Cascade in the News

Bookies in Exile
By WILLIAM BERLIND (NYT)
Published: August 17, 2003
To read the complete article click here.

Among the bookmakers K.C. encountered when he first moved down to Costa Rica was L.R., at Cascadesportsbook.com, a small operation formed in 1996. L.R. is a stocky, soft-spoken man. Like many of the bookmakers, he's fond of wearing athletic warmup gear, though he doesn't exercise much or play ball. His life is about bookmaking.

Cascade's no-frills offices reflect L.R.'s character. The firm is situated in a colorless, two-story building on the side of a ravine some 20 minutes outside San José. As you enter, a sleepy guard in a worn blue uniform points you up a flight of stairs. There are two rooms with slatted windows looking out across a cracked road on a stand of thin, dusty pine trees; fast-food wrappings hang in the nettles. Occasionally a truck will rumble by spewing diesel exhaust, but aside from that it's quiet. Cascade's offices consist of two rooms, a small back office and a larger room connected to it. In the larger room there are 10 or so rows of long, straight desks with computers on them, lending the place the air of a classroom.

Behind the computers local employees sit on mismatched office chairs fielding calls from gamblers and tracking the bets being placed over the Internet,which now accounts for 30 percent of Cascade's business. (The remaining volume is still conducted over the phone.)

When I arrived one Saturday afternoon at the end of the college basketball season, the office was half full. L.R. was seated at the front of the large room on a foot-high rise. Known as ''the stage,'' a feature common to nearly every sports book, this is where the head oddsmaker monitors all the action.

There are seven large TV's suspended from the ceiling above the stage anda few smaller ones on the desk tuned to games in progress or to ESPNews.

L.R. arrives at his office at 7 in the morning to enter his lines for that day's games on his site. He has spent the previous night and the early morning studying the games being played that day, speaking with the sources and handicappers in the United States who help him decide how to shade his lines. To do it right, he has to keep track of an impossible number of details, things like whether Marquette's star guard has recovered from his ankle sprain

Sites that expect to do significant business have no choice but to offer a huge range of games, even obscure college match-ups that would never be shown on national television. A professional shop requires a minimum capital base of about $1 million to cover overhead and keep the lights on during a losing streak.

Bookmakers make their money by extracting a percentage out of every bet being made, which is called the vigorish or ''the juice.'' That means the gambler has lost 10 percent of his bet regardless of whether he wins or loses. If the bookie can win 50 percent of the games (which if he sets his lines right, he should be able to do), he'll break even on the betting, clear the 10 percent for each one, and, after expenses, eke out a profit of about 3 percent.

With such a relatively small margin, the key to the business is volume.

And that's why the Internet is so useful. With the power to receive scores and other game information instantly, on-line bookmakers can generate extra betting volume by offering a tantalizing variety of propositions - the total points scored in each quarter of basketball and football games and in each inning of baseball games. There are even lines offered for specific achievements, like, will Allen Iverson score 30 points, or will Keyshawn Johnson be the first person to score in the Super Bowl.

Around 11 a.m. gamblers back in the United States start making their bets. Bookmakers use a point spread to equalize unevenly matched teams. Football, college and pro, generates the greatest action. Basketball is also popular.

Based on how much betting action he receives for each team, the bookmaker then adjusts his spread. For instance, if his bettors are heavily betting the favorite team, he'll adjust his line to give more points to the underdog, in order to attract betting on the underdog. His objective always is to maintain approximately 50 percent of the gross betting action on either side of the game.

If he does this, then no matter the result of the game, he takes his 10 percent cut. While the gambler tries to figure out weaknesses in point spreads - games where the bookmaker may have misjudged the strengths of the teams or is unaware of a critical injury - the bookmaker's job is to anticipate how the public is going to bet and adjust his line up or down to split betting action on both sides of the line. (Once a bet is placed at a particular spread, that number holds for that bettor, even if the spread subsequently moves.)

Every sports book has its own personality, formed by the number and type of gamblers it attracts and the manner in which it moves its line. Cascade's gamblers range from small-time guys making $50 bets to professional gamblers betting $10,000 on 10 different games - the latter type attracted to Cascade, in part, because L.R. is regarded as one of top bookmakers offshore.

As the bets roll in, L.R. watches two things. One window on his computer is open to Cascade's back-end software, which tracks all the bets and the gamblers who make them. Each of Cascade's gamblers has a profile, with a betting history and personal information, which flashes onscreen when the bettor places a bet. Another window on L.R.'s screen is open to DonBest.com, a subscription service that is like the Bloomberg of sports betting. On DonBest.com, many of the prominent offshore sports books, including Cascade, show their lines in real time. When a book changes its line, it is immediately registered on DonBest.com. It's a way for bookies and serious bettors to keep tabs on the lines that sports books are offering for a particular game. While L.R. and I were talking, a bet came in to one of the employees in the pen. ''Lafayette for five dimes,'' she shouted out. L.R. quickly glances at the screen to see who was making the bet. ''Twelve point five,'' he said reflexively. ''And that's it.''

What had transpired was this: the University of New Orleans was playing a basketball game against the University of Louisiana at Lafayette that afternoon, and most of the books on DonBest.com, including Cascade, had Lafayette favored by 12.5 points.

When to move a line is a point of great philosophical debate among bookmakers. According to traditional bookmaking practice, a bookmaker only moves his line on the basis of a bet that has come in. After bookmakers receive a big bet, they will typically adjust their line to try and draw action for the other side of the game. By letting the betting determine the line, a bookie should, theoretically, be able to maintain his 50/50 split and preserve his profit margin. But frequently, bookies move their lines for other reasons- for example, when a well-regarded sports book has moved its line on DonBest.com, a practice known as ''moving off air.'' Or they might do it because they have a particular bias or hunch about a game, in which case they're essentially throwing their 3 percent margin out the window and gambling with their own money.

L.R. tends not to operate this way, and in the case of New Orleans versus Louisiana Lafayette, he was simply waiting for a solid bet before moving his line. And then it came. A guy sitting behind a computer screen somewhere in the United States wanted to put $5,000 on New Orleans and take the 12.5 points.

L.R. accepted the bet and changed his line to 12. He cut the guy off from making any more bets on the old line. L.R. suspected it might be a professional gambler, so he was being particularly careful. The bookmaker and the professional sports bettor, known in the business as a ''sharp,'' are engaged in a constant game of cat and mouse. Average bettors don't put much thought into their bets, often betting on their alma mater or home team, regardless of the spread. But sharp sports bettors make their living by constantly trolling for weak lines. The sharp holds the advantage over the bookie in this because his sources usually run deeper than the bookmaker's, sometimes even into the inner sanctum of a professional or collegiate team, like a team doctor or an assistant coach. More important, the sharp can be selective. While the bookmaker has to put up a line on every game -- on this Saturday there were more than 100 college basketball games, along with a golf tournament and a tennis tournament -- the sharp gambler carefully chooses the game he bets on. It takes just one nugget of inside information on some obscure game between, say, Alabama A&M and the University of Arkansas at Pine Bluff, to give a sharp the advantage he needs. And while all sports books have limits on the amount of money a single gambler can bet, usually between $3,000 to $10,000, depending on the sport, the professional gambler can easily exceed these limits by using a ''syndicate,'' or a crew of ''beards,'' who have accounts at multiple offshore sports books and spread bets around for him.

Because of the high-risk nature of the business, and because of the tremendous amounts of money the Internet allows bookmakers to traffic in, a herd mentality has developed among bookmakers. When one sports book on DonBest.com changes his line, it doesn't take long for the others to follow suit. And this is what happened after L.R. moved his line on the New Orleans game to 12.

Cascade's line for the game flashed red at 12 on DonBest.com. Immediately several other books on DonBest.com changed their lines from 12.5 to 12.

L.R. and every other bookie in Costa Rica go through rituals like this hundreds of times a day, microscopic dramas that run morning to night. It's precision work, requiring a superhuman ability to process reams of information all at once. By 10 or 11 at night - when the West Coast games finally start - the day's betting is done and L.R. goes off into the night with hundreds of thousands of dollars riding on a hundred college basketball games and the 19-year-old kids who play them.