Tiger Woods Is Back and Testing How Bookmakers Manage Risk
(Bloomberg) -- Tiger Woods won the Masters last month.
That’s worth remembering when the conversation turns to gambling and this week’s big golf event: the U.S. PGA Championship at Bethpage Black on Long Island. Tiger’s shock victory at Augusta is a key issue for bookmakers trying to manage their risk. One in every five wagers at the Masters was on Woods, and he wasn’t even a top favorite.
Wood’s resurgence means he’ll attract even more money this time, but if a sports book tries to redirect the flow to other golfers by tweaking the odds -- say, moving Tiger from an 8-1 shot to the 6-1 favorite -- the casino risks the money walking out the door for a higher payout across the street, or to a phone app.
Pricing Tiger fairly can be make or break for a sports book’s success on any tournament, let alone on one of golf’s four majors. Woods is a self-contained gambling ecosystem and his magnetism attracts more than just the money on the man himself.
“People are willing to overpay to bet on Tiger Woods,” said Adi Wyner, a professor of statistics at the University of Pennsylvania. “Casinos see this as a huge opportunity, but it’s very risky. They can attract a lot of action if they give odds that are closer to the truth, but it can lead to an unbalance.”
Woods’s participation in a tournament can boost the money wagered by 20%, according to Jeff Sherman, the vice president of risk management at Westgate Las Vegas SuperBook. With more cash coming in, there are more proposition bets -- wagers on special events like a hole-in-one or whether the winner will be wearing a hat or visor.
“With the interest we’ve seen with propositions, we’re expanding them,” Sherman said. “That means more Tiger props for the PGA than I’d normally have if he finished middle of the pack in the Masters.”
Read: Tiger’s Masters Win a Major Boost for Brands Still With Him
Listen: Tiger Woods and the Sports Business Ripple Effect
Casinos can lay off some of their risk by enticing gamblers with higher odds on the rest of the field. That’s creating value bets for most of the top-ranked players in the world. Sherman cited the example of Spain’s Jon Rahm, who’s being offered at 18-1 and would “probably be 16-1 if it weren’t for the Tiger effect.”
So far, that value is luring the early, typically more sophisticated money at Station Casinos and SuperBook to younger golfers. Tiger, a veteran at 43 years old, doesn’t lead the ticket count at either sports book. That could all change as attention turns to Bethpage.
Tiger’s recent success -- his 15th major win was his first in a decade -- is a welcome boon for the industry, according to Chuck Esposito, the sports book director at Station Casinos.
“It brings guests in which is a win-win,” he said. “Plus, it was just so much fun seeing Tiger in that red Nike shirt on the back nine again.”
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