Keep it Simple, Stupid!

Sports books in the U.S. are making a mistake by using an odds formula that is more confusing than it should be. Bruce Merati explains why a more sensible system would make U.S. sports betting more understandable and intuitive.

Keep it Simple, Stupid!

The purpose behind the phrase “Keep it Simple Stupid,” KISS for short, is to emphasize the importance of using a commonsense approach in design and business. The KISS principle says it is always best keeping things simple than making them complicated. By offering an unnecessarily complicated odds structure, U.S. sportsbooks do not follow KISS. They use what is called American odds, a format developed several decades ago by unscrupulous individuals became known as bookies.

Bookies created a betting convention that was hiding their commissions in the wager and the outcome of the game. They intentionally made things complicated to make their fees which they called the juice or vig, short for vigorish, less obvious. After Nevada legalized sports betting in 1949, its casinos followed the same convention because that was the format their customers were already used to. Also, after the reversal of PASPA in 2018, other states that legalized the business followed suit. However, now that betting on sports is legal in most states and game odds are cited on national TV and official websites, operators should consider presenting their offerings in a dual format to keep it simple for both their existing customers who are used to the American odds as well as potential new customers who would find other formats such as decimals and fractional odds easier to understand.

Despite the popularity of the business and billions of dollars wagered every month on sporting events, sportsbooks outside of Nevada continue to lose money. Most of the losses are due to excessive promotions and sign-up bonuses which are offered as marketing tools to first-time bettors with the goal of converting them to regular customers. Although this strategy works with die-hard fans eager to root for their teams, most others will not follow through after the promotions end because they find it challenging to get used to the odds. They find putting plus and minus signs in front of the odds and the inconsistency of betting $X to win $100 on one side and betting $100 to win $Y on the other side irrational and too complicated to bother to commit to memory.

Overall, bettors fall into three categories, a tiny percentage known as sharps, are pros that operators prefer not to have because they find it difficult to make money on them. The second group are die-hard fans that would bet regardless of their formats, and the third group are rational consumers who would not bet if they don’t fully understand what they are doing. Generally, promotions are geared towards the third group, designed to give them the opportunity to practice, hoping after placing a few free bets will become regular bettors. The problem is that there are tens of millions of people in this category, and it will take a long time and billions of dollars in promotions to educate them. Also, chances are once they use up the giveaways they will sign up as new users with other operators to take advantage of their promotions for first-time bettors.

The obscure odds convention originally was developed by the bookies worked well for Nevada casinos while they had monopoly on the U.S. legal sports betting market. Historically bettors in Nevada which could be categorized into four groups have been somewhat different than other states. The first group are out-of-town visitors staying at their properties who are mostly casual bettors and have the opportunity to ask the ticket writers in case they have any questions. The second group are the sharps which sportsbooks try to avoid, and the third group are illegal bookies who discreetly lay off their risk exposures on Nevada casinos. And finally, the fourth group are the locals who over the years gradually learned how to bet and became accustomed to the format.

Bookmaking is all about using probabilities calculated by oddsmakers to attract enough wagers on each side of a game to balance their books so that they can earn their fee without being exposed to the outcome of the game. Most sportsbooks outside the U.S. use decimals and fractional odds which are more intuitive to a user because they reflect the implied probabilities of a team winning. For example, if a team has a 75 percent chance of winning, its odds would be 1.33 in decimal and 1/3 in fractional versus -300 in American format. The decimal format is the easiest to understand, it simply says for every $1.00 you bet, you get paid $1.33 if you win, while the American odds is the most complicated to comprehend. Those who are good at math or are savvy, can either convert the odds from one convention to another, or use websites that offer odds converter tools and tables, however for a large majority of the general public the American odds is incomprehensive.

Over the last two decades I have worked on the technology of sportsbooks for U.S. licensed operators and know all new systems are capable of handling any of the conventions used around the world to give them the flexibility to offer any format they choose to. However, to avoid confusion, it is important that odds are presented uniformly across all communication channels ranging from TV, newspapers, internet, betting sheets and odds boards inside a casino, all the way to the user’s web and mobile apps. I would like to be the industry’s cheer leader and work with operators for a KISS initiative to develop the best approach in making sports odds simpler for the public to understand so that they bring their guard down and get more engaged with betting on their favorite teams.

In summary, people bet on a game for its entertainment value, they want to root for their teams and want to brag when they win, however operators are not keeping it simple, instead they are making it complicated for people to bet. A good majority of the population are reluctant to put in the time and effort to learn something they find mysterious and confusing. The sooner the industry works together to make their products simpler, the less money is wasted on something which is made too complicated for no good reason.

Articles by Author: Bruce Merati

Bruce Merati is cofounder of BC Technologies, a sportsbook system provider and CEO of Uplay1, a gaming IP company.