by Kyle Johnson
“It’s immoral to let a sucker keep his money.”
This is a famous quote from legendary gambler/swindler William “Canada Bill” Jones. Depending on your feelings about gambling, you might believe it describes casino operators.
Crypto has been the trendy way to gamble in recent years. The industry is still down since the highs of November 2021, but rather than gambling on crypto, many now gamble with crypto at online casinos.
If you’re unfamiliar with this trend, the scale might surprise you.
Most major countries have outlawed many forms of online gambling. So the industry went offshore. The Caribbean nation of Curaçao has licensed over 450 online casinos. Gamblers from around the world use crypto to play live-dealer games like blackjack, and electronic versions of games like slots. The most popular online casino, Stake, does over $2 billion in revenue per year. Reportedly, Stake pays Grammy-winning rapper Drake $100 million per year for promotion.
There’s an entire cottage industry of online gambling “streamers”—people who livestream their online gambling sessions. Some of the top streamers make seven figures per month to promote a specific offshore casino.
Unsurprisingly, there are allegations of influencers gambling with house money (or fake money). Many believe influencers play through special web portals with enhanced player odds on electronic games. Several of the biggest casinos have curious website malfunctions that interfere with a customer’s ability to alter bets. Sometimes withdrawals are temporarily unavailable.
Nevertheless, an estimated $90 billion in crypto was gambled online last year.
And there’s another option much closer to home: online sports gambling.
A Supreme Court decision in 2018 opened the door for online sports betting. The market is now flooded with choices. Tune into any professional sporting event and you’ll be bombarded with online sportsbook advertisements.
Legality has helped normalize the act of placing bets on your phone. The industry now has millions of new bettors and billions of new dollars. Americans wagered an estimated $119 billion in sports last year—up 27.5% YoY. Over $16 billion was wagered on the Super Bowl. Industry insiders forecast massive growth in the coming decade.
I have no problem with gambling per se. But anyone looking to get in on the action should first examine the risk/reward profile.
You’ve undoubtedly heard the phrase, “The house always wins.” Well, it’s no different in sports betting. The “vig” (short for “vigorish”) is the house edge—bookmakers ensure that potential payouts are always less than what is collected from the losing bettors plus the fees collected for facilitating the bets.
Here’s an example: In the most recent Super Bowl, the San Francisco 49ers were favorites at -130 (meaning, bettors would need to wager $130 to win $100). The Kansas City Chiefs were the underdogs at +110 (meaning, bettors could win $110 if they bet $100).
A -130 moneyline bet has an implied probability of 56.5%.
A +110 moneyline bet has an implied probability of 47.6%.
Total = 104.1%.
That’s not a mistake. The extra 4.1% is the vigorish.
In sports betting, the vig is typically just shy of 5%. It might not sound like much. But it’s why most sports bettors lose in the long run.
Billy Walters is widely recognized as the most successful sports bettor in US history. His winning percentage was “just” 57%. Walters had a small army of computer scientists, mathematicians, and statisticians to help him earn a nine-figure fortune.
Most sports bettors play hunches.
Losses can add up quickly. In desperation, many bettors talk themselves into placing sucker bets.
A “parlay” involves tying multiple wagers into a single bet—for example, picking the winner in four separate games. The bettor must be successful with each component or leg of the parlay. Falter on any component, and the entire parlay fails. You must be perfect.
More risk = bigger payouts.
Well, bigger potential payouts. The UNLV Center for Gaming Research estimates that casinos collect about $31 for every $100 wagered on parlays. The New Jersey Division of Gaming Enforcement states that 55% of New Jersey casino profits come from parlays.
Make safer bets and you’ll need a seven-figure bankroll to even have a prayer at a six-figure return. Chase outsized returns and you’ll end up with $0. Sports betting is a pretty lousy deal unless you’re seeking entertainment.
Millions are learning this lesson the hard way—young men in particular. Below is the average monthly amount of money Americans spent on sports betting last year, according to Statista.
We haven’t even gotten to the worst part yet.
Sportsbooks are generally allowed to unilaterally suspend or restrict bettor accounts. Some will cap the maximum bet at a trivial amount like $1.
One sportsbook allegedly defended a decision to close an account by claiming its services are reserved for “recreational” (aka losing) bettors. Some have suspended the accounts of certain net-losing bettors. Not because they lost too much. But because they displayed “non-recreational tendencies”—i.e., the potential to become a winning bettor.
Imagine putting in all the work to overcome the odds, only to be denied service. What then? Pick up and move to a different state only to have it happen again? Go offshore?
No thanks.
Granted, not every bet fails. But looking at the chart above, I see a recipe for squandered rainy-day funds, rent, car payments… and lost stock profits. Yes, easy for me to say (and admittedly self-serving). But I suspect a great many bettors will eventually wish they had done just about anything else with their money.
Log in to your favorite sportsbook app and fire away if it genuinely improves your life. But do so with the knowledge that your bookie has no intention of playing fair.
This is not to claim that people on Wall Street are any more honorable. But I’ve never heard of brokerage accounts getting suspended for “non-recreational tendencies.” Yes, stocks get halted for nefarious reasons. Brokers can be unscrupulous at times—remember, Robinhood allegedly prevented some customers from trading GameStop as desired. But these incidents seem rare compared to the shenanigans dealt with by sharp bettors.
I concede that there’s no replacing the excitement of placing a bet and watching the action unfold over the next couple hours. But with a bit of patience and discipline, there’s no replacing the outsized returns you can achieve by speculating in resource stocks.
Speculating—not gambling.
For more on what we mean by that, please see our free report, Speculation 101.
Well-known legends in this space have made fortunes by cashing in a smaller number of huge winners that more than make up for more numerous, but smaller losses. That’s how we were taught to speculate. But…
We think there’s a better way—and we’re happy to share it with you for free.
Compared to sports gambling, disciplined resource-stock speculation can offer less downside risk and significantly more upside potential. But only if you play your cards right.
KJ
PS: Resources like gold and uranium are currently positioned for a bull run. To learn more, consider subscribing to our free, no-hype, no-spam newsletter—the Speculator’s Digest.
