NBAs David Stern does not oppose sports betting anymore – and his successor will favor it (maybe).

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Sports Illustrated:

I asked Stern if it is in the best interests of his league to seek legalization of sports betting. He sighed with his head down, as if to emphasize the gravity of what he was going to say.

&#8220-It has been a matter of league policy to answer that question, &#8216-No,&#8217- &#8221- he said. &#8220-But I think that that league policy was formulated at a time when gambling was far less widespread &#8212- even legally.&#8221-

He went on to provide a brief lesson in history involving J. Walter Kennedy, the NBA commissioner from 1963-75. &#8220-Walter Kennedy testified in Congress many years ago, probably over 40, that gambling &#8212- any gambling, not just sports &#8212- should not be allowed in Atlantic City, that gambling shouldn&#8217-t be expanded,&#8221- said Stern, who was a lawyer for the NBA at that time. &#8220-I remember it because I wrote a statement. It was the U.S. association of attorneys general, the U.S. attorneys association, the association of chiefs of police, the clergy of all denominations &#8212- all lined up to say that expanding [was wrong] &#8230- and I don&#8217-t think lotteries were legal back then.

&#8220-So that was the sin. And that&#8217-s the way sports grew up in their opposition.&#8221-

What has changed, Stern acknowledged, is that the NBA can no longer oppose gambling on moral grounds.

&#8220-Considering the fact that so many state governments &#8212- probably between 40 and 50 &#8212- don&#8217-t consider it immoral, I don&#8217-t think that anyone [else] should,&#8221- Stern went on. &#8220-It may be a little immoral, because it really is a tax on the poor, the lotteries. But having said that, it&#8217-s now a matter of national policy: Gambling is good.

&#8220-So we have morphed considerably in our corporate view where we say, Look, Las Vegas is not evil. Las Vegas is a vacation and destination resort, and they have sports gambling and, in fact, there&#8217-s a federal statute that gives them a monopoly of types [on sports betting]. And we actually supported that statute back in &#8216-92.&#8221-

Stern has long maintained that he doesn&#8217-t want the NBA to turn into a point-spread league, and he talked about how NBA games create little of the sports-betting handle in Vegas, and that the majority of NBA fans have scant interest in the spread. I responded by noting that the NBA has created a variety of constituencies, including fans who wear NBA clothing, who play NBA video games and who view Kobe Bryant and LeBron James as Hollywood-level stars, which is not to forget the fans from any number of countries who follow the NBA patriotically via Dirk Nowitzki, Tony Parker or Yao Ming.

Why not make room under the big tent for the minority of fans who like to bet on NBA games?

&#8220-OK, but then you&#8217-re arguing there may be good and sufficient business reasons to do that,&#8221- Stern said. &#8220-And I&#8217-m going to leave the slate clean for my successor.&#8221-

He smiled and added, &#8220-But it&#8217-s fair enough that we have moved to a point where that leap is a possibility, although that&#8217-s not our current position.&#8221-

There you have it. That is a breakthrough. You don&#8217-t hear baseball commissioner Bud Selig &#8212- and you surely don&#8217-t hear NFL commissioner Roger Goodell &#8212- saying that legalized betting on their games is a &#8220-possibility.&#8221- Sports betting is their third rail, and they&#8217-ve long maintained the anachronistic appearance of having nothing to do with it. (Even though illegal sports betting has helped turn the NFL into the No. 1 sport in America.)

As Stern acknowledged, gambling has gone mainstream since the scandal of 1919. The gambling industry will continue to grow as more and more casinos are built throughout the nation, such as the casino now being planned by Cavaliers owner Dan Gilbert for downtown Cleveland nearby Quicken Loans Arena.

Without committing himself in any way, Stern acknowledged that sports betting could create a new stream of revenue for the NBA &#8212- not unlike the interest that March Madness betting pools have created for the NCAA tournament.

&#8220-You&#8217-re right about the threat that we perceive, and we stay on it,&#8221- said Stern of the menace of illegal gambling rings. &#8220-I think the threat is the same legal and illegal &#8212- the threat is there.

&#8220-Gambling, however it may have moved closer to the line [of becoming acceptable], is still viewed on the threat side,&#8221- he said. &#8220-Although we understand fully why, buried within that threat there may be a huge opportunity as well.&#8221-

How the Tampa Bay Rays went from $7.00 to $750.00 on yoonew.com.

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No one epitomizes the success you can have on the yoonew exchange like the Tampa Bay Rays. The Rays, were a ball club who finished in last place last season in the AL East for the 3rd straight year. Playing in the same division with the World Champion Red Sox and former dynasty New York Yankees always provided prognosticators an easy pre-season prediction for the Rays: last place. The outlook was never rosy for the Rays despite their young talent because of the financial disparity between them and the teams who held court at the top of their division.

Entering this season, Las Vegas sportsbooks had the Rays as a 200-1 futures bet to win the World Series. Seven months later, the Rays are now in the World Series and bettors who even invested $10.00 in them can walk away with a cool $2000.00. Vegas sportsbook&#8217-s will be in for a cold winter if the Rays manage to pull off a World Series victory against the Phillies and possibly become the greatest baseball story of all-time. There&#8217-s already been talk out of Vegas that they&#8217-ll never open a team at those odds again.

But, on the yoonew exchange it was a totally different story. yoonew.com is the &#8220-Stock Market for Sports Tickets.&#8221- A futures site where fans can get tickets for the big events like the Super Bowl, Stanley Cup, NBA Finals, World Series, UEFA Finals, Final Four, and BCS National Title at prices much lower than face value. On yoonew, you can also buy a &#8220-Team Fantasy Seat&#8221- or &#8220-Matchup Fantasy Seat&#8221- on a team and as they progress in the season, the initial value of your futures stock could increase and you can either sell it for a profit, hold on to them hoping it continues increasing, or hope your team makes it to the big game to receive your free ticket.

The initial IPO for Rays 2008 World Series ticket futures was $7.50 before the season started. When yoonew began making markets for the team in June when they looked like a real threat, there were asks at 18.50. Looking back, It was a steal for anyone on the exchange. Plenty of traders appeared to be saying: &#8220-Why not the Rays?&#8221- They had nowhere to go but &#8220-UP,&#8221- especially with the excessive amounts of young talent they had entering the season and the early season struggles of the Sox and Yanks.

Before we delve deeper into explaining the meteoric rise of the Rays, let&#8217-s take a month by month look at the Rays and how yoonew users who bought this season were happy to hold on to them.

Take a look at the chart below and the month by month breakdown which was originally analyzed on yoonewverse.com:

Month by month Rays breakdown:

March Pre-Season (Market launch):$7.50
April: $7.50 (14-12 record)
May: $15.00 (33-22 record)
June: $217.07 (49-33 record)
July: $161.68 (62-45 record)
August: $342.44 (83-52 record)
September: $394.10 (97-65 record)
Up 3-1 on the Red Sox: $1050.00
Up 3-2 on the Red Sox: $750.00
Tied 3-3 with the Red Sox: $650.00
Clinch ALCS Title: $750.00

There are obviously two sides to every trade and it won&#8217-t always be as profitable as the Rays. For example, take the story that Bigleaguestew.com wrote on yoonew and the Chicago Cubs market and how it completely dropped from nearly $4000.00 to a stunning $2.00.

Plenty of yoonew users invested in the Rays in mid-May when the Rays swept the Los Angeles Angels and then won 3 out of 4 against the same team who beat up on them for years, the Yankees, in a division battle that sent a clear message: &#8220-We are here to stay.&#8221- As the season progressed, the Rays continued to make believers out of their doubters. On the season, the biggest increase the Rays made month to month was from May to June when they increased +134% on the exchange.

As the summer ended and the Fall classic was weeks away, fans and sports futures traders began registering on the site and buying the Rays as an investment they felt was profitable. Rays fans also saw the potential World Series berth waiting in the wings and got in on them as well. Plenty of traders cashed out with their $300 and $400.00 in profit. You even had die-hard Rays fans who cashed out because of the need for extra cash in these down economic times and said they&#8217-d take their chances with the Rays on sale for tickets.

Now, flash forward past the division title, home-field advantage, and ALCS title, the Rays are now in the World Series playing the Phillies for the ultimate prize. Of course, there were other yoonew users from across the country who bought in early and kept their tickets for the World Series at prices in the $50&#8217-s and $100&#8217-s while a ticket on the open market cost above $300.00 at this point in time. A huge savings for them and the yoonew mission was complete – which is to give fans a chance to land tickets under face value to the hard to get games.

By: Claudio E. Cabrera

ProTrade vs. Sports Derivative Exchange

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I asked Chris Hibbert whether they are &#8220-exchanges&#8221-.

Chris Hibbert:

It looks like it from a cursory glance. In both cases, you can buy and sell, and the prices appear to be set by market interactions rather than institutional fiat. They both have a feedback mechanism based on “dividends” produced by on-field performance. ProTrade has a sophisticated formula that takes into account the players’ contribution to a winning season. SDX seems to base their dividends purely on wins and losses. The latter is easier to understand, and probably closer to the way most fans think about things. I think ProTrade is justified in believing they are closer to capturing the individual athlete’s contribution.

There’s also the difference in betting on players or teams. I think both might be helped by offering bets based on both players and teams. But until they cover hockey, I won’t spend a lot of time there. I don’t want to have to start following one of the major sports in order to bet in these play money markets.

ProTrade has a market maker, and SDX uses book orders.

External Links:

– ProTrade

– Sports Derivative Exchange

– Zocalo (the open-source software for enterprise prediction markets, coded by Chris Hibbert)

UPDATE: The SDX co-founder has a comment.

The Value of Tom Brady?

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New England Patriots&#8217- quarterback Tom Brady suffered a season-ending injury during yesterday&#8217-s game with the Kansas City Chiefs. After he left the game and before the extent of the injury was known, the TradeSport&#8217-s contract on whether the Pats would win the Super Bowl fell about 5 points (from 21 to 16). Then at about 6:30pm ET Yahoo Sports posted a story that he was done for the year and the price collapsed. It has now stabilized at about 8, so the injury experiment suggests that a healthy Brady was worth about 13 points in this market.[*] I hope his agent is paying attention.

[*] Possibly understates Brady&#8217-s value since there were already concerns about his health prior to the injury.

link: Tradesports NE Pats market

Did Patri Friedman misread BetFair?

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About the latest New York Times story on BetFair fighting sports corruption&#8230-

Patri Friedman:

Prediction markets not only make fixing easier to profit from, by creating a liquid market for insider betting, but they also make it easier to detect, by creating a centralized database of betting for analysis: […]

So. the effects are mixed, and in the end we are left with the Homer Simpson-esque paradox that prediction markets are both the cause of, and the solution to, insider trading.

Hell, no.

My remarks about his 2 statements:

#2. Sports betting (thru bookmakers and sportsbooks) existed well before the apparition of the prediction exchanges (betting exchanges) &#8212-BetFair was created in 1999 and was launched in 2000, and TradeSports, in 2002.

#1. More money is bet on sports with bookmakers than with prediction exchanges (betting exchanges).

  1. Match fixing existed before betting.
  2. Profiting from match fixing existed before BetFair and TradeSports.
  3. BetFair is the only betting company in the world that has systematized a cooperation program with sports bodies in order to detect and fight sports corruption.