PRESS RELEASES

History of sports betting

TAGs: sports betting, Valentyn Kyrylenko

The history of sports betting is very interesting. Since ancient times it was difficult for a person to stay an indifferent spectator of competitive betting, he aspired to become a part of it. The kind of competition was not as important as a fact of participation in the events. At first, it was a simple betting between spectators, when the only question was who would become a winner but the complexity of betting and gambling was changing rapidly.

Even in ancient times, people couldn’t remain indifferent while watching the competition between several contenders for the winner title. It doesn’t matter what kind of competition it is, it’s very important for the punter to have a sense of involvement.

The spectator wanted to become a part of competition. At first, betting looked like a betting between spectators themselves. The only question was who would win the fight. The spectator, who guessed the winner or the final score, received the agreed amount of money. And that is where sports betting history begins.

Players could bet which of two raindrops reaches the bottom edge of the window glass first, or which of the fighting cocks will survive after the bloody fight. Since ancient times, everything could become a bet subject: homes, wives, children, cathedral’s bells and even entire states. There is a Chinese poem of the IV century BC, dedicated to two beggars, infected with the passion for dispute, who made a bet on what side the birch leaf torn from the tree, would fall. They bet their own ears. The loser resolutely cut off the ear lobes and presented them to the winner on the birch leaf.

Over time, it became clear that one had to find a partner with an opposite opinion for betting, but with a similar size of the purse. So, a step was taken towards finding a professional intermediate man whom both sides can trust and rely upon. It didn’t take long to find one. Such intermediate man began to accept bets in any amount from everyone who wanted to participate in betting. That is how a bookmaker came to life.

A bookmaker was born from the experience of gambling people placing small or large bets on the likelihood of events.

A professional approach to cash betting as means of profit generation has started from horse races. Originally, the main purpose of horseracHistory of sports bettinging was to compare the results of the horses and demonstrate their advantages to potential buyers. In order to get some interest, complete strangers started to make bets among themselves which of the horses will finish first. Originally, it happened spontaneously, but in the 19th century, first professional bookmakers started operating in England. They were the people who controlled the process of accepting bets and prize payout, and kept a small profit from this process.

The main skill of a bookmaker is to accept as many bets as possible, and not to forget about his financial interests at the same time. In theory, it looks like this: a bookmaker establishes betting relationships in a way of having the percentage of the revenue in his favor. Here is a simple example: in a race of seven almost identical horses, a bookmaker offers a bet 5 to 1 (1 point less than natural conditions) per horse.

If suppose, that an equal amount of money are bet on each horse, then no matter which one comes first, the bookmaker’s profit will be one seventh of all bets on this race.

However, in practice, not everything is that simple. It is very difficult to have a situation where a bookmaker would not have a financial interest in the race results and would be indifferent to which horse wins, even though he still receives the profit.

As a last resort, he can remove the favorite from his list and refuse to accept further bets on this horse (if it’s race) or reduce risk or part of it by placing a bet on the favorite through other bookmakers.

Some years later, devices that automatically calculated the winning odds for particular event according to the bets distribution were created. They were called totalizators. After everyone put a bet on an particular event and total amount of money was known, bookmaker’s percent was deducted as a service fee from that amount, and the rest of money was distributed among the winners. Obviously, the more people bet on the winning outcome, the less money each of them received at the end. In order to increase the amount one can win and make a bet more attractive, bookmakers complicated bets in various ways. For example, one had to predict not just one outcome of the particular event, but the outcomes of several sequential races at once. In this case the winning odd increased substantially.

The device that was invented by Ekberg was used for the first time in 1880 in New Zealand. The first tote represented a simple machine like an arithmometer. The first electric tote was tested at the same place, in New Zealand, in 1913.

The same device known as Australian Tote has been spread in America.

People who started placing bets on sporting events soon wanted a greater variaty of betting options. So another type of bet was added with the appearance of so-called auction pools, where players automatically set the size of prize by themselves. The horse would be “sold” to someone who paid more money. As a result, that person received all amount of winnings, excluding interest rate of a “seller”. Disadvantage of this system is that only one pawner wins (who gives the highest stake).

Finally, this problem was eliminated. In 1872, a Parisian shopkeeper named Pierre Oler (according to some sources he was involved into bookmaking, but often lost), invented a modification of the auction pool, where tickets could be bought by an unlimited number of participants in any quantity. After the fee that had to be paid to Oler was withdrawn from the pool, the rest of the revenue was divided between winning ticket holders in proportion to the number of tickets held. Oler’s system, which he called “pari mutuel”, that means “betting against each other,” proved to be extremely attractive and became very popular. Despite the fact that French government at first met this idea with disapproval, pari mutuel system was declared the only legal means of betting in France.

Nowadays, different types of totes are used in all kinds of operations of pari mutuel system, usually these totes are integrated with computers.

There are two main principles at the heart of this system. First of all, all bets accepted before the beginning of the race, are registered and summed up. Secondly, after the race is over interest rate is calculated and winning prize is defined, excluding a certain percentage for paying a government tax. Obviously, the ordinary player is deeply indifferent to the various mathematical aspects and calculation algorithms necessary for the effective functioning of this complex electronic system. The main thing for the player is the result – winning the prize.

However, bookmakers didn’t want to completely lose ground. People preferred to deal with a human being, not with a mechanical device. In addition, it should be mentioned that many of the permanent bet participants were suspicious of early totalizators.

The amount of payouts when playing totalizator is unknown until the process of bets registering is over. It’s scary to bet on a horse 4 to 1 and then suddenly find out that your chances declined and the final payout decreased to 2 to 1. There were also rumors that hippodrome owners placed huge bets in the totes after the race was over, and, thus, guaranteed themselves a win. Such complaints had stopped only after the totes were improved, and government agencies enhanced control over this activity, as taxes from betting in pari mutuel system had become a significant source of budget revenue.

In the 19th century pari mutuel system was tried out in the United States. However, it was implemented on a constant basis in Kentucky in 1908. In 1940, New York stayed the last state where bookmaking was prohibited, and pari mutuel system was the only legal form of race betting. All this happened mainly under the influence of state governments, as this system was providing the most convenient tax collection.

In some countries, such as England, where bookmakers exist alongside with betting in pari mutuel system, bookmaking is a more popular form of betting. Those people who bet a lot of money on races, complain that they are forced to bet in the tote with themselves, as the larger the amount of money they bet, the smaller the amount of payouts are. Small bet participants prefer to deal with bookmakers outside the race track. They can place small bets there, which are not accepted by the tote. Besides, both large and small invesHistory of sports bettingtors receive extra service from these bookmakers  – the ability to bet on via phone and, moreover, on trust. Even in countries where bookmaking is illegal, underground bookmakers continue to prosper. bookmakers

To make the betting process for players easier to understand, bookmakers started to calculate the odds that were fixed and did not depend on their distribution anymore. Besides, bookmakers introduced a concept of handicap. To equalize the chances of horses with different strength, one of them received additional “weight” called handicap. Consequently, the betting itself became more fun for participants but more difficult for any individual bookmaker to maintain singlehanded. Therefore, large bookmaking organizations started to form and they were capable of accepting, processing and paying off winnings on sporting and other events at agreed-upon odds in timely manner. Having started in England, they gradually began to spread out throughout the world.

In the second half of the 20th century, bookmakers started to accept bets not only on horse and dog races, but also on other kinds of sports competitions, making bookmaking an even more profitable business. Indeed, a football match audience is not comparable to the audience of horse race. After a while, apart from sports events betting, bookmakers began to accept bets on the events of the political and cultural life of society (elections outcome, winners of musical contests, etc.)

A great role in the history of sports betting plays the World Wide Web.

The growing popularity of Internet is an important stage in development of bookmaking business. Earlier, in order to make a bet, it was required to visit the bookmaker’s office personally. This necessity has become irrelevant with the development of information and telecommunication technologies.

Online versions of bookmaker’s offices (online sports betting websites) started to work in the 90s of the 20th century. For example, the website of the famous bookmaker of Great Britain “William Hill” was launched in 1995. The first bookmaker of the post-Soviet space that launched a website was Fonbet. It started operating online in 1997. Probably one of the best known bookmaking organizations of the post-Soviet space and the most trusted one is Favorit Sport or FavBet as this company is known abroad with BetInvest as its B2B side of operations. Sports-Betting

At first, betting websites offered a small selection of betting events, but as years went by, the situation changed for the better. A big improvement for bettors was introduction of live betting – the bets could be place on any outcome of the sporting event that was taking place live. Nowadays many offices work on the Internet even without having land based points of sale.

Creation of Bookmaker’s exchanges was the next stage in the development of online operations. Players started to bet not with the bookmaker alone, but with the other players. Thus, everyone could act as a bookmaker on the exchange. In this case, the profit of the exchange was a fee in a form of interest paid by the winner.

Internet provides a wealth of opportunities not only to bookmakers, but also to players. Today there are things available for the player that no one dreamed of even a few years ago. One can study betting strategies, watch the progress of sports matches using online broadcasts, analyze statistics from various online sources. For example, learning analytics of the upcoming football match allows the client to place the right bet and increase his chances to win. The modern player has access to information, and it is commonly known, the one who owns information, owns the world.

One cannot omit mentioning key players while discussing sports betting history so I would also like to mention one of the world’s leaders which contributed a lot to the establishing sports betting industry as such – William Hill.

One of the largest bookmaker’s offices in the world is William Hill’s office in England, which is believed to serve more than 2 000 000 races and football matches attendants annually. It has more than three hundred highly qualified operators in the staff. (The company itself is also engaged in training of telephone operators and other operating personnel.) One of their task is to accept and register bets received via telephone, to record correct time of bet placing.Sports-Betting-statistics

When all the necessary operations have been completed, operator puts a receipt on the assembly line, that delivers it to the employees, which in their turn register and file the receipts into a folder.

New main office of Hill’s company in London that costs 5 million 600 thousand pounds sterling, has its own modern printing-office, underground garage for armored postal vans delivering bets receipts, independent air conditioning system and restaurant for employees with 450 seats. This super-automated complex stands in stark difference from the tiny apartment on the second floor in a small mansion where William Hill opened his first bookmaker’s office. The Hill’s company is an excellent example of a professional approach to the gambling industry.

Sports betting history is an exciting topic and it was only a small introduction to it.

Valentyn Kyrylenko, a VP of Business Development of BetInvest.

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