aTm2004 said:
Buck Compton said:
Bassmaster said:
k20dub said:
"It's really strange," he said. "A lot of the action is coming from a big bettor all over town and all the bookmakers are talking about it."
"You mean the mattress king," I asked.
"Well, I can't really speculate, but"
Mattress Mack really is spreading cash all over town and, every time the books get some Dodgers money to balance out their rolls, it seems he's coming in and making the line go cuckoo.
But wait. As I was recording with Scooch, Darren Rovell of ESPN fame texted me with a link that read, "Here's something for your newsletter."
I clicked, and it was this gem from Rovell and ESPN's David Purdum, reporting that ticket brokers are unloading on the Astros, to hedge against any potential Game 7 losses. In total, they wrote, "there is more than $20 million in profits on the line in Game 6." Johnny Avello, bookmaker at The Wynn, said in the story that brokers have been betting $200,000-$300,000 on past games in the series. "And that's just me," he said. "I assume they are spreading it all over town."
So, aside from the game-clinching storylines, you have a whole lot of hedges to talk about with your friends. And, for the record, Scooch also noted that the bettors have been on the right side of every game so far in this series. And, tonight, they are on the Astros and ace Justin Verlander.
My buddy was in line behind Mattress Mack in one of the sports books in Vegas last Thursday (after game 2). He snapped a picture of Mack at the betting counter carrying a backpack. I couldn't believe that he doesn't solely use insurance to hedge. I guess he actually was betting on the games.
Specialty insurance is going to be under-written at a huge premium, as there is no pool over which to spread risk and outcomes. Casinos will be the more efficient method, as they are balancing risk by moving the lines and have much more information than an insurance underwriter will. Under the right circumstances, you can leverage with betting more efficiently than with insurance.
Now though? Unlikely. I think these are just real bets he is making. The ticket brokers are the real hedges.
Futures bets at the Casino when we were opening the season at 12-to-1 (+1200) would have been cheaper than any insurance policy he could buy. Even the 9-to-2 (+450) odds at the start of the playoffs might have been better than insurance. Not now though.
Not a gambler, so could you translate all of this into English?
The people writing the article were incorrect about Mattress Mack's motives on recent bets. I'll break it all down.
He announced at the beginning of the season that if the Astros win the WS, that he would refund purchase prices for anyone that bought during a period of time at the beginning of the season.
Let's say that creates a potential liability of
$1MM (he sold $1MM in furniture that is at risk). As a smart guy, he wants to find a way to pass that risk off to others. If he increases his bottom line by more than the cost to pass this risk-off, it's a winning strategy.
- At that time, he could have gone to Vegas and placed bets that paid out $12 for every $1 wagered that the Astros would win the WS. This means to cover a potential liability of $1MM, he would need to wager $76,923.08 (7.7% of the liabiilty) on the Astros without changing the odds.
- Astros win the WS: He gets his original bet back, along with 12 times the bet amount. Then uses that money to refund the purchases
- Astros lose the WS: He loses the bet amount, but doesn't have to refund any purchases
OR
- To hedge that $1MM liability today, he would need bet $1.75MM
- Astros Win: he wins the $1MM, then refunds purchases
- Astros lose the WS: He loses the $1.75MM, which is more than the original liability - no reason to hedge
Now that the event is much closer, and the Astros odds are much better, he would have to wager much more money to hedge any liability, making it useless.
Insurance that has to be underwritten for him, purely for this event, would likely cost more than 7.7% back in May. If he is hedging at current odds, he is an idiot. Any bets he places are just that - bets.
Joe West is a fat piece of **** and a waste of oxygen.
