Sports Betting Arbitrage (and more)

I was going to post this at a later date, but the Billy Walters appearance on 60 Minutes last night, complete with its references and analogies to stock trading, made me reconsider.  As I explain in Gaming the Game, big-time sports bettors often rely on far more than solid handicapping to succeed.  Often times, this means they obtain inside information (a subtopic I find as fascinating as anything else I have discovered during the research for the new book), and on many other occasions arbitraging is involved.  Though I am an avid sports fan who knows plenty of bettors, I had never heard of sports betting arbitrage before this project.  A common definition of arbitrage is "The purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy."  Another site similarly explains, "An arbitrage opportunity is the opportunity to buy an asset at a low price then immediately selling it on a different market for a higher price."

Importantly, consequential sports bettors apply these principles to their craft with equal alacrity.  One particular pro gambler highlighted in GTG made an incredible living just by arbitraging, particularly before the advent of the internet (which made real-time odds from multiple sportsbooks widely available, thus negating the benefit certain pro gamblers had who maintained a network of sportsbooks and bookies constantly providing real-time odds changes over the phone).*  As one web site explains re: arbitrage in sports betting, "An arbitrage is available when pricing discrepancies between betting sites allow [bettors] to place bets that will yield a guaranteed risk-free profit." Though there are several forms arbitrage can take, the most common among the pro gamblers I interviewed is often referred to simply as "One Good, Two Markets" and is summed up as follows:

One Good, Two Markets Arbitrage in Sports Gambling

Arbitrage of the "One good, Two markets" variety is quite common in the world of sports gambling. Arbitrage on the sports market exists because different betting agencies often post different odds on the outcome of a game. Suppose the White Sox are playing the Red Sox. Bookmaker Billy is giving even money on the game, so a $100 bet placed on either team will earn you $100 if the team you picked wins. Sportsman Steve has the White Sox at +200, which means if you place a $100 bet with Steve on the White Sox to win, you will get $200 if they win, and $100 if they lose. You can guarantee yourself a profit if you make the following bets:

1. Place a $300 bet on the Red Sox with Billy at even odds.
2. Place a $200 bet on the White Sox with Steve at +200.

In baseball there are no ties. So either the Red Sox will win, or the White Sox will win.

Profit if the Red Sox Win 

If the Red Sox win, Billy pays you $300. However since the White Sox lost, you lost your bet with Steve and must pay him $200. Your profit is $100, as that's the difference between what Billy pays you and what you must pay Steve. 

Profit if the White Sox Win

Since the bet you made with Steve on the White Sox was at +200, Steve pays you $400 for your $200 bet. Since the Red Sox lost, you must pay Billy $300. Again your profit is $100, represented by the difference of what Steve pays you and what you must pay Billy. 

There are a number of gamblers who try to exploit differences in odds from bookmaker to bookmaker. It's not quite as profitable as it seems, as the odds do not generally differ as much as they do in this example, plus you have to pay the bookmaker in order to place the bet as that's how they make their money. 

*The pro gambler I am referencing also employed a host of other non-handicapping approaches to sports betting.  Among the numerous resources available in books, articles, etc., the best free and credible source I have located to date that explains the sorts of methods used by pro gamblers like the one I am discussing is here.  Pay particular attention to the section "Betting Blind = Big Money" and its subsections "Find 'Positive Subsets'" and "Learn what a 'point is worth'."  Also see "Beware the Sharp Book" and "Scalps and Middles". 

Brief comments on the Billy Walters 60 Minutes appearance

I don't think the 60 Minutes piece that aired last night broke any ground for those who have remotely followed the remarkable career of Billy Walters.  However, it was probably noteworthy for the majority of viewers who likely know little if anything about white-collar pro gamblers - those who have nothing to do with organized crime and who treat sports betting as a legitimate profession.  This small and exclusive crowd (of which Walters is by far the most consequential) employs sound business practices, including (as referenced last night) recruiting the best workforce possible, which usually means some combination of statisticians, handicappers, and a trusted coterie of movers and runners who must jump at a moment's notice to place (often large) bets at the desired number (betting line/point spread).  These are precisely the types of individuals I have spent two-plus years researching, including a focus on pro gambler/mover Jimmy Battista, who worked with/for several of the world's heavy hitters.  [Re: white-collar pro gamblers, also see, for example, my post re: Joseph "Joe Vito" Mastronardo.]

Other items that rang true in re: the sociology of big-time betting in the 60 Minutes piece were: the use of Don Best (this was the interactive site Billy Walters was viewing during the segment to track dozens of betting line moves in real time), which is a necessity for anyone who wishes to bet seriously; and the manipulation of betting lines by pro gamblers to obtain a more favorite line/point spread.  Regarding this latter point, this is precisely why it is risky to try and copy the bets of sharp bettors like Walters.  That is, even if one was somehow privy to his bets, it is impossible to know if this is the "right" side, or if this is a "head fake" or "phony bet" to get the sucker money to follow and eventually force sportsbooks to change the line to a number Walters or another sharp plans on betting heavily on the other side.  I have embedded an online version of the segment below, but don't know how long this will be available (my apologies for the slightly irregular manner in which this runs in a blog):

The World's Most Consequential Sports Bettor

In the course of researching the big-time sports betting world, I soon discovered there was unanimous agreement among the dozens of people I interviewed (bookies, runners, movers, sportsbook managers, and pro gamblers) as to who the world's most significant and influential sports bettor is and has been for some time - Billy Walters.  It has been widely reported that Walters is the "Rick Matthews" featured in Michael Konik's The Smart Money (which I have noted before, and which I reference in Gaming the Game).  Anyone interested in the history and sociology of the highest level of sports betting would be wise to start with a look at the man heralded as the head of The Computer Group.

Notwithstanding my quite serious concerns about the ability of 60 Minutes to uphold its reputation for biting and incisive reporting, I am eager to see their look (however superficial) at Walters tomorrow night (Sunday, January 16, 2011).

Robert E. Brennan released from prison/duped investors still seeking funds

Robert Brennan is back in the news this week, following the successful completion of his prison sentence.  According to the AP, Brennan spent months in a Newark halfway house following his time in FCI at Fort Dix.  [Note: NJ.com ran the same AP article here, which may be of use if Philly.com deactivates the Inquirer link as is its custom within a few weeks of an article's publication.]

Importantly, the coverage also offers an update on some of the outstanding financial judgments against Brennan.  I have always found this area of securities fraud enforcement fascinating - and equally frustrating - in large part because offenders very rarely compensate their victims in any meaningful way (either because the ill-gotten money has been squandered and/or successfully hidden, and/or because victims are fighting with government agencies who want their own judgments paid, and/or because lawyers fighting on behalf of duped investors are entitled to their own piece of the judgment pie).  In the specific rulings against Brennan, the AP article offers the following updates:

*Regarding a $55 million judgment against Brennan in a class-action suit brought by investors, less than half of that figure has been recovered. 

*Regarding a $75 million judgment against him in a Securities and Exchange Commission case, the SEC has collected $29 million. 

*Regarding a $45 million judgment against him in a New Jersey Bureau of Securities case, the state has been paid approximately $5 million. [Another article regarding this case notes that 27,000 investors/victims are eligible to file for a portion of the $5 million.]

Philly's Underworld: A Complicated and Fascinating Melting Pot

[Note: This was originally posted in December 2010 and has been updated in September, November, and December 2019, and in January 2020]

Far from the simplistic treatment often afforded organized crime in the media, the underworld commonly consists of various groups operating various rackets and affording various services.  At times these groups compete to monopolize a territory or market, but more often than not they find themselves operating peacefully beside - if not in concert with - each other.  The reasons for harmony in the underworld are numerous and most are fairly obvious, especially the desire to avoid attracting the attention of law enforcement.  Importantly, savvy groups also befriend seeming rivals because illicit entrepreneurs are constantly in need of funds, products, and services - often at a moment's notice, and must rely upon fellow criminals for things like moving hot money, street-level financing and credit, easy access to narcotics and other goods to offset product lost or stolen or seized by authorities, etc.

These inter-relationships were exhibited time and again in Philadelphia during organized crime's heyday in the city.   The 1960s, 70s, and early 1980s saw members of Philadelphia's predominant Italian-American crime syndicate, the Bruno Family, work in coordination with the city's loosely-defined Greek and Irish mobs, and especially with the city's more organized and notorious (and self-named) Black Mafia.  It was also during these times that mobsters of various backgrounds allied themselves with union bosses, affording the involved parties with an assortment of benefits.  Such patron-client networks embody the fabric of organized crime.

Though I have spoken and written extensively about this phenomenon, the topic occurred to me recently when I was informed the book I Heard You Paint Houses by Charles Brandt was being made into a film.

The adaptation of the book, which tells the story of the late Wilmington, Delaware Teamster leader Frank "The Irishman" Sheeran, involves the unreal combination of Martin Scorcese, Robert DeNiro, Al Pacino, and Joe Pesci.  Wow.  Regardless of how true to history I Heard is, the film, whose title is now The Irishman, should at least be entertaining.*  Critics have been raving about the picture and the 41 reviews to date on Rotten Tomatoes earn it a perfect 100% score.  It is slated for a November 1, 2019 release. *I have never been a fan of the book as history, and thus appreciated this critical assessment of the film project and especially this critique re concerns over accuracy (having nothing to do with cinematography, etc.).

In real life, one event perfectly captured the odd times and circumstances surrounding Frank Sheeran vis-a-vis Philly racketeers: "Frank Sheeran Appreciation Night" in October 1974.  Held at the Latin Casino in Cherry Hill, New Jersey, the event consisted of the following who's who at the time: Sheeran was joined on the dais by Philadelphia Mayor Frank Rizzo, former Teamsters head Jimmy Hoffa, Roofer's Union Local 30 head John McCullough, legendary civil rights leader Cecil Moore, and former Philadelphia District Attorney F. Emmett Fitzpatrick; the front table had upstate PA mob boss Russell Bufalino seated with his close friend, Philly mob boss Angelo Bruno; and assorted gangsters populated the surrounding tables. To make this still more surreal, Jerry Vale was the evening's entertainment.  Sheeran, of course, would soon be tied to Hoffa's July 1975 disappearance.  Here is a photo from Sheeran Appreciation Night (Rizzo is shaking Hoffa's hand, with McCullough second from right and Moore at far right):

I wrote briefly about Sheeran's role in Philly's underworld milieu in Black Brothers, Inc., including and especially his close relationship with Roofer's Union boss John McCullough (along with much discussion about those identified above re: Frank Sheeran Appreciation Night because each played a role in Philly Black Mafia history).  Former Philadelphia Inquirer reporter George Anastasia put together a great "Mob Scene" vid clip about a decade ago regarding McCullough, who was murdered in December 1980 as part of an infamous underworld dispute.  Alas, the clip is apparently no longer available online.  According to at least one media account, the McCullough murder is part of the soon-to-be-released film.

Joseph "Joe Vito" Mastronardo

Discussed intermittently throughout my new book on big-time sports betting, Joseph “Joe Vito” Mastronardo has long been one of the most consequential bookmakers and bettors on the East Coast.  Even casual news followers in the Philadelphia area are familiar with the 60 year-old “white-collar” (i.e., not affiliated with organized crime) pro gambler, who most recently made headlines in April 2010 when the FBI confiscated approximately $2 million following his arrest for gambling-related offenses.  Authorities dug up approximately $1 million in his front lawn, where the cash was buried within 18-inch capped sections of PVC piping under shrubs and other landscaping.  Authorities executed 46 related search and seizure warrants in 13 locations in the Philadelphia area and in Boca Raton, Florida, targeting homes, vehicles, bank accounts, and safe deposit boxes.  Officials also seized Mastronardo’s records and, perhaps more importantly, his computers.  [Please note there is commentary below the related pics and vid clips.]

Unfortunately, the superficial media coverage of Joe Vito’s 2010 arrest and seizure almost universally misses the mark, and Gaming the Game: The Story Behind the NBA Betting Scandal and the Gambler Who Made It Happen (Barricade, 2011) contains the first serious context for these events and for the related (and ongoing) federal investigation.  

In November 2010, Mastronardo was sentenced to 8 - 59.5 months for violating the probation stemming from his 2006 guilty plea in a local (Montgomery County, PA) case.  Unlike the 2006 case, Montco officials have deferred to federal officials who have yet to charge Mastronardo in the current investigation.  The 2006 case garnered considerable attention because Montco authorities executed 24 related search warrants resulting in a record $2.7 million being seized from Mastronardo’s betting operation.  Prosecutors opted to charge Mastronardo and his brother with misdemeanors rather than with felonies (which were applicable) because the brothers forfeited the $2.7 million.  Though facing 10 years in prison, Joe Vito received 6 months of house arrest followed by more than six years of probation.*

Joseph "Joe Vito" Mastronardo

The primary figure in Gaming the Game is former pro gambler – and longtime Joe Vito associate/partner – Jimmy Battista, who revered Mastronardo for his brilliant mind and no-nonsense business approach.  Much of Joe Vito’s impressive career is presented in GTG, and the 2006 Montco situation is examined in the greatest detail to date (for reasons relating to Jimmy Battista’s activities vis-à-vis Mastronardo, none of which are as yet public knowledge).  

Serious NBA betting scandal followers may recall that it was Joe Vito’s phone records that were first subpoenaed in the FBI probe which led to the successful prosecution of the scandal’s three conspirators (Battista, referee Tim Donaghy, and mutual friend Tommy Martino).  Until now, there has been no explanation offered for this curiosity.  Gaming the Game provides the inside story of the unbelievable and consequential circumstances. 

12/21/20 UPDATE: Joe Vito was released from jail on December 20, 2010, and will serve the remainder of his term under house arrest.  Mastronardo, who must wear an electronic ankle bracelet and request permission to leave his home, is still awaiting the outcome of a federal investigation into his gambling activities.

*Note: I have not linked to related articles that appeared in the Philadelphia Inquirer or Philadelphia Daily News, even though they were almost always the most substantive, because they are no longer available online without a subscription to their archives.  For those parties who have such access, see the work of George Anastasia (Inquirer) and Kitty Caparella (Daily News).

Philadelphia's Black Mafia on TV and online

I posted a long time ago about the popular Black Entertainment Television (BET) American Gangster program.  The opening episode of AG Season Two was based on my Black Brothers, Inc.: The Violent Rise and Fall of Philadelphia's Black Mafia (Milo, 2005/07), and I have been inundated with correspondence ever since.  This is particularly true now that the program routinely airs on other networks such as Bio and Centric TV.  BET now offers the entire episode ("Philly Black Mafia: 'Do For Self'") online, and it appears below (with a few, brief commercials):

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