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The Perilous Future of Gambling in the Time of the Coronavirus
26th March, 10:10For many of us, March 11 was the beginning of the pandemic. It wasn't actually the beginning, far from it. But for those of us who were healthy, whose kids were still in school, whose bosses still expected us to be at work every day, and who had paid attention to the news of the coronavirus only on the radio while driving the kids to school like the unsuspecting protagonist of a zombie movie, that Wednesday night was when we came face-to-face with what was about to happen to our lives.
As the Utah Jazz prepared to tip off against the Oklahoma City Thunder, word came across our television screens that the game would be canceled after Utah's Rudy Gobert tested positive for the virus. By 9:30 p.m. the NBA announced a suspension of the entire season. From there other sports leagues announced they were considering following suit, including the NHL and the NCAA, which canceled the upcoming March Madness tournament. In the next two days, nearly every sporting event in the world was canceled or postponed, including Thursday night's Lakers game, and the rest of the Lakers' season. I logged on to my sportsbook account to check the status of my sizable future bet on the Lakers winning over 50 games this season. The status was pending. I tabbed over to view the Lakers' current record: 49 wins.
I had nearly $1,000 in NBA future bets that were now uncertain. I had hoped to cash more than a few of them, and the end of the season would dovetail nicely with potentially putting a down payment on a house that my wife and I had been hoping to buy. We'd been saving for the moment for years, socking the money away into savings and stocks, biding our time for when we could finally afford to stop renting and join the landed gentry. I had bragged to her that my winnings would contribute, albeit in a small way, to this occasion, attempting to earn her respect, or at least increased tolerance for my gambling proclivities. I felt I was making progress on that front. But now ...
As that weekend commenced, we prepared ourselves for the coming quarantine. Stocked up on provisions. Downloaded Zoom. Obsessively watched the news. Texted frantically with our friends and family. Although my frantic texts were of a different flavor than my wife's. One friend of mine who is a professional gambler and single mother texted me that if the casinos closed she'd likely go belly up, completely devoid of any income and unable to file for unemployment. Two professional sports bettors who had both been at the Sloan Sports Analytics Conference, Rufus Peabody and Spanky, announced that they were feeling sick. (Rufus would later test positive for the coronavirus; Spanky was sure he had it but has quarantined himself since testing centers were so backed up.) And the guy who ran the poker game I frequented in the back room of a local pool hall let me know he was fine and wanted to know whether I was coming to the game on Saturday night. I texted back that it seemed unwise. He replied to me with a photo of a box of latex gloves and hand sanitizer. "If Resorts is playing, we're playing," the text read.
Resorts World Catskills in Monticello, New York, is the closest legal poker room to New York City, and as of that Saturday the casino remained open, as did most every casino in the United States. That morning, however, the Wynn in Las Vegas announced it would close the following Tuesday, the first Nevada casino to do so. By Monday, nearly every commercial casino in the United States, including Resorts World, would follow suit.
The human toll of the coronavirus, by nearly every account, could be devastating. Tens of millions of people could be infected. Millions could die. Those numbers take into account only those who will be directly affected by the virus. The indirect effect from the economic toll could also be deadly. Millions more will lose their jobs, and with them their health insurance. Poverty will increase. On March 21, the president of the Federal Reserve Bank of St. Louis predicted that unemployment could reach 30 percent and the GDP could drop as much as 50 percent. Those are extreme predictions. If they come true, and if the virus isn't contained to the point that economic activity can return, there is a good chance they could come true, and the country could be facing a calamity worse than the Great Depression.
Ironically, gambling in the United States experienced its biggest period of growth during the Great Depression. States turned to legalized gambling as a way to generate much-needed tax revenue. For most states, that meant legalizing horse racing. In Nevada, it led to the legalization of full-scale casino gambling and an economic transformation perhaps unparalleled in American history. But gambling couldn't have made a dent in public coffers if there were no customers. Given that the Depression meant widespread unemployment and poverty, you'd think there wouldn't have been any money to bet on a horse or a lottery ticket, let alone a dice game in the middle of the desert. But oh, there was! Americans responded to legalized gambling in the 1930s with gusto. By the 1950s and the return to stable economic footing, gambling had blossomed into a multibillion-dollar industry in the United States.
It seems counterintuitive, but studies have shown that during periods of economic uncertainty, Americans gamble more, not less. For most of us, particularly the non-sharp gamblers, the square money, gambling is about dreams, about luck, about betting a little and winning a lot. It's about taking a risk that's based not on merit but on fate, on the gods shining fortune down on us in our time of need. It's irrational, but so, too, is America.
On Saturday night, as I sat home playing board games with my family, my curiosity was piqued. I texted to see whether the poker game actually happened. They texted me a video of a packed room of participants playing poker in masks and a mix of latex and leather gloves. "Land of the free, home of the brave I guess," I replied.
On March 16, school was indeed canceled and our family of five was homebound, trying to stay socially distant from the rest of the world, but perhaps as socially proximate as we could get among ourselves. The following night, after my second long day of acting as unpaid elementary school teacher, I received a message from a friend asking why there are NBA lines posted in the Pay Per Head we use. (A Pay Per Head is a website used by bookies to track and process bets with their customers.) I logged on and sure enough there they were. Knicks -5 against the Hornets, Rockets -10 against the Cavaliers. Was the NBA back? Hardly. Next to the lines, I noticed a URL linking to Twitch. When I clicked it, I found a broadcast of an NBA 2K game, and the voice of what appeared to be a teenager addressing members of the chatroom. I figured this was what it had come to, taking bets on teenagers playing video games on Twitch. Still, I was looking to wind down after a particularly stressful and weird day. And ordinarily watching (and betting on) the NBA was my go-to move on days like that. I asked in the chat which of these teenagers was the better player and who would be playing what team, hoping to get an idea of what to bet on. "We don't play," was the response. "It's just a sim."
The kid explained that they simulated an entire NBA season and had been doing it for a while. They would let the game take control of each team and play itself, letting the game's internal algorithm and the programmer's sense of each player's abilities and other variables dictate the results. The graphics in this particular video game are good enough that if you squint you wouldn't even know it wasn't a real game. This, it seemed, could be a passable substitution for the real thing. I placed $80 on the Rockets and $20 on the Knicks, cracked open a Coke Zero, and settled into my rocking chair to wait for the game to begin. As we waited, a couple of hundred people joined the stream. The kid seemed surprised at the traffic. Someone in the chat mentioned that the game had appeared on their bookie's website. Others said the same. "Bro," the teen bellowed to someone off screen. "They're saying that our game is on some kind of betting website." "That's crazy, bro," the offscreen voice responded. "How?"
Once the game tipped, I couldn't believe my eyes. The box score on the screen began to populate with numbers. A clock began to rapidly tick down. Where were the simulated players? Where was the virtual game? Within seconds the entire box score, all four quarters, was filled with numbers. The Knicks had been crushed. I had lost $20. I asked in the chat whether we were going to get to see the games. "Nah, bro. If we actually watched the games we'd be here all night," the teen responded. By the time he had finished speaking, the Rockets had lost by 40 points to the Cavaliers, and I was $100 in the hole.
The next day I asked the guys who ran my Pay Per Head what the deal was with the Twitch stream simulations. "We're experimenting with offering some virtual sports," was their reply. The next night they ditched the Twitch teens in favor of simulating their own games on their own Twitch stream, and this time they would show the virtual game in all its glory. In fact, a quick survey of gambling Twitter showed that there were simulated sports being streamed by bookies and groups of bettors all over the world looking for their fix. It was hard for me to muster up the nerve to try betting on fake sports again. For one thing, I couldn't understand where any of the betting lines came from, or what they were based on. For another, I didn't know whether I could even trust that the games were real. It's bad enough having to wonder whether a syndicate paid off a referee or a small conference benchwarmer to shave a point or two IRL. This felt ripe for unscrupulousness.
My options, however, had grown slim. There were so few sports to bet on that Vegas Dave, the most notorious (and noxious) of the sports betting touts, had resorted to selling his curling picks for $499. One sport that had soldiered forth in the face of the falling dominoes, however, was horse racing, a sport very near and dear to my heart. A sport that depends more on revenue from gamblers than ticket sales from spectators, it was an easy decision to continue operating without crowds and letting fans bet the races online. Some tracks, like Oaklawn Park in my hometown of Hot Springs, Arkansas, chose to stay open to the public. I had pleaded with my mother and family members to stay away. "This is Arkansas, David," was my mother's exasperated reply. As things continued to worsen around the country, however, Oaklawn decided on Thursday, March 12, that it would bar spectators from the grandstand for that weekend's races, including the Rebel Stakes, an important prep race for the Kentucky Derby. The track's casino, sportsbook, and restaurants would remain open to the public.
One person in attendance that day was New Orleans Saints head coach Sean Payton. As is the case with any famous person who visits the nation's smallest national park, Payton was received all over town as a dignitary, lunching with big shots and shaking hands with members of the Chamber of Commerce and the like. He presented the trophy to the winning owners during one of the spectator-less races, and hobnobbed with trainers and jockeys. On Sunday, he started to feel sick. On Monday, he tested positive for the virus.
In New York, where horse racing was also running without spectators, the calls to close the racetrack were growing louder with each passing day. For the industry, however, the lack of competition for spectators (and betting dollars) was proving profitable. On Wednesday, March 18, NBC Sports Network announced it would air 20 hours of horse racing coverage over the next two weekends in an absence of any other sports to cover. Fox Sports 2 planned to add over seven hours of horse racing coverage that weekend. Aqueduct in New York was reporting seven-figure increases in betting handle over the previous year. And online betting sites like FanDuel and Derby Wars were also reporting increases in wagering on horses on their sites.
The morning of March 18, a backstretch worker at Belmont Park tested positive for the virus. The New York Racing Association announced that day it would suspend all operations. NBCSN announced that instead of airing horse racing it would broadcast monster truck rallies.
One sporting event, if you'll allow me to describe it that way, that I was looking forward to watching over the next few weeks was the FIDE Candidates chess tournament in Russia. Because there were only eight participants, the organizers decided they could safely hold the event and did not cancel. (One player pulled out of the event in protest of this decision.) Grateful that I'd still have something sporting to watch during quarantine, I wondered whether it might also be possible to bet on it. I texted with some friends to see whether anybody wanted some action. They did, but what odds would I give? I searched to see whether anyone in the world had thought to make a line on this event. I knew that it was common for bookmakers to hang a number for the World Chess Championships. Perhaps given the dearth of betting options at that moment, some bookmakers might have hung numbers for this event. Lo and behold, they had. The Candidates was on the board at books all over the world! I logged on to the bitcoin sportsbook I often used, loaded up my account with bitcoin, and started placing all sorts of ridiculous parlays on the various games. Who, I wondered, was making these lines? How good could they really be if someone who usually handicapped European soccer was now trying to make sense of eight chess grandmasters' relative chances? As it turned out: pretty goddamn good. By the weekend I was down over .025 bitcoin on chess bets. How much was that worth in dollars anyway? Bitcoin had lost more than half its value in the past week. Was it even worth anything anymore? Had I lost even more than I thought? I tried not to think about it.
One night, as I placed my bets for the following day's chess matches, I searched the internet for some help on handicapping the various games. After following a rabbit hole from Twitter to Reddit, I found a community of degenerate gamblers posting about betting on marble races. Curious, I clicked through to find a Twitch stream where a number of sports bettors were cash-apping money to a streamer to "buy" marbles in a virtual marble race. He was affable and amusing, soliciting customers like a carnival flat store man, barking out ballyhoo to his viewers and asking the winners to please tweet about their good fortune. "Twenty dollars a marble!" he called out. "Only nine marbles left!" Impulsively, I pulled out my phone and fired off $20 to him before I even understood how many marbles were in a race or what the winner was paid. I was so caught up in the spectacle of it all. Was this what it had all come to? Were we all really this desperate?
As the marbles raced down the virtual track, the streamer called them out like it was the Kentucky Derby. I couldn't even see my marble in the pack. Had there been a glitch? Was this a scam? But then I saw my marble. And then I heard the streamer calling my marble's name. My marble was in the lead! My heart raced. What was first prize? $1,700? Good God, marble, get there! One time! Baby needs to move out of this dump and into a place with more than one bathroom! The finish line was in sight. My marble was rolling ahead of the others, unobstructed. I was going to win. Then a marble named Trump2020 appeared behind me and knocked my marble off the track. As my marble descended over the edge and into the virtual void, Trump2020 plunked down into the cup that served as the finish line. The streamer exhorted us to cash app another $20 for the next race. I couldn't take the embarrassment. I've done a lot of bad things in my life, especially when it came to gambling. I've called three bets cold with king jack off-suit. I've bet the "horn high, yo" in craps. I've made too many NBA championship future bets on the Knicks to count. I've lit money on fire. But this felt like a low point. What in the hell was I doing, especially now, on the precipice of disaster and ruin?
On March 18, MGM Resorts International CEO Jim Murren met with President Donald Trump at the White House to make a direct appeal for federal assistance to the casino industry during the economic crash created by the coronavirus crisis. He was putting himself in a long line of beggars that included executives from the cruise lines and the oil shale industry, all elbowing their way into the Oval Office to make sure they got their shot at a few hundred billion before the rest of us working stiffs could put up a fight for our measly $1,200. But Murren may have figured the casino business had a leg up on its competition for a bailout. After all, Trump was once a casino mogul himself. And Murren's predecessor at MGM, Steve Wynn, as well as the powerful multibillionaire gambling boss Sheldon Adelson, were big donors to Trump. Perhaps he'd be more open to an appeal from the casino business than another.
Despite the trivial nature of their business, the casino industry's case would be simple to make. When Murren met with Trump, MGM had already laid off 70,000 workers, and many more casino employees and workers in associated businesses would feel the brunt of the shutdown as it wore on. According to the American Gaming Association, as of March 23, 973 casinos across the country have closed and about 650,000 employees have been affected. They claim that if the casinos stay shuttered for two months, it could cost more than $43 billion in lost revenue. Those numbers aren't hard to believe. Gambling is a $260 billion industry, one that has made its CEOs and executives phenomenally wealthy. Where did all that money go? This is a business that doesn't sell any product. The vig is baked right in; the house can never lose. Casinos virtually print money. What happened to it all? Any gambler will tell you that even when you have the best of it, even when you're on the right side of that vig, you're going to hit a bad streak from time to time. If you don't have the bankroll to withstand it, what business do you have being in the game? The idea that the casino industry didn't have enough money socked away was absurd. It was a question of will, not resources. But it made me wonder about my own family, our dream to buy a house this year, our savings for our future. What was going to happen to us? Even if we managed to stay healthy, were we bankrolled for a pandemic? Was anybody?
After being cooped up in the house with three kids for so long, I needed a break. The stress of worrying about impending doom on a day-to-day, hour-by-hour basis was getting to me. I went for a drive to clear my head. There's this diner on the New Jersey side of the border I like to go to when I need to write. At least that's what I tell my family, that I go there to get out of the house and get writing done. The real reason I like to go is that they always have the games on in there, and gambling online is legal in New Jersey. Sometimes I actually do get some writing done in that diner. Sometimes, when I'm dealing with writer's block, I'll ask the guy behind the counter to put on the game so I can log on to bet it. I found myself pulling into the parking lot purely on instinct. The diner, like almost every other business in New York or New Jersey, was closed. The McDonald's next door, however, was open for business. But customers weren't allowed inside. Instead, a line stretched around the drive through and down the block. I pulled into the McDonald's parking lot and rolled down the windows. All around me were cars with people sitting by themselves eating, staring blankly at one another through their windshields.
I logged on to the DraftKings app on my phone. Even the skimpy and exotic betting options from a few days before were now gone. The app instead begged me to click on the virtual casino icon to play blackjack instead of bet on sports. They offered me this proposition: win seven hands in a row and share in a pot of $21,000. I texted a friend who is better than me at math and asked him what the odds were. He told me it was (½)^7, or about 99-1. Fuck it. I fired away. The sound of my casino app, the coins and bells and whistles, caught the attention of the family in the van parked next to me. I looked over at them staring at me, each of them wearing a surgical mask, pulling it down each time one of them wanted to insert a fistful of French fries into their mouth. I rolled up my windows, partly out of shame and partly out of caution. I looked back down at my phone and closed the casino app. Then I opened up my bank app to check my 401(k). One sucker bet to the next. I had lost my marble for sure.
David Hill's book, The Vapors: A Southern Family, the New York Mob, and the Rise and Fall of Hot Springs, America's Forgotten Capital of Vice, is due out in July 2020. His website is davidhillonline.com.