The end of the NFL lockout will undoubtedly make owners, players and fans very happy that the season has been salvaged. But the end of the four-month-long lockout also drew a prolonged sigh of relief from the sports books that dot Las Vegas Boulevard.
Thirty-one of the NFL's 32 owners agreed to a new collective bargaining agreement late Thursday. It took until Monday for the NFL Players Association to also agree to the new labor agreement, based on latest reports. While some things are certain, such as the cancellation of the annual preseason Hall of Fame game, other business remains unfinished.
The NFL Players Association still needs to recertify as a union. Once that occurs, the union would need to collectively bargain over sticking points such as HGH testing, disability payments, benefits and personal conduct, according to an ESPN report last week.
Football fans would rightfully be upset at the void left on Sunday afternoons and Monday evenings by an NFL lockout, but Vegas sports books had much more at stake considering that bettors wouldn't be able to lay money down on an entire season of NFL games.
"We had some rough estimates around town as far as the impact that the NFL has on bottom-line numbers. I've heard anything from 10 percent to 70 percent," says Jay Kornegay, director of the Las Vegas Hilton Super Book, the largest sports book in Vegas. "It's a wide range. My best estimate would be that the NFL represents about 35 percent of our bottom line."
Kornegay says that during the lockout period, the Hilton's Super Book conducted business as usual. The book posted odds for the Super Bowl, games of the year, division winners, and even Week 1. The only odds they didn't post were the over/under wins for teams, since the NFL free agent market has still to be determined. Even so, there was a hint of nervousness in preparing for the season, he says.
"You can't replace the NFL. You can't just put up ping-pong. It doesn't happen that way," he says. "There are certain things we have to address if there weren't an NFL season, like reforecasting, budgeting, looking at the number of people we bring in for football. We also had to look at changing disclaimers associated with those type of bets."
A few publicly traded casino operators certainly have an interest, albeit small, in the NFL season taking place. MGM Resorts operates several Vegas properties with prominent sportsbooks, including the Bellagio, MGM Grand, Mandalay Bay, New York-New York, and the new CityCenter complex.
Las Vegas Sands runs the Palazzo on the Vegas Strip, and Wynn Resorts owns the Wynn Las Vegas.
Michael Lawton, senior research analyst with the Nevada Gaming Control Board, said that football bets accounted for $1.19 billion, or 43 percent, of the $2.76 billion in total sports pool bets in Nevada last year. However, Lawton says that casinos in Nevada report NFL and college football bets in aggregate, so it's impossible to know how much of last year's bets were on NFL games.
Lawton does point out that February's Super Bowl game between the Green Bay Packers and Pittsburgh Steelers saw $87.5 million wagered in Nevada's 183 sports books. However, sports book winnings totaled only $724,176, down from more than $6 million in winnings for the 2010 and 2009 Super Bowl. For some perspective, MGM Resorts posted revenue of $6 billion last year and Las Vegas Sands had revenue closer to $7 billion in 2010.
The sports books themselves, though, stood to lose a significant amount of bets this season, and there were questions about what the impact to Vegas would be beyond that. After all, many visitors to the Vegas Strip require airfare and transportation, accommodations, food and entertainment as part of their trip to place money on the long-shot bet that the Carolina Panthers win the Super Bowl. Measuring the wider impact of what might have happened in a lost NFL season is a difficult task.
Gerry Sullivan, portfolio manager of the Vice Fund, says it's unclear what the effects of a prolonged lockout would be on Las Vegas occupancy rates, traffic at the McCarran Airport, or the dollar amounts wagered at sports books. The $85 million Vice Fund invests in stocks of tobacco, alcohol, gaming, and weapons companies with a belief that those industries tend to thrive regardless of the economy as a whole.
"The lack of NFL wagering should effect the Sunday gross amount wagered in the Vegas sports books, yet I believe the major properties are innovative enough to fill the weekly void," Sullivan says. "I have not seen any analysis to determine if Vegas is a destination for NFL sports gamblers. In my life experience, I have seen the active NFL gambler use more nefarious avenues to place their bets. Bookies do not require airfare or hotel."
The effects of a prolonged lockout would reverberate far beyond the Las Vegas Strip. Adam Young, head oddsmaker at Internet gambling site Bodog, says one-quarter of the company's business is on the NFL alone. Bodog operates from its head office in the Caribbean nation of Antigua.
"About 25 percent of all the bets that we take is on just the NFL, and 15 percent of our bettors bet only on the NFL," Young says. "That's quite a significant amount of people. Obviously, we were a bit worried, but we always felt an agreement would be reached. But when it's 25 percent of your business, we were forecasting the worst-case scenario. It was pretty scary."
Some small-business owners are just as relieved that the NFL season has been salvaged. Paul Bessire is the general manager of the Web site PredictionMachine.com, which uses quantitative methods to simulate each NFL game 50,000 times to come up with a pick against the spread. Having been established only a year ago and with a perfect 12-0 record in the NFL playoffs last season, Bessire's reputation has been pinned to his success with picking NFL games.
"The NFL directly accounted for about 70 percent of our revenue," Bessire says. "We also have college football and the NCAA tournament. But if you take the NFL away, we would've only made a little less than a third of what we did make. Obviously, that's significant. It's very important to us."
Bessire says that his team has added new products and diversified offerings, including basketball and baseball, but he still projects that the NFL will account for 50 percent of his revenue this year. His model's success during the previous NFL season is one reason that's such a large portion of his revenue. Bessire's so-called "Against The Spread Locks of the Week" were correct 70 percent of the time, a fine winning record to go along with the Prediction Machine's perfect performance in the playoffs
When asked about what his "Plan B" would have been if the NFL went missing for a season, he shudders.
"We don't like to think about," Bessire says with a laugh. "We weren't ever too worried about it. The biggest concern was that we sold full season packages at a discounted rate right after the NFL playoffs last year. This was right after we went 12-0 in the playoffs. We marked our reputation so deeply on the NFL because of how we did against the spread. It's where we've made the most income, but we also made the most money for people."
With the NFL season no longer hanging in the balance, oddsmakers like Kornegay and Young as well as modelers like Bessire are preparing for the season as quickly as they can. Usually, oddsmakers and savvy bettors have the luxury of spending all spring and summer researching coaching changes, rookie draft picks and free agency moves. That window of time will be condensed into a scant seven weeks.
"It's going to be very busy in late July and August," Bessire says. "Usually I have the NFL season previews and projections done in the second week of June and then I work on college football until late July. Now, I have college football ready to go. I probably know way too much about college football, and that's because I can't do much with the NFL yet until we see how the rosters look."
With the alternative of not having a season at all, Bessire says he'll gladly cram everything he needs to do into a short period of time. Both Young and Kornegay are less worried about the small window of time to prepare for the season, as there aren't many high-impact free agents that would change teams.
"From that aspect, we're not too worried about it. There will be some small adjustments," Bodog's Young says. "Every year in the NFL there are a few surprises. After Week 1, things completely change."
"I don't know that it's a disadvantage. We're approaching it differently than we normally do. It's a little more work than we're normally used to," Hilton's Kornegay says with a laugh. "There will be a lot of cramming months of work into a few weeks. But Peyton Manning isn't going to the Broncos or something. If some teams signs three or four free agents, though, that may affect the line."
The top concern now is the global economic slowdown, which seems to have impacted gambling as well. Data from the Nevada Gaming Control Board show that total bets increased in 2010 after drop-offs in 2008 and 2009. Oddsmakers say it's tough to gauge how continued high unemployment will affect the sports books going forward, but the signs are already there.
Kornegay says that the Super Book at the Hilton has been taking bets as normal, and that the handle -- a term used for the total amount of best -- is typical for this time of year. But he says that the economy has certainly taken its toll over the past three years.
"The number of people coming into town to watch the games -- the number is similar to what we've seen in previous years," Kornegay says. "The amount of tickets that we write still is on par from previous years. I would say the average bet has dropped dramatically. The bottom line is that people are still coming in and betting, but they're betting a little less than they normally do."
"During down times, we see smaller bettors betting smaller amounts," Bodog's Young says. "During those times, we'll see a drop-off in the amount of people who sign up. Just like any other business. With the NFL being back, people will be excited and back betting."
By the way, the New England Patriots and the Green Bay Packers are the favorites to win the Super Bowl. But if you're looking for some underdog action early, the Minnesota Vikings are getting 9.5 points in their Week 1 game against the San Diego Chargers, according to Kornegay. Win or lose, bettors are surely happy just to have the action.
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