(Bloomberg Opinion) -- “I’m a pencil and paper guy,” said Eddie the bookie, and the minute I stepped into his office I could see he wasn’t kidding.
In a basement apartment dominated by four desks arranged in an L shape, the office was exactly how you’d imagine a bookie’s office would look: It would not have been out of place in “The Sting.” On every desk was a neat stack of index-card-size tickets on which he and his employees had written, in triplicate, each bettor’s wagers on Sunday’s football games. I visited Eddie on a Monday morning; he and his crew would spend the day toting up each customer’s wins or losses, and then settling up. In cash, of course.
Ever since May, when the U.S. Supreme Court ruled that any state — not just Nevada — could permit sports betting, I’d been searching for an old-school bookie to see how the coming of legalized sports betting was likely to affect the illegal wagering business. It took a while, but through a friend of a friend, I found Eddie, who, at the age of 70 and nearing the end of his career, was happy to talk so long as I protected his identity. To blow the punchline: Illegal bookmaking isn’t exactly analogous to horse-and-buggy making in the auto age. But it’s close.
Before going further, there are some things Eddie would like you to know about him. A Vietnam veteran, Eddie has spent all but the first seven or eight years of his working life as a bookie. He told me that while he knows his share of “connected guys,” he has never had any mob affiliation. He is careful to establish limits for his clients based on how much he thinks they can afford to lose — partly for their sake and partly for his. (“If you win $10,000 from a bartender, that’s your fault.”) If a customer refuses to pay up after losing a bet, he immediately becomes an ex-customer, but Eddie doesn’t go after him for the money. “You start threatening people, that’s how you get caught,” he says.
Indeed, Eddie has not only never been arrested, he’s had only one close call, a long time ago, when one of his employees was hanging out with some men from a different bookmaking operation that wound up getting busted. He has about 100 regular customers, and he doesn’t want more; keeping his operation small prevents both the mob and the cops from caring about his little business. He usually makes between $150,000 and $200,000 annually. There have been years when he made more, but those days are long gone.
When I asked him if he ever thought about the fact that he made his living doing something that was illegal, he paused for a moment. “I never got married,” he replied, “but I was engaged when I was 40 and wanted to have children. I thought at that point maybe it was time to do something else.” But then he and his fiancée broke up, and there went any thought of getting out of bookmaking. “This was my business and that was it,” he said. “I don’t think I’d be any good at doing anything else.” Besides, he told me, he loves what he does.
It’s easy to pinpoint when the business began to change. Along with pornography, sports betting was one of the first industries to be transformed by the internet. Offshore gaming companies set up sportsbooks that allowed gamblers to bet online, and they were immediately popular. But the U.S. government put some of those companies out of business, while others blew up of their own accord. In 2006 Congress passed a law that essentially made it illegal for offshore companies to accept sports bets from Americans.
Not that that has stopped them. Today, according to Eddie, offshore sportsbooks primarily serve as a kind of back-office operation for bookies, who continue to retain customers even though the gamblers are interacting primarily with the offshore entity.
Eddie told me that he’s never used offshore companies, even though they would have made his life easier. This was partly because, in the early days, he feared the consequences for his customers if a company went out of business. But it was also because he enjoys interacting with his customers, and doesn’t want to give that up.
Ultimately, the offshore industry didn’t cut into his business, he told me, and he doesn’t expect legalized sports gambling to either. Some of his customers have been with him for decades; they’re not going to abandon him just because sports betting is legal in New Jersey and is likely to be legalized in New York in 2019.
Besides, when you make a legal bet, there are tax consequences; indeed, in New Jersey, any gambler who wins more than $5,000 will discover that 24 percent of the money has been withheld for taxes. One of the great advantages — if you can call it that — of illegal gambling is that nothing ever got reported to the Internal Revenue Service.
Eddie believes that most of the people using the various services offered for legal sports betting — there are eight or so apps now for bettors, and at least as many New Jersey venues where people can place bets — are either new gamblers or people who bet so irregularly that finding a bookie is difficult.
I’d add a third category: younger gamblers who don’t have a personal relationship with their bookie, and are nervous about doing something illegal. Whatever the clientele, New Jersey is off to a roaring start; according to Legal Sports Report, an industry newsletter, New Jersey gamblers spent $184 million on legal sports bets in September. With football season well underway that number will certainly rise in the coming months.
It’s easy enough to see why Eddie is unworried about the arrival of legalized sports betting; as with any business, when you have a reputation for providing good customers service, your customers will stick with you. But he and his ilk are the past, not the future.
Younger gamblers fully expect to be able to use apps, or to walk into a casino or other sportsbook operation and place a bet in full view of the world. Convenience is what people now expect from modern life, and that’s what legalized sports betting provides, even if it does mean having to pay taxes.
“I am getting a little tired of the business,” Eddie told me before I left. “I’m now doing it for my customers. I feel like I owe them a little bit.” Soon enough, he’ll retire, and when he does, he won’t be turning his sportsbook over to someone else; he’ll shut it down. So will his peers. The illegal bookmaking profession isn’t dead yet. But it will be soon enough.
To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is co-author of “Indentured: The Inside Story of the Rebellion Against the NCAA.”
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