Posted Monday, February 25, 2013 11:33 PMHave you heard of bitcoins? If you haven't, you will....
I first heard of them about 6 months ago, when a buddy of mine who is crazy about almost everything (I add the word "almost" only because bitcoin is the only thing he has ever told me that is not crazy). He told me of this strange online currency - that would change a lot of things - but of interest to me was online gambling.
So here are the cliff notes. Yes, it is long - but this is a little untidy and complicated because it is still in the infant stages. I am new to this - so please excuse me if some of my details about the technology of Bitcoin are wrong - just correct me and I will acknowledge it.
As we all know, Americans have been targeted for playing poker and betting on sports online for the last decade or so. The US govt has fought this on basically two fronts: by going after the online gambling providers, and by passing the UIGEA which basically limits financial transactions to gambling establishments. The success of this campaign has been huge - online poker has all but dried up in the US, and we all know the trials and tribulations of online sports gambling in 2013.
Enter Bitcoin. What is bitcoin? It is basically online currency.
* One bitcoin is worth a certain value (more to come), and that bitcoin can be broken down to 8 decimal points.
* Bitcoin has no physical presence - and I cant really explain what makes you have possession of it - but I assume it is something like a long password that uniquely identifies each bitcoin.
* Your bitcoins are stored in a wallet, either online or on your local computer.
* There are a limited number of bitcoins in existence. There cant be devaluation through printing of bitcoins. From what I understand - there will be 21 million in existence by 2017 and thats it.
* Bitcoin can be bought and sold in to regular currency.
* Bitcoin value goes up and down based on supply and demand.
* Bitcoin is not owned by anyone. It is not regulated by anyone. It is public source code.
So how does Bitcoin translate in to online gambling? If you had a online sportsbook that took bitcoin, it basically bypasses the UIGEA because it is not trading currency from financial institutions. Your USD are converted to bitcoin, which are deposited and withdrawn from the SB. Then you trade your bitcoin back to USD. It is unlike Neteller in that Neteller trades USD, and are owned and operated by a company. Bitcoin is an online currency, not regulated by the UIGEA, and it presents a challenge for govts that want to go after someone - because there is nobody to go after.
And there are actually sporstbooks out there, and the most exciting is a sportsexchange that uses bitcoin. At www.btcsportsmatch.com - there is an exchange that is basically vig free - with the winner paying a 1% commission on winnings. The exchange uses pinnacle lines, and uses a midpoint between the lines, and you can make offers on sides and totals with bitcoin.
The really interesting thing is the ease of movement of bitcoin. It is just a couple of mouse clicks to move your bitcoin around - which means a couple of major advantages for both you and the SB. The first is that you dont need to keep a balance at the SB or exchange. You simply transfer in the money you want to wager, and when you win, you transfer it out. And because the movement is free and easy - the SB and exchange are happy for you to do this. So your bitcoin balance is always in your possession when not in play. The cost savings of the enormous overhead of transaction fees for currency based sportsbooks is eliminated for both the player and the book.
There is also onlin poker popping up, the most popular is "sealswithclubs". The poker community is pretty excited about it from what I can tell.
There are a couple of things that worry me. One is the fluctuation of the bitcoin. I suggest you look at this chart http://blockchain.info/charts/market-price . Bitcoin was at $5 about a year ago, at 15 a month ago, and at $30 today. The volatility is crazy, and it is very hard to determine what causes the spikes. But the trend is upward - but who knows. I tend to think that this is becoming more and more known in the gambling world, and is growing as a result- but I have nothing to back that up.
There have also been reports of hacking, and stealing bitcoins. I have read safe ways to keep your bitcoin offline - and they seem to be effective. But this brings up the fact that if you are not technical (I am not), it is not an easy in and easy out. This technology is not yet fully dummy proof for the average joe to just click here or there. There is a learning curve, but it is all out there.
It will be very interesting to see the US Govt reaction to dealing with this. Obviously, gambling is not the only problem for them - as I am sure the online drug trade, money laundering, and tax evasion are all issues. Who knows. But it sure seems like a tougher kill for them. Im not even sure how they could attack it.
My personal experience is that my buddy set me up, walked me through it, and I bought 3 bitcoin back in December for $13.50 each. I opened an account at the exchange, and played around there. I got offers matched and matched some offers. I think that the exchange itself will evolve and need to make some fundamental changes - but the concept of the bitcoin is the discussion here - not the exchange itself. My 3 bitcoin turned in to 3.25 bitcoin, and the value is now about 30 bucks for each - so my original $40 investement is now worth about $97. Not bad.
Who knows - maybe bitcoin will implode and be the pets.com or napster.com of online currency. But maybe it will become mainstream - and you can say you heard about it here first.
Yes, todays news from the poker world is bad. No, it is worse than bad.
How bad? Bad enough to potentially bring down the 3 top poker sites - Pokerstars and Full Tilt together swamp the online sports betting world in terms of volume. So one can only assume that this is very bad for the extremely limited sports betting that is left out there for Americans.
The cliff notes are that Pokerstars, Ulitmate Bet, and Full Tilt were using undercover ways to fund and pay accounts in America. They bought off bank presidents, bought banks outright, and used CC and WU methods that the DOJ deems illegal according to the UIGEA of 2006. Indictments were handed out today, and no official word has come from the sites - but there is much speculation from very reliable sources that they will most likely shut down completely. At best, they will remain open for non-Americans, but Americans poker playing days online are all but done.
I wonder what Negranu, Hellmuth, Ivey - and those other posers will do now - will they just make a cash grab and disappear or will they fight with the money they made on the backs of the players to get something done. I wonder what this will do to the poker movement - it could go one way or the other - but what are the odds on a bunch of degenerates getting organized and getting something done? Maybe the PPA will do something - I hope so.
Sounds similar to sports betting? How do you think the few sportsbooks left out there will feel when they contemplate this knowing they do the same exact things to keep Americans?
The end is near my dear friends. Sure there will always be places that will take wagers with extreme risks and non-transparancy to the bettor, but the days of trust are gone. Any book can close at any time, your money could be gone at any book at any time.
This is a big deal. Some might say that online gambling for Americans couldnt get worse, but today it got enormously worse. I have my own opinions about why this is happening - and those have to do with paving the way for inevitable legalization and taxation and knocking these guys out for financial gain - but that is just opinion and doesnt really matter. The reality is that I wouldnt have a penny offshore now at any book that accepts Americans. If you have money at Pinnacle or Betfair - you are probably fine - but unless you are willing to lose your money at any time, just sit out for a while. Pokerstars and Fulltilt are in a different stratisphere compared to bookmaker and greek - if they can go (at least for Americans) then certainly anything can happen to those remaining.
Keep your eyes and ears open - things are happening quickly - stay on top of the news and stay on top of your balances.
Today, we went from being very cold to entering the ice age of online gambling. The good news is, the ice always seems to melt eventually.
So there is a new bill up for approval sponsored by Barney Frank and Jim McDermott. It is advertised as the reversal of the UIGEA that passed in the dead of night a couple of years ago and removed neteller from our lives and made it harder to move money.
Here are the specifics:
1. It is currently LEGAL at the federal level to bet on sports. This legislation does NOTHING to address the legality of wagering for the bet placer. It is still ILLEGAL to accept wagers. This wont change.
2. The new legislation excludes any business that handles sports betting. So this does nothing to open up sportsbooks moving money easier.
3. The new legislation will license gambling establishments. These will include establishments that offer online BJ, craps, and poker etc. - NOT SPORTSBETTING.
4. Any company that gets this license will pay a 2% tax on all deposits.
5. Any company that gets a license will be required to provide to the IRS a summary of all wins and losses by player.
6. There is language about protecting the addicted gambler, children etc - useless.
7. The UIGEA is delayed from being enforced on Dec 1 09 to Dec 1 10 (this is useless because it is essentially unenforceable more than what they do now).
So in a nutshell - the govt has realized that they are missing out on a big revenue stream - both from taxing the gaming business but also the player. This is a plan to get both. This is not a plan to overturn the UIGEA.
This is also not a plan to accept sporst betting as a form of government sponsored gambling. The govt thinks poker and table games are fine, but not sports betting. I guess the poker lobby is much stronger than the anti sports gambling lobby (the NFL, NBA etc).
So thats really it. In the end, even if this passes, I am not convinced a company like pokerstars would even participate. Yes, it would be much easier for them to receive deposits - but it would cost them 2% on all deposits, the cost of the license itself, and a presumed loss of customers who will be very pissed that the govt will be getting a log of their wins and losses. I guess this will come down to a business decision for companies like PS.
The big winner here is land based US casinos like Harrahs who are struggling now, but are foaming at the mouth to be a govt sponsored online gambling company - which they will be with very little effort.
For the player, if you play a lot of poker, and dont mind the govt knowing your wins and losses - there will be very easy ways to deposit and receive money from a harrahs or similar. Im sure they will accept CC's, and online banking transactions - and in that respect this will help a lot of people win at a online poker table and collect their money 5 minutes later.
Unfortunately, it will do nothing for the guy who wants to bet on a football game in 5 minutes but has not money offshore.
As the MLB season is upon us, it might be time to think about your strategy for betting bases. There are 2 main schools of thought for handicapping, handicapping a winner - or handicapping a line.
From my perspective, the vast majority of MLB bettors handicap a winner. They come up with reasons to bet a team and while the line comes in to their thought process, they are looking for a winner. This leads to betting lots of favorites, and often paying too high of a price for teams. Chasing is not only for bet amounts - a lot of people chase a line too - thinking "if its a winner at -150 it is a winner at -160 so Im still betting it". In my opinion, this is a recipe for longterm MLB disaster.
The second way to bet baseball is to handicap a line, and bet on the side that gives you the most value in relation to your line. When you come up with a line, you are not coming up with the line you think will be closest to the betting line - you are coming up with a line that you think is an accurate reflection of results. If those 2 teams played 100 times, the line you handicap would break a bettor even if they took one side all of those times.
Using this method, you could end up on either side of any game on any day based upon what the line is, regardless of whether you think they will win that day or not. In MLB you are often betting on teams you think have a better chance of losing that day than winning, but the line is the great equalizer. Lots of guys go sub .500 in MLB and win lots of money.
Baseball, more than any other sport, is a longterm venture. So overpaying even 3 or 4 cents will kill you longterm - its just like paying a tax. Do yourself a favor and get numerous outs - and always always always bet the best line you can - and make sure you have reduced juice books in that mix. Dont make the mistake of saying "5 cents is no big deal" - it is a big deal - every penny is a big deal on lines.
The average bettor would be better off line shopping and betting the best available line than increasing his win percentage by 3%. For some reason, people like to put all of their time in to handicapping and then pay too much for the team they bet.
Remember - the number one determinant of longterm sportsbetting success is how often you beat the closing line and by how much.
So the next time you read someones writeup and it is loaded with comments about how they think a pitcher will come to play, or how a team is motivated, or anything of the sort - remember one thing - all of that doesnt matter if you are paying too much for that team - and if that line is 10 cents too much you should be playing the other side.
In my opinion, the only way to make money at MLB longterm is to handicap the line by predicting results, and betting whichever side is value in relation to that number. This takes a totally unemotional approach, as you cant "fall in love" with any team on any day, but instead you will be falling in love with your bankroll as you profit on the marathon that is MLB.
GL all
It seems like I cant read a post at Covers anymore without a mention of who the "public" is betting, and at what percentage. I will admit, I have strong opinions (almost all negative) about the validity of these percentages, what they mean, and the seemingly endless inability of anyone to provide any sort of statistics with history of how to use them and what to expect.
But yet it is so prevalent in how people pick their games they must know something I dont, so Im keeping an open mind and putting this out there as an honest attempt to gain meaningful information. Currently, all I have is anecdotal answers of personal experience, but no facts. Its always things like "I use the numbers, but I use other stuff too" or "I am 10-4 in my last 14, its working!". You get the same kind of answers when you ask someone "is there life after death". Im trying to draw a line here between faith and science - so I will ask the follwing questions to anyone who will answer:
1. Where does a company like sportsinsights get their numbers?
2. Why would any sportsbook give up to sportsinsights (or anyone like them) any information about betting patterns?
3. What type of sportsbook gives up these numbers? If crappy sportsbooks with 500 dolar limits are the main contributors, what good is that? Does pinnacle really give out these numbers? Try walking up to a Vegas sportsbook and ask the manager about their handle - let me know what they say....
4. Think about the business model of sportsinsights. Spread a popular belief that you know more than the average gambler, then charge for that info - sounds a lot like a tout in different clothes if you ask me. Explain sportsinsights motivation to be forthright in any capacity.
5. Assuming the numbers are real, and from a real sporstbook, and from legitimate sportsbooks - what do they mean? What - specifically - do you do with them and why would that make any sense?
6. Do people who bet more money win at a higher percentage than those who dont bet as much?
7. Please provide any history, statistics, or a model of when to use the numbers and how. Not a vage answer - but specifics - with backup. Example: When a team is 80% or higher, and the line has moved 1 point in the opposite direction, that team wins at a 58.5% rate over the past 5 years.
Im sure the answers to the above will provide a platform for more follow up questions, but considering I have never seen an answer to the above - I wont hold my breath.
This is not bashing those that use these numbers, or an attack in any way, it is an attempt to understand and inject some rational discussion in to what appears to be a totally irrational subject.
Everyone has their own opinion about these numbers - but everyone uses them differently - and that is always trouble from a statisctical relevancy standpoint. If something is statistically relevant, there shouldnt be varying opinions on how to use the numbers or what they mean, it should just be self evident.
My opinion going in to this discussion is that these numbers are absolute hogwash - an urban myth spawning an industry to suck more money out of lazy gamblers looking for easy answers to complex questions. So someone please change my mind.....