Thanks for the spread

A Wall Street Journal article about sports gambling handicapper Bob Stoll contains the interesting tidbit that it was a Chicago bookie who invented the point spread. Don’t say we never gave you anything, m’kay?

If modern sports gambling has a spiritual father, it’s a Chicago bookmaker named Charles McNeil.

When Mr. McNeil quit his job as a securities analyst to devote himself to gambling in the 1930s, its conventions were very different. Bets on a sport like football were based on “straight” odds: If Army was favored to beat Navy, for instance, the game might be offered at 7 to 1. The problem: If the game wasn’t expected to be close, it was difficult to find anyone willing to bet on the favorite.

For bookmakers, this was bad news. When taking bets, the only safe strategy is to balance the wagering — to make sure your liability is the same no matter what happens in the game. By splitting all the bets and factoring in a small commission, or “juice,” a bookie will always profit.

Mr. McNeil’s solution was to switch the focus from which team would win to something less predictable: the final scoring margin, or point spread. Rather than favoring Army at 7 to 1, bookmakers would set the spread at a logical number — say 10 points. If Army “covered” the spread, or beat Navy by more than 10, Army bettors would win. If Army failed to win by 10, or lost, Navy bettors would collect.

(via Making Light)

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