The regulated versus offshore bookmaking debate reignited last week thanks to a bad NBA line from BetCris that was copied around the world.
The market-setting offshore book opened the Toronto Raptors as three-point favorites for the second half in Wednesday’s NBA playoff game versus the Brooklyn Nets. That line was up for about three minutes, according to anonymous bettor Spanky on Twitter, before being corrected to Raptors -9.
Ok so here’s the forensic evidence just in case there are any nonbelievers. Cris hangs the mistake -3 at 2:44:41 moves a bunch of times then corrects the line to -9 at 2:47:35
Everyone else for the most part copies the mistake around 2:46 and corrects the mistake around 2:48 pic.twitter.com/LzpPjpZ2N2
— spanky (@spanky) August 19, 2020
In the meantime, however, the bad line was copied by bookmakers around the globe, including bet365, BetMGM and William Hill. And that’s where things really got interesting.
Market forces at play
To offshore supporters, the incident was proof that regulated US bookmakers are simply copying offshore lines. Therefore, by extension, criticism of offshore books is hypocritical because regulated books can’t run their own businesses without them.
There might be some truth in there but it ignores the reality that liquidity drives markets. And offshore is still where the largest money is wagered. For decades, Cris has built a black book of the sharpest bettors in the world and their liquidity helps shape its lines.
A standalone Vegas book like Circa Sports might look at a Cris opener and think it’s five points wrong, but at most, they would open a point different. To do anything else would be to get crushed by an avalanche of money on one side from pros and arbers.
Remember too that 99% of the time the Cris line isn’t wrong and you are in essence taking on the sharpest bettors in the world.
Liquidity is king
“Whether you’re in the financial markets or sports betting markets, whoever has the most volume is going to drive the price,” said Matt Metcalf, the sportsbook director at Circa. “The reality at this point in time is Cris basically the market. I might want to take a view and move my line but at most I can handle a $10,000 decision. Cris can do 10x that easily, so they are going to drive the market.”
And it’s true in betting markets around the world. The UK horse racing market is an interesting analogue. Horse racing is notoriously tricky to price. But UK bookmakers have long stopped taking a view or standing out on price.
Why? The Betfair Exchange.
That’s where all the pro money ends up, and the Betfair price is the price. If a bookmaker goes a tick bigger than the Betfair price, they will be hit by an army of bots or fast-fingered pros. And ultimately that’s a losing proposition.
Regulated US sportsbooks currently face a similar issue.
The Toronto bet was also a “perfect storm” for Circa, as Metcalf puts it. Unlike college football, NASCAR or golf where Circa has invested in proprietary pricing, NBA is still a relative weak spot.
“On Wednesday, we relied on the market too much,” Metcalf said. “And some of that is because we’re not where I want to be on the NBA. “My goal personally is to have the largest volume sportsbook in the world across all sports. And then we can dictate terms it the market rather than the other way around. We have that to an extent on college football where we set world-opening lines and our own second-half prices with huge limits. And in things like NASCAR or golf, we are among the best in the world if not the best.”
This is the hope for the regulated sports betting market. As it grows, so does its volume and market power. And that in turn leads to bigger limits and more liquidity in a virtuous circle.
No ramifications for Betcris
Taking liquidity away from offshores also hurts their market power. Cris voided those Raptors second-half bets – something it only started doing recently, according to one pro bettor. He also noted early Cris halftime limits were much lower than they used to be.
A coincidence? Or a sign of changing times?
Cris also made no explanation as to why it voided the bet. And what recourse do customers have? None.
The difference in regulated markets
Meanwhile, regulated books like Circa were forced to pay out on the bad line.
There are palpable error rules in the US, of course, that might have allowed a book to void. But if an extra five goals on a soccer handicap doesn’t qualify as a palp, it’s highly unlikely five stray points in an NBA game would.
So, US regulated books were indeed caught napping on Wednesday. And they should be criticized for that. But as Metcalf says, they are still being dictated to by the market, rather than vice-versa.
The ultimate goal is to flip that dynamic on its head.