“At the same time, centralized and decentralized exchanges will compete to amass liquidity. “Over the next few years, there will be a number of creative attempts to build sports wagers into insurance products and institutional investment vehicles,” said Lloyd Danzig, managing partner at Sharp Alpha Advisors. It remains to be seen whether a broader, more formal commingling of sports betting, insurance, and the stock market is in the offing, but smart money’s on that happening. It worked out well for us.”ġ0 years ago today, Tim Tebow and Demaryius Thomas connected on this iconic play in overtime to give the Broncos a playoff victory over the Steelers □□ The operator had massive exposure on Broncos futures and sent one of their people over here to bet on them to win the Super Bowl, and the Broncos got obliterated by the Patriots in the next game. “The Tim Tebow Broncos team, they beat Pittsburgh in the wild card game. “I do know of other operators that have hedged their bets at our sportsbook, but we have never done it ourselves,” Murray said. Sportsbooks do sometimes engage, however, in layoff wagers, where they reduce liability by taking the other side of a given bet at another sportsbook. Same goes for the SuperBook when it comes to its annual SuperContest, said John Murray, the sportsbook’s executive director of operations. Somewhat surprisingly, Benson added, “We don’t insure our guarantees at all” - including Circa’s lucrative pro football contest. “It allows us to sell off some of our position if we need to instead of just lowering the Suns to an unbettable number.” “If we have the Suns at 2/1 to win the title, people can also lay -240, for example, on them not to win the title,” said Jeffrey Benson, Circa’s sportsbook operations manager. As for Circa, yes/no wagers act as a type of de facto insurance in markets where it has considerable exposure. Mack would have won both bets and like $32 million, but he decided to not let the customers feel like they took the worst of it.” Saying yes/no to hedgingĬaesars Sportsbook, which takes McIngvale’s action as often as any other operator, told Sports Handle that it doesn’t hedge his bets. “He took Bengals moneyline instead and the Rams won by 3. “With the Super Bowl, his advisors told him to take the Bengals +3.5 while saying customers got free mattresses if the Bengals won,” Andrews added. “If I had a chance to buy a $5,000 mattress and had a 47% chance of getting my money back, I’d go to Mattress Mack.” “It’s a good deal for his customers” if they’re already in the market for a high-end mattress, said professional sports bettor Bill Krackomberger. But for his customers, it’s a riskier proposition, albeit one that is not without benefits. With sports betting replacing insurance as his safety net, McIngvale always wins - and gets a ton of free press out of his gambling largesse. Then he has an edge with his sports bet where he negotiates deals with these companies” - like, say, a generous amount of free play to account for the promotional value received by the sportsbook that takes his big bet. “Mattress Mack could be considered arbitrage - he gets promotion, he gets deals with vendors. “Cases where is optimal is arbitrage, where both sides have value,” said Andrews. If the Astros lost, he and his customers lost their wagers - but McIngvale reaped the profits from all those mattresses that became purchases rather than giveaways. If the Astros won it all, he cashed a big ticket and his customers walked off with free mattresses. So, rather than purchasing insurance from a heavyweight provider like Lloyd’s of London, McIngvale began hedging his mattress promotions with sports bets. “It covered his ass, but it wasn’t as good as he could do just laying it off in the sports betting market.” “He was basically giving up half of his EV (expected value) by taking this lousy insurance,” Andrews told Sports Handle after the podcast first aired. But it wasn’t long before he and his advisors came to the conclusion that there had to be a better way. Jack Andrews (a pseudonym) interviewed one of Jim “Mattress Mack” McIngvale’s betting handlers, who explained how the Houston-based furniture mogul became perhaps the country’s best-known (and most polarizing) high roller.īack when he started giving away free mattresses if, say, the Astros won the World Series, McIngvale would take out an insurance policy to cover the potential cost of such promotions. On a podcast back in April, the sports betting entrepreneur Capt.
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