Back in March, before a worldwide health crisis upended his industry, the sports bettor widely known as Spanky traveled to Boston for the MIT Sloan Sports Analytics Conference. After attending panels and conversing with speakers each day, hed head to the same cigar bar every night, blissfully unaware of the ramifications his unwind time would soon yield.
The consequences revealed themselves on March 12, as the leagues that hosted the games that Spanky bet on started to shut down at the exact same time his body didand for the same reason. Pain shot through his stomach, sides and lower back. His shoulders and neck ached without end. He lost his sense of smell and taste, suffered from headaches, fought full-body cramps and registered a high fever. I didnt know if I was going to make it, says Spanky (full name: Gadoon Kyrollos). He sent text messages to his doctor that grew increasingly urgent, asking whether he needed to call an ambulanceand this personal hell lasted for more than two weeks.
Erick W. Rasco/Sports Illustrated; Frank Taddeo (ticket)
Spanky was eventually diagnosed with COVID-19, the now infamous and ubiquitous respiratory virus. Everyone who hung out in that cigar bar got it. Spanky did recover, but his industry, like so many other industries, did not. In the weeks after the conference, Spanky would put most of his sizable operation on holdwith a staff that helped him find betting opportunities, write computer programs to analyze markets and make wagers, the total well into seven figures. He would watch the sportsbooks in Las Vegas, where gamblers can place bets and watch games in person, close for the first time since they opened.
He would see other, less sophisticated gamblers pivot to wagering on the weather (the over-under on the high temperature), the rare and obscure sports leagues that still held games (Belarusian soccer, anyone?), the various stock indexes (an over-under on the S&P 500), politicians (who would win the Democratic nomination), documentaries like Tiger King (which actors would play which characters in the movie version) and television shows like Top Chef (where contestants would pack their knives and go on any given week). His office would sit empty. His four children would attend virtual schools. He would laugh at the experts selling their favorite Belarusian soccer picks. And, with an eye to the future, he would spend his postrecovery days writing code, examining the market for inefficiencies, preparing for when the games return and the action resumes at something much closer to full volume.
Spanky knew that sports gambling was a multibillion-dollar industry growing at an accelerated pace; he saw state after state consider legalization and watched as legal betting moved beyond Las Vegas and into every corner of the country, from New Jersey to Arkansas to Oregon. Books were opening in casinos, hiring employees, adding payroll, poised to capitalize on a surge in cashat least until COVID-19 hit sports gamblers with the worst kind of beat. To understand what happened, start with characters involved, from the people who make the odds to those who run betting websites to the bettors themselves. All have spent the past two months considering the same question as Spanky: What does sports betting look like without sports?
* * *
Jay Kornegay stood there, at the Westgate Las Vegas Resort & Casino, where he works as the executive vice president in charge of the sportsbook. He stood there, looking up at the 240-foot-wide video screen that normally plays sports highlights 24/7 and watched as all the lights went out for the first time. His place of business had never actually closed before; the doors there didnt even lock. And he wondered: Just how had he ended up there, a casino executive inside a casino that had gone dark and silent?
Nobody saw the widespread shutdown coming. Not the total stop for major sports. Not the hiatus that lasted weeks, then stretched into months. Certainly not how dramatically the sports-gambling world would change overnight for people like Kornegay. Every year, his same group of friends gathers for the Mountain West basketball tournament, this March included. He had seen some reports about the novel coronavirus and its spread through Asia, but thought little of the future impact, at least until reports of an infected guest at the Mirage, the same hotel where his friends stayed on their trip.
Belarusian soccer is one of the few professional sports still going.
Natalia Fedosenko/TASS/Getty Images
The next week, starting on Monday, March 9, another group of friends flew in for the Pac-12 tournament. But this time, as panic spread along with the virus, Kornegay turned down their offer to sit courtside. What happened next remains a blur: Officials canceled that tournament, all major sports leagues shut down and his staff of oddsmakers was forced to scramble for offerings in places like Australian rules football, Russian hockey playoffs, minor league soccer and professional table tenniswhile many of those leagues halted their own schedules as soon as or even before his odds went up. After a little less than a week, we just shut down our book, he says. It wasnt worth it; we were scrambling for crumbs. When Nevada ordered all casinos to close on March 17, Westgate also shuttered its mobile betting app.
The shutdown happened at the worst possible time for sports gamblers and the various entities that take their money. Most estimates, like those from the American Gaming Association, place the amount wagered on the NCAA tournament in the neighborhood of $8.5 billion, accounting for a larger handle than the Super Bowl. And: Since sports betting was legalized in more states this year, with added books in casinos and apps where consumers could wager on sports like college basketball, many believed the industry could have collected its highest-ever windfall, with states taking in a record in corresponding tax revenue.
Instead, in the weeks that followed, the casinos and their books remained closed. Kornegay sometimes came in for work anyway. He knew there were other people physically inside the building, whether managers or engineers or executives. Its just that, in a place that was once always packedoverflowing day and night for years on end with revelers drinking and smoking and spending money and losing money, the space brightly lit even at 4 a.m.Kornegay never saw another person. Every room, every floor, every parking garage he walked through was empty. Everything was different.
* * *
There is a professional gambler who lives in Las Vegas and gambles on sports and plays in high stakes fantasy sports leagues and says things like I could never be a normal person. Well call him Uncle Tony, trading anonymity for candor. His life these past two monthsthe bets he made before the shutdown, what he pivoted into and the madness he took note of but left aloneserve as an approximate for sports bettors everywhere this spring.
The canceled slips might hurt the most. Uncle Tony had placed NCAA tournament champion futures wagers on both Dayton (at 35 to 1) and Baylor (15 to 1) before both teams emerged as front-runners. He often did well in March, winning thousands of dollars, sometimes even six figures, betting on games throughout the tourney, increasing the amount he wagered while on hot streaks. A couple of years back, he correctly picked 25 winners in 28 plays, netting his largest March bounty ever, more than $100,000 in a matter of weeks, just like that. This year: zero bets, zero winners. All the air came out of me, he says. It was like a flat tire.
Headlines about the industry were salaciousbettors could shift to simulated contests, meaning approximations of games based on probabilities and rankings rather than ones featuring actual humans, or video game tournaments, or over-under wagers on the high temperature in Las Vegas on a Wednesday. But the idea that sports gamblers had simply shifted into other, wacky bets was misleading, too. The unusual wagers were being offered by offshore sites outside of federal and state-by-state regulations designed to ensure fair markets. And the action that was available in the U.S. for the books that had stayed open (all online) was limited in both what could be offered (leagues that met the regulatory standard) and the amount of money on the line (fractions of normal amounts in play).
Rather than shift, sports betting stalled, especially with the professional set. They dont resemble the caricatures portrayed in movies; shadowy types craving the big score, oblivious to the risk, wagering the family car when they run out of cash (like the movie that Uncle Tony hated, Uncut Gems, which featured those stereotypes on steroids). Real sports bettors like him and Spanky are steeped in methodology, even computer science, and they crave what they call a positive expectation. In Belarusian soccer, there is not enough information and thus no positive expectation and thus no reason to flip a coin against the house and see who wins. Gamblers win when they dont play.
During the shutdown, Uncle Tony has dabbled with some bets on horseracing at tracks that remained open or have reopened, but hes spent more time on the book he hopes to write, an autobiography of a pro gambler, rather than with any bookie. One of his friends claimed to have some insight on lower-tier soccer being played in Mexico. But when Uncle Tony asked for his friends picks that week, five of the six selections lost. Now, he could have had a bad week, Uncle Tony says, but thats why theres not much action.
The NFL draft did create something closer to a sense of normalcy, for the brief three days that the event took place. Bettors could wager on how many running backs would go in Round 1 (one, it turns out), or who would be the second quarterback selected (Tua Tagovailoa, to the Dolphins at Pick 5). But the overall take was described by several people in the industry as not in the same universe as a normal year, with revenue failing to cover basic operational expenses, like the salaries of employees who run websites, set odds, run the books or work in them. So, yes, players could bet on chess, checkers and TV shows like Ozark (who would die and when). But those were novelty bets, not serious ones, catering more to degenerate gamblers or adrenaline junkies looking for a rush rather than real pros.
* * *
Ray Marino is laughing on the phone from Costa Rica. Hes the head trader for live U.S. wagering at the sports betting websitebookmaker.eu, and, as he details the turn his industry has taken, hes watching actual human beings wager on a simulation of a football game thats not being played. Its insane, he says from his home office, his setup for the last 45 days. The blinking screens in front of him are proof that while sports betting may have stalled, it has neverand perhaps will nevertruly stop.
Most days, in most years, Marino would set up in his tropical office around 7:30 a.m. and stay for as long as the heavy action lasts. His crew would deal live U.S. sports, the typical stuff, baseball and football and basketball, depending on the season. In recent days, hes considered placing odds on bitcoin, while pivoting to others areasesports, computerized simulations done by third parties and stock market exchangeshe never expected to grow like they have in 2020. Were not trying to make any profit now, Marino says. But the action thats going on is mind-blowing. The average total bets on a simulated football game in April rose near or surpassed the average typical take for an early-season Major League Baseball contest, which Marino estimates at $150,000.
In one of Wednesday's Madden simulations on Twitch, the Lions +6 was an easy winner, and a 56-yard pass interference penalty as time expired made Detroit money-line bettors (+170) happy as well.
I have no clue how to trade this stuff, Marino says, adding that some staff members are studying up on obscure sports leagues, like pro table tennis, while others scrutinize the early action, then adjust the lines based on what bets are coming in. The new process has forced some unexpected tweaks. Like how late-game clock management is worse in computer simulations of games than real ones. Or how the Dolphins own the worst collective ratings for his simulations but tend to pull off more upsets than their lowly ranked counterparts. In fact, as Marino laughed over the phone, Miami took a 7-0 lead over New England in a simulation on his site, after the line had closed at +14.
Marino says he isnt worried about nefarious activity in these simulations, which are run by a third party that offers them for football, basketball and hockey. Its harder to trade live for them, he says, because they move much more quickly, with only a five-minute break at the half. He worries more about the perception that these games will be fixed.
Overall, Marino estimates that the revenue his company collects is about 10% to 15% of what they were taking in before the major sports shut down. This is never going to replace real sports, but its something we can do for now, to give people their fix, he says. Its sick! Were talking about the strengths of virtual teams right now! But this is the current landscape. Were throwing s--- at the wall and hoping something sticks.
As long as we dont get killed, he says, Ill consider it a success.
* * *
Everyone in the gambling industry realizes that theyre not alone, that COVID-19 shut down way more than just the sports that people wager on, that while top bettors are built to withstand six-figure downswings, most sportsbook employees and workers at the betting sites have lost their jobs. Many immersed in the industry, like Joe Asher, CEO of one of the worlds largest bookmakers in William Hill, live in Las Vegas, a desert oasis built on tourists, conventions and casino revenue. Until theres a widespread vaccine available, Asher says, its hard to even consider when the Strip might begin to reopen, let alone recover. Its going to be a tough 2020, for sure, he says. But this is bigger than our industry.
William Hill remains openonline, anywaywith offerings stretching from sumo wrestling in Japan to baseball in Nicaragua to those now famous footballers in Belarus. Theyre losing money, Asher says, but thats balanced by staying in the market, being in touch with customers and giving them welcomed distractions from the chaos of the larger world. Look, we really have nothing to complain about, Asher says. The real people on the front lines of this are working in hospitals. Were all in awe of their courage, and we should be embarrassed they dont have the proper equipment. Im not feeling sorry for myself at all.
Asher felt more for the more than 600 workers he had to furlough. His company created a charitable organization for those workers, the William Hill Foundation, with the money raised being funneled directly to those impacted. Asher donated all his salary this year to the fund.
Hes not alone in considering the impact on sports gambling as less important than the toll this health crisis has exacted on the world. Professional sports bettor Rufus Peabody was concerned about the rapid changes in his industry, all the states legalizing sports betting, the various legislative bodies involvedand the public health crisis has only reinforced his desire to help shape the industry when it returns. That impact will be bigger than just wagers, too.
Peabody had started to help form an American Bettors Coalition to give people like himself a voice in all the changes, combatting, he says, blatant and unethical behavior by operators, especially in states where legislators knew little about sports gambling. In a more ideal world, bettors, rather than lobbyists, would educate new operators. Having the interests of bettors adequately represented will be good for the ecosystem long term, he says.
Peabody had to pause that pursuit when sports ended and the world changed and he was diagnosed as COVID-19 positive. His symptoms werent as bad as Spankyshe experienced a headache behind his eyes, a minor fever and some unusual shifts in his sense of taste, like the good bottle of wine that he mistook for rubbing alcoholbut he likely passed the disease at the cigar bar in Boston.
Like Spanky, Peabody pretty much stopped betting, save for one Outlaw Tour golf tournament. He built a spreadsheet, scraping minitour data back to 2015, creating power rankings. He bet $13,000 and lost $5K. So while hes down roughly $3 million to $5 million in volume this spring due to the PGA Tour stoppage, its pretty easy, he says, not to lose more than he would otherwise. Im trying to focus on things that give me purpose, he says, like the future of his industry.
* * *
Captain Jack Andrews saw the disruption coming back in February, at a ski trip in California for fellow sports bettors where no one actually skis. Most of their conversations centered on the novel coronavirus and how quickly and far it might spread. People were saying how bad it was going to be, that it could be crippling, he says. Then, it was like someone just turned off the faucet.
Like his fellow pros, Andrews pivoted away from most of his bets. He had wanted to film educational videos about sports gambling for years and now, suddenly, he had the time to try a new pursuit. He signed up for the webcast option on Zoom and started working on his editing skills, filming videoslike one with Spanky and Peabodyand dispensing them on YouTube.
This pivot allowed Captain Jack to not only look toward the future of his industry but to influence it. Hes not trying, at this point, to make money off his segments. He is looking to help stabilize the market, introduce new bettors to the industry and make sure more casual ones continue to wager on the same events as he does. They become a sustainable part of the economy, Captain Jack says. I need people who are putting money in the market, so that I can take that money out when I win bets.
While that happens, Captain Jack has also spent time fine-tuning his models, like his fellow pros. He has studied which NFL teams might be most impacted by a shorter or nonexistent offseason program, like those with new quarterbacks or offensive coordinators or changes in their schemes. For every project that helps to illuminate his future there are several others that lead nowhere. But Captain Jack is pointed forward, to when sports return, to what the market might look like and how he might best exploit it. Theres a secret sauce to how sports betting works, he says. Its not guys in a back office setting a line and then the world betting into it with half on one side and half on the other. What really happens is theres a line put out there, and the sharp bettors bet into it, and the line moves based on their action. If, as he believes, the pros have sharpened their respective approaches, then the market should also be sharper and thus more efficient when games come back.
Theyre all grappling with the same uncertain future. Captain Jack believes that many of the new sports books will fail without customers. He wonders if states in need of revenue will be more likely to embrace legalization.
Kornegay, who runs the Westgate sports book, says theres no playbook to reopen a casino. It will have to be done in phases. How far apart can people sit? How many gamblers can occupy any one table? Its hard to put too much stock into any scenario, he says, because two days later everything changes again.
Marino, the trader offering bets on simulated games in Costa Rica, wonders how he might handle all the action if so many sportsbaseball, basketball and footballall return at the same time. He worries about the more responsible bettors, too, many of whom will have lost much of their discretionary income. Perhaps their $200 bets will become $50 ones. Or maybe theyll stop betting entirely for now. The percentage of professional players to non-pros will go up for sure, he says.
Spanky and Peabody, both now recovered from the virus, plan to jump back in like Captain Jack once the real action resumes. What we all want is for sports betting in the U.S. to be successful and sustainable long-term, Peabody says. That looks less like the stereotype, the degenerate gambler in the smoky room, and less like the current landscape, with wacky bets and furloughed workers. It looks more like what sports betting is poised to become: a widespread, heavily regulated, multibillion-dollar industry. At least once sports return.
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The World of Sports Betting in a World Without Sports - Sports Illustrated
