Hacking March Madness
It's March Madness, college basketball season in America, and for Nicky Gold that means one thing: time to bet. The twentysomething player sits down at his shiny wide desk in a sweeping loft, and fires up his PC. A Red Bull condenses in arm’s reach. Gold boasts five monitors in his home office, each filled with windows from dozens of sports sites. Instant messages chime endlessly on his screen. In another window, a tally of available lines rise and fall. In this country of bettors, Nicky Gold is among the best.
Gold makes millions betting sports online. He and a college friend head up a team of a half dozen math-minded friends who quit their day jobs for this. You name it, they bet it: NBA, NCAA, NFL, hockey, golf. On a given day, they may have up to $1 million in action. They have a well-engineered system, which, for obvious reasons, they don’t want to reveal. “If you’re really good, you don’t publish how you do it,” Gold says, with a laugh, which is why he doesn't want to use his real name. But each person essentially has his own responsibility, from keeping tabs on the changing lines to researching a history of stats on how well teams and players perform against the line. And though they take their hits, in the long run they win.
“Why should I get a job on Wall Street?” Gold says, “I make more doing this, and I don’t have to wear a suit.” While his skills and success are unique, he epitomizes this new manifestation of the American dream, and the generation of secretive young guys who are pursuing it. They’re college educated math smart sports fans weaned on the Internet and video games. The best of them have the broker-like gift for analyzing numbers and the dexterity of make flash decisions on the fly. They're similar to the "quants" - analysts who rocked Wall Street the last decade, except they're focused on mastering the betting systems online.
But online gambling is still a murky field. It's governed by an ancient, some say archaic, law. In 1961, long before Gold and his crew were born, the United States Congress passed the Federal Interstate Wire Act aimed at illegal bookies who were taking sports bets by phone across state lines. When the Internet gambling arrived in the late 1990s, the United State Justice Department dusted off the Wire Act and applied it to the wires of the new and burgeoning digital age. While exceptions are now made for off-track horse betting, the vast majority of bets on the Internet are deemed against the law. Enforcement is often another story, though.
While poker garners most of the hype, sports betting is among the most popular – and profitable – games online. Though the U.S. regulates other forms of gambling, from the lottery to Vegas and Indian casinos, online play remains a wild west. As a result, hundreds of operations set up shop in Costa Rica, making this the largest mission control for this controversial new American pastime. In addition to sharing the U.S. time zone, Costa Rica is in the proximal satellite footprint. It also boasts a highly-literate workforce, willing to sit at the computers in call centers for a fraction of U.S. minimal wage.
Running the game is both an art and science. It relies on two essential sources: Don Best, and the Wiseguys. Don Best is the name of a computer program, commercially available software that displays the various lines being offered at sites across the Internet. As bets come in, the betting sites adjust the line and the company’s take, called the “juice.” They do this with the help of the Wiseguys, their term for the professional bettors like Nicky Gold. If the Wiseguys, who they know from experience by name, come in at a certain line, the odds-makers adjust accordingly.
In the underworld of online betting, the Wiseguys like Gold are the taste-masters, the people setting the standard that others follow. Betting sites have terms for their followers; the Beards are the savvy players, who come in after the Wiseguys’ moves, and the Squares are everyone else. Most bettors are Squares, he says, putting down an average of under $50 a bet. Ultimately, it’s the Squares, not the geeks, whom the sportsbook operators care about most. The average guy putting fifty bucks on the Wildcats to win is the lifeblood of this culture and industry. And the only way the sites are going to continue to reach him is to overcome the most pressing concerns: underage gambling, money laundering, and problem gamers.