Proposition BetsGeneration gap might have been an adequate way to describe the growing gulf between youth and their parents when it became popular in the late 1960s, but today the term generation chasm might be more to the point.
That is especially true in the world of online sports wagering, in which a vast army of younger players is forcing significant changes in betting menus. In the constantly evolving duel between bookmakers and bettors, sportsbooks are wrestling with two thorny issues: one is an ongoing challenge that comes with the territory; the other is a product of the singular whimsy of a new generation of bettors.
As online gaming experiences the explosive growth of recent years, the influx of new players reflects a strong bias away from traditional betting patterns, and the infusion of computer-savvy customers is mainly responsible.
When the industry started, about a decade ago, the combined handle of the two dozen or so books operating out of the Caribbean and Central America was estimated at less than $300 million. Last year, according to Christiansen Capital Advisors, a US-based gambling industry consulting and research firm, offshore sportsbook revenue was estimated at $3.44 billion. Add in casino games and poker, and the figure exceeds $10 billion.
With growth came competition -- lots of it. The Internet democratized gambling for the player, but also gave anyone with the ability to construct a website and send out spam the opportunity to troll for players. That set off a wave of competition so ruthless and counterproductive that it seriously impacted profitability and created industry disorder that still exists today.
Although the numbers vary wildly, the cost of obtaining new business back in the mid-'90s ranged from $50 to $100 per customer. And in those days, the average post-up amount was $300 to $500, with minimum bets for the shops that took action over toll-free phones at $25 to $50.
When the Internet arrived as a betting medium, minimum bets dropped to as low as $1, and average post-up funds dropped to around the $50 to $200 per player range. But the marketing cost of bringing in new business was escalating to $300 per player and up. Obviously there was an untenable dichotomy between revenue expectations and the cost of obtaining it, but competition forced the books into a price war against their better instincts. Giving away the shop to get fresh blood eroded profitability but was a standard practice for many books.
Common sense finally kicked in and many, but not all, of the most successful books tried to rein in their new business bonuses and incentives.
But then, just a few years ago, a new trend began emerging. "At the beginning, it was almost imperceptible," remembers Dutch Magnum, oddsmaker and gaming consultant to Intertops.com in Antigua. "We do not have a call center and because our business is 100 percent online," he noted, “early on we started noticing a change in betting habits and preferences.
"We have always posted unusual bets, long before other shops began copying the technique. Originally it was a way to get publicity for Intertops. That's how many of our customers first heard of us, through some quirky wager for which we posted odds.
"But a few years ago, we noticed that the action for these props was increasing dramatically. Today, we need to feed our clients’ cravings for new and different wagers. So we work at meeting these needs."
Most of the sportsbooks declined to reveal specifics on the amount of action they take on these creative props. But Bodog.com CEO Calvin Ayre cited the handle the book took on the outcome of the Michael Jackson trial last summer. He said the Bodog customers placed "more than $50,000 in wagers on the Michael Jackson verdict," with 80 percent of the bets predicting an acquittal.
"The significant increase of pop culture wagers placed at Bodog.com reflects the popularity of wagering on the most talked about entertainment events," Ayre stated.
As we went to press, Intertop.com’s Magnum had just introduced a unique prop keyed to the success of the University of Texas football and basketball teams. Dubbed the Texas Two-Step, the wager is based on a sequence of events that had never been achieved: the football and basketball teams from the same school winning the BCS (Bowl Championship Series) in football, and the NCAA Men's Basketball Tournament in baskets. The book offered odds of 15-1 that the school would win both crowns; the takeback was posted at 1-20.
Immediately after the prop was announced, Magnum said action on it was "quite brisk." He noted that it was preceded by other quirky bets: one that offered odds on whether aliens would first land on earth or whether earthlings would first land on Mars. That wager piggybacked on hype of the summer movie blockbuster "War of the Worlds." Another prop bet posted odds on whether volatile Philadelphia Eagles wide receiver Terrell Owens would report to the team's training camp, or stay out.
Pegging a creative prop bet to topical events -- whether it is sports, entertainment, national or world news -- is now a routine ploy by several leading shops. And they are generally considered revenue generators as much as publicity vehicles.
This trend also landed on marketing radar screens when several books began noticing that Super Bowl props were attracting much more action than they used to. And so it seemed obvious to ratchet up this part of the business for more than the two weeks of Super Bowl activity.
Today, the sportsbooks are aggressively seeking new ways to increase revenue above and beyond the crush of business that comes every football season. Their oddsmakers are paying attention to celebrity news as well as the front pages of newspapers and lead stories on the Internet and television news shows.
Sportsbook.com offers odds on the 2008 US presidential elections with Hillary Clinton the frontrunner at 7-2, just ahead of former New York City mayor Rudolph Giuliani at 10-1. Arnold Schwarzenegger was pegged at 250-1 and conservative TV news personality Bill O'Reilly was 750-1.
BetCris.com caters to a hardcore sports-betting clientele, and the book came up with a prop made to order. When New England linebacker Tedy Bruschi returned to action after suffering a stroke 8½ months earlier, the Costa Rica shop posted odds on when Bruschi would make his first interception, starting with the first game of his comeback.
The book's CEO Mickey Richardson also took advantage of headlines surrounding one of the actors in the hit HBO series The Sopranos. Robert Iler, who plays Anthony Soprano Jr., almost got busted in New York for being in an illegal poker room on the city's Upper East Side. His ID was run by police who then let him go.
Seizing the day, Richardson offered the young Sopranos star an exclusive account of $3K to play online with CRIS, and thus stay out of trouble with the law. "The Sopranos is one of my favorite shows and I'd hate to see them lose Anthony Soprano Jr. because of something like this," said Richardson.
Late last summer, when the price of gasoline spiked causing consumer rage and sticker shock at prices at the gas pump, Bodog jumped into the fray. It created a wager on whether the price of gasoline would reach a national average of $2.70 by January 1, 2006.
Bodog CEO Calvin Ayre noted that betting patterns are "great indicators of the public mindset." Based on the action the prop bet generated, Ayre said, "Without doubt, consumers expect fuel costs to rise substantially in the coming months." Earlier, Bodog claimed it received a "record amount of betting action on the price per barrel of oil."
But the emphasis for most of these wagers is lighthearted rather than serious. Earlier this year, amid speculation regarding the future of Hollywood's flavor of the month couple, Tom Cruise and Katie Holmes, Bodog suggested the Tinseltown romantics would break up before the end of 2005. The odds opened at -125 in favor of the two splitting.
Not every book looking to get headlines and/or business is worthy of coverage. One shop, which was torched on Internet websites as a non-payer amid other criticisms, sought publicity by announcing what it called the single largest available payout in the history of sports betting -- a $5 million parlay.
Bettors were told the payoff on a $25, 22-team parlay, sides or totals, would be $5 million. Or, a $5 wager would return $1 million.
It is most unlikely that anyone would ever hit the parlay given that the true odds are over two million to one. But more unsettling than the book's unconscionable usury are questions about its ability or intentions to pay off should lightning strike. For obvious reasons the shop will go unnamed.
Where is it all leading? At the rate the sportsbooks are conjuring up exotic new wagers, we wouldn't be surprised to see a shop posting odds on, “How many angels can dance on the head of a pin?” or, “When will the first flood caused by global warming happen?”