The research that led to future-predicting markets stems from the 1960s and 1970s, when now of George Mason University and the California Institute of Technology in Pasadena, respectively, began using laboratory experiments to study different market designs. In the early 1980s, , now of Yale University, tested how well markets aggregate information by designing a set of virtual markets in which they carefully controlled what information each trader had. In one experiment, Plott and Sunder permitted about a dozen study participants to trade a security, telling them only that it was worth one of three possible amounts—say, $1, $3, or $8—depending on which number was picked by chance. Plott and Sunder then gave two of the participants inside information by telling them which amount had been selected. Traders couldn't communicate with each other; they could only buy and sell on the market. "The question was, Would the market as a whole learn what the informed people knew?" Plott says. "It turned out that it would happen lightning fast and very accurately. Everyone would watch the movements of the market price, and within seconds, everyone was acting as if they were insiders." In another experiment, gave the inside traders less-complete information. For instance, if the outcome of the random pick were $3, they would tell some traders that it was not $1, and others that it was not $8. In these cases, the market sometimes failed to figure out the true value of the security. However, if Plott and Sunder created separate securities for each of the three possible outcomes of the random pick instead of using one security worth three possible amounts, the market in which some traders had incomplete tips succeeded in aggregating the information. The studies established that, at least in these simple cases, markets indeed can pull together strands of information and that different setups affect how well they do so. This type of experiment gave researchers a "wind tunnel" in which to test different market designs, says John Ledyard, a Caltech economist who chairs the board of Net Exchange. "With experiments, we're starting to zero in on what really works," he says. Market logic Armed with Plott and Sunder's insights, researchers in the late 1980s started designing real-world markets whose primary purpose was to aggregate information and predict the future. The Iowa Electronic Markets provided evidence that so-called idea-futures markets could provide a valuable service. Why the Iowa markets worked so well was at first a mystery. "We know our traders are biased and mistake-prone, but somehow the markets manage to work," says Thomas Rietz, one of the University of Iowa professors who direct the market. Market participants, recruited at a Web site and the University of Iowa's business school, are far from a representative sample of voters. By an overwhelming margin, they are young, well-educated, high-income, Republican males. What's more, they tend to be unreasonably optimistic about their preferred candidate's chances, and they trade accordingly. On closer inspection, however, the Iowa team has found that traders fall into two categories. Most participants hold on to their shares, trading rarely and then tending to accept someone else's price. About 15 percent of traders, however, trade frequently and post offers rather than accept other people's offers. These "marginal" traders are less biased than the other traders are, the researchers report. "The people who drive the markets—and therefore the predictions—are trading with their heads, not their hearts," says another member of the Iowa team. The other 85 percent of traders do perform an important function. To put it bluntly, they're the suckers willing to trade with the bettingter-informed participants. "You need some amount of unintelligent money in the pool," says an economist at Stanford University. "That's the honey that draws in intelligent traders." The Iowa markets typically have hundreds or even thousands of traders. Economists generally expect these so-called thick markets to form bettingter predictions than do thin markets, which have fewer traders. Their reasoning goes like this: The more traders there are, the more information is potentially available, and the more opportunities there are for trading. However, of Hewlett-Packard Laboratories have demonstrated that under the right circumstances, even thin markets can make accurate predictions. In their experiments, markets consisting of about a dozen Hewlett-Packard employees predicted future sales bettingter than the company's usual methods of market analysis did. made up for the small number of participants by the care with which they selected them. They chose people across a wide range of the company's departments, to maximize the different sources of information available to the market. They also included some uninformed speculators, both to provide liquidity to the market and to provide watchful eyes against illogical market behavior. To illustrate that idea, consider the example of an election market with candidates A and B. Perhaps one informed trader believes candidate A has a 90 percent chance of winning, and so bids shares of A up to 90 cents. Meanwhile, another trader pushes B's shares up to 90 cents. This set of prices is illogical, because if one candidate's chances of winning are 90 percent, then the other's chances should be 10 percent. If A and B are both selling for 90 cents, speculators have a golden opportunity: They can buy a packet consisting of one share each of A and B from the pool for $1 and immediately sell the shares on the market for $1.80. Speculators will pounce and, in the process of trading, will push the prices down to a more reasonable level. "It's useful to have people around noticing inconsistencies and making money by making the market consistent," Plott says. Bubble-proof markets Of course, one potential objection to idea markets is that markets have been known to make bad predictions, some of them whoppers. During the dot-com boom, for instance, the stock market drastically overestimated the immediate promise of the information-technology industry. Many economists view the Internet boom as a bubble, in which speculators buy stock not because they think it will be valuable in the long run but because they expect to sell it quickly for a profit. "Maybe I buy Amazon stock at $100 because I think you'll buy it next week for $110, and then you buy it from me because you think you'll be able to sell it for $120, and so on," Wolfers says. "Eventually, the whole thing collapses." Idea futures may be less prone to bubbles because they usually terminate on a specified date. "If the security is about whether the Raiders will win the , we all know it will be resolved on a particular date," Wolfers says. "No one wants to be left holding the baby on that date." Another potential objection to idea futures markets is that some participants might try to affect prices for reasons other than profit, such as to promote a particular candidate in an election market. However, the Iowa Electronic Markets suggest that this won't be a big problem. Attempts to manipulate those markets have failed miserably, Rietz says. For instance, in the 2000 presidential market, several people opened accounts on the same day, and each invested $500—the maximum allowed—in Patrick Buchanan shares. Buchanan prices briefly spiked, but well-informed traders then seized the opportunity to profit off the manipulative traders and by the end of the day, the effect of the investments had virtually vanished. In an experiment in the same market, economists Koleman Strumpf of the University of North Carolina at Chapel Hill and Timothy Groseclose of Stanford University made random purchases. "The market would typically undo what we had done in a few hours," Strumpf says. "People weren't being fooled by our crazy investments." The policy-analysis market Many questions remain about idea markets. Hanson and Ledyard are tackling two of them: What types of predictions can a market make successfully? and Which market designs work best? Hanson and Ledyard have come up with a new structure that, they say, performed bettingter in studies with volunteer traders than previous designs did at squeezing the most information out of a small number of participants. The design incorporates two new elements. With the first element, called conditional bidding, participants can betting on outcomes that emerge from complicated combinations of circumstances, such as, "What are bets chances of being reelected if Howard Dean loses the Democratic primary?" The other new element, called the market maker, provides an automated bidder that is always available to trade with anyone who comes to the market. That enables the market to remain liquid even when there are few participants. The tricky part, Hanson says, was ensuring that the automated market maker didn't lose tremendous amounts of money. The next step would have been to test their market structure in a real-world application. Unfortunately, Hanson and Ledyard didn't do a good job of predicting the future themselves. Their proposed test bed was the ill-fated Policy Analysis Market. Despite opponents' claims, nfl was never intended to predict terrorist attacks, Hanson says. For that role, it probably would be self-defeating because terrorists themselves could monitor such a market and switch their tactics accordingly. Rather, Hanson says, the original focus was to be on the social, economic, and political future of Middle Eastern countries. Hanson, Ledyard, and the people at Net Exchange were aware that the project might spark controversy. Even so, they didn't expect what actually happened: Senators held a press conference denouncing the project, and the Defense Department, the very next day, summarily canceled all funding. "The science was irrelevant in the flap in Washington," Ledyard says. The uproar turned all research on idea markets into political poison. The Defense Department canceled not only nfl but also projects using markets to predict how large a severe acute respiratory syndrome outbreak is likely to be next year and how soon engineers will reach certain technological milestones in building next-generation vehicles. Researchers in the field are philosophical about the abrupt reversal of their fortunes. It is probable, they say, that private funding will pick up the slack, because many corporations are interested in the potential of idea markets. Perhaps the next market should focus on the question, "Do idea futures have a strong future?" According to the insiders, at least, the answer appears to be a resounding yes.

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Super Bowl Betting Lines

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Super Bowl Betting Lines

The two most popular ways of expressing odds in American Super Bowl are point
spreads and money lines. We have previously discussed point spreads and in
this article, we will discuss Super Bowl betting money lines, how to read them,
and use an NFL Super Bowl game as an example to illustrate a money line bet.

The easiest way to understand a money line, is to think of it as an indication
of the amount you need to bet to win $100 (or 100 of whatever currency you
are betting in) or the amount you will win if you bet $100. Money lines are
expressed with a negative number, say -110, or a positive number, say +110.
A negative money line number indicates what you must wager to win $100, and
a positive money line number indicates what you will win if you wager $100.

If you bet $110 on a team with a money line of -110, and they win, you will
win $100 (plus return of your original $110 bet).

If you bet $100 on a team with a money line of +110, and they win, you will
win $110 (plus return of the original $100 bet). Unlike point spread bets,
the teams do not have to win by any particular number of points.

Now, you do not have to bet an amount equal to the money line number. You
can bet more or less and the payoff simply becomes a proportional amount. For
example, if you bet $11 on a money line of -110, and your bet wins, you will
win $10. If you bet $50 on a money line of +110, and win, you will win $55.

A Super Bowl Money Line Bet

Money line bets are common in many sports, particularly in NFL Super Bowl betting.
Here, we will look at some examples of money line bets using NFL Super Bowl games.

Example 1

The Oakland Raiders are playing the New York Jets. You want to place a bet
on the Raiders who are expected to win the game. The money line lists the Raiders
at -110 and the Jets at +110. You place $110 on the Raiders. If the Raiders
win, you win $100 (plus your original $110 bet). If you had bet $100 on the
Jets, and they had won, you would win $110 (plus your original $100 bet).

Example 2

In the same example, you place a $55 bet on the Raiders. If the Raiders win,
you win $50 (plus your original $55 bet). If you had bet $50 on the Jets, and
they had won, you would win $55 (plus your original $50 bet).

Example 3

We'll use the same example but change the money line. The money line now lists
the Raiders at -165 and the Jets at +145. You place $165 on the Raiders. If
the Raiders win, you win $100 (plus your original $165 bet). If you had bet
$100 on the Jets, and they had won, you would win $145 (plus your original
$100 bet).

Money lines are not nearly as complicated as they first appear. Place a few
bets and they will become second nature.

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bet on the superbowl