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LOWERING THE VIGORISH 09/30/03 - Wild Bill
The Internet has been a revolutionary technology in terms of offering better products and cheaper prices. So why has it had just a minor influence on sports betting?
A few operations have strongly embraced the Internet and have lowered their prices as a result. Those include Pinnacle and Canbet, as well as the recent moves of Hollywood and PanAm.
However, in most of the Internet betting world, $11 to win $10 is still the rule rather than the exception. Why haven't more books embraced nudging their customers to the lower cost world of Internet wagering by lowering their vigorish?
If there ever was a particular sport that would make sense for lowered vigorish it would be pro football. After all, the NFL has the most liquidity and highest betting interest.
Simply put, one can find somebody willing to back any team as long as the price is right. The sheer volume of action should mean that NFL ‘sides’ - more than any other betting proposition - provide sports books close to balanced action where there is no risk.
Despite this, almost every sports book has not lowered the vigorish for on-line NFL betting. That’s especially surprising since Pinnacle has lowered this to a dime line.
I asked a few people in the business why this hasn't happened, and received two common answers.
First, it has long been the custom due to the good balance between book and player. Because of this, the books don't want to upset their long-time customers who prefer to stick to phone betting.
Secondly, there is a possibility it would put some books out of business, especially during football season when they get the majority of their action.
Now let’s see, prior custom means everyone doesn't mind paying more and doesn’t care to change? That doesn’t make much sense. Many people have moved to patronizing cheaper on-line options because they are more convenient and cost less for both buyer and seller.
So why aren't the books making an effort to embrace this trend? People who want to continue calling on the phone and costing their books more in labor should pay for the convenience. Those embracing technology and driving down the costs for the books should get rewarded.
The second reason really baffles me. I don’t see a book going out of business by cutting its vigorish from minus $1.10 to $1.07. I realize that three cents adds up in the long run. However, if you are in danger of going out of business at the lower vigorish, you probably have a pretty good risk at the standard 11 to 10.
I can only hope that increased competition and the apparent successes of the lower vigorish books leads to more operations joining the trend towards on-line wagering.
I truly think sports book managers are overlooking the fact that a lower vigorish doesn't necessarily lead to a corresponding drop in their overall revenues. As we all well know, players who lose seem to find a way to make sure they stay broke.
Taking a little less from those bettors on a daily basis simply means they will wager more. Their bankrolls will last a little longer, and that will make the pool of action more vibrant.
After all, the ‘square’ bettors are the ones that make the betting world possible. Smarter players will take more shots as the break-even point goes down and the risk-on-investment goes up.
More ‘square’ action also means the sharp player will get the number they desire more often. And that will frequently offset what the ‘squares’ are betting.
It seems to me that everyone wins in this scenario.
