Sports betting line movement: Why & how

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What is a line movement?

When the line (spread) moves in one direction or the other, that's a line movement. Lines move often in sports betting. It is a rare line that stays exactly where it was opened by the sportsbooks. Here's an example of a line movement from Super Bowl XLIV:

	OPENING LINE (1/24/10)		TWO DAYS LATER
TEAM	SPREAD	TOTAL	SPREAD	TOTAL
New Orleans	+3.5 (-110)	54.5 (-110)	+5.5 (-110)	56.5 (-110)
Indianapolis	-3.5 (-110)		-5.5 (-110)

As you can see, the Colts opened as a 3.5 point favorite but moved pretty quickly to a 5.5 point favorite. The over/under moved up 2 points from 54.5 to 56.5.

Why did the line move 2 points in each case? Because, from the sportsbooks' perspective, too much money was coming in on one side. In the example above, the vast majority of money was coming in on the Colts at -3.5. So, in order to encourage more bets on the Saints (to even out the action), the oddsmakers moved the line to -4. When that didn't have the desired effect, they moved it -4.5, and then -5 and then -5.5. The same thing happened on the total, as too much money was coming in on the OVER.

What does this mean? It means that if you like the Colts or the OVER, you would have rather bet the game early as you would be laying 3.5 points instead of 5.5 and a total of 54.5 instead of 56.5. if you like the Saints or the UNDER, you'd prefer to have the +5.5 and 56.5.

What causes line movements?

As mentioned above, betting activity moves lines. Oddsmakers initially set a line based on where they think it should be based on their goals. Notice that I did not say that they set the lines based on what they think is the "fair" or "right" line. They set it based on their goals, which can differ game-to-game.

It's true that their goal is often to split betting activity, getting about 50% of the bets on one side and 50% on the other side. This way they can't lose. They simply pay out the winners (minus their 10% juice/vig) and collect from the losers. The vig/juice on the winning bets ensures them a profit. They can't lose.

But, the oddsmakers' goal sometimes is to actually take lopsided action. They sometimes roll the dice, believing the betting public will be on the wrong side and they can score a huge win.

Despite popular belief, bets are rarely split 50/50 on most games. There is quite often very lopsided betting. 

So on any given game, the sportsbooks have high exposure. But, spread over hundreds of games per week, their exposure is relatively limited. The biggest exposure for them, of course, is on the big games in which the betting is so heavy that it dwarfs the betting activity on other events. The most obvious example of this is the Super Bowl. Sportsbooks have massive exposure both positive and negative on this game, given the high number of bets. In Super Bowl XLIV, 65% of the bets were on Indianapolis, meaning that the sportsbooks are likely rooting for the Saints to cover.

Sharps vs. the public

Another question I often get is, who exactly moves the lines - the sharps or the public? The answer is, it depends. On low-profile games, line movements tend to be more driven by the sharps. The percentage of money that sharps place on low-profile games is relatively high, so their bets have a bigger movement effect.

One way you can see this is that you will see a game on which the percentage of bets is very high on team A (say 65%), but the line is moving the opposite direction, indicating heavy betting on team B. Despite only 35% of the actual bets coming in on Team B, the amount of money bet on Team B is higher than Team A. In this case, you can bet the movement is due to a few very large bets placed by sharps. The public is betting small amounts on Team A while the sharps are betting massive amounts on Team B. Some people employ a betting strategy that looks for this kind of game, and they go with the side the sharps are on, assuming they know what they are doing.

In higher profile games, specifically the Super Bowl, the roles reverse. On the Super Bowl, the public money from Joe Square dwarfs that of sharps. So, line movements on the Super Bowl tend to be more driven by the general betting public.

Key numbers and middling

In football in particular, there are key numbers as it relates to the spread. Due to the scoring structure of football, an inordinate number of football games end with a team winning by 3, 7, 9 and 10 points. The most common margin of victory in football games 3 points (about 15% of the time), followed by 7 points (8%). In contrast, only 3% of games end with a 5-point margin of victory.

This is important as it relates to line movement. Oddsmakers try not to move a line too much, and they try extremely hard to avoid moving a line over a key number. Why? Because it exposes them to massive losses by bettors "middling" them.

A middling opportunity arises when a line moves by a large amount, and/or moves over a key number. This opportunity gives the bettor a chance to win two bets, with little risk. The sportsbooks don't like this :). Here's an example:

Team A is favored by 2.5 points over Team B. Bettors think Team A at -2.5 is a bargain so they place a lot of money on Team A. Seeing the wildly uneven action, the oddsmakers realize they set the line wrong and to encourage more bets on Team B, they move the line on Team A to -3. But, the bets keep coming in on Team A. There is not enough action on Team B. If this continues, and Team A covers the spread, the sportsbook stands to lose big. So, they move the line again, to Team A -3.5 . This does the trick as now a bunch of money comes in on Team B. Some of these new bets may actually be placed by the same people who bet Team A at -2.5.

Anyway, in the end, the sportsbook has about an even amount of money on Team A and Team B. They are safe, right? Wrong!

Most of the bets on Team A are at -2.5 while most of the bets on Team B are at +3.5. As luck would have it, Team A wins the game by exactly 3 points, 20-17. What happens to the sportsbook? They lose all the bets on Team A at -2.5 and they lose all the bets on Team B at +3.5. It's an absolute nightmare for them as they lose their shirt. They got middled.

As you can imagine, the sportsbooks look to avoid this at all costs. They rarely let lines cross key numbers (numbers that are more likely to end up as the final margin of victory). And, they try to get the initial line right so they don't have to move it much.

They will also employ another trick to avoid getting middled. Instead of moving a line over a key number, they will often leave the line unchanged, but change the odds required to bet at that line. For example, you will often see this:

Team A opens as an 8.5 point favorite at -110 odds. They get a lot of bets on Team A, but rather than move the line to a 9.5 point favorite (and risk being middled), they will keep them as an 8.5 point favorite but move the odds to, say, -125. So you can still bet Team A at -8.5, but instead of risking $110 to win $100, you have to risk $125 to win $100. That has the desired effect of evening out the bets, without requiring a line movement that would risk a middle.

What to do if a line moves

When I send out picks, I send them out using a "consensus" line at that time. I look at 10 online sportsbooks right before I send, and choose the line that is the most common amongst the 10 sources. My goal is to come as close as possible to the line my clients will actually receive.

But, when going to palce a bet, sometimes you won't be able to find that same line. That can happen for two reasons:

1. The sportsbook you use has a slightly different line. Sportsbooks don't always exactly agree. It's not uncommon to find a 0.5 or even a 1 point difference, simply due to the fact that each sportsbook is different and each is balance their own risk. The best way to combat this is to open multiple accounts so you can line-shop.
2. Some time has lapsed between when the pick was sent out and when you can place the bet. In that time, the line has moved due to betting activity.

In either case, I am often asked what to do. Let's look what could happen with your bet, assuming you bet it using the new, different line:

1. Line moves for you and has no effect on the bet outcome (neutral)
2. Line moves for you and turns a loss into a push (good)
3. Line moves for you and turns a push into a winner (good)
4. Line moves for you and turns a loss into a winner (really good)
5. Line moves against you and it has no effect on the bet outcome (neutral)
6. Line moves against you and turns a winner into a push (bad)
7. Line moves against you and turns a push into a loss (bad)
8. Line moves against you and turns a winner into a loser (really bad)

The first four scenarios above are good. Obviously, if the line moves in your favor (i.e. I tell you to take the Cowboys at +4.5 and you get them at +5), then it's a good situation. Over the long haul, about half of the time the line moves will be like this, in your favor.

But, what if the line moves against you? What if the Cowboys are now +4 or +3.5 or even +3? In that scenario, you are susceptible to the second four scenarios shown above (#5-#8). What should you do then? Good question. Unfortunately there is no one right answer.

In order to have one right answer, we'd need to know which of the four scenarios was most likely. But we don't know the outcome of the game yet, so we can't predict whether the line move against you will have a neutral or negative effect. It's nearly impossible to determine beforehand whether that 1-point move will result in scenario 5, 6, 7 or 8. If we could predict with that level of accuracy (down to 1 point) on a regular basis, we'd all be millionaires, right? But we still have a decision to make.

If we lay off the game, or take our bet size down on it, two things can happen. If the bet wins anyway, we may be upset at ourselves for leaving money on the table. If we reduce our bet or pass and the bet loses, however, then we are happy that we saved ourselves some money.

But since we can't know beforehand which of those two things will happen, then what do we do? We apply some logic and we take into account your personal riskpreferences.

Logic dictates that the more a line moves, the higher a chance it will affect the outcome. If a line moves half-a-point, that's a small move and is quite unlikely to affect the outcome of the bet. If it moves 2.5 points, it's more likely to affect the outcome. And, if it moves on to, off of, or over a key number, then the chances increase even more.

Risk preference simply refers to how you personally feel about taking risks. If you are a natural risk taker, then you may decide to ignore the line move and roll the dice. Sure, you have a worse line, but if our team wins big, it won't matter. So in this case, you could just play it at your normal level and hope for the best.

If, on the other hand, you can't stand the thought of a line movement turning your winner into a loser and you tend to be risk averse, then you might choose to lay off the game, or at least take your bet size down. You may reason, "Hey if it wins, I will win less but that's ok. It's better than the thought of losing this due to that pesky line change."

What about buying points?

Another option is to buy points to get the spread to match the number at which I released the play. Should you do this? The general answer is no. Why? Because the cost of this over time will eat up your profits. I have studied buying points across all sports and based on the math, the only time I recommend considering buying is when buying 1/2 point on or off of 3 in football. This means you could consider buying +2.5 up to +3, or buying -3.5 down to -3. Doing this has been proven to be slightly profitable. Any other buying of points, in my opinion, is a mistake.

In the end, it's up to you and how you personally feel about the possible outcomes. If outcomes #5-8 above really scare you and you will be very upset about losing due to a line movement, then back down your play or lay off it. If you aren't really that scared by those scenarios and can take a possible loss in stride, and you tell yourself that sometimes you win, sometimes you lose, and next time maybe a line movement will help you, then you can just let it ride.


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Frank’s bill doesn’t include sports betting

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All of you WagerWeb.com customers in the United States who were hoping that new legislation introduced by Massachusetts Democrat Barney Frank would make online sports betting legal in the U.S. are going to be disappointed.
It only relates to online poker and games of the sort.
Frank, chairman of the House Financial Services Committee, and Peter King, R-N.Y., unveiled the legislation Wednesday that would basically repeal the 2006 UIGEA that was rammed through Congress while hidden on a port security bill. The law currently prohibits U.S. credit card companies and banks from processing bets placed on online gambling Web sites.
The Frank bill would allow the Treasury to license and revoke licenses of Internet gambling Web sites. It also would also allow the Treasury to “assess” license holders for the costs of background checks and investigations of Web sites applying for the license.
“The government should not interfere with people’s liberty unless there is a good reason,” Frank said. “This is, I believe, the single biggest example of an intrusion into the principle that people should be free to do things on the Internet. It’s clearly the case that gambling is an activity that can be done offline but not online.”

But why not allow betting on the NFL, NCAA football, etc.? Well, the NFL, for one, is a powerful lobbying force in Washington. And any bill that included full sports gambling would have no chance to pass. Even this one has no better than maybe a 25 percent chance. No similar bill has been proposed in the Senate, and Senate Majority Leader Harry Reid, D-Nev., has said that he opposes Internet gambling.
Michael Waxman of the Safe and Secure Internet Gambling Initiative, a lobbying group, told Covers.com that political realities limited Frank to legislation that is at least a step in the right direction.
“We’re disappointed that this version of the legislation does not include online gambling,” says Waxman.
“We think that Americans should not be prohibited from placing a bet on the team of their choice. (But) Congressman Frank obviously felt that he needed to file a bill that had a chance of passage.”
Among the safeguards in the bill is that any Internet gambling operator would be required to ensure an individual placing a bet is of legal age and physically located in that jurisdiction.
If the Frank bill does pass, banks would no longer have to report credit card transactions between U.S. residents and web sites that offer poker and other casino games. Thus in reality, you could still bet on other sports on that site with the impetus falling on the site on whether to accept those bets.


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How a Bookmaker and a Whiz Kid Took On a DDOS-based Online Extortion Attack PART II

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Hackers create zombies by scanning for exposed systems that they can manipulate remotely. Often these are home and office broadband users. (Lately, existing bot networks have been found scanning for more computers to turn into bots when they're not launching attacks of their own—akin to an army recruiting its soldiers in peacetime. One security consultant said he connected an unsecured computer to the Internet to see what would happen, and it was recruited within three minutes.) Hackers can also insert their attack code through phishing, spyware, viruses and social engineering. Universities have long been popular spots for creating zombies because of the number of easily accessible, unsecured public computers. With a zombie network in place, the only issue left is scale. The more zombies on a network, and the more aggregate upstream bandwidth they have, the swifter and more severe havoc they can wreak. Several hundred computers could generate 100MB of traffic, enough to knock a small network offline. A 10,000-computer bot network could deliver a 1Gb attack, enough to knock anyone offline who hasn't installed some rudimentary anti-DDoS infrastructure. Some experts believe that right now different sets of hackers are engaged in an arms race to see who can build the biggest zombie network. Not for bragging rights, but for renting out the networks to anyone who wants to launch an attack, the raw capitalist idea being that the biggest network will generate the best rental business. Tuesday, Nov. 25, 2003: Running Out of Time The extortionists' e-mail that arrived on this morning demonstrated that they were losing whatever patience they had: [all typos sic] "I told you that if you try and f*** with us that your site will be down forever.... The excuse that you were in the hospital does not matter to me. So here are your choices: 1) You have until 4pm est today to send us our $40K. 2) You have until 4pm est Wednesday to send us $50K if you can not send the $40K today. 3) You do not pay and your site will be down for 4 days starting Thursday and it will cost you $75K to come back up Monday. 4) You do nothing and do not respond to this email within an hour and we will make sure you are down forever...." Richardson was panicked. He can't remember precisely when—the entire week has blurred in his memory—but by this time, he had reported the crime to the National Hi-Tech Crime Unit (NHTCU) in Scotland Yard. According to an NHTCU spokeswoman, the unit had already opened a similar investigation with a British gaming site called CanBet.
According to Richardson and Lyon, the NHTCU encouraged Richardson to wire two extortion payments of a few thousand dollars each to separate Western Union offices in Eastern Europe. The NHTCU wanted to nab anyone who showed up to take the cash. (NHTCU won't confirm this; the spokeswoman said the unit does not discuss investigative tactics.) Richardson agreed, but for a different reason: He wanted his site back up. "I knew another person [in the industry] who was successful getting back online by sending three or four small payments like this," Richardson says, "and those guys didn't even have a solution to the problem when they paid. I knew Barrett was getting closer and closer to a solution. So I sent the payments, thinking maybe I can get a good week out of this." But no one took the bait. After about two weeks, Richardson pulled the money back. Wednesday, Nov. 26, 2003: Barrett's Big Bet From Sacramento, Lyon instructed the PureGig engineers who would turn on his system 630 miles southeast, in Phoenix. Another 2,400 miles southeast from Phoenix, everyone at BetCris waited impatiently. Lyon's system intercepted traffic headed for BetCris's servers in Costa Rica, diverted it to his creation in Phoenix, scrubbed off the attack traffic and delivered legitimate traffic back to Costa Rica. It was designed to bar DDoS traffic from touching BetCris. If the system failed, it couldn't defend BetCris, and it wouldn't be able to send legitimate traffic to Costa Rica. But BetCris itself wasn't getting attacked. The system did a lot of other stuff too: monitoring, capacity planning, logging and analysis. It wasn't perfect. After it was installed, Lyon had to tweak routers on the network, install new versions of software and add capacity to his system. The extortionists kept changing attack vectors, and Lyon and his team kept tweaking. It was a constant battle, but Lyon was confident that the system would enable BetCris.com to stay online. Wilson at PureGig called Lyon's system "ingenious" not because it was unique—it was monitoring and filtering at a proxy location—but because Lyon's monitoring and filtering seemed to stop attacks better than any other effort he'd seen. But when it was first turned on, the extortionists stuffed too much traffic down its throat. Wilson recalls the math: "We had 100MB links to the DNS servers. We went from handling under 2MB per link to, all of a sudden, 600MB." That's six times a full load. Imagine Fenway Park, which holds about 35,000 people. Now imagine 200,000 people trying to get inside Fenway Park at one time. The DNS servers were overloaded, and Phoenix got tense. Costa Rica had been tense for nearly a week (as much as half a million dollars in lost revenue), but now BetCris was bordering on despair. Mickey Richardson lacked sleep, and he struggled to make decisions and lead. His IT staff was fracturing, feeling impotent as they watched the attacks and waited for Lyon. BetCris's small call center staff was getting abused around the clock by customers calling in to vent frustration and demand to know what the heck was going on. The simple task of creating a smart message about what was happening eluded Richardson. "You can't just have your call center staff tell people you were hacked," Richardson says, because it creates more questions than answers. At the same time, his decision not to pay the extortionists was affecting other wagering sites that shared the same ISP and were experiencing network problems. "I'm getting calls from friendly competitors saying, 'Look, Mickey, we paid. Just pay. We're going down because of you.'" He was running out of time and energy. Richardson remembers around this time having to update his staff—275 or so people who weren't entirely sure they'd have a job soon—and he couldn't even find words. He thought, "I wish they could read my mind because I'm too exhausted to explain it anymore. I don't have any answers." In hindsight, Richardson says, he would have spent more time preparing for these human issues attached to the crisis—decision making under pressure, keeping the staff together—and less time worrying about technical defenses. Yes, create those technical defenses and make sure you have a crisis response plan. But also focus more on issues like exhaustion and emotional distress, and how they can be handled. It was in this context that Richardson received an e-mail, at 11:12 a.m. It caused him to feel, for the first time, "blind fear." "I would like to thank you for not keeping your end of the deal and making this upcoming weekend an enjoyable one for me." The extortionists demanded $75,000, but then seemed to disregard the money. "I do not care how long I have to destroy your business and I will. You will learn the hard way that you do not make a deal and then f*** around with us.... Let the games begin." Richardson would soon learn they were not bluffing. They could destroy his business, and they were going to try. For BetCris to survive, Lyon's slapdash system in Phoenix, which was just starting to find its purchase, would have to stand up to the biggest DDoS attack any of them had ever seen.


The DNS servers that had overloaded in Phoenix were brought back online in a couple of hours, after Lyon and Wilson adapted some filtering scripts and increased the size of their network pipes. Lyon then spent Thanksgiving and Friday eating leftover turkey his girlfriend delivered and tweaking his system to absorb bigger DDoS attacks. On Friday, he believed it could handle a 1Gb attack, and he felt good about that. He assured a frayed Richardson that he'd never see an attack that big. It would take tens of thousands of zombie computers. Which is exactly what happened. It turns out the extortionists had more than 20,000 zombies. PureGig's data center suffered badly, which affected several of its ISP customers. PureGig decided to take Lyon's system offline to fix it. "The attack went to 1.5Gb, with bursts up to 3Gb. It wasn't targeted at one thing. It was going to routers, DNS servers, mail servers, websites. It was like a battlefield, where there's an explosion over here, then over there, then it's quiet, then another explosion somewhere else," says Lyon. "They threw everything they had at us. I was just in shock." Richardson recalls the attack: "So I have Barrett on the line, who I think is the second coming, and he says, 'Let me think about this. Give me some time.' And I say, 'OK, I don't want to pressure you. I have faith. But if you don't fix it, I'm out of business.'" Why Online Extortion Works It was never supposed to have gotten to this point; Richardson was supposed to have paid long ago. The extortionists expertly optimized the chances of it. To ensure a quick, quiet transaction, the extortionists did what all extortionists (in the physical or online world) do: They exploited the problem of the commons. An ecological principle, the problem of the commons states that people will act in self-interest if it profits them in the short term, even if that act will hurt everyone, including themselves, in the long term. Every act, every threat, every negotiation tactic, every single move extortionists make is designed to make paying the protection fee not only appealing, but in fact, the smartest business decision you can make in the short term, even if you know in the long run that you haven't stopped the problem at all. Thus, extortionists attack when it hurts the target the most; they ask for $10,000 to $100,000 (generally considered the sweet spot of extortionist profitability versus victim willingness to pay, depending on the size of the victim company).


In BetCris's case, the extortionists revealed they were Eastern European, which would make them hard to find, never mind prosecute. Online crime laws are weaker in Eastern Europe than in the United States and the desire to enforce them weaker still (and the FBI wouldn't get involved with offshore gaming sites being extorted from overseas). The online version of extortion provides unique advantages (relative anonymity, low probability of prosecution, lots of easy targets, diminished chance of physical violence) that have made it a highly lucrative business alternative for bad guys. BetCris was just another easy target. What the extortionists didn't count on was the unlikely confluence of Richardson's resolve, Lyon's ingenuity and an ISP that would provide them a place to fight back. Friday, Dec. 12, 2003: BetCris Wins the War of Attrition The extortionists must have screamed "Hooy na ny!" or some other Russian expletive after their blitzkrieg, when Lyon "got the chemistry down" and managed to absorb the massive amounts of attack traffic and get PureGig and BetCris back up and running. Lyon assumed the bad guys would come back with something bigger, as hard as that was to imagine, so he set out to scale up his system "for whatever was next, a 6Gb attack or something." But for the next week, the attack stayed steady at around 1Gb. BetCris, Lyon and PureGig had entered a war of attrition. The extortionists would find a way to kick Lyon's system, Lyon and Lebumfacil would tweak it and get back up. Cat and mouse. "Attack, counterattack, back and forth," Lebumfacil says. "It was 24-by-7 monitoring for two weeks." Wilson and PureGig stopped noticing any of this because the attacks had been segregated from PureGig's other traffic. And then, suddenly, the attacks stopped. At 8:46 a.m. on Friday, Dec. 12, two weeks after the assault that nearly put him out of business and three weeks after he first read the words "Your site is under attack," Richardson received an e-mail: "Dear Mickey, I tried getting to your site today and I could not. I thought with all the money you spent you would not have these problems anymore. I guess you wasted your money instead of keeping your word. Good luck. P.S. I bet you feel real stupid that you did not keep your word. I figure by now you have lost 5 times what we asked and by the end of the year your decision will cost you more than 20 times what we asked."
Richardson knew this was an admission of defeat, even if it was disguised as braggadocio. His site was up. The extortionists couldn't get to it because they were blocked. He hadn't paid them a dime. They made no more threats. They couldn't because they couldn't back them up with action. The extortionists had lost. And yet, the e-mail was not far off. Richardson figures it cost him a million dollars in lost revenue and IT investments to win this war. "It was worth it," he says. "I just didn't know it would take a couple years off my life." "It was amazing we made that system work against that attack," Lyon says. "It was a wake-up call on how good the bad guys had gotten." And Lyon knows the bad guys have gotten even better since. They've built zombie networks of 35,000 machines, capable of delivering a steady stream of 3Gb traffic. Peter Rendell, CEO of Top Layer Networks, which makes intrusion prevention and anti-DDoS hardware, says he expects botnets to pass 50,000 machines (and 4Gb to 5Gb) by the end of this year. It's an arms race, as defenses scale, then offenses scale, though Lyon is convinced the defenses have far outpaced what extortionists can throw at them. But the bad guys have a response. Extortionists have encrypted DoS attack scripts and have put them on peer-to-peer networks, making criminals who use them nearly impossible to track or contain. They're registering domains and then attacking those domains, only those domains are redirected to other targets. "The only way to stop that is to delete the domain," Lyon says, "and that's not something you can just do." Lyon stopped an attack but certainly didn't stop the problem. Still, he wouldn't learn of all this until later, after he decided to start a business and, as he did with Don Best, track down the BetCris extortionists. At that moment, though, after the extortionists admitted defeat, he was ready to relax. He booked a vacation in San Jose, Costa Rica, for New Year's. Finally, he'd meet the people he saved and celebrate with them. New Year's, 2004: Visit to an Online Gaming Hotbed Costa Rica is about the size of West Virginia, bookended by Nicaragua to the northwest and Panama to the southeast on the Central American isthmus. With coastlines on both the Pacific Ocean and Caribbean Sea, and mountainous terrain inland, Costa Rica sits along the Ring of Fire, so volcanoes and earthquakes are native. Political strife is not. The CIA calls Costa Rica a "Central American success story."
Lured by its stability, BetCris located there in 1993. Richardson joined as a "utility man" in 1996. Back then, the business wasn't online, it was a call center. BetCris's call center once employed more than 500 operators at peak hours, but the number dwindled as the business moved online. Today, maybe 30 operators will man a call center at peak hours, or during an extortion crisis. As the Internet took off, so did San Jose as an offshore gaming mecca, for several reasons. The government encouraged the industry to expand its economy. (BetCris supports an industry group to lobby local politicians.) Also, the people are educated, with an excellent work ethic, Richardson says. Costa Rica has a 96 percent literacy rate. More high-level employees at gaming companies are Costa Ricans, including all of BetCris's accounting staff and 90 percent of its managers. The other reason gaming companies swarmed here is, of course, because it's not the United States, where gambling laws are difficult to negotiate. Today, hundreds of offshore gaming companies, most of them online ventures, operate from San Jose. In BetCris's seven-story headquarters alone, Richardson says, there are 10 such enterprises, two software companies and a telecom company—pretty much offering everything you need to get started in the online gambling business in one building. The competition is mostly friendly. Richardson says it's not unusual to bump into competitors at a restaurant and join them for dinner. The valley that makes up the San Jose metropolitan area holds almost half the country's 4 million people. Richardson says the valley gets blistering hot, and downtown San Jose is "undesirable." But BetCris, and most of the gaming and tourism industries, are above all that, nestled in the higher elevations of the valley's surrounding mountains, where Richardson compares the weather—and the lifestyle—favorably to San Diego. When Lyon arrived here, he felt a sense of pride for helping. He saw "this beautiful building with this top-notch data center," he recalls. "And I met all the people who work there, and I kept thinking, I protected all of this. Me and my keyboard helped all these people keep their jobs. It was so neat to see how good a thing it was that we did." Richardson and Lyon bonded immediately. There was a party with professional-grade fireworks launched from Richardson's front lawn. They went to dinner, talked about life and the attacks. Lyon had developed antipathy to the extortionists; he wanted to nail them. He told Richardson and Lebumfacil he was going to start a business, a service whereby people could subscribe to his anti-DDoS attack infrastructure. Lyon recruited Lebumfacil to help him start DigiDefense. BetCris was his first customer. Richardson gave them office space to start.



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Mr. Bookmaker

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It's about 12:30 p.m. Eastern standard time. At football stadiums from Detroit to Miami, kickoffs loom and excitement builds. But even in cities where the home team must win to ensure a playoff berth, the intensity level is nothing compared to what's going on in San José, Costa Rica -- a place where 10 years ago football could have only meant soccer.
From one end of the city to the other, in shiny office buildings and low-slung suburban developments, telephones ring incessantly. Digital pipelines overload with information. Computer screens grind through many megs of mathematical computations. All of this takes place within the walls of operations bearing names such as BoDog, 5dimes, Wager Web and Hollywood, online sports books that take massive numbers of wagers from gamblers across the United States.
A guard holding an enormous rifle, its barrel poking up toward the overcast sky, stands outside the building owned by an enterprise called CRIS (Costa Rican International Sports). Inside, a fluorescent-lit, airy white-walled room is crowded with about 200 telephone clerks handling the incoming wagers. But many more bets arrive invisibly, via the Internet. A gray-haired, slender line-maker (the person who decides how many points each team should give up or receive) introduces himself as "Mac, just Mac, from southern California," before marveling at the flow of action. "If not for the Internet, we'd never be able to handle nearly this much," he says, keeping both eyes glued to a computer monitor that allows him to track the incoming wagers and manipulate his lines so that he doesn't get stuck with too much of a liability on one side of a game or the other. "If everything came in over the phone, there could be a thousand clerks in here and it wouldn't be enough."
Mac is one of hundreds of American sports-betting professionals (i.e. bookies, marketers, money movers and line-makers) who've found refuge in Costa Rica, the reigning world capital of sports betting. While there are gambling operations scattered around the Caribbean, Costa Rica currently ranks as the hub, housing anywhere from 200 to 300 sports books (depending on whom you ask) that combined generate at least tens of billions of dollars in wagers each year. It's no accident that hundreds of American bookies have settled in Costa Rica. This Central American nation boasts a good technical infrastructure, a reasonably friendly government (only in the last year have Costa Rican officials begun pressing the betting operations to buy licenses for $45,000 to $90,000), loose laws, close proximity to offshore banks (gambling money is not allowed to pass through Costa Rica, so the books do their banking in places like
Curaçao, the Dominican Republic and Antigua), and so many beautiful, available women that one happily married sports-book manager comments, "If I didn't have a wife, I would lose my mind here." Another American, pointing out that cocaine is dirt cheap and plentiful, adds, "I've lost good guys to women and to coke. They get too involved with one or the other and stop coming to work."
Back at CRIS, with only 15 minutes until game time, the phone action escalates. Digital chirps ring out with the mounting intensity of a symphony reaching its crescendo. Sitting behind a raised dais-style table called the stage, Mac continually yells out changes to the lines, answers clerks who want to know whether or not particular gamblers can exceed their limits, and keeps an especially close eye on what he calls Wise Guy Row. It's a single table occupied by a small cadre of elite phone clerks who facilitate the bets of professional gamblers: players who are capable of moving lines at the last minute, then catching the other side of a wager and essentially risking no money while hoping that the final score will fall inside the point spread and result in a risk-free payday. Or else they simply are so smart about sports-betting that they're far more likely to win than they are to lose.
Told that a lot of his competitors eschew the wise guys, Mac says, "I happily take their action. Sharp players
bring a lot of volume. Then we nudge the line to generate action on the other side."
He looks at his monitor and grimaces. "Right now I'd like to have a little more money on Cincinnati," he says, acknowledging an imbalance of $90,000 weighted toward the opposing team. Then, as chaos swirls around him, he calmly adds, "But I'd rather book an extra bet than give away a number I don't want to give away."
CRIS, founded by Ron "Cigar" Sacco, the godfather of offshore gambling, is run like an old-school operation. Bereft of gimmicks, technologically low-key, not at all caught up in marketing gambits, CRIS is philosophically similar to the small, independent sports books that once dotted the Vegas Strip. Just across the parking lot, however, resides BoDog, a successful operation that is CRIS's antithesis. Where CRIS is stripped down, BoDog is a flashy, swaggering beast of a company, taking 90 percent of its action over the Internet (as compared to 70 percent for CRIS) and even featuring its own mascot: a tooth-baring canine that looks ready to pounce. CRIS's name is obvious to the point of sounding generic; BoDog's was devised as strategically as a soft-drink's: it had to sound aggressive, bear fewer than six letters (a preference for Web surfers) and be available as a URL.
Unlike CRIS, BoDog discourages wise guys -- going so far as to have two separate point spreads, one for the wise guys and one for the squares or recreational bettors that it aggressively courts. The site gets mass-marketed as if it's trying to compete with Amazon or Orbitz. "We only market on the Internet -- not in print or broadcast -- and in two seasons we've become the dominant brand on the Web," maintains Cole Turner, BoDog's Chief Executive Officer and founder. "Companies here in Costa Rica are run by one of two types of people: a bookmaker who somehow managed to educate himself on e-commerce and technology, or a technology person, like myself, who came in from the other direction. I believe that the most powerful person is the one who's strong in technology. You can dominate this industry with an average bookmaker if your technology and marketing are world-class. But you will never dominate this industry with a world-class bookmaker and average technology. Make mistakes on the marketing side and you get lost in the chaff of the industry. Nobody will even know that you exist."
It's a headstrong sentiment that generates controversy among the hardworking bookies here. But, judging by the late-game activity in BoDog's phone room, the approach seems to work. Clerks are busy, line-makers frantically massage the numbers being offered to their square customers, and Cole Turner stands on the edge of the stage with a self-satisfied look as a second round of kickoffs nears.
Turner entered the offshore sports-betting business after being accused of insider trading in Canada and carving out a niche for himself as a provider of e-commerce software. He shrugs off his crime as a youthful indiscretion, acknowledges that he changed his name and insists that he did nothing more than sign the wrong papers. Whatever the case, he is not alone in coming to Costa Rica after having a slightly sketchy situation up north.
If, as Casino author Nicholas Pileggi once wrote, Las Vegas is a morality car wash, then Costa Rica is the morality car wash of the morality car wash. One successful sports book owner here abandoned a similar operation in Vegas after he was robbed of millions and supposedly stiffed his winning gamblers for the dough; he's generally regarded as a great guy among his fellow expats. A highly esteemed oddsmaker got busted for money laundering, imprisoned and deported from the United States; he relocated to Costa Rica where he's since been embraced as an upstanding citizen. And even the guys who did nothing blatantly illegal inevitably turn squirrelly when questioned about their old lives in the States.
For all of that, the Costa Rican operations appear stunningly well run and efficient. Telephone rooms, with their long tables of bilingual clerks, are as antiseptically comfortable as any telemarketing setup in the United States. The businesses (which are run by men whose ambitions rarely exceeded 20 clerks in a little broom closet of a bookmaking office operating on the down-low) are solid enough that one was sold for $14 million and another supposedly went for $30 million, plus some $270 million in stock options. Both were purchased by the British company sportingbets.com. Hearing those amounts, though, and finding out that one bought-out company had the particularly enviable URL of sportsbook.com, I wonder if it was purchased partly for its online handle. Reggie Reggoni, who runs a mid-level sports book called Blue Marlin and was among the first half-dozen bookies to begin working down here, looks at me with some disbelief. "No," he says. "They bought it because they wanted the company's 80,000 American gamblers."
With deals like those, it's clear that bookies' lives in Costa Rica are as legit as it gets in this world. Undoubtedly, they're out of the shadows, perfectly legal and part of society. Collectively employing tens of thousands of young Costa Ricans, they pay better than average salaries, employ bodyguards (especially if they like to wear their diamond-encrusted Rolexes while swanning around town) and occasionally own the buildings that they occupy. Bet-On-Sports, one of San José's more successful books (it takes 1.6 billion bets per year), boasts an Olympic-sized swimming pool, a private club for its premier players and a free daycare center for the children of its employees. "The idea," says Bet-On-Sports' CEO David Carruthers, "is for our customers to realize that we are a substantial operation" few months later de DOJ went so hard on them that erase them from the map, but that is another story.
While CRIS's Mac goes so far as to say that the sports books have created a middle class in San José (a somewhat dubious assertion, as many Costa Ricans believe that the books are a corrupting influence on the good Catholic kids who work there), his boss, Mickey Richardson, gives the impression that being a bookie here has become too much of a real job. "It was more fun before," admits Richardson. "It used to be a party atmosphere. What used to be considered a racket is now a real business and we're dealing with things we couldn't even have imagined 10 years ago.
The watershed moment for all of this can be traced to the evening of December 13, 1992. That's when Steve Kroft of "60 Minutes" interviewed Ron "Cigar" Sacco, the lifelong bookmaker, who looked cocky with his shock of red hair, shirt pocket crammed with pens, and a signature Cohiba jammed between his teeth. Speaking from the Dominican Republic, to which he had relocated and set up dozens of toll-free phone lines, Sacco told Kroft that he was doing nothing illegal. Sacco insisted that he felt comfortable taking bets from U.S. customers in the Dominican Republic, where sports wagering had long been legal.
Sacco's message was a seductive one for bookies across the United States. "Seeing that interview changed me," remembers Richardson. "Suddenly, bookmaking seemed like something that could be done outside of the United States. It immediately appeared to be the ticket." In no time, the Dominican Republic was home to more than 200 expatriated American bookies, plying their trades beyond the reach of stateside authorities.
Within a couple years, however, the Dominican Republic ceased to be a gambler's Eden. "The government got greedy," says Reggoni. "You'd pay one general $50,000 and the next week his brother would show up demanding another $50,000." Following a false start in Antigua, Sacco moved his operation to Costa Rica; he was the first one in the industry and, once again, other bookies followed. Then, in the late 1990s, the Internet blew wide open. With easy access to information, the ability to place bets hassle-free, and an opportunity to monitor ever fluctuating lines (via services such as Don Best), the Web seems to have been custom-made for sports betting -- and it has ignited the multibillion dollar explosion in wagering.
However, all is not perfect in paradise. On the consumer end, gamblers run the risk of getting ripped off. It can happen surreptitiously or blatantly (in a well-publicized event, one of the major books in town stiffed a professional from Las Vegas for nearly half a million dollars, claiming that it simply didn't want wise-guy action, maintaining that the Vegas gambler knew this and bet anyway). "Some of these places get set up specifically for the purpose of not paying people," says one bookie, who did not want to be named. "They attract a lot of post-ups [the betting bankroll that you deposit up front] and then disappear, only to reopen under a whole other name." And it's not only the gamblers who face financial risk. "Sport Bucks [which worked as a bank for local sports books] recently went out of business, owing the books a total of $1.5 million," remembers Reggoni, adding that Sport Bucks got into trouble after its owners got hooked on betting games with money they were supposed to be minding. "We lost $30,000 on that one and felt lucky."
Even worse is the constant vulnerability to high-tech terrorists who cripple computer systems by flooding them with calls and demanding payments of $30,000 be sent to Saint Petersburg, Russia, or else the site will remain unusable. "We could have paid those guys who were putting out the denial of service attacks or stood up to them," says Will Gatten, a goateed hipster from Texas who does marketing for a respected sports book called Hollywood. "We did the latter and paid way more than $30,000 to upgrade our system" -- and make the attacks impossible -- "but it was the right thing to do."
Questions loom as to whether Costa Rica will be the gambler's refuge for much longer. In light of the recently activated licensing fees, those in the industry fear that politicos in their adopted homeland will get as greedy as the Dominicans had once been. And while few bookies are currently prepared to say hasta la vista, baby, they are looking at alternatives to Costa Rica. "Right now Panama is a front-runner," says one sports-book manager who recently returned from a trip to Panama City. "The place is completely modern. It's got a skyline that rivals those in many American cities, and it's cheaper than San José. From what I understand, the government is looking to bring in 10 big sports books." The manager's cell phone rings, he deals with some business involving a line move for an NBA game, then he softly adds, "One problem, though, is that Panama has a closer relationship with the United States than Costa Rica does."

And therein lies the rub. Never mind that it's legal to book bets in Costa Rica, the true lawfulness of what the offshore books are doing remains fuzzy. Consider this: if an American citizen opens a sports-betting business in a place such as Costa Rica and takes bets from customers in the United States, is he breaking the law? Maybe. Since hardly anyone in America has ever been busted for placing a bet (only for taking them) and taking bets is legal in Costa Rica, you have an area so gray that even attorneys who specialize in representing gaming-related cases can't provide a straight answer.
What's indisputable is that Ron Sacco -- who supposedly became a massive FBI target after showboating on "60 Minutes" -- was recently arrested while trying to go from Costa Rica to Nicaragua. The Costa Rican government maintained that his passport was not in order, and, rather than take his chances waiting for slow justice in Central America, Sacco turned himself in to U.S. authorities where an old bookmaking warrant led to his receiving a nearly two-year prison sentence.
Sacco's arrest had a chilling effect on Costa Rica's sports-book community and has led to much speculation about the future of online gambling as a big public enterprise. Already the U.S. attorney general has advised publications such as Maxim and radio programs such as the "Howard Stern Show" (both beneficiaries of advertising dollars from Costa Rican sports books) that running ads for offshore gambling may put them in the position of aiding an illegal activity. "Right now the American government is the biggest threat to the future of online gambling," says one bookmaker who believes that the business will be forced to return to its underground roots. "Supposedly the NBA and NFL are at least partially behind it. But the really ridiculous thing is that sports betting helps keep basketball and football and everything else going. Without having a little something riding on the game, how many people do you think would really bother to watch?"

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The Man Behind Las Vegas Lines

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Bob Scucci learned much of what he knows about the sports betting industry at one of the most unlikely places: the family dinner table. That's because both his mother and father worked in Las Vegas sportsbooks. After the family moved

to Las Vegas from New Jersey when Bob was in high school, his father took a job at the old Rose Bowl sportsbook and his mother took a post at the Showboat sportsbook. Dinner table discussions were a lesson in Sports Betting 101. And Scucci has used that knowledge to get where he is today, managing the Race & Sportsbook at the Stardust. Because of the history behind the hotel/casino and the fact that the book sets the first Las Vegas line for football, his job is one of the most recognized and revered in the industry.

"My dad probably taught me the most, whether he knew it or not," said Scucci. "We would have conversations at the dinner table and it wouldn't even be like he was trying to teach me anything. It was just a normal discussion. And, over the course of those years, it just, by osmosis, sunk in. Some things are just second nature. You don't realize it until you are actually working in the industry that things kind of come naturally."

The Stardust sportsbook is famous for setting the opening Las Vegas line for football. At 5:30 p.m. on Sundays during the NFL season Scucci, with help from consulting services, posts the first lines and lets the professional bettors take the first crack at them. The sportsbook holds a lottery for line placement in order to avoid a free-for-all to the window. Bettors are allowed to make five wagers before they have to move back to the end of the line. During the first couple hours of action, the line on an NFL game can move as many as two points. The lottery, however, has decreased in popularity over the last several years.

"In recent years it seems like people want to think about it a little bit before they rush to the counter," Scucci commented. "So there hasn't been as many people that want to join up in the lottery. They just prefer to wait until the numbers are up and then gradually pick their spots. For the first hour and a half, the numbers are bouncing around all over. If you are talking about 1 ½ points on every game and you are taking $10,000 a whack, it doesn't take long to have a $30-$40,000 decision on each game."

Since the Stardust sportsbook is a favorite of professional bettors in Las Vegas, Scucci is used to sweating it out. While the goal of most sportsbooks is to get 50 percent of the action on both sides of a game, it doesn't always work out that way. The Stardust has taken some big losses in the years that he has been there (Scucci served as the right-hand man for former manager Joe Lupo, who took a position as vice president of operations at the Borgata in Atlantic City, for six years before taking over last October). Putting out the first line can be a liability, said Scucci, because there are no other numbers out there to compare to his lines and because the pros are usually there to attack a bad

number. When the Las Vegas sportsbook industry does well, the Stardust usually follows suit, but when the industry as a whole has a bad week, Scucci usually takes a harder hit. "Occasionally, but not often, when the industry does well we may not do as well at all because we take all the early hits that the other casinos don't take," he added. "But I feel we can draw enough off of it that it's worth the liability."

One of the most unique things about the Stardust sportsbook is its ability to draw an even mix of locals and tourists. Now that the south end of the Strip is the place to be in Las Vegas, Scucci's sportsbook is still keeping pace with the big boys in terms of handle. Tourists want to visit the Stardust because of its history and atmosphere and locals like the wide variety of parlay cards and the chance to take advantage of the opening numbers. "We probably have the highest percentage of locals of all the Strip properties," said Scucci.


Limits for NFL games are $10,000 for sides and $2,000 for totals and college football limits are $5,000 for sides and $1,000 for totals. Scucci's philosophy is not to set the lines by predicting the outcomes of games, but rather set the number according to the way he thinks the public will bet. And he always has to be concerned about the professional bettors, who are lurking around every corner at the Stardust.

"To make money in this business isn't just to give the bettors what they want, because that's not in our best interest," he said. "However, knowing which way they are going to bet is always a help. There are a lot of factors that go into making the numbers. The whole key is to not give away too much value to someone who is making a living betting on sports. We know which way the public is going to bet, predominantly. The public likes to bet favorites, they like to bet a lot of home favorites and they like to bet a lot of overs. There's a pattern that we know the public will bet on these games and a lot of times we just have to go into a game knowing that they are going to bet this way but we let them bet it because we feel like this 2 ½ (as an example) is the right number. So we let them lay the 2 ½. If they win they win and if we win then so be it. But we are not going to move it to 3 or 3 ½ just because we know the public is going to bet it because at that point the sharp guys are going to say 'at 3 ½, it's a buy.'"

The sportsbook also offers two contests in order to attract business. The public is invited to play the weekly free All-American Football Contest, in which $10,000 is awarded weekly, and the Stardust Invitational is an annual battle among 16 of the best handicappers in the nation who compete for a $10,000 prize in a head-to-head format. The weekly contest takes place live in the sportsbook and always gathers a good crowd.

According to Scucci, the Stardust is the only sportsbook in Las Vegas that gives bettors the information they need to beat the house. The sportsbook offers its patrons a handicapping library with wall-to-wall information about sports betting. In order to make betting easier for locals, Scucci has implemented Sportscall, a telephone betting system that differs from traditional phone accounts in that it is geared toward the average bettor instead of the high-limit player.

Since taking over in October, one of the most difficult aspects of his new job, said Scucci, is following in the footsteps of Lupo, who was one of the most respected and well-liked managers in the industry. This will be his first full football season without his former mentor.

"He was great to work for - he really knew his stuff," said Scucci. "When somebody is that well respected you have some big shoes to fill and you've got to rely on your own confidence in your abilities to hopefully do the job that he did. You realize that everything falls on your shoulders now. I kind of felt like the first March Madness without him it was noticeable. From years of working with him and having that symbiotic relationship where we would bounce ideas off each other, I found myself, at times, turning to ask his opinion and realizing he is not around anymore. A couple of times I have felt like giving him a call in New Jersey and asking him 'what do you think about this or that?'"

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