The 2004 National Football League season will go down as one of the worst ever for the sports betting industry.
A trend of heavy favorites winning throughout most of the season had some books teetering on the brink of existence. A run of underdogs winning in the playoffs has provided relief, but not enough to turn the season into a positive one.
"We were never in danger of being put out of business, but I am sure some of the smaller books were on the edge and the way the season ended up probably saved them," commented one operator, who spoke to Interactive Gaming News on the condition of anonymity.
The season's low-water mark for bookmakers came on Nov. 24, when 13 of the 14 favorites won their games, and 11 of them covered the spread.
Punters have a tendency to bet the favorites disproportionately to the underdogs. Even with the 10 percent juice, bookmakers struggle if the majority of bettors are winning.
In an ideal world, a book will have an equal number of bets coming from each side and take the 10 percent juice as revenue, but that seldom happens.
"The trick is to get it as close to even on each side as possible but also not to put your whole operation at risk hoping for an outcome to go one way or the other," one operator commented. "By doing that, you are basically gambling with your business."
Some books were rumored to have lost more than $3 million on that dark November Sunday when nearly all the favorites won.
Alistair Assheton, CEO of VIP Sports said his Curacao-based sports book was one of many to take a heavy hit.
"We've been in the business since 1997 and that was the worst day ever in our biggest sport," Assheton said.
With only two Sundays left in the NFL season, bookmakers have little time to regain their losses from the first half of the season, but things are starting to look up for many of them.
The playoffs got off to a good start with three underdogs--St. Louis, Minnesota and the New York Jets--winning in the wildcard round. Then in the divisional round, New York covered on Saturday and New England won its pick 'em game against Indianapolis on Sunday.
The spreads for the coming weekend's NFC and AFC championship games, meanwhile, have shrunk, and closer lines typically make it easier to balance the betting. This is precisely what happened Sunday in the New England/Indianapolis game, in which the line fluctuated between 1 and 2 points and moved to a pick-'em with some odds makers.
Diversified Operators Are Less Reliant on Sports
Hoping for the right outcome in a sporting event is an occupational hazard for bookmakers, and the 2004-05 NFL season is proof of that.
But as the Internet gambling industry matures, operators are becoming more capable of absorbing bad outcomes. While the operation might suffer in the short term, well established brands--both online and offline--can weather the storm.
The bad NFL results, coupled with not having National Hockey League games this season, has hurt, but operators who have diversified their offerings looked to other revenue streams for compensation.
Many sports books have added online casinos to their sites, and a handful offer online poker rooms. Assheton said that on the same November Sunday his sports book got killed, the company's online poker room and casino experienced record amounts of traffic.
"It just goes to show the value to a sports book of having a joined up offering," Assheton said.
Many of those visitors to the poker room had won their football bets and were presumably looking for somewhere to spend their winnings, so VIP's ability to keep the players in house, lessened the blow significantly.
The European Perspective
Most operators agree that U.S. bettors make up around 75 percent of the football betting market, but the portion of action coming from overseas is growing steadily. As the playoffs continue and the Super Bowl nears, anticipation is rising in the United Kingdom and the rest of Europe.
After their big win over the Colts on Sunday, the Patriots were quickly installed as the heavy favorites to win the Super Bowl at nearly all of Europe's leading sports betting sites. New England is no better than 13/8 to win Super Bowl XXXIX and is as short as 11/8 at some U.K.-based operations, but 13/8 with bet365, Ladbrokes and Skybet.
Fresh off their overtime escape against the New York Jets on Saturday, the Steelers were installed on Monday by the U.K. books as the second favorite to win the Super Bowl.
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