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April 19, 2014

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How a sports book fares can turn on a single play

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Mona Shield Payne / Special to the Sun

MGM Resorts Sports Book Director Jay Rood, left, monitors NFL games with Craig Schaffer and Donie Callahan while working in the back office at the Mirage Race & Sports Book on Sunday, Oct. 16, 2011.

A Day in the Life of a Sports Book

Philadelphia Eagles fan Jeff McKee of Huntington Beach, Calif., watches his team as they continue to push past the Washington Redskins on the TV monitors at the Mirage Race & Sports Book on Sunday, Oct. 16, 2011. Launch slideshow »

Of all the football fans in the Mirage sports book watching the San Francisco 49ers-Detroit Lions game on Sunday, perhaps nobody was more glued to the screen than Jay Rood. He runs the book.

He was already feeling the bite of seven dominant college football teams and the unlikely turnaround of baseball’s St. Louis Cardinals. So he and his crew, crowded in a tight office, stopped what they were doing to watch a small TV screen as 49ers quarterback Alex Smith set up for a fourth-down play that would likely decide the game.

“It’s going to help the afternoon and make the morning better too,” Rood said of the prospects for a Niners’ victory Sunday afternoon. Wagers totaling “well into” the millions of dollars at his company’s 12 sports books hinged on the play. The friendly verbal sparring of sports book co-workers stopped. TV announcers lamenting the horrific crash at the Las Motor Speedway could be heard from another screen in the office. Smith took the snap and passed to Delanie Walker. “Get in! Get in!” Touchdown. “Yeah!” Niners win, 25-19.

Bettors had parlayed the surprisingly dominant Lions with other favorites, the Packers and Ravens among them. A victorious four-teamer would have paid $1,000; a winning five-teamer, $2,000. The Lions loss knocked out hundreds of parlay card holders who believed the Detroit team would go 6-0 for the first time in more than 50 years. “It’s not going to dictate our day,” Rood said of the Niners’ victory, “but it’s going to make a few things for us.”

Rood, a University of New Mexico hospitality school graduate who minored in math, is part sports savant, part momentum trader. Throughout the day he’ll use the Internet to eye the betting line at competing sports books and offshore betting sites. “I’ve talked to the NCAA, their gaming group. I tell them what I do is kind of close to a day trader. I sit at a desk, manage liability for the company and try to squeak out a 3 to 5 percent profit for the company while generating an entertainment experience for the customers.”

It’s a tricky task, balancing the money bet on opposing teams so that, by the end of the day, the results for the casino are a wash. A sharp sports book operator is constantly manipulating a game’s betting line to achieve that goal. The house earns its money from the vig, or fee, it chargers gamblers to place a sports bet.

The betting lines are set by a small universe of private operators — both domestic and international — that crunch all aspects of a team’s performance.

The typical sports book sees its hold, the house’s cut of every dollar wagered, hover between positive and negative 5 percent. The margins are boosted by specialized prop bets. Among them: Who will score the first touchdown in a game or rush for the most yards? Which team will beat the second-half spread?

It’s been a difficult run of football Saturdays for Rood and other sports book operators throughout the business, with some of college football’s biggest names routinely covering the point spread each week. Regular bettors have caught onto the trend, parlaying Alabama, LSU, Oklahoma, Oklahoma State, Wisconsin, Clemson and Stanford into healthy paydays. “They don’t care what the spreads are. They’re just betting them because the teams are covering the spreads,” Rood said.

The challenge for sports books is intensified by college head coaches who keep their starting teams in longer than needed to boost their margins of victory, a practice that helps with the computer-generated rankings and human polling that determine postseason bowl bids. “Three weeks ago Boise State was pulling their guys after three quarters, but we’re not getting that anymore. It’s backdoor money because they’re leaving everybody in, and we’re getting pounded.”

Rood’s phone rings. It’s Johnny Avello, who oversees race and sports book operations at Wynn and Encore. Competitors talk, even during games. Avello has called to reminisce about the previous day’s games.

“Hey Johnny, what’s up? ... Oklahoma, if they get there it’s the worst day I ever had ... Right, right. That was just cheap ... We held 1.8 percent, but it was all on Oklahoma,” Rood said. “We had a lot of parlay money going to Oregon late in the game.”

The Ducks beat Arizona State by 14 points, 41-27. The spread had hovered between 14 and 16 as Rood and his colleagues tried to manipulate the wagering. Now it was just a few hours before the St. Louis Cardinals were to take on the Milwaukee Brewers in what would be the final game of the National League Championship Series. In late August, the Cards appeared to be finished for the season, 11 games out of a wild-card playoff position with just 28 to go in a 162-game season. It would take a legendary run for the Cards to pull it off.

The Cards are an especially popular team throughout the Midwest, and some adrenaline-seeking tourists as well as a few sharps — the smart-money bettors — put some money down on Tony La Russa’s club to overcome the odds. It did, and advanced through the first two rounds of the playoffs to make the World Series against the dominant Texas Rangers. Should the Cards win the series, Rood’s 12 sports books stand to lose $892,000, a significant chunk of money for a casino operation that in its best years breaks even or turns a slight profit.

• • •

Conventional wisdom dictates that sports books are a casino amenity, a setting where 200 or 300 people come together for big games, place wagers, eat, drink and cheer as though they are at the game. They generate foot traffic, with a spillover effect finding sports bettors placing wagers on the craps and blackjack tables or in slot machines. Rood says the reality is more nuanced, with sports books helping boost hotel occupancy rates during the college and pro football seasons. “If there were an NFL strike,” as it once appeared there might be this season, “Sunday occupancy would have gone down 10 or 12 percent. The NFL drives the bus. The NFL is much more heavily wagered. There are 80 games in (major) college football, but only 15 to 18 carry any interest.”

For more than a decade, Las Vegas sports books also have battled a very real challenge from offshore sports books, which are deemed illegal by the U.S. Justice Department but often have deep pockets and the willingness to place big wagers from international bettors who book those bets from anywhere a computer is found. Observers say much of the smart money has gravitated to such sites because of the convenience and a lack of federal and state financial reporting requirements that were beefed up by the adoption of the U.S. Patriot Act in response to the funding of the 9/11 terrorist attacks.

• • •

In the aftermath of the 49ers last-minute victory over the Lions, Rood is philosophical about the prospects for the four remaining games of the day as well as the Monday night game. His 12 sports books are slightly ahead for the day, taking some of the edge off Saturday’s results. Nonetheless, this self-described day trader with an affinity for sports is rather guarded when explaining the skill set needed to perform his job.

“I can’t pinpoint what I do or how I do it. I don’t think anyone can. You can see what’s coming sometimes with the help of experience, feel. You just put the house in the best position to minimize your risk. You’ve got to have luck, too. We’re in the gaming business. The good news is we’ll have another set of games next week.”

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  1. Not sure why a sport book would lose money? They collect a fee on all winning bets. They just need to have equal bets on both sides of a play. I could do that if MGM wants to hire me.

  2. Good luck Tom. I hope u hit it. I'll root for ya.

    The book only makes a guarantee profit when they book a pari mutual bet. However, with the free drinks and comps that kinda washes put. The sports end truly is a gamble for the casino. It's not easy money!!!

  3. It needs to be legalized online. The industry would absolutely explode...put a tax on it and let players wager legally. Silly in this day and age that our nanny gov't won't allow adults to place a bet over the internet.