History of Sports Betting and the Point Spread
This article on sports betting history first appeared in the 2005 edition of Doc's Sports Journal. To contact Jeremy Martin, e-mail him at email@example.com.
Ever since there have been sports in America, there have been people compelled to bet on the results. The founders of the United States were risk-takers by nature, hence the obvious attraction to gambling in all forms. Back then, people bet on makeshift horse races, cockfights and bare-knuckle brawls. Colonists from England had gambling in their blood since their fathers and grandfathers had been doing it for generations - not only in hopes of a profit but also as a form on leisure and entertainment. If there was a sport to be played, there was somebody somewhere who was willing to bet on it. Sports betting, it seems, was a natural part of the culture of the early Americans.
Today, betting on sports is more popular than ever before. Last year, Nevada took in almost $2 billion in betting handle via more than 150 sports books in the state. That is just a small percentage, however, of the money bet worldwide. An ESPN The Magazine article published in 2003 estimated that the online sports betting industry takes in $63 billion a year. It has also been estimated that one in every four Americans bets on a sporting event at least once a year and that 15 percent of the U.S. population bets on sports regularly.
There are many factors that have played a part in this growth, and there have been many colorful characters that have made their contributions to the sports betting industry over the years. One thing is for certain: sports betting is here to stay. And it will likely continue to expand exponentially in the future, despite the federal government's attempts to limit its growth. The possibilities, most agree, are endless.
"Sports bettors used to be a real small segment of the betting public," says Bob Scucci, race and sports book director for the Stardust Resort and Casino in Las Vegas. "The industry has elevated above that now. It goes through the entire middle class family to the professional [bettor] to the guy off the street. It just permeates through every facet of society."
History of Sports Betting: The Beginning
In regards to sports betting, horse racing saw the most widespread popularity throughout the 19th Century and into the early 20th Century. In its initial stages racing was a sport that was enjoyed and wagered on by mostly the upper class. But after the Civil War horse tracks began to dot the eastern landscape and bettors from all economic sectors flocked to the tracks in droves.
Many enterprising bookmakers would start 'auction pools' in the early days of horse racing which involved auctioning off bets for each horse in a race. But this format was short lived because bettors were out of luck if the horse that they wanted to wager on was already taken. The bookies - always considered an innovative bunch when contrasted with professionals from any other industry -- soon realized that setting odds on individual horses would increase betting handle and, in turn, the bookie's hold. When there was overwhelming money on one horse, the bookmaker would simply lower the odds to increase the attractiveness of other horses in the race. This format is still in use today, although horse betting has steadily decreased in popularity since the 1930s.
By the 1920s racing had reached its peak and there were more than 300 racetracks in the U.S. in addition to thousand of 'pool halls,' or off-track betting facilities, which were connected to the tracks by telegraph wires. Here locals could place their bets on horses at a multitude of racing venues around the country. Horse racing remained the most popular form of betting until professional sports leagues began forming and capturing the attention of the nation's gamblers.
In the late 1800s, professional baseball began to gain popularity and, consequently, so did betting on the sport. Baseball 'pool cards' became a standard in urban areas in the East. These cards, similar to present-day parlay cards, offered bettors a plethora of baseball betting options that they could wager on for amounts as little as 10 cents. But there was a catch with these pool cards: the odds were badly skewed in the houses' favor. There was no way for a bettor, no matter how sharp they might have been, to make a profit over an extended period of time. No one seemed to care, however, as the cards continued to increase in popularity while the bookies' pockets continued to get fatter.
A fixing ignominy in the 1919 World Series -- dubbed the 'Black Sox Scandal' by the media -- exposed the risk of professional baseball to be compromised by gamblers. Some players from the favored Chicago White Sox were found to have fixed games at the request of gamblers (Chicago lost the series to Cincinnati, 5-3). The scandal rocked the nation and the general public was given a negative impression of sports bettors, who were made out to look like criminals who were trying to ruin the sanctity of the game for their own monetary advancement. While gambling was illegal, most considered sports betting to be a victimless crime before the scandal broke.
Baseball, however, pushed ahead despite the black eye, and the bettors didn't waver in their zeal to have action on the games. If baseball lost anything because of the moral consequences of the Black Sox Scandal and other cases involving fixed baseball games, it wasn't reflected in the nationwide betting handle, which continued to grow progressively.
Even more people became interested in sports betting during the 'Golden Era' of sports in the 1920s. College football and college basketball were gaining huge popularity with bettors, as was boxing, and baseball was as well liked as ever. Pool cards were the favorite option of many bettors because of their promise of riches during the tough economic times of the Great Depression. Football pool cards proved to be as popular as the baseball cards even though bettors faced the challenge of picking a winning combination of usually five or more games in hopes of a big payday. Just like the baseball cards, the odds for football cards were heavily in the bookie's favor.
"It was a stickup -- an absolute robbery, but you didn't know any better," says former Mirage Race & Sports Book Director Jimmy Vaccaro of the pool cards, which were referred to as 'spot sheets' in his native Pittsburgh. "The odds for a 10-team [parlay] were 100-1 and ties lost on every card. Now you can get 800-1 or 1000-1 [for a 10-team parlay]. You played for the danger of it. You played for a huge payoff if you would ever get lucky."
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Sports Gambling History: The Point Spread
Before the invention of the point spread and 11/10 vigorish (the commission taken by the bookie on all bets), bettors who wanted to wager on an individual game had to bet against the odds on each team that were assigned by their bookie. If someone wanted to take a favorite, they would have to risk heavy odds and bets on big underdogs would pay off a hefty sum in the case of an upset. This odds system presented certain problems for bookies: they ran the risk of losing their bank if a big underdog hit on a given weekend or they could take big losses if all of their customers were on a big winning favorite. If a particular contest looked to be extremely lopsided, the bookie would have to refrain from taking any action on the game in order to minimize his risk. The odds offered by bookies in those days were similar to the moneyline system that is used primarily in present-day baseball betting.
The solution to the bookie's dilemma was the point spread, which first came on the scene in the 1940s. There is much debate as to who the inventor of the point spread was, but most believe it came from professional bettor and bookmaker Charles McNeil from Connecticut. Despite contrasting theories of the originator of the spread, most agree it was McNeil who streamlined the idea and first put it into use. McNeil undoubtedly borrowed some concepts for what he called the 'wholesale odds system' from other professional bettors -- including fellow sports betting luminaries Billy Hecht and Ed Curd. Regardless of who is credited with inventing this new system of bookmaking, it changed the face of sports betting forever.
This new point spread system created a windfall for bookies because they could now even out the betting handle on each side of a game by making a point spread that reflected the difference in points between two teams in a game. This virtually guaranteed a profit for the bookies in addition to giving them the option of offering many more games to their customers.
Before the point spread, most bookmakers would try to book games that were fairly evenly matched in order to decrease the risk of huge losses. But with the point spread they could offer any game they wanted because the line reflected the differences between the strengths and weaknesses of the two teams and helped them attract business on both sides of a game. If a particular game saw heavy action on a particular team, the bookie simply had to move the line to make the opposing team more attractive.
Offering a point spread and 11/10 vigorish not only ensured that the bookies would earn a profit over the long run, but it increased the interest in sports betting across the country as bookmakers in different markets began to implement the new system. Over time, the 11/10 vig would earn the bookie a 4.4 percent profit on the bets they booked (in a perfect scenario where action was balanced for all offerings). The 11/10 system also gave professional bettors something to shoot for: 52.38 percent. When factoring in the vigorish, a winning bettor must hit at that ratio just to break even and they must best that percentage in order to achieve profit.
The implementation of the point spread, along with the widespread emergence of television in the 1950s, can be referenced as two factors that perpetuated the massive growth of sports betting during this era. More games were offered by bookies, and people could actually watch the contests they bet on at home or their local tavern.
In many American cities - especially in the east -- betting on sports was becoming an integral part of daily life. Some of the men who helped mold the Las Vegas sports betting scene remember being exposed to the enterprise at a very young age. Current Las Vegas professional bettor Lem Banker, who has been prominent in the Southern Nevada sports betting scene for more than four decades, learned the craft as a youngster under the tutelage of his father who ran a bookmaking operation out of his candy store in Union City, N.J. Vaccaro remembers betting at bookmaking operations that were located in the back of cigar stores in Pittsburgh and driving to neighboring communities to 'shop' for better numbers at competing books. Frank 'Lefty' Rosenthal recalls his days as a young man betting in the bleachers at Wrigley Field and Comiskey Park in Chicago where he says, "gambling was more popular than hot dogs."
"Put it this way, I was one of a million kids growing up in that era, [sports betting] was all around you," says Vaccaro. "You learned at an early age what it was and you just gravitated from there. Although there are smart people who grew up on the West Coast, the gambling society in general -- the people who started Las Vegas as you know it and the sportsbooks as you know [them] -- were probably more from my part of the country."
The History of the Sports Betting Industry: The Minneapolis Line
Long before Las Vegas became the epicenter of the sports betting world, a man named Leo Hirschfield started a company, Athletic Publications, Inc., that would become the oddsmaking standard for the sports betting world for three decades. Established in the mid 1930s, the company set the lines in all sports and distributed them to bookies across the country via telephone and telegraph. Hirschfield also published and distributed several publications that provided sports information intended to help bookies make a better line and for bettors to be able to spot weak numbers. The most popular of these publications was called The Green Sheet.
While most of his thousands of customers were illegal bookmakers, Hirschfield's business was purely legitimate. He had a team of four handicappers that would analyze each game for the following week and set a line during Monday morning roundtable discussions. The late Mort Olshan, who eventually became the founder of The Gold Sheet tout publication -- which is still immensely popular with bettors to this day -- was a young handicapper on Hirschfield's staff in the late 1940s to the early 1950s. His son, Gary Olshan, remembers hearing stories of how the 'Minneapolis Line' was set.
"[My father] read the sports sections each day from 40 papers from around the country to learn as much as he could about the teams so he could come up with a good line on games," says Gary Olshan. And setting good lines was especially important for Hirschfield and his staff since their reputation and livelihood were at stake. Clients paid approximately $25 a week in order to subscribe to the line service.
According to Howard Schwartz, owner of the Gambler's Book Shop in Las Vegas, Hirschfield used to pay airplane pilots and cleanup crews for the collection of newspapers from all around the country that his staff could use in the formulation of point spreads. Until the company disbanded in the early 1960s as a result of new laws that made it illegal to discuss gambling on the telephone across state lines, just about every point spread used anywhere in America originated from the Minneapolis office.
Sports Betting History: Nevada Opens the Doors to Sports Betting
Gambling was legalized in Nevada in 1931, but it wasn't until years later that sports betting would become commonplace across the state. Before gambling, Nevada was in big economic trouble. The state's main industry had been mining, but that trade had diminished by the late 1800s and Nevada was in a dire financial situation. Most of the state's cities, which had boomed during the mining apex, were virtual ghost towns. Reno was the state's biggest city with approximately 15,000 residents, and Las Vegas had nearly 5,000 citizens. But legalized gambling, boxing, effortless divorce and prostitution made Nevada an attractive tourist destination. The economic condition changed dramatically -- almost overnight -- once gambling was added to the state's coffers.
While casino-style gambling was deemed legal, sports betting was still illegal until a regulation was passed by Congress in 1951 imposing a 10 percent tax on all sports bets. Of course, in an atmosphere that revolved around gambling, it was probably not difficult for visitors or residents to find someone to take a bet before the new law was passed. But the new regulations allowed the bookmakers to come out from the shadows and work their trade openly in the public eye.
The first legal sports books in Nevada were stand-alone shops which were independent from any of the large casinos. They were called 'turf clubs' and had names like the Del Mar, Churchill Downs and the Rose Bowl. These small operations were sometimes referred to as 'sawdust rooms' because of the wood chips that were spread across the floor to soak up spilled beer and to remove some of the foul odors. Betting options were posted on chalkboards and cigar smoke was heavy in the air.
After the office in Minneapolis shut down, these turf clubs filled the oddsmaking void left by Hirschfield's departure from the industry and the first 'Las Vegas Line' was established. It was during this time that a man named Jimmy 'The Greek' Snyder became the world's most visible linesmaker. Snyder, who formulated his numbers out of the Saratoga Club, was known by most industry experts as more of a public relations wiz than an astute oddsmaker. He is, however, often credited as the being the individual that brought sports betting into the public eye like no other before him. Snyder, who ran his own PR firm, wrote a syndicated newspaper column that was published across the county and even landed a lucrative gig on the CBS-TV football pre-game show, where he would make his game selections live on the air every Sunday.
"One thing that [Snyder] was able to do that no one has been able to do before and no one has been able to do after him is get gambling on national TV on a regular basis," says Michael 'Roxy' Roxborough, who would later become the most prominent linesmaker in the world in the 1980s. "He was such a celebrity that he did a TV commercial where he would give people 5-2 odds that you could get a closer shave with some shaving cream and he was rolling dice in the commercial. That could never happen today."
Even though sports betting was becoming widely accepted, the turf clubs faced some problems from the outset. Because of the 10 percent tax, it was impossible for these betting shops to make a profit while offering 11/10 vigorish. Many of the books passed the tax on to their customers -- who were willing to lay the action no matter how steep the price -- in the form of 12/10 vig. Some say that enterprising book operators found other illegal ways around the tax. Despite the tax, the turf clubs evidently did quite well during the 1960s and early 1970s.
"They were all well organized," says Rosenthal of the turf clubs. "They used to bail their money [like hay]. It just kept rolling in. They were the only game in town and it was legit."
The turf club operators had an agreement with the larger casinos, according to Vaccaro. As long as the hotels would stay out of the sports betting business, the turf clubs promised not to add casino games into their operations. The two entities ran separately and in harmony until 1974.
It was during that year that legislation was passed that would change sports betting in the state forever. The 10 percent federal tax imposed on sports bets was deemed unconstitutional and Congress agreed to lower the tax to just two percent. This created a sports betting boom because operators could now legally make a profit while offering their customers 11/10 juice. It was a move that would also signal the beginning of the end for the turf clubs.
The casinos had decided to stay out of the sports betting game because it didn't offer the high profit margin of other casino games like blackjack, roulette, craps and slot machines. But after the tax was lowered (it would be dropped even further, to .025 percent in 1983), some casino executives began to see the potential advantages of opening a book in their outfit.
One of these men of vision was Rosenthal, the real life figure who was portrayed by Robert DeNiro in the movie "Casino." In 1975 Rosenthal, who was running the Stardust, appeared in front of committees of the state legislator in favor of new laws that would allow sports books to be located in casinos. "In this one situation it seemed like I had a crystal ball," remembers Rosenthal. "My premise [was] that it would create thousands of jobs and bring in millions of tourists and [the sports book] would just be another arm of the casino. [The commission] acted within two weeks and passed the ordinance."
This new law paved the way for what would become the standard for Nevada casinos. In 2004, nearly every large property in the state has a sports book. Back in the mid 1970s, after the new law was passed, the casino operators wasted no time in getting into the sports betting business. Jackie Gaughan opened a book at the Union Plaza Hotel and Casino in downtown Las Vegas in 1975 and Rosenthal opened his book at the Stardust the following year. Books subsequently "sprang up like cactus" in the casinos, according to Rosenthal.
"[Gaughan and Rosenthal], they are the pioneers of what you would call the new race and sports book," says Vaccaro. "They moved forward and took the backroom stigma out of race and sports by placing it in a high visibility property. Those two people had more to do with the way things are now than anybody."
The sports book at the Stardust became the prototype for what every designer after it would aspire for their book to be. Rosenthal created a plush environment for his customers with plenty of seating space and multiple television sets where patrons could keep tabs on their action. He replaced the old chalkboards with electronic boards to display up-to-the-minute on a multitude of sports.
Rosenthal's vision for the potential success of the sports book for the overall bottom line of the casino was correct. Customers herded into his book and the casino started to see increases in revenue across the board. "We knocked their socks off," he says. "It really wasn't rocket science. If you build an operation that contains horses and sports and do it properly and make it comfortable and luxurious, people will be coming in from various parts of the country."
Consequently, sports books began to show up in other casinos at a rapid pace. The turf clubs were not able to compete and they all eventually shut down. With the exception of Little Caesars, which was operated by the late Gene Mayday and stayed in operation until the early 1990s, the casinos rendered the turf clubs nearly obsolete by the mid 1980s.
"They held out for as long as they could," comments Vaccaro. "Those old guys who ran those joints, they were what you would consider just purist bookmakers. But they couldn't change with the times because they couldn't buy hotels. The hotels could buy them."
One of the holdovers from the turf club era was the late Bob Martin, who ran the Churchill Downs book and was eventually hired on by Gaughan to run the book at the Union Plaza. Martin had established a reputation as a shrewd oddsmaker. According to Vaccaro, Martin was the "greatest bookmaker that ever wrote down a point spread." In fact, he was so well respected that most of the lines used throughout the country originated from his office. After Snyder's reputation had diminished, Martin's numbers became the Las Vegas Line.
"At Monday around noon, the sports book at the Union Plaza would have hundreds of people there and then once the line went up, the sports book -- one or two minutes later -- would have about six people in there," remembers Martin's son-in-law, Eric St. Clair, who is currently a Las Vegas bookmaker. "It was people all running to the phone to call their people and saying 'here's what the line is' so they could put it up all across the country."
In the 1980s Roxborough emerged as a major force in the sports gambling world and he helped usher in the technological revolution. Roxborough brought legitimacy to the industry as he portrayed an image of the businessman, as opposed to the street corner bookmaker type that had dominated sports betting for so long. While most other oddsmakers before him bet into their own lines, Roxy believed that practice was a conflict of interest and he stopped wagering completely when he started making the lines.
Roxborough, who learned the trade during his formative years in Vancouver, B.C., got his start at the Club Cal-Neva casino in Reno where he was hired because of his penchant for setting solid numbers on baseball 'totals' (the late Bill Dark from the Del Mar turf club was credited with inventing the totals concept in sports wagering). Roxborough soon gained a strong reputation throughout the industry and he eventually signed a lucrative contract with the Stardust in the early 1980s to set their opening line.
Las Vegas Sports Consultants, Inc., which is what he called his odds and information service, eventually acquired 90 percent of the sportsbooks in Nevada as its clients. Roxborough took advantage of new technology that was available and used it to provide his customers with -- not only lines -- but also updated injury and weather information.
According to Roxy, before LVSC was founded, if a bookmaker wanted to know what the weather was like in Cleveland they would have to call up a contact there and get the information via the telephone. "We became a clearinghouse for information by checking on injury rumors and getting weather reports," he says. "[Sports book] managers could call one place and get it all."
Before LVSC was founded, most oddsmakers kept their information in loose-leaf notebooks. They would copy thousands of box scores into these notebooks for future reference. Roxborough was the first one in the industry to use a computer and electronics for the storage and transmission of data. As a result of these technological advances, the sports books were able to increase their offerings to the public. Due in large part to Roxborough's new computer-generated power ratings, the betting rotation expanded significantly.
"When I first came to Las Vegas in the early 1970s, there weren't that many college football games that you could bet on each week -- there were like 15-20," he remembers. "People didn't even book college basketball until after Jan. 2 [when the college bowl games were completed] and there were only 60 or 70 teams that appeared regularly [in the rotation]. The demand for the business to get bigger and the computerization allowed us to follow more teams and offer more reliable odds."
When Roxborough started LVSC in the early 1980s, it was a one-man show. By the time he sold the business in 1996, the company had grown to be worth millions of dollars and it employed a full staff of employees. LVSC is still around today and is still the source of the numbers for most of the sportsbooks in Nevada.
The proliferation of the sports schedule and the resulting increase in handle created the need for bigger and better sportsbooks. The Las Vegas Hilton 'SuperBook' opened in 1986 and the book at Caesars Palace was reinvented around the same time. The Mirage, designed by casino mogul Steve Wynn, opened in 1989 and was then considered the most extravagant hotel -- and sports book -- in Las Vegas. Vaccaro, who had previously helped open books at the Royal Inn and the Barbary Coast, was sought out by Wynn to help him develop and run the books at the Golden Nugget, located in downtown Las Vegas, and at the Mirage. Vaccaro is often considered the last of the old-school bookmakers in Nevada as he took huge action and didn't turn away the professional bettors.
"We had the highest limits," Vaccaro says about his days at the Mirage before he left bookmaking in 1996 to pursue other interests. "I was never questioned about big wins or losses. [Wynn] knew that if the place was to be run properly, that you [couldn't] squirm when you lose. We never refused a bet." During his peak at the Mirage, Vaccaro says he was taking in 25 percent of the betting handle for the entire state.
The History of the Sports Gambling Industry: Present and Future
Nevada sports books have been in a steady decline over the past decade. According to the Nevada Gaming Control Board, revenues have dropped six out of the last seven years across the state. It is no secret that this can be attributed in part to the massive growth of the offshore industry.
But critics of Nevada sports betting -- and Las Vegas in particular -- point to other factors as well. The consolidation of the casinos by corporations has created an atmosphere where there are only a handful of sports books releasing their own numbers while the rest are just satellite offices of their main book. This reduces the opportunity to shop around for numbers and increases the attractiveness of offshore books where a wide variety of point spreads are available on a wide array of sports.
Some say that the government has over regulated the industry and that cash transaction reports requiring big players to identify themselves have scared off many of the larger bettors. Others say that sports book managers are in constant fear of their jobs and that, as a result, they are not willing to take any risk -- as opposed to the old-style bookmakers in Las Vegas who took any bet and relied on the strength of their numbers.
While the Stardust had the distinction of setting the 'opening line' for several decades, many offshore books release their numbers even earlier on the Internet. The rest of the offshore industry -- and even some Las Vegas bookmakers -- often follow the lead of these offshore books when setting their initial numbers after they have been flattened out by the professional bettors.
"At that time we catered to our players and we didn't fear players," says Rosenthal of his time as a bookmaker in Las Vegas. "We welcomed them. We were very conscious of customer service. Today, it is the reverse. It's not only a shame, it borders on being counterproductive to the state and the individual properties. I think the offshore industry, in 2004, is closing in on any industry in the world. The demand, the interest - speaking of the public - from a global standpoint is skyrocketing and will only get bigger."
Scucci is one who disagrees with the assessment that Las Vegas will continue to decline. In fact, he says that his profit margin has increased at the Stardust since the offshore books have become popular. He points to the record $81.2 million that was bet statewide on the 2004 Super Bowl as proof that Las Vegas is still a force in the industry (Nevada books won a record $12.4 million on the big game).
"There's no doubt that [the offshore industry] took a big portion of our business," he says. "However, a lot of that business was the very shrewd, very sharp action. So, in terms of handle, yes. It took a lot of our handle away. But did it take a lot of our [profit] away? Probably not. We have had more people in the book than ever and we are writing more tickets than ever.
"The people who say Vegas won't take a bet are the ones that want to cherry pick a particular game where they have some advantage over a soft line. Go ask the guys at the Mirage how many $100,000 bets they take or at Caesars where they take $300,000."
"The reason Las Vegas is still doing great is that gambling is social and people would rather do it with other people," adds Roxborough. "When you walk into a sports book you know that if there are 25 people in there that you have something in common with all 25 of those people, even though they are strangers."
The sports book is one of the only gambling venues in a hotel where the casino actually has a chance to lose money over the course of a year, although the 11/10 vig usually ensures a small profit margin. But the casinos have lost big in the past. Rosenthal points to Super Bowl XIII, which had Pittsburgh was favored over Dallas, the defending champions of the NFL. Due to heavy action on both sides, the line on the game went as low as -3 ½ and as high as -4 ½. Pittsburgh won the game by four points and the Stardust lost $1 million by getting 'middled' on the game. A big loss in the Super Bowl can have disastrous effects on a book's football season and, thus, its overall profits for the year.
Although it is possible for sports bettors to win over an extended period of time, only a small portion of the population can actually achieve this feat. Banker, who some say has regularly earned a six-figure annual income in Las Vegas at the expense of the sports books, issues some words of warning for anybody interested in attempting to bet sports professionally: "You have a better shot at becoming a rock star or a movie star than being a successful sports bettor."
Despite the government's attempts to stifle sports betting, all signs point to its continued growth. Gambling is legal in almost every state in some form; whether it's casinos, horse racing, OTBs or government-run lotteries. As gambling interest and growth in general increase everywhere most feel that sports betting will follow suit. As a recreational activity that has been around since long before our country was founded, it doesn't appear to be going away anytime soon. "The people have spoken," concludes Scucci. "They like it. They want sports betting. That's not going to change."
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