Sportsbooks: World Cup Handle Exceeded All Expectations
by Jeremy Martin - 07/14/2006
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If there is one negative about the business that sportsbooks did for the 2006 FIFA World Cup, it would have to be that they will have to wait four more years for another chance to rake in big soccer money. The next World Cup will take place in 2010 in South Africa.
Heading into the month-long tournament, which took place at assorted venues around Germany from June 9 to July 9, bookmakers were optimistic. Many had thought that a strong performance by the U.S. squad would be directly related to the strength of their profit during the tournament. The Americans flopped in the World Cup, but the sportsbooks made out like bandits anyhow.
"We exceeded the upper end of our predictions for overall handle on all bets relating to the World Cup," said Calvin Ayre, founder and CEO for Bodog.
"The interest and betting action on the World Cup surpassed even our wildest expectations," added Simon Noble, spokesman for Pinnacle Sportsbook.
Since estimates indicate that 80 percent of Internet sports wagers come from the U.S., bookies were holding out hope that the Americans would have another strong tournament like the last one, which saw them advance to the quarter-finals in 2002 in South Korea. The U.S., however, only managed one point (on a draw against eventual World Cup winner Italy) and was sent packing after the first round.
The Americans were placed in a group that many considered the toughest in the tournament. According to Ayre, Bodog actually stood to lose a lot on futures wagers if the U.S. had won the tournament. The fact that they were knocked out early, however, did not affect the bottom line one bit as far as individual game wagers are concerned.
"The only team that really would have hurt the book by winning was perhaps the USA," he said of futures wagers placed at Bodog. "The USA was only the 6th ranked team in terms of handle in the first round, so while their poor performance may have had an impact, the impact was small overall."
According to the books we spoke to, most of the liability for futures involved the USA and several of the heavy favorites like Brazil, Germany and England. Italy, listed in the 10/1 area to win the tournament before the World Cup started, didn't receive much heavy futures action at the books.
One problem sportsbooks ran into was a large number of American bettors that were new to soccer wagering - many who didn't understand the way bets were graded. Since there are three betting options for World Cup wagering - team A, team B and 'Draw' - and wagers were graded according to the results of the 90-minute regulation period only, books had to provide more customer service than they might have to for an average American sporting event.
"The American bettor is still getting used to wagering on soccer, as it is a three-outcome event," commented Ayre. "The 'draws' throughout the tournament may have caused some confusion with bettors, as the wagering rules for draws are different. We did see a large amount of 'over' betting in the early rounds, but by the end of the tournament it was pretty balanced."
Squares, or novice, recreational bettors, are notorious for playing the favorites and 'overs' for sporting events. The books with a high volume of recreational players, no doubt, had a high hold percentage for the tournament for World Cup totals. The under was 27-21 during the group stages and in elimination rounds the 'under' cashed in on 12 of 16 games. The books we talked to reported that most of the totals action in the group stages was on the 'over' but it evened out once the elimination rounds started.
The most important factor for the books, however, will likely be the number of new players brought in. Noble said that 95 percent of their annual soccer business comes from outside of North America. But for the World Cup, 50 percent of the business came from the U.S. while the other 50 percent was made up of international customers.
"Bodog certainly saw new players join the site in light of the World Cup of soccer," said Ayre. "We are very confident that a good portion of these players will continue to stick around and enjoy the many Bodog offerings."
"The World Cup generated a tremendous amount of new bettors to Pinnacle and only time will tell whether they will take advantage of the consistent value and low juice that Pinnacle offers on every sport - not just soccer," added Noble.