Tennis, Anyone?

I have a pro client who's only been betting sports six months. After dot-com he left his analyst job (he failed some certification exam, but I'm told that's Neither-Here-Nor-There) to trade his own account. He survived 08-09, and claims the Flash Crash was the most profitable day of his life. But he gave up last summer.
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I have a pro client who's only been betting sports six months. After dot-com he left his analyst job (he failed some certification exam, but I'm told that's Neither-Here-Nor-There) to trade his own account. He survived 08-09, and claims the Flash Crash was the most profitable day of his life. But he gave up last summer.

He was doing OK, he says, but Greece told him it was time to move on. His kids are still young enough that they think their Dad is cool. He planned to spend their summer vacation with them. But he said this tear-gas-in-Europe stuff “left him only vaguely aware of two short people sharing his home” as he stared at screens at 4 a.m. So he's moved to the slow lane, betting sports, which takes much less time.

I take Pro Client's action because he's honest, he wins, and whatever he bets me I can push out the back door three to five times. Pro Client called asking for a moment of my time. For him, always.

Pro Client wanted to know why we don't take Tennis. Well, that's an easy question:

...there's little steady interest and we don't like getting beat on stuff we can't get rid of. Injury info is hard to get and that's crucial in an individual sport. And then there was that match-fixing thing two years ago. Surely he understood risk vs. reward?

Of course he did. And he's the guy who, given five minutes, could talk Rush Limbaugh into championing Obamacare. To make a long story short, we're offering tennis as of Thursday, he's making the numbers, and it's a 50/50 split.

I'm happy for a few reasons. First, as it sits, I basically open July and August as a service to customers. I don't make money. Half my regulars are out of town and the other half only have baseball to bet on. Tennis is going to be on ESPN so we might get some bets.

Second, I want to see what he can do with the bookie's vig on his side. He knows I'll be looking over his shoulder to make sure his prices aren't so far out of market that we're setting ourselves up as an easy arb. But he's got opinions and he knows numbers. It's going to be peanuts for starters, but who knows where it ends.

Last, when it comes to the NBA, Pro Client is my hero. Never mind tennis being fixed. Not so long ago, an NBA ref got to bring his whistle to Club Fed 3-on-3 tournaments because he was there as a guest of the Government. I sweat NBA results each and every night: I swear that this player isn't trying, that coach is insane, or this or that.

Woe is me—but not Pro Client. Pro Client went 3-for-4 on Christmas Day and is 56% on the NBA with me for the season. He bets me two grand, I bet out five or ten.

I just blindly follow his bets, like some Gambling Zombie. To beat the standard bookie's vig, a bettor needs to win 52.4% of his games against the spread. Pro Client's mercurial brain is better than that, and that's what a Gambling Zombie like me feeds on.

Many bookies kick their winners out. I've no idea why. Winners you can blindly follow are better than losers. The losers might stiff you. The winners just win, and let you win beside them.

And that's business I cannot afford to lose. A majority of my clients bet $100 or $200 a night. I don't make a lot of money off them. But Pro Client's a winner and my profit potential is limited only by the size of my 'nads.

Don't get me wrong—I want his tennis to win. I'm on for half. But if it's only small bets here and there, Pro Client has now become a business partner, and I'll keep getting some of his basketball bets. He's probably playing at ten different places; now I'm sure to stay in the mix.

I'm not sure how we're going to do this tennis. Bets to win the tournament, individual matches, etc. I know they measure serve speed. Do they measure who grunts the loudest? I guess I'm going to find out.

Related

(Trump image courtesy Flickr user Gage Skidmore)

Opening Bell: 4.26.17

Trump tax plan is (kind of) here; David Einhorn might need to revisit his dot-com bubble analogy; "White Collar Crime Zones"; and more.

Maddeningly Bad Luck

March Madness has been a disaster: two of my best customers, who know each other, combined to go 2-for-39 on the first two weekends. Faithful Assistant has been laughing at their tought breaks, but I've been trying to soothe them. I need these guys to keep playing, losing, and paying. Their luck really has been atrocious. 18 of the losses have been by three points or less. One of them asked me if I'd ever heard anything worse. I guess there's Tsotomu Yamaguchi. Yamaguchi was on a business trip in Hiroshima when the A-bomb dropped. Wounded, he figured he'd better get out of Dodge ASAP, so he barrelled home the next day – to Nagasaki. I reminded the client that his bad luck paled in comparison to Yamaguchi's, and that Yamaguchi lived another 65 healthy years...plenty of time to make more bets. But now I'm dealing with more than bad luck. These guys have now declared that sports are rigged. This month's point-shaving scandal at Auburn hasn't helped, and it brings others of recent years to mind. The NBA has Tim Donaghy. Overseas, it looks like half the Turkish soccer league is going to jail, and half of Italy has already been. I actually believe that most of sports are on the level. Disagree if you want, that's OK. But what really gets my goat are the people who think the bookies want the games rigged. We don't. If people think the games are fixed, and thus become afraid to bet, I'm out of business. It's the same story for the guy running a poker game or the CEO of a retail brokerage. No faith, no business. There's a really simple reason somebody with the available cash or credit can get down a $500,000 bet on the NFL, but might not be able to easily bet $50 on Wrestlemania: the market can take the $500,000 football bet, adjust the price slightly, and bettors will come for the other side. There is no market for Wrestlemania, because nobody trusts it. So these clients are generally miffed, but also fixated on one game: Syracuse vs. Kansas State. The price started moving 20 minutes before tip when a K-State star was ruled ineligible. These guys took the new price on K-State thinking they got a deal, when it was just the market reacting to information. Well, Syracuse rolled and now it's allegedly a “fix”. Of course it's not a fix—it's just betting dumb with less info than everybody else. They should have checked why the spread was moving. Emotion trumps reason, though, and there was no reasoning with these guys. And maybe that's why these guys bet with me instead of going online somewhere—they're so Old School, the building probably only had one room. If you want to be a pro gambler these days, there's a ton of free information all over the Internet. I'm not saying it's easy to win over time—it's not. But there's a bucket of info out there on any game you want to study, and all sorts of arcane stats to help inform your decisions. And since everyone else is studying, you better too. When I worked in Chicago, we had a good customer who worked at O'Hare. He would bring us out-of-town sports sections that travellers left behind as they boarded planes. We got useful injury information from beat writers in other cities that the rest of the Chicago market just didn't have. That was 20 years ago, but when I tell that story to Faithful Assistant, he usually asks if Orville and Wilbur Wright were flying the planes. He's been on the Internet since middle school, and pretends he can't remember life without it. So I'm not sure what to do with these guys—they bet six times a day, but haven't called since Saturday. I think I'll give them a free bet equivalent to what they lost on Kansas State. I know I don't have to, but I'm not willing to risk losing the business. That's the worst part of all this—and the reason why I'm trying to get out of this racket. I don't just need the customers to lose, I need them to lose slowly and have fun doing it. I'm not a psychiatrist trained to actually convince people that betting really is a random thing for the vast majority of gamblers and losing streaks just happen. I wonder if I should join the Army. I'm not much for getting shot, but I hear the poker games are good. Baseball starts next week and the guys who just bet bases are much easier to deal with. They understand the nature of a game where the very best teams win 65% of their games and the absolute worst teams still win 35% of the time. I can't wait. Anybody know if Tim Tebow needs someone to take his action? He's on every channel, everywhere.

Football? Yep. Oscars? OK. The VIX? Really?

I was scoring up the Super Bowl (small loss) when Ocean called. Ocean is a good customer. He had a couple questions, and I told him fire away. First he wanted to know if we were doing the Oscars again this year. Of course we are. I'm not thrilled about it –I'm half paranoid about inside information bubbling on the Internet, but I'm learning to embrace the inside mis-information. Most importantly, we do it as a service, so the customers won't start betting online with bookies in Costa Rica. Ocean was pleased. For what it's worth, he likes The Artist at very short odds. He watches rom-coms. With his wife, he says. His favourite movie though is Love Story, and he cries shamelessly every time he watches it: he truly believes that love means never having to say you're sorry. I've never figured that out. I'm forever apologizing to my wife for doing boneheaded things and saying stupid shit. And apologizing is a necessity But whatever. A happy customer is a beautiful thing. And I thought the phone call was over. And then Ocean said it. “What do you have on the VIX for this summer?” I asked him what the hell he was talking about because I didn't compute what I was hearing. He then said how he had been watching CNBC. He went to his mutual fund guy determined to buy the VIX, and the salesman blew him off with “Oh, that's just gambling”. So, hey, I must surely book the VIX, right, because I take bets from gamblers? Well I totally had my pants down and started mumbling about monthly contracts and the need to be a sophisticated investor and how there were a few products out there and...he cut me off. He understood how “the 1% were trying to make this complicated” and he just wanted a near-even-money type bet that the VIX would be over 30 at the end of June, as per the top of the screen on CNBC. I gave him the bet. 30's a pretty big number, and I figure this'll make me learn about trading the VIX instruments so I can lay it off if I want to. (I've never done anything more sophisticated than buy a put spread when I was afraid of a downturn. Go ahead, laugh.) 30's a lot. So I let him have it at 6-to-5. He was only expecting even money or slightly worse, so he was pleased. Ten minutes later I was using this episode as an object lesson for my Faithful Assistant, a guy who is muddling through an MBA while living in his parents' basement. Garage loft, I stand corrected. Anyway, good customers need to be kept happy, good customers lose, and happy customers pay. The Hollywood-movie days of kneecapping customers who stiff you were over before I was born, if they ever even existed, and—and the phone rang again. Ocean again, wanting an over/under number on where Apple would be in a couple months' time. Oh, and Facebook. I told him I would have to call him back. I started throwing coffee cups and in between my screams my Faithful Assistant told me he'd just pretend I have Tourette's. He's cold. Then he asked me what was going on. And after I told him, he smiled, and tried to give his boss an object lesson of his own: “This is great. You trade the odd option. All my electives are Finance. We just set the over-under price, I mean you KNOW he's going 'over', high enough that we can buy calls a couple strikes below that number. We use his bet to buy the calls, if he wins we clean up, and we're covered.” And when I asked what would happen to Ocean's bankroll over time, the answer came back that we would sodomize it. I just shook my head. My young friend may well end up in a business career where the necessary m.o. is to grab-it-all and grab-it-now, but that's not how my business works. I actually want my customers to win 45-50% of their bets, lose fairly small amounts over time, and never lose so much in one fell swoop that they can't pay or that they decide to stop playing. There's a purpose behind all that languid ritual at the Baccarat table in the high-limit room at the casino: try to keep the House's earn slow-and-steady. It makes the news when a whale beats Vegas for $10 million, or drops $10 million, but the casinos tolerate those lumpy earnings—aside from a little ink, they don't really want them. The casinos want everybody playing dollar-slots, losing three cents a spin. His eyes kind of glazed over, so I thought, what would Suze Orman do to get her point across? I figured Suze, to make the young'uns understand, would probably Go Gangsta. So I said “Look, we make money by drawing blood from our customers.” His eyes lit up as I continued: “We're blood collectors. We need a nice orderly blood bank. What you're proposing, is a drive-by.” (Well, I actually said “drive-thru”, but we sorted it out after a little confusion.) So we've told Ocean that these bets are going to be for peanuts and we're going to have fun with them. He's on board, and he's all excited. Faithful Assistant is going to make the numbers and I told Ocean to give us some requests for stocks he thought would go lower. “Oh you mean I could bet 'under' too? Not just 'over'?” Yep, 'under' too. February's a shit month in the bookie biz—the regulars are there, but football's over and it's a ways before March Madness. Ocean's stockpicking is going to keep me interested.