The big business behind sports betting | CNBC SportsOn October 14, 2019 by Raul Dinwiddie
Ten on number 12, please.
Ten on number 12. Whether you’re waging the cash in your pocket
or hundreds of thousands on a single race, this is an industry which attracts
gamblers from far and wide. And it’s not just here at the races. Every
year, billions of dollars are staked at boxing arenas, on soccer fields and golf courses
all around the world. So what keeps people coming back for more, and is
it ever possible to beat the bookie? Five pounds. Just five quid, turned it around.
Bit of racing, bit of money, so I’m always up for it. I have not got
a clue what I’m doing. Three times in our history we’ve
paid out the big one million. Just got my first one
in and fingers crossed. If they can beat us, they’re
usually pretty happy. For the bookmakers, the global sports betting
business is booming. Last year, the total amount bet was more than 500 billion dollars.
Even after bookmakers paid out winning bets, the total gross turnover was
still nearly $65 billion dollars. To give an idea of how lucrative the industry
has become take a look at Denise Coates. She’s the CEO of BET365, one of the UK’s
biggest betting firms. She’s also the best paid female executive in the world. In 2018,
she earned $353 million dollars, that’s two and a half times more than Apple’s Tim
Cook, the CEO of one of the most valuable companies in
the world. So surely that means the people betting, otherwise
known as punters, are losing all their money? I got a lovely pair of wedding shoes.
Yeah that was our biggest winner. Someone had a £5 acca a few weeks ago and
won £35,000. When those days did come,
when you are… You cry. Terrible gambler, I lose all the time. I had a
full head of hair when I started this business. This game can
tame lions. If you’re new to betting, one of the first
things to understand is betting odds. Once you understand how likely an event is
to happen, you’ll be able to work out what your potential
winnings will be. At first, it may appear confusing,
but let us explain it for you. All betting odds do is present
how likely an event is to happen. Let’s take for example a coin toss. When
flipped there’s either a 50% chance of it landing on
heads or tails. For sports betting in the UK, that’s displayed
as evens. Much of the rest of the world uses a decimal based system, which equates to 2.0,
while the U.S. uses its moneyline method, which would display
the odds as 100. For an event like horse racing with several runners
there are multiple possible outcomes in a race. If a horse is priced at 4/1 to win a race, then
the bookmakers believe there’s approximately a 20% chance of it happening. So, for every
$1 you bet, you’ll get 4 back plus your original stake if the
horse crosses the line first. So how do the bookies come up with these odds,
and is there a way for punters like me to win big? I’m going behind the scenes of British bookmaker Fitzdares to find out how it all works. Very good to see you. Come on in, welcome
to Fitzdares. Racing’s just started. These are the brokers
and the traders. Fitzdares is a private bookmaker that offers an
exclusive membership for high rolling gamblers. We’ve been taking bets since 1882 which
is probably the oldest in the world. Some customers have a quarter of a million
pound credit line and that’s not a bad thing, we’re not encouraging them to gamble, it’s just
the way they do business and they pay monthly. They get their own phone number.
So when they phone us on any phone in the world, we
know it’s them. Hi Peter, how are you?
Yeah i’m very well thanks. The biggest bet you’ve ever taken?
350 thousand, yeah. Let me have a look, the next race at Sedgefield? Lots of money for
Dawn O’Vaunt today. Yeah sure, 100 reverse, one and four. I’ll
put that on for you. For the traders taking bets and the success
of the business as a whole, each sporting event has to be given the right
odds and it’s the job of one man. Gentleman holding the racing post.
This is Glyn, head of pricing. Hi Glyn,
how’s it going? For big sporting events Glyn
uses what he calls a matrix. Ok here we are. The first thing I would do
is to look at the weather forecast, you have to know what the forecast ground is going
to be. Having got the weather, I settle down with my blank sheet of paper and I do this
matrix and I’ve got eight runners down here. We start with form so horse A as we can see
gets three ticks. He probably won last time out, he might have been a close second. E
has got no form, no recent form at all. Ground, if a horse doesn’t act on the ground it
hinders its chance immensely of winning that race. So we’ve got A, B, like the ground.
E doesn’t like the ground, absolutely hates it. Distance, the horse’s optimum distance
means a tick. Rank the trainer form as well, if all his horses are running out of their skin
then you’ve got to take that into consideration. Top jockey booked up, then obviously that’s
going to get a tick as well. Position of the race and whether they’re going to be at
the back or the front of the field in each race. The ones with the most ticks obviously
going to be strong fancys. So that’s probably favorite 2 to 1. All the other horses, they’re
all relative to the price of the favorite winning the race. 4 to 1, 8 to 1 as well,
16, 14. That is our matrix complete. Today, with the rise of online gambling, it’s
hard to find a sport without a betting market open somewhere. So does it really
matter more when there’s money on it? It only matters when there’s money on it.
Completely irrelevant whether I’ve won or lost it’s just a day out.
Not for me, I just love it anyway. Are you ever interested in a horse
race if you’ve not got a bet on? No, never. If you’re going
to watch it just have a little bet. You could have 50
pence and it makes a difference. It’s about enjoyment, it’s not about just
bet this horse and if you lose that’s it. Some people eat meat, some people are vegan.
Some people drink, some people don’t but for those that do enjoy to have a speculation
and find that that’s a little bit of picante, then that’s great and we’re
here for them if they are. For some sports, however, betting really does
matter. Horse racing here in the U.K. is only possible because of the money
generated from lost bets. Racing and betting have a shared history in
terms of the returns we receive from the betting industry to be reinvested into our participants.
That’s to owners and trainers and jockeys and stable staff. As well as ensuring that the sport
is regulated to the highest standards as well. The Horserace betting levy board is in charge
of dividing up the money and reinvesting it back into the sport. The levy is 10% of bookmakers
gross profits of their horserace betting business, in 2018 that was more than $126 million dollars.
The largest portion is for prize money, followed by investment into regulation services, racecourse
fixture incentives, industry training and veterinary science and finally
any other administrative costs. The money is designed to benefit those who
work directly in the sport as well as communities in which
racing operates. The growth in the UK betting industry in the
last twenty years has coincided with the rise in online gambling. The global online gambling
market is expected to more than double by 2024, and be worth
nearly 100 billion dollars. Many bookmakers have already developed their
own sports betting apps to cash in on this trend. That’s moved the majority of money
staked from the high street to almost anywhere with a
phone signal. It’s completely changed and people now can
can get on their phones they can bet straightaway, they can also bet “in running”. You can
see the movement in the market as well as it as it literally
happens. The ease at which betting is now possible
has had negative effects, however. In 2017 a record number of gambling addicts were hospitalised
in the UK, a 50% increase from the year before. How much of your responsibility is to make
sure that people aren’t betting too much? Oh yeah quite a lot, for sure. If we
have a relationship with them and are talking on the phone then we can
make decisions together with them. It’s a difficult one because you want to
say are you sure you’re ok, but then they’re losing. It’s the last thing they want to
hear. Sometimes we just have to draw the line and say I’m afraid we
can’t take any more bets. There’s lots of actually quite good protocol
in this. From having timeouts to actually people restricting themselves so we can’t
ever contact them again or for a period of time. They say good things come to those who wait. Some believe that the problem has been made
worse by the U.K. deregulation of gambling advertising since 2007.
Who are paying seven places each way. In a 2013 report by Ofcom, the U.K. communications
regulator said there’d been about a 1400% increase in gambling ads since 2005,
around 1.4m a year on our TVs. But for the U.K. government the growth in
the gambling industry has generated significant funds through taxes. Last year, the tax revenues
from online sports betting alone was worth £339 million or $452 million
dollars to the U.K. treasury. While there are strict rules on gambling in
certain countries such as Japan, India & much of the Middle East, there are countries that are keen
to open themselves up to this lucrative industry. The United States, for instance, is expected
to become the world’s biggest sports betting market by 2023 as the number of states with
legal sports betting is set to grow from 8 to 25. Not only is sports betting set to become increasingly
global, but through the development of digital platforms, the opportunity to
place a bet has never been easier. But, as this sector grows, how much responsibility
should governments take to balance an industry that can enhance the experience of a sports fan,
but also limit its damaging effects on society?