← Against the Rules: The Big Short Companion
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- [00:06]
Michael Roxborough
Pushkin.
- [00:09]
Malcolm Gladwell
Hello. Hello there. This is Malcolm Gladwell from Revisionist History. In a world full of ordinary, there's a brand that dares to be different. Picture this, a sleek design that makes every driveway feel like a Runway. Feel the rush of precision engineering as power meet sophistication with every turn. It's not just a drive, it's an experience, a symphony of performance and refinement harmonizing on the open road. When you're behind the wheel, the question isn't where you're going, but how incredible the journey can be. So buckle up and embrace the extraordinary. Because when the road calls, only one answer will do. BMW, the ultimate driving machine. Learn more at BMW usa. The most innovative companies are going further with T Mobile for business. Together with Delta, they're putting 5G into the hands of ground staff so they can better assist on the go travelers with real time information. From the Delta Sky Club to the Jetbridge, this is elevating customer experience. This is Delta with T Mobile for business. Take your business further@t mobile.com.
- [01:20]
Michael Roxborough
There'S a lot to say when buying a new home or car, but only one thing to say that can help you protect them. Like a good neighbor, State Farm is there. And just like that, a State Farm agent will be there to help you choose the coverage you need. No matter where you are in life, when you need coverage options, your state Farm agent is there to help on the phone or in person. Like a good neighbor, state Farm is there. Oh yay, oh yay. Oh yay. May 2018, the United States Supreme Court strikes down the federal law that has effectively banned sports gambling in nearly every state. What happens next happens faster than anyone imagined and happens in so many places at once that it's basically impossible to follow it all in real time. I ended up picking Mississippi and Kansas as the two states that I really decided to focus on and really was just there becoming a part of the furniture as the lobbyists were working their magic. That's Eric Lipton, New York Times reporter, who with his colleague Ken Vogel, just sat and watched as lobbyists created the conditions for a new industry to emerge overnight. Sports gambling and, you know, buttonholing various legislators, getting them to introduce language that they wanted into the gambling bills, changing the tax rates, getting, you know, provisions included that would allow them to entice bettors with free bets that they wouldn't have to pay taxes on. Eric knows that state capitals are where the action is. He started his career covering state governments for local papers. When he returns to his old beat, he sees right away how much lonelier state capitols are because his old job, state House reporter, now barely exists. There were times when I was in the state capitol where I was pretty much the only reporter there while they were debating, you know, sports betting. And I would stay until they wrapped up. Two in the morning as the session was closing and they were trying to get the bill passed and there were no other reporters present. It's like if you do something at the federal level, there are going to be a lot of people watching, still a lot of reporters who will cover national politics. But if you push things down to the states, you're more likely to just operate in the shadows. Yeah, and I think the lobbyists know that. And it's actually a lot easier to get things done in state capitals. You can build a national strategy through a collection of states. Eric and his colleague at the Times wrote about Kansas back in 2022, but he could have written the same piece almost anywhere in the United States. 38 states plus Washington D.C. were rushing to legalize sports betting and rolling over for the new sports bookies who were pushing to minimize just how much of a cut the states took. They cut the tax rate almost in half. They gave them the ability to, to give out free bets as a promotion to sign people up and not have to pay taxes on that. So essentially the state becomes a loss leader, a promoter of getting people into gambling by giving them tax free promotions and without a whole lot of pushback from anyone. Oftentimes the legislators weren't even aware that they were passing these things or it was given to them at the last minute just before they were asked to vote on it. And they weren't even fully informed us of what they were voting on. Overnight, the states have gone from the bookies cop to the bookies partner. So have all the pro sports leagues, the NFL, the NBA and major league baseball. The entire sports industrial complex now has a stake in the revenues that flow into sports gambling companies like DraftKings and FanDuel. There's now a vast new machine with one clear purpose. To maximize those revenues by maximizing the number of bets that Americans make on sports. A sports equinox is coming. Four sports, one day, one contest that's free to play. It's as if when prohibition ended, there were these two massive liquor companies sitting there with databases on individual Americans and their taste for alcohol. And the government ordered them to go wave a glass of whiskey under the nose of every alcoholic to persuade as many as possible to start drinking again. Of course, there are Some restraints, some rules. No state has allowed small children to gamble on sports. Eight have declined to allow people to gamble on their phones. And the taxes that the new industry pays varies a lot from state to state. New York takes 51% of all sportsbook revenues. Indiana takes only 9.5%. In 2017, the year before the Supreme Court struck down a federal law against sports betting, legal sports bookies in the United states generated roughly $300 million in revenues. In 2023, they took in 11 billion. In 2017, Americans made roughly $5 billion in legal sports bets. Last year, they laid down more than 120 billion. The numbers are crazy. The consequences are even more so, and we'll be exploring them for the rest of the season. Take your shot at more than $270,000 in payouts. That's a lot of money. I'm Michael Lewis and this is against the Rules. A show where we look at specific roles in American life and how they're changing. The fan's role's changing because a powerful new machine has sprung up to encourage the fan to gamble on sports. Sports gambling has never been just a simple and straightforward marketplace. It's more like a jungle. And draftkings and fanduel are like this invasive species that's been dropped into it by accident. They've disrupted the food chain and overrun the habitat because they feed so efficiently on fan emotion. And phanomotion is the jungle's greatest food source. But they're also vulnerable to a creature that feeds on them. Lets recall for a minute what sports gambling once was in America by listening to just a snippet of a press conference held back in 1961 by then Attorney General Robert F. Kennedy. The report has been since the passage of the legislation that big time gambling by the big time operators has been materially decreased since the passage of the legislation. Kennedy celebrating a new law called the Federal Wire Act. The point of the law was to cut the legs from under the mafia by shutting down its sports gambling operations. By giving the federal government the power to arrest and prosecute anyone who booked a sports bet over any phone or telegraph wire that crossed state lines. And in fact, the head of the Royal Mounted Police in Canada said in a speech last week that Canada will now have to pass legislation and take new steps because many of the big time gangsters and hoodlums of the United States are now moving to Canada because of the drive that is being made against them here in this country. When you think of Canada, this isn't the first thing that pops into your head. Happy refuge for big time gangsters and sports gamblers. But I don't know, it was a different era.
- [09:07]
Rufus Peabody
I always had an interest in sports. My father coached me in swimming, coached me in tennis. But my world changed when I found out you could gamble on it. I became no longer a fan. I became interested in gambling.
- [09:22]
Michael Roxborough
That's Michael Roxborough. Everyone just calls him Roxy now. He grew up in the 1950s in Canada in a nice upper middle class family. He's now zooming with me from a home in rural Thailand with the AC blasting in the background and a straw fedora on his head and the emotional feel of a man in a witness protection program. A placeless man. But he really did grow up in Canada. When Roxy was a kid, there was a sports gambling market. It was smaller and more constrained than it is now, but very real. And its center was the pool halls of Vancouver, British Columbia.
- [09:59]
Rufus Peabody
If you envision in the movie the Hustler, if you take a look at the pool rooms of that day, those were the pool room. Those were the pool rooms of my day. It was just full of wannabes, desperados, hustlers, drug dealers, bookmakers, everybody that was operating outside the law.
- [10:22]
Michael Roxborough
Right when you got the bug. What'd your parents think about it?
- [10:26]
Rufus Peabody
Not too happy. My father was a Harvard mba and my mother was a high school valedictorian. And I think they had higher aspirations.
- [10:38]
Michael Roxborough
Roxy's dad wanted him to go to Dartmouth and he got in. But he went to American University in D.C. because he sensed the action was better there.
- [10:47]
Rufus Peabody
I ran a blackjack game in the American university dorm at night, and that's what's the source of most of my profits. But then I got kicked out.
- [10:58]
Michael Roxborough
For what?
- [10:59]
Rufus Peabody
For running that blackjack game.
- [11:02]
Michael Roxborough
Roxy never did finish college. Instead, he went back to Canada, cycled in and out of boring jobs, but never stopped gambling. And then he finally caught a big break by reading a book.
- [11:13]
Rufus Peabody
I was in a Reno airport flying back to Vancouver, and I picked up a copy of Ed Thorpe's Beat the Dealer.
- [11:23]
Michael Roxborough
Beat the Dealer was the first book to show how a gambler inside a casino could have a systematic edge by counting cards in blackjack. The other casino games, like slots and roulette, were more or less perfectly rigged against the gambler. Anyone who played them for long enough was sure to lose. Blackjack was an exception. Play blackjack for long enough, at least the way Ed Thorpe taught people to play, and you were sure to win. Ed Thorpe published his book in 1966. A few years later, Roxy read it, and it gave him the idea that changed his life.
- [11:57]
Rufus Peabody
I decided that if I'm going to look at sports betting, I need to look at it statistically driven data driven not by not visual or instinct or just watching a lot of games.
- [12:10]
Michael Roxborough
Outcomes in sports were obviously far less regular and predictable than outcomes inside slot machines or even at blackjack tables. But that didn't mean you couldn't learn stuff about sports that would allow you to make better predictions. Not perfect predictions, but better predictions than everyone else betting on games. In the 1970s, Roxy had baseball in mind. The guys who booked baseball legally in Nevada and illegally everywhere else offered gamblers the chance to bet on not just who would win the game, but how many runs both teams would score. Roxy had an insight that seems obvious now. The number of runs scored in any baseball game depended on factors like the weather at game time and the size of the fields. San Diego's was a good example.
- [12:56]
Rufus Peabody
You just could not hit the ball out of there. And then the Padres went and spent like an outrageous contract to sign a guy like Oscar Gamble. All he did is hit fly balls, and that park was a place where fly balls went to die. So you soon found out that general managers really didn't know anything about their own ballparks either.
- [13:15]
Michael Roxborough
The idea that the people who run sports teams don't know what they're doing has probably never been a new idea. Fans have always thought that they know better. What was new is that someone in the stands was actually figuring something out. The effects of the wind and the humidity and the barometric pressure on a ball that was flying through the air.
- [13:33]
Rufus Peabody
We started to start getting weather reports from all the cities to parse out which ones helped scoring or hindered scoring and dimensions.
- [13:41]
Michael Roxborough
Right. I mean, just the length of the.
- [13:43]
Rufus Peabody
Left field fence dimensions were important. And we found out a couple of the ballpark dimensional drawings were wrong. They had the North Pole wrong. Well, it pointed north because we went out and did them ourselves.
- [14:00]
Michael Roxborough
Roxy moves to Vegas full time in 1975 to bet on sports. And just by taking into account the weather and the size of ballparks, he's able to make a killing while trying to avoid. The people who know a thing or two about actual killing. Were the Nevada legal bookmakers effectively run by the mob.
- [14:20]
Rufus Peabody
They would have had a hand until about.
- [14:23]
Michael Roxborough
Right, till about the late 70s. Well, yeah, I just. In that environment, was it dangerous to win too much?
- [14:31]
Rufus Peabody
No, because actually what they would do is they could find somebody else who could take your bet and they can move it for more money someplace else in the country.
- [14:43]
Michael Roxborough
The old sports gambling market inside the United States was shady, but it had its unwritten rules. And one was that they always took your bets. If you bet a lot, they eventually moved the lines. These betting lines were all set in Vegas. For a very long stretch, they were actually set in a single Vegas casino, the Stardust. The bookie at the Stardust set the odds, and everyone else just followed his lead. There was a bank of payphones outside the Stardust that were said to be the most profitable in the country for the phone company, because sports gamblers used them to relay the odds to the illegal bookies and bettors across the country.
- [15:21]
Rufus Peabody
Communications back then was just a phone call. That was the only communications there were.
- [15:29]
Michael Roxborough
In the late 1970s, the Nevada Gaming Control Board tossed the mob out of Vegas and out of sports gambling. And pretty soon, Roxy became old news. By the early 1980s, everyone knew that the weather and the size of ballparks had big effects on baseball scores. And Roxy never found another systematic edge. His life became a bit of a mess. He'd been arrested for violating RFK's Wire Act. He'd taken crazy risks as an illegal bookmaker and had run through two marriages. Is a gambling business hard on relationships?
- [16:02]
Rufus Peabody
Terrible.
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Michael Roxborough
Why?
- [16:04]
Rufus Peabody
It just sort of takes over your mood and your personality. I don't know anybody who's ever been in gambling thought they were a better person for it.
- [16:14]
Michael Roxborough
It's interesting, because when you think about why a person would drift into gambling in the first place, it would be because you think it might be an easy way to make money.
- [16:21]
Rufus Peabody
Yes.
- [16:21]
Michael Roxborough
It ends up being a harder way to make money.
- [16:25]
Rufus Peabody
It does. When they say it's hard way to make an easy living.
- [16:30]
Michael Roxborough
People said that Roxy now knew it. So in 1982, he quits gambling. He creates a company called Las Vegas Sports Consultants. This new company will effectively replace the Stardust casino in setting the odds for all major sports contests. Roxy's just better at it, and pretty soon, he's selling his odds to all the sports bookies, including the Stardust. This makes sense to everybody in Las Vegas. Hiring Roxy to set the odds in sports Is like hiring the first card counter to guard the blackjack tables.
- [17:06]
Rufus Peabody
So I said, you know, I'm going to try this for a couple years, But I'm not sure if it's going to work, because it wasn't a given that every hotel was going to have a sports book. It was a rather limited business. But that was one of my better decisions, because it turned out to be a massive business.
- [17:24]
Michael Roxborough
Sports gambling isn't exactly a financial market, but it rhymes with financial markets. What happens on Wall street somehow eventually also happens in sports gambling. And Wall Street's about to undergo dramatic change. First, computers and then the Internet will allow the markets to become a lot more complicated and the bets a lot more complex. The world's about to speed up and a new kind of person with a different kind of education is going to enter it. Old school traders with high school degrees and lots of body hair and names like Vinnie and Donnie are about to be replaced by hairless PhDs from MIT with computer models who as kids thought they'd grow up to be professors, not traders. On Wall Street. In the late 1980s, smart old school guys served as a kind of bridge between the two cultures in sports gambling. Roxy was that bridge. But it took a while for anyone to cross it. The most innovative companies are going further with T Mobile for Business. Tractor Supply trusts 5G solutions from T Mobile. Together they're connecting over 2,200 stores with 5G business Internet powering AI so team members can match shoppers with the products they need faster. Together with Delta, T Mobile for business is putting 5G into the hands of ground staff so they can better assist on the go travelers with real time information. By leveraging the nation's largest 5G network, Delta aims to improve operations across nearly every part of the journey from check in and boarding to departure arrival, baggage handling and beyond. Tractor Supply, Delta and T Mobile for Business are all passionate about connecting people and places while delivering exceptional customer experiences along the way. These partnerships are pacing the way for unprecedented innovation. Learn more about taking your business further by visiting t mobile.com now.
- [19:29]
Malcolm Gladwell
This is Malcolm Gladwell from Revisionist History. So we are, we're sitting in what.
- [19:36]
Michael Roxborough
We'Re sitting in a 1988 BMW 325IS.
- [19:40]
Malcolm Gladwell
And describe the way in which it's been modified.
- [19:43]
Michael Roxborough
Oh, it has no interior. That's where it begins.
- [19:48]
Malcolm Gladwell
Not even a steering wheel is what I'm talking about.
- [19:50]
Michael Roxborough
Yeah, right now there's no steering wheel, although I can fix that in a second.
- [19:54]
Malcolm Gladwell
And what's the appeal of a late 80s BMW 325?
- [19:58]
Michael Roxborough
Well, it's almost like the perfection of a recipe that BMW began in the 60s, which is to take, you know, a really beautifully made inline six engine, rear wheel drive and just like an incredibly balanced and fun to drive car. Yeah, yeah, let me give a little, little sneak peek. I need to connect the battery. The battery is disconnected.
- [20:25]
Malcolm Gladwell
Wait, the battery's in the backup.
- [20:26]
Michael Roxborough
The battery is actually under the rear seat.
- [20:28]
Malcolm Gladwell
Oh, I see. Just. That's it. That's. So it has an absolutely perfect balance between front and rear.
- [20:33]
Michael Roxborough
Rear.
- [20:33]
Malcolm Gladwell
Rear way.
- [20:34]
Michael Roxborough
Exactly. Yeah, yeah.
- [20:35]
Malcolm Gladwell
So yes. Turn it on.
- [20:37]
Michael Roxborough
Let's hear it.
- [20:39]
Malcolm Gladwell
Oh, yes.
- [20:47]
Michael Roxborough
And this is you.
- [20:48]
Malcolm Gladwell
This is your first BMW.
- [20:50]
Michael Roxborough
My second.
- [20:51]
Malcolm Gladwell
Oh, no, Lucas, you can't say that to say it. Wait, what was your second? What was your first?
- [20:55]
Michael Roxborough
It was an 1989 535i.
- [20:58]
Malcolm Gladwell
Oh, yes, this is. But you own that with a bunch of other people.
- [21:02]
Michael Roxborough
Yeah, yeah. So this is my first. My true. My first, you know, sole BMW. Solely owned solely on BMW.
- [21:09]
Malcolm Gladwell
Okay, wonderful. Whether it's a vintage 3 Series or the all new 20253 Series, you'll never forget your first BMW. The new 3 Series combines mind blowing driving dynamics with modern style, offering a striking sports sedan that thrills on every ride. With innovative technology, intelligent driver assistance systems, and bold design inside and out, the 3 Series makes every journey unforgettable. Learn more at BMW USA.com this message is a paid partnership with with Apple Card. When I'm reporting a season of revisionist history, I'll admit I rack up a lot of expenses. There's archival fees, travel expenses, meals, research materials, books, my very own Pushkin plus subscription so I can hear the episodes early on Apple podcasts. Of course it all adds up. And that's where my no annual fee Apple Card comes into play. Now every time I pull out my iPhone, double click and tap to Pay, I'm getting 3% cash back on all purchases at Apple and 2% on everything else when I use Apple Pay. I love my Apple Card because it makes the expenses of producing revisionist history go down easy. Plus, there's no fees, all the privacy and security I expect from Apple, and everything is done right on my phone. If you have an iPhone, you can apply for an Apple Card right this moment in the Wallet app. It's that easy. Just promise to come back and listen to the rest of the episode.
- [22:49]
Michael Roxborough
Subject to credit approval. Variable APRs for Apple Card range from 19.24% to 29.49% based on credit worthiness rates as of August 1, 2024. Apple Card issued by Goldman Sachs Bank USA Salt Lake City branch terms and more@applecard.com we're here to see Rufus Pbot. Okay, we're in the right place. Yes. Great. We're still in Vegas, but far from the strip. We're not gonna be long. We're just gonna make a bunch of Sports bets. He runs an illegal gambling operation upstairs. Oh, does he? I never even knew this. You want any action? Jungle for the Lakers. The real action is no longer on the strip. The real action's basically invisible. But here on the 17th floor, with a sweeping view of the distant casinos, Rufus Peabody lives and works. Rufus, we're here. We're here. Rufus Peabody is. Who crossed Roxy's bridge.
- [23:55]
Eric Lipton
I never was a better as a kid. I didn't know anything about sports betting.
- [23:59]
Michael Roxborough
You feel a little twinge of desire?
- [24:01]
Eric Lipton
None.
- [24:02]
Michael Roxborough
None.
- [24:02]
Eric Lipton
Most people that got their start, they started losing and they learned how to win. But I was never a better. I never grew up betting, like, besides NCAA tournament pools. And I was always good at those, but for me, it was a game. And I'm not. I'm a risk taker, but I'm not a gambler by nature.
- [24:19]
Michael Roxborough
Rufus grew up outside of Washington, D.C. always loved sports. Thought he might like to be a sports journalist. He still reminds me a bit of a journalist. He's a watcher. A person whose eyes move more than his mouth. But even when he was a kid, his mind took him places that journalism usually doesn't.
- [24:37]
Malcolm Gladwell
So.
- [24:37]
Eric Lipton
So it was this team won, 82 to 64. But why did they win? Basically, I wanted to. I kind of wanted to report on the why it happened rather than just, this guy got 18 points and 12 rebounds, and this team won. Right. I kind of wanted the. The story of why.
- [24:52]
Michael Roxborough
Right. You wanted explanations.
- [24:54]
Eric Lipton
I want explanations.
- [24:55]
Michael Roxborough
In 2004, Rufus graduated from high school and went to Yale. He was still obsessed with figuring out why. He studied statistics and built models that predicted the performance of athletes and the outcomes of sporting events. Not because he wanted to gamble on them, just because it was cool to figure out stuff that even people who run sports teams don't know. He wanders around Yale looking for someone to teach him more. Rufus wants to do a thesis on, if I remember correctly, behavioral biases and the baseball betting market. He's who Rufus found. His name is Cade Massey. He's a professor of organizational behavior. Was it interesting? Oh, yeah, absolutely. I mean, what's not interesting about trying to find psychological mistakes that people make with, like, hundreds of thousands of observations of real money being bet? And he found mistakes. I mean, he was finding profitable strategies right off the bat. Rufus just kept asking questions about the behavior of sports gamblers. He still wasn't placing bets himself. He was just working with his professor to build a model to predict college football scores. They pitched it to the Wall Street Journal and the Journal Agreed to publish their college football picks of the week. It was just how they would bet, were they to bet on college football. And he would then post our picks of the week. We were just posting them because we were working with the Wall Street Journal. So post them on Tuesday or Wednesday. And then he would watch as the prices started moving on his screen. Oh, my God. Which is to say the sports gambling market would see their picks and move in response because the market figured out that their picks were that good within a year or so. We quit posting college picks because it was getting too much in the way of what he was trying to do. Because he wanted to bet it himself. Because he wanted to bet it. And if they're so good, you would bet them, you wouldn't sell them, right? I mean, it was bound to eventually occur to Rufus that if he could predict the scores of college football games, then he should just bet on them himself. But it's funny how he got there in his head. Roxy Roxborough had started as a gambler who then set out to find some kind of edge to bet. Rufus Peabody started by finding these edges and kind of stumbled into gambling and then found Roxy. During Rufus's junior year at Yale, he read an article in ESPN about Roxy's sports analytics company, Las Vegas Sports consultants. Roxy's company wasn't used to getting resumes from Yale juniors, But they gave him a summer internship anyway and showed him their world. From their offices right next to the Las Vegas airport, they would bet on.
- [27:40]
Eric Lipton
What plane was most likely to land next, right? And this is like sort of pre Internet days or pre, like being able to see flight plans and stuff like that. And so it was like, okay, American airlines is like 6 to 1. Like, you know, Southwest is 2 to 1, whatever. What people didn't realize, though, was Roxy actually had a contact in the control tower. And so Roxy won. He made money off of these bets, but he didn't make enough to draw suspicion. That was the key. But he would occasionally hit the Japan Air at 301, right? Or whatever.
- [28:21]
Michael Roxborough
Roxy's crew would bet on everything. Rufus wasn't like that. He didn't even think of what he wanted to do as gambling. But he did want to understand this other world, this world where people bet on anything that moved.
- [28:36]
Eric Lipton
They shared the building with American wagering. So with Leroy's, which was a sort of third party sportsbook operator, Leroy's didn't have a casino, but they were in casinos like Hooters or Terrible herbst, right? Hooters has a casino yeah, Hooters Casino. It's on the Strip. It's right by. Yeah, Tropicana, basically.
- [28:59]
Malcolm Gladwell
Yeah.
- [29:00]
Eric Lipton
So I meet the head trader there, right, And I have all these questions. A bookmaker can make more money, let's say, if they know the public's bias, they can make more money setting a line somewhere between the true price and the price the public thinks that's the way to maximize.
- [29:18]
Michael Roxborough
There's no reason you should understand what Rufus just said there, but let me try to explain it because it tells you a bit about how this old school sports gambling world works. The line is just the odds or the point spread. The true price is what the odds would be if you somehow knew every possible relevant bit of information about some upcoming game. Of course, no one ever knows everything, so there is in reality never a perfect true price, just some number that the smartest and best informed bettors agree on. Say they agree that the packers should be 8 point favorites over the Cowboys, but most of the gamblers are Cowboys fans and the Cowboys fans think the Cowboys are only 3 point underdogs. Rufus was asking the bookie if he thought he could entice the public to make more stupid bets if he set the line not at the true price of eight points, but at say, five points. Because Cowboys fans will think the Cowboys are better than they actually are and bet even more.
- [30:20]
Eric Lipton
I said theoretically you can make more money setting a line somewhere between the true price and where the public thinks the price is. And he says, theory, theory. In theory, a dick don't fit in an asshole. And this guy, yeah, he was probably £300, 5, 8. Smoking a cigar in a dark room, looking at a bunch of numbers on a screen.
- [30:48]
Michael Roxborough
In just a flash there you've changed our podcast rating.
- [30:51]
Eric Lipton
Sorry.
- [30:52]
Michael Roxborough
Foreign. The most innovative companies are going further with T Mobile for business. Tractor Supply trusts 5G solutions from T Mobile. Together they're connecting over 2200 stores with 5G business Internet powering AI so team.
- [31:15]
Eric Lipton
Members can match shoppers with the products they need faster.
- [31:20]
Michael Roxborough
Together with Delta, T Mobile for business.
- [31:22]
Eric Lipton
Is putting 5G into the hands of.
- [31:24]
Michael Roxborough
Ground staff so they can better assist on the go travelers with real time information. By leveraging the nation's largest 5G network.
- [31:32]
Eric Lipton
Delta aims to improve operations across nearly every part of the journey from check in and boarding to departure arrival, baggage handling and beyond.
- [31:42]
Michael Roxborough
Tractor supply. Delta, Delta and T Mobile for Business are all passionate about connecting people and places while delivering exceptional customer experiences along the way. These partnerships are paving the way for unprecedented innovation.
- [31:57]
Eric Lipton
Learn more about Taking your business further by visiting tmobile.com now.
- [32:05]
Malcolm Gladwell
This is Malcolm Gladwell from Revisionist History. So we are, we're sitting in what.
- [32:13]
Michael Roxborough
We'Re sitting in a 1988 BMW 325is.
- [32:17]
Malcolm Gladwell
And describe the way in which it's been modified.
- [32:20]
Michael Roxborough
It has no interior. That's where it begins.
- [32:24]
Malcolm Gladwell
Not even a steering wheel as far.
- [32:26]
Eric Lipton
As I can tell.
- [32:26]
Michael Roxborough
Yeah, right now there's no steering wheel. Although I can, I can fix that in a second.
- [32:30]
Malcolm Gladwell
And what's the appeal of a late 80s BMW 325?
- [32:34]
Michael Roxborough
Well, it's almost like the perfection of a recipe that BMW began in the 60s which is to take, you know, a really beautifully made inline six engine, rear wheel drive and just like an incredibly balanced and fun to drive car. Yeah, yeah. Let me give a little sneak peek. I need to connect the battery. The battery is disconnected.
- [33:01]
Malcolm Gladwell
Well, wait, the battery is in the back of.
- [33:02]
Michael Roxborough
The battery is actually under the rear seat.
- [33:04]
Malcolm Gladwell
Oh, I see. Just. That's it, that's so it has an absolutely perfect balance between front and rear.
- [33:09]
Michael Roxborough
Rear.
- [33:10]
Malcolm Gladwell
Rear way.
- [33:11]
Michael Roxborough
Exactly. Yeah, yeah.
- [33:12]
Malcolm Gladwell
So yes. Turn it on, let's hear it. Oh yes.
- [33:23]
Michael Roxborough
And this is you.
- [33:24]
Malcolm Gladwell
This is your first BMW.
- [33:26]
Michael Roxborough
My second.
- [33:27]
Malcolm Gladwell
Oh no, Lucas, you can't say that. What was your second? What was your first?
- [33:31]
Michael Roxborough
It was a 1989 535i.
- [33:34]
Malcolm Gladwell
Oh yes, this is. But you own that with a bunch of other people.
- [33:39]
Michael Roxborough
Yeah, yeah. So this is my first, my true, my first, you know, Soul BMW. Solely owned solely on BMW.
- [33:46]
Malcolm Gladwell
Okay, wonderful. Whether it's a vintage 3 Series or the all new 20253 Series, you'll never forget your first BMW. The new 3 Series combines mind blowing driving dynamics with modern style, offering a striking sports sedan that thrills on every ride. With innovative technology, intelligent driver assistance systems and bold design inside and out, the 3 Series makes every journey unforgettable. Learn more at BMW USA.
- [34:25]
Michael Roxborough
Even if you think it's a bit overhyped, AI is suddenly everywhere from self driving cars to molecular medicine to business efficiency. If it's not in your industry yet, it is coming fast. But AI needs a lot of speed and computing power. So how do you compete without costs spiraling out of control? Time to upgrade to the next generation of the cloud. Oracle Cloud Infrastructure Oracle oci. OCI is a blazing, fast and secure platform for your infrastructure, database and application development, plus all your AI and machine learning workloads. OCI costs 50% less for compute and 80% less for networking, so you're saving a pile of money. Thousands of businesses have already upgraded to oci, including MGM Resorts, specialized bikes, and Fireworks AI. Right now, Oracle is offering to cut your current cloud bill in half if you move to OCI for new US customers with minimum financial commitment. Offer ends December 31, 2024. See if your company qualifies for this special offer@oracle.com strategic that's oracle.com strategic. Rufus Peabody, recently of Yale, is no one's idea of a hustler. He's too sweet natured and even tempered and way too open to telling other people about the stuff he's learned. He finishes up at Yale and moves back to Vegas to work full time at Las Vegas Sports Consultants. But now Rufus thinks he might have an edge. And people in and around Roxy's firm think that maybe he's right.
- [35:59]
Eric Lipton
The super bowl was my first big break. Super Bowl 2009.
- [36:03]
Michael Roxborough
Okay.
- [36:04]
Eric Lipton
I had made a friend with a professional sports bettor, a guy that bet baseball, and he loaned me $10,000 to bet. I had my own 10 to $12,000. My boss, Kenny, unbeknownst to everybody else, invested $40,000 in me and gave me a 20% free roll on it.
- [36:26]
Michael Roxborough
Meaning that if it WINS, you take 20% of the profits, but you suffered another losses.
- [36:31]
Eric Lipton
Correct. And so I ended up with close to $60,000 bet on the Super Bowl. And so I basically was pretty leveraged. And I remember being like, if this game doesn't work out, I. I gave it a shot.
- [36:45]
Michael Roxborough
All right? And what is causing you to have such conviction about a game?
- [36:49]
Eric Lipton
Oh, nothing. It wasn't conviction about the game. It was betting the props.
- [36:53]
Michael Roxborough
The props, short for proposition, bets not on the whole game, but pieces of the game. The standard story, which is almost certainly not true, was that the prop bet was invented for the 1986 Super bowl between the Chicago Bears and the New England Patriots. The Bears were such heavy favorites that Vegas had trouble ginning up interest in the game. So a Vegas bookie created a side bet. The odds that a Bears defensive tackle named William the Refrigerator Perry would score a touchdown. It was a long shot bet, and the betting public loved it. And Vegas bookies lost a fortune when the Fridge did indeed score. But back to Rufus. And forward to the Super bowl of 2009. The Pittsburgh Steelers played the Arizona Cardinals. Rufus wasn't betting the whole game, but pieces of the game. His pro football model spits out odds for all this weird stuff that Vegas bookies are now offering bets on the odds that Steelers running back Gary Russell will score the game's first touchdown. For example, Rufus has vast troves of data to mine. He can do stuff with it that Roxy would never imagine. He could do stuff that even the people who run the Pittsburgh Steelers would never imagine doing. I mean, even Gary Russell likely has no idea that you can calculate the odds that he will score the game's first touchdown. But Rufus can. His model puts those odds much higher than the bookies odds. So in Rufus mind, it's a great bet. He makes dozens of similar bets. Bets where his model tells him that the bookies are giving him better odds than they should.
- [38:32]
Eric Lipton
I still remember going, it was like Harrah's Caesars, the Rio. I ended up getting down like $200 at a time, like $5,000 positions on a few things that were really good. And so I was diversified within the game. Within the game. I wasn't betting on the outcome of the game, but I still to this day have never watched that game. I was too nervous.
- [39:00]
Michael Roxborough
How did you experience the game if you didn't watch it?
- [39:03]
Eric Lipton
I. I went to this little par three course that's open at night right south of the airport, and I played the par three course twice until I felt like the game would definitely be over. And then I went grocery shopping, and I didn't have a smart. This is pre smartphone. I went grocery shopping and then I went home and cooked myself dinner.
- [39:25]
Michael Roxborough
Huh.
- [39:25]
Eric Lipton
And then, and only then did I open my computer and check and see how the game went.
- [39:30]
Michael Roxborough
And were you just going through your prop bets, seeing what happened first?
- [39:33]
Eric Lipton
I looked at the box score and I saw the first score was Gary Russell, one yard touchdown run. I was like, ah, right. And it turned out out of like $56,000 bet, like I profited like 23,000 on it.
- [39:49]
Michael Roxborough
Rufus figures out how much he's won. Then he physically retraces his steps to the many casinos that had taken his many bets. Still driving an old Honda Civic, you had all these little tickets you have.
- [40:01]
Eric Lipton
To, you write, you go cash them, each one individually.
- [40:03]
Michael Roxborough
So you must have had 100 tickets.
- [40:05]
Eric Lipton
Oh, yeah, probably.
- [40:07]
Michael Roxborough
He just drives around Las Vegas and the money piles up.
- [40:12]
Eric Lipton
And I remember having like $30,000 on that front seat and being like, oh, my God, so much money.
- [40:18]
Michael Roxborough
In cash.
- [40:19]
Eric Lipton
In cash.
- [40:24]
Michael Roxborough
After that, lots of people in Vegas wanted to lend money to Rufus and take a cut of his bets. Rufus, for his part, was still sitting in his office in Las Vegas. Sports consultants. But pretty soon he was directing an army of people to lay bets in sportsbooks across the city. Sportsbooks that got their odds from Las Vegas sports Consultants. Rufus was, in effect, betting against the lines created by Roxy's firm. Roxy himself had moved on at this point, but he watched what Rufus was doing, and he admired it.
- [40:57]
Rufus Peabody
He came to Phuket once, and I met him. Even after one lunch, I said, this guy's thinking at a higher level than other people. And I learned a lot from him. Not because he was divulging his seekers, but he was just thinking at a.
- [41:12]
Michael Roxborough
Higher level to get his edge. Roxy had used weather reports. Rufus was using the spin rates on pitchers, curveballs.
- [41:21]
Eric Lipton
I try to drill things down to their root cause. It's kind of what you do when you write books. You try to figure out the person, what makes them tick. What's the story? I try to figure out why things happen in a baseball game or a golf tournament. What makes a player good. It's not just their score. Like, what are the things that are driving their score, which of those are repeatable, which aren't. And right now, you have all this, like, computer vision and that type of data available now. And with a lot of these sports, I mean, we're now talking about bat speed, measuring bat speed, and looking at, like, aging curves for bat speed.
- [41:57]
Michael Roxborough
The whole point of Rufus is that he never lets emotion interfere with his process. But that doesn't mean he doesn't feel emotion. He does. He feels it for his process.
- [42:08]
Eric Lipton
We're using bat speed to then predict exit velocity, and we're using exit velocity to then predict, like, weighted on base average and basically whether a ball will be hit or not and what kind of damage it'll be if it is. And then, you know, use that to predict winds.
- [42:24]
Michael Roxborough
And how did it work?
- [42:25]
Eric Lipton
How did it work? It worked well. We made 125,000 in the first month. I don't know what our volume was overall, and I got 20% of it, which was great because my yearly salary was 25,000.
- [42:40]
Michael Roxborough
Rufus had become the card counter at the blackjack table, only it was richer than that. He was generating new insight about why things happened in sports. A blackjack dealer knows where the card counter gets his edge. The sports book. He couldn't really tell where Rufus was getting his, which made Rufus and what he was doing even more unsettling. And did the M at any point say, we're not taking your bets? The M Casino was one of Rufus's favorite sports books.
- [43:09]
Eric Lipton
No, they had their whole thing was, we're going to take all comers. We want to be. We want a lot of volume. We think we're Better than people.
- [43:17]
Michael Roxborough
Then comes the supreme court decision of 2018. 23 states soon legalized sports gambling. Rufus now has the M casino and a lot of others right in his pocket. Fanduel and the PGA Tour have teamed up. Now you can get more action out of every stop on the tour. And Rufus, of course, stands to make a killing. The bigger the markets, the more he can bet. Bet the PGA Tour and make every moment more with FanDuel Sportsbook. But as it turns out, that's not how it's going to go down. This ecosystem is going to change in ways Rufus didn't predict the and he began to sense it in late 2020.
- [43:59]
Eric Lipton
So I would drive up to New Hampshire to. To bet at these kiosks initially, and then once it was there, was mobile betting. I had an account on DraftKings.
- [44:11]
Michael Roxborough
Rufus had a girlfriend in Massachusetts. Massachusetts hadn't yet legalized sports betting, so he needed to cross state lines to use the betting app on his phone. The drive took him like 45 minutes, but it was actually easier than running all over Vegas trying to get cash down. He and his process were built for this new type of casino. He could bet on golf basically all day long, until one day, he couldn't.
- [44:36]
Eric Lipton
One week, I lost $30,000. I got a phone call to tell me that they were cutting my limits on golf.
- [44:43]
Michael Roxborough
He'd lost $30,000, and DraftKings stopped taking his big bets. By the way, we've reached out to DraftKings, and so far, they have declined to talk with us. Anyway, it was clear to rufus back in 2020 that this was definitely no longer his old sports gambling world.
- [45:00]
Eric Lipton
Because I had bet enough, it spurred them to actually go in and look at the stuff I'd been betting and how I'd been doing. Books are not limiting people just because they win. They're limiting them because they think they're going to win in the future.
- [45:14]
Michael Roxborough
Rufus used data to predict what athletes were going to do. DraftKings was using data to predict what Rufus would do. When they looked at the data, they saw that after Rufus placed his bets, the odds nearly always moved in his favor. These were the bets of someone who knew things before the market knew them. And the new bookies were not like the old bookies. They only wanted to take certain kind of bets. Bets that were more like the bet you make when you press the buttons on a slot machine. Bets that if you made them often enough, you were sure to lose. The sort of bets a fan would make. The sort of bets Rufus Peabody never made.
- [45:54]
Eric Lipton
Refusing a bet wasn't a thing. It never was a thing here.
- [45:57]
Michael Roxborough
Huh?
- [45:58]
Eric Lipton
Like you. If you got kicked out of a casino or if you couldn't bet there, it was because you did something wrong. Like you violated the sacred bookmaker better covenant.
- [46:09]
Michael Roxborough
Being smarter than the market didn't used to get you kicked out of the market, but the market's changed. Sports gambling is still a hard way to make an easy living, but now it feels even less fair. Now it feels like someone should step in and help Rufus. Okay, cool. So I downloaded FanDuel, DraftKings, Flyff Fanatics, Caesars, BetMGM, and PayPal. So now everyone has all of my information and my Social Security number.
- [46:38]
Eric Lipton
Wait, your Social Security number?
- [46:39]
Michael Roxborough
They all asked for it? Yes, These new sports gambling apps, they all ask for it. And so we're going to give it to them in our next episode. Against the Rules is written and hosted by me, Michael Lewis, and produced by Lydia Jean Cott, Katharine Girardot, and Ariella Markowitz. Our editor is Julia Barton. Our engineer is Jake Gorski. Our music was composed by Matthias Bossi and John Evans of Stellwagen Symphonet. Our fact checker is Lauren Vespoli. Against the Rules is a production of Pushkin Industries. To find more Pushkin Podcasts, listen on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts. And if you'd like to listen, ad free and learn about other exclusive offerings, don't forget to sign up for a Pushkin plus subscription at Pushkin FM plus or on our Apple show page. The holiday season is back, which means it's a time for giving. Subaru and its retailers believe in giving back to those who need it most. For the past 17 years, Subaru Subaru has made the act of buying a Subaru during the holiday season an act of love when you purchase or lease a new Subaru during the Subaru Share the Love event. Subaru and its retailers donate a minimum of $300 to charity. By the end of this year's event, Subaru and its retailers will have donated nearly $320 million to national and hometown charities. To learn More, go to subaru.com/subaru More than a car company the holidays are here, and so is the Ikea Winter Sale. Now's your chance to make the holidays a little more magical and less expensive. Save up to 50% off on select items in store and online now through January 7th. Plus IKEA loyalty members get an extra 10% off on sale items. Offer valid in the US through 17 mall supplies. Last selection may vary by store and online. See store@ikea-usa.com wintersale for complete terms. Restrictions apply. Welcome to TGL, presented by SoFi, golf's newest league. It's sharp and it's electric. How is it sharp? How is it electric? Good questions. Try this on for size. Two hours of hammer dropping overtime forcing playoffs on the line. Golf with 24 of the best players from the PGA Tour split into six teams Atlanta, Boston, Jupiter, L.A. new York and the Bay this isn't your average Sunday pickup game. Catch the inaugural TGL match January 7th, only on ESPN. Keep up. It's golf.