Cantor Fitzgerald: The First Wall Street Firm to Become a Bookie in Vegas

Professional gamblers often make the assertion that what they do correlates well with a career on Wall Street. Just like traders, successful sports bettors look for weaknesses in the market, they strive to know things that their opponents don't, and they frequently use technology to predict trends. But their prowess has never been tested in the same way that Wall Street's traders have been tested -- until now. Cantor Gaming, a division of bond trading specialist Cantor Fitzgerald, is the first Wall Street firm to become a bookie in Vegas.

Cantor is taking bets and setting odds for the newly opened M Resort Spa & Casino. But instead of simply handicapping games and accepting wagers, the tech-savvy braintrust at Cantor has turned betting into something more akin to trading. Gamblers inside the M Resort sit behind double-screen terminals or work from handheld devices called eDecks and, unlike in most other casinos, laptop computers are welcome.

More Bets (and More Commissions) Per Game

Another anomaly Cantor has instituted is a form of sports betting known as in-running. Typically, in Las Vegas casinos, gamblers can only bet on a game before it starts and make a handful of so-called proposition bets (say, betting on who'll be ahead at the end of the first half). With in-running, gamblers can bet on the game even during play, accepting ever-changing point-spreads and odds. They can invest money on a Knicks foul shot going through the hoop or a Dodger getting to first base -- contending with ever-evolving odds.

More critically, bettors can create hedges while jumping in and out of positions. But instead of buying into the fast-breaking moves of Microsoft, they're betting on the Mariners' impending fortunes.

This form of wagering is new to Las Vegas but old-hat in other markets. "The idea evolved over the last 10 years," says Andrew Garrood, who helped create the program at M Resort and serves as executive director of Las Vegas Sports Consultants, the sports-handicapping service owned by Cantor. "We started in-running wagering in 2001. We did it as a bookmaker [in England] and we were principal to all the action. We built models and figured we could bring it to Nevada."

Because in-running provides opportunities for gamblers to make more bets per game than they can with traditional wagering, Cantor stands to generate more "vigorish," which is casino-lingo for the 10% commission that bookies collect on all losing wagers.

A Derivative of a Derivative

Garrood has a background in financial derivatives, and he maintains that in-running is no different. "Sports are predictable events," he says. "Dramatic as sports may be, you've seen everything before. Let's say the Los Angeles Lakers are ahead by five points with three minutes left to go. You use historical analysis to figure out what each side of the outcome is worth."

Comparisons to derivatives are appreciated by professional sports-bettor Steve Fezzik, an online moderator at lvasports.com and a two-time winner of the Las Vegas Hilton's Supercontest NFL handicapping tournament. "During the NCAA finals, I had $30,000 in my account, and over the course of a game, I'd be all-in with a hedged portfolio," he says. "You wait for the one situation in five where the line is off. It's like someone is slicing up a loaf of bread and asking you which piece you want. Of course, you take the piece where the slicer made a mistake and cut it too thick."

Critics of in-running maintain that some people don't want to bet sports as if they're day-trading a stock. Sometimes, the reasoning goes, you just want to sit back, drink a beer and enjoy the game.

Kenny White, who runs Cantor's Las Vegas Sports Consultants, sees it differently. He points out that casual gamblers view in-running as a convenience rather than a complex puzzle of wagers. "You see momentum changing and can make a bet," he says. "Plus, you can get money down after the game begins. Ordinarily, if you're stuck in traffic and reach the sports book after the tip-off, you are locked out from betting. That's no longer the case."

An Equal Opportunity Bookie

Cantor is standing behind its convictions in a way that many sports books in Las Vegas do not. Often, casinos discourage action from consistent winners, or so-called sharp bettors. They will literally limit amounts that skilled players are allowed to wager -- or refuse their action altogether.

The M Resort is, for now at least, welcoming the sharps. It's also outdoing competitors by allowing all gamblers to bet higher on totals (that is, betting whether or not both teams' scores will be above or below a specific sum), which are particularly easy for pros to beat. "The M wants [sharp bettors] to be there," believes Fezzik. "They want your information, and that's a progressive attitude. But people are concerned about the long-term profitability" -- and viability -- of the M Resort's strategy.

"It's a fact that the world's best gamblers beat games of skill, which include sports betting, and the M is attracting the world's best sports bettors. The success of Cantor relies on getting their share of square [that is, non-professional] action," says Fezzik. However, by being known as a big-action spot, M Resort should attract high-rolling amateurs, and, says Fezzik, "maybe they will win more from the losers than they lose to the winners."

Garrood seems less concerned. He makes the in-running operation sound easy for a company like Cantor, which he says handles $150 trillion in Treasury business each year. "This is an application of what Cantor has always understood," he says. "It's just dressing up the emperor in new clothes."

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