06/30/2004 11:00PM

A behind-the-scenes controversy


While hanging out in a local race and sports book Wednesday afternoon, I stopped at the 75-cent hot dog stand.

It doesn't matter to me where the dogs come from, how they're processed (some things are better left unknown), or how they were delivered to the casino. The end product is all that matters. They taste great, and the price is right.

The same thing goes for sports betting. As I look at the betting menu, it doesn't matter to me where the odds come from. If I like what I see, I bite; if they don't pass muster, I pass. I can't imagine that any other sports bettor - whether they're in a Vegas book, calling a local bookie, or clicking on a website - would feel differently. We don't really care how the numbers come into being, we make our decisions on the end product and either bet or pass.

This analogy is apropos because there has been a minor controversy in the background of the Las Vegas sports betting industry the past two months or so. In May, Las Vegas Sports Consultants, the most famous oddsmaking firm in the world, informed its Nevada sports book clients that they were increasing their fees effective July 1.

"We were long overdue for an increase," said Ken White, chief operations officer for LVSC and its top oddsmaker. "Some books hadn't seen an increase since 1992 and we have employees that haven't had a raise in two years. To provide the best service, we need to hire more handicapping, a programmer, and we have to get better on the technology side."

A survey of sports book directors, most of whom asked not to be quoted directly, said the average fee was around $1,400 a month. White said increases ranged from 5 percent at smaller properties to 60-70 percent at larger companies.

"The success of any business is based on location, location, location," White said. "We started with the Strip and then branched out to downtown and then the locals casinos and then to locations outside Las Vegas. If there was a hub, they were charged more, and then on the rate card we added on for satellites. The biggest complaints have come from the larger companies, but I really think the smaller places have a bigger beef because they've been footing the bill for the industry all these years.

"We had to take it in front of Gaming Control Board and get their okay, to make sure it was a fair process and the Board was comfortable with it."

White said another reason for the increase is that consolidation of the casino companies has lowered the number of sports book clients.

"LVSC had more than 100 clients back when Roxy [Roxborough] was running the company, and now we're down to 31," White said. In addition, White said gaming regulators have prohibited LVSC from working with companies outside the state with few exceptions. White said it wouldn't sit well if the company was seen to be aiding and abetting illegal betting.

"We had to give up one of our biggest outside clients, Caliente [in Tijuana, Mexico], and we still have a lottery in Canada, a lottery in Oregon, an Australian book, a London book, and one in Costa Rica," White said. "The Gaming Control Board isn't keen on us working with the offshores, but we need to get their information, and Gaming has allowed us to continue. The key is regulation. With the NCAA coming after Nevada because of college betting, we need to show we're well regulated. If we could sell our services to everyone from coast to coast, we would be able to provide the service to the books here for free, but that's not the case."

The Nevada sports book operators predictably balked at the increases, and there were behind-the-scenes discussions about forming a new oddsmaking company.

One sports book director said, "We looked into all of our options, just like we would do with dealing with any vendor."

White added: "Some books have looked for other ways to do business without us, but what I stressed with them is that we're on their team, we're trying to make them more money. But as we try to improve our product, it takes time and money."

White said LVSC isn't just pocketing the money. He said raising rates is necessary to keep up with the times.

"All of our profits are being put back into the business to provide better service," he said. "I feel I've accomplished 1 percent of what we want to do in the company. We have great oddsmakers, but we need to be able to get them more information in a quicker manner so they can interpret the information."

The bottom line for bettors is that all of this behind-the-scenes stuff is pretty irrelevant when it comes time to make our bets. This is no different than books that invest in new plasma screens or upgrades in other areas. They don't adjust the odds because of overhead costs. It's just the price of doing business.

None of this is likely to change the odds that we have to choose from. For instance, books that feel they need to charge 20-cent baseball lines to make a profit will continue to do so, and books that think a 10-cent line will draw more crowds and that they'll make more money with higher volume will continue to do that, too.

"Tell your readers that none of the sports books are going to close because of the increase," a sports book director said. "We'll still be open tomorrow with the same odds and amenities."

And hopefully the same delicious, economically priced hot dogs, no matter how they're made.