Risk of Ruin
Audio documentaries about risk takers.
Risk of Ruin
Greetings from Las Vegas - Part II
Mark DeRosa, Zack White, and Rufus Peabody. The story a group of friends from Appalachian State that went on to team up with an econ grad from Yale. They started playing casino games and eventually would go on to bet the max at sports books all over Las Vegas.
Follow Zack White on Twitter.
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Rufus's betting analytics startup: Unabated.
I got to the point where I despised... the tourists because you know we lived in a world out there where everybody else who was there was on vacation and I can't tell you how many drunk tourists I've pulled pulled out of the street before they got hit by a car you know crossing you know at the Venetian or something like that you know you get to the point where you get really jealous of all these people who are you know on vacation having a great time and you're out there it's 105 degrees out and you've been walking for three miles since you know 7 a.m. or something like that in and out and you know it's Cash is a dirty thing to have. Your hands are always dirty. It's the desert. It's hot. So yeah, we did a lot of driving around, a lot of cutting people off in traffic and running red lights.
SPEAKER_01:Risk of Ruin is a podcast about gambling and life and their intersection. I'm John Reeder. This is Greetings from Las Vegas, Part 2. In Part 1, we heard about a group of college friends that had a bunch of different ideas for how to win at gambling. By the time they met Rufus Peabody, they had a bankroll as well as a lot of valuable knowledge. In this episode, we're going to hear about the impressive operation they all built together.
SPEAKER_00:This is
SPEAKER_01:Mark DeRosa.
SPEAKER_00:Rufus was the big database guy. He wanted to get as much information, as many data sets as he could, and he was able to cram it into the$3,000 computer that we bought him and tell us, you know, we think we should bet on this because of this. I followed the NFL really closely, and me and Rufus did a lot of work together for, like, big primetime NFL game props where he would say, you know, you know, my numbers say this, but you actually follow this more than I do. So what is your qualitative opinion of this? So I guess you could say me and Rufus did a lot of work together for the NFL. Zach and my other guy were really into NASCAR. And they did their, they kind of brought the NASCAR to the table. Me and Zach did a lot of boots on the ground, running around town, you know, physically in the sportsbooks. So we had all been winning bettors before Rufus came on. But It got to the point where we kind of realized, okay, this guy's better than us. So we can swallow our pride and make more money if we're willing to do that. And instead of being the brains behind the operation, maybe be a little bit more of the boots on the ground approach. But that's not to say that we weren't the brains of it either. It was really a group effort.
SPEAKER_01:Part of the business was analyzing the market. And part of the business was turning analytics into action. Here's Zach White.
SPEAKER_03:The operation kind of changed a little bit over the years with personnel changes. But Rufus would come up with a second half number shortly after the game went to half, and we could scrape that first half information. Then there would be a pilot, somebody who's saying, well, let's go hit this at Hilton, let's go hit this at Cantor, let's go hit this at William Hill, or if we had somebody that was still allowed to bet there. And then there's... But yeah, basically like looking at the odd screen, finding the best numbers. Once you get that projection from Rufus, we were just trying to execute as efficiently as possible at that point. And obviously you only have an 18 minute window, almost half times to get everything down. So it has to be pretty orchestrated. And it was impressive if you ever saw it in action.
SPEAKER_01:The bets they were making didn't happen on an app. They happened in the physical world where things like traffic and parking exist. If you spent any time on the Las Vegas Strip, then you know there's a gravitational pull on time. Even simple tasks take forever.
SPEAKER_03:Most of the casinos in Vegas were free valet for a long time too. And then a different status with the, I have a seven stars car with, with Caesars and that lets you pretty much do whatever you want to. And then it's not necessarily the car. Sometimes like if you really need to be in and out of a sports book quickly and you don't want your car to move, just pull up the valet and give the guy a$20 bill and say, I'll be right back. And it's going to be there and you can jump right in your car and leave and give them another 20 on the way out. And a lot of times it's worth it if it saves you 30 minutes. If you're betting half times and you need that extra 10 minutes to get to the next sports book, there's no point in trying to go to the parking deck. It's going to cost you a lot of money by losing that 10 minutes.
SPEAKER_01:Also, there was a real human element involved. The sports books were staffed by actual people who made the odds and decided which bets to take.
SPEAKER_00:There was a little place called Poker Palace and north of the strip. And it was a total dump. And it was a tiny little casino like the size of my house. And it had a lot of unsavory characters that hung around there. But the thing about them was they never updated their NASCAR odds. So they would basically copy the race odds for the week on Monday or Tuesday. And they wouldn't take a bet on them the whole week. So on Sunday, you could walk in there and it was like having the opening odds, but having all the information. This place was so... dumpy. They had the white dry erase board markers. They had that to display their odds when everybody else had gone digital. They had one guy, maybe if you were lucky, there was two people working. One would be the supervisor and one ticket writer. And the supervisor would sit there behind the counter and smoke cigarettes. He would let the cigarette get to be so long in ashes before he would ash his cigarette. It was just And he had to have been 75 years old. And he had these long eyebrows. You know, it was just quite a character. And they didn't take like really big money or anything. They would write tickets to win about five grand. And so I'll never forget this one. We went in there and we bet Carl Edwards at 15 to one to win the race. And it was 300 bucks to win 4,500 bucks. And he was like six to one everywhere else. And so sure enough... Carl Edwards wins the race, and I go in there to cash the ticket a couple days later. All hell was breaking loose. They didn't know what to do. I cash the ticket, and it rings up, and everybody in the sportsbook knows that something's going on because they see the supervisor talking with the ticket writer, and he's getting all flustered, and I'm holding up the one line that they have so nobody else can make a bet. The problem was the guy didn't. They had never cashed out a ticket that large. It was only$4,800, which is the$4,500, I won, plus my$300. And they didn't know the proper legal proceedings for that. If it's over a certain amount, there has to be something filed with the state. And if it's over a certain amount, there has to be something filed with the federal government. So it got to the point where he was so confused over this. He wanted my social security number, and he wasn't really entitled to it for that amount of money. And I wasn't going to give it to him. And so they refused to pay. And then he called the casino manager in. They had to look up the regulations because they honestly had no idea. Finally, they paid me and I actually requested that security walk me to my car because I didn't want to get robbed in the parking lot. And normally getting walked to your car for me by security was not a good thing. But this was the one time it was a really good thing.
SPEAKER_01:The following week, Zach went in to check the NASCAR lines and there were no NASCAR lines.
SPEAKER_03:And Mark had already gone in and cashed, I think, and then I went in so it wouldn't be the same person. And they were just like, no, we're not going to do NASCAR anymore. We only wrote one ticket last week and it was a winner. So they hung it up.
SPEAKER_01:That story is simultaneously about the undying optimism of the human spirit and also about folding like a cheap tent. The Poker Palace was happy to offer NASCAR odds as long as they didn't have to take any bets. So they dutifully filled out the whiteboard with the expectation they weren't going to book any action. Then they wrote one ticket and threw in the towel. Mark also got to know some of the other characters in the sports books, including bettors and bookmakers.
SPEAKER_00:You could walk into a casino. I remember, so Matt Metcalf runs Circa Sports now, and he was living in Vegas when I was living out there. And he was working in a sports book, but he would also bet. I would be out in the sports book and I would see this guy and it would be 7.30 in the morning and we'd be at Caesar's Palace when the sports book was opening up. We're the only two people in there on a Wednesday morning and we're both betting NASCAR for the limit. They've got NASCAR on the big screen. The practice sessions are going on. And there was a guy who was the supervisor of the book at the time. His name was Dave. I'd make a bet, let's say on Dale Earnhardt Jr., And he'd look up at the screen and he'd say, yeah, Dale Earnhardt Jr. looks really good in practice. That's a good bet. You know, you'd have the lines move from like plus 140 to minus 200 in the course of 20 minutes. I had another time, the Plaza Sportsbook was being run by Mike Colbert at the time. And he went on to be running the sportsbook at the M Resort, which when they were doing that, it was the biggest, highest volume sportsbook in the world. But when he was at the Plaza... Same thing happened. It would be like a Wednesday morning at Open. And I'd be in there betting. I'd bet$30,000 worth of NASCAR matchups in an hour and then leave. And I'd be in there the whole time with Metcalf there. And he's doing the same thing. And finally, one day, Colbert asked me, he says, how come I don't write a single bet all week long? The odds have been up since Monday. And I don't write any bets until Wednesday or Thursday. And then all of a sudden I write$100,000 or$50,000 in volume. And then I don't write any more volume until Saturday. He says, why is that? And I said, I don't know, man. I said, I have no idea. The reality of it was that's when the practice was going on and you could tell which drivers were stronger than the others. So it amazed me that the bookies sometimes could not see what was going on, whether it was a situation like that or whether it was taking parlay cards where every single team on the parlay card was two or three points off. Over time,
SPEAKER_01:the group became involved in more sports and more varieties of bets. This was not a thing where the guys would drink beers on Saturday while they watched the games, then call it a week. As Zach says, this was a full-time business.
SPEAKER_03:It depends on the day of the week. Obviously, on Monday morning, we're checking all of our numbers, being sure everybody's cashed the right tickets, everything's been graded correctly. Then you're doing Monday night football props that night. and going out and betting college football openers that afternoon and evening. The golf would be moved on Tuesday, usually, matchups and outrights, cleaned up on Wednesday and doing first round stuff on Wednesday. Thursday, you've got Thursday night football props. Saturday, you're moving into betting day of game stuff, late moves, cleaning up some positions. And then you've got halftimes all day on Saturday from roughly when the games will start going to half at about 10 a.m. Vegas time. And if there's a Hawaii game, you're up until 10 or 11 o'clock at night on a Saturday. And then in the Saturday morning, we would do a lot of derivative stuff, bet some money lines, bet some first half money lines, and then do it all again on Sunday for the pros, mix in some props for that Sunday night game, and hopefully tally up a win at the end of the week and party Sunday night. I always try to do a little barbecue or something at my house on Sunday and watch the late game with some friends. And, you know, the mood was always set by how well we were doing. But we tried to do a little get-together on
SPEAKER_01:Sunday nights, no matter what. While Zach and Mark focused on the logistics of making the bets, Rufus had his own set of challenges, because he was the one generating predictions. I remember
SPEAKER_02:being so nervous, though, that there was this one... There's the one day I still remember we were we were doing a lot of live baseball betting and I was essentially creating a model on the fly. I'd be running these regressions based on these certain scenarios of games. I'd have this data set pulled up and and like literally game goes the half innings over. I'm running this regression. I'm like, OK, the number is 57.02 percent. And then Zach is going in and firing. So it was it was extremely time consuming, something like that. Um, and I still remember this one game we had built up this huge position, I think on the diamond backs and laying a fairly substantial price. And they were like up seven runs or something. And then, and, and the other team came back and, um, I think we ended up, we had like maybe a hundred thousand at risk or something. So I was, that wasn't a hundred thousand of my money, but, but it was a hundred thousand overall for the group. And which is, which is a lot. And they did manage to win, but it was, it was one of the, I mean, we had, it was one of those moments in the No, the swings were hard for me, for sure. And it wasn't just the money. It was the fact that I had people counting on me and all that. And I don't know if it actually made it harder or easier having these other people involved. Like, Zach is the consummate pessimist. He'd always be like, like, people lose, like, you know, we're looking to buy a van down by the river, you know, things like that. He was... You know, he always thought the worst was going to happen and that always thought the best. Like, so if you wanted to actually know what the true outlook was, you had to sort of average out their two perspectives. When you're the guy that built the model and it's doing bad and you're just hearing about it from someone, it made it a little bit worse because it felt like an attack on me in a way, even though it wasn't. In
SPEAKER_01:any domain that has high amounts of uncertainty, you can end up in a situation where the process and results don't line up. Ideally, when you have a good process, you would also have good results. And you don't ever want to have a bad process, but if you do, then the most satisfying outcome would actually be bad results. But make predictions for long enough, and you will invariably experience every possible combination. Good process, bad results, or bad process, good results. Rufus has seen all of these combinations materialize. I think
SPEAKER_02:late 2010, during the season, I'd been looking at the second half stuff, and we actually... tried it like I think college football second halves in November of 2010. And we were getting the most insane closing line value. We were betting something at minus 120. We thought it should have been priced minus 180 and it closes at like minus 175. And we actually didn't make money on it though, over like a three week stretch, last three weeks of the college football season. And so a lot of those guys were like, yeah, I don't think this is worth our time. And I was like, no, I think like, it's just, you know, it's variance. Cause I don't think with anything we had bet, I think for, with most things we ended up, we, we bet we did pretty well the beginning. And so everybody was encouraged by that. And this, and this was a case, this was a situation where that wasn't the case and where we had bad variance to begin with. And, and so the other guys didn't want a part of betting college football, second halves in, in 2011. And so I literally just in, in, in 2011, I'd moved, I guess during the football season, I'd moved to American Samoa and, Rufus also experienced
SPEAKER_01:situations where the process was bad and the results were good. In 2016, I
SPEAKER_02:was betting baseball. I always do well in the even-numbered years. Don't ask me why, but literally, even-numbered years, I always kick ass, and odd-numbered years, I break even, mostly, or even lose a little bit. But anyway, May of 2016, I noticed, because we're betting totals, and I scraped the weather forecast at the airport closest, not a major airport, but even a municipal airport, closest to the game or the stadium, and apply that weather forecast. I have wind vectors for in and out to center and then left to right. And so my weather model, how I incorporate the weather is based on historical data from the stadium, the official game time weather. So it'll say, you know, game time temperature, 68 degrees wind, eight miles an hour out to left field or something. So I translate that into the wind vectors. But I'm watching this game and I see that we'd bet the over, I think it was because I thought the wind was going to be blowing out based on the forecast. close by. It was a Brewers game. And then I look at the box score and it says wind in from center field. And I was like, what the hell? And what it is, is the fact that I was comparing apples to oranges because the weather, especially in like a city around a stadium, oftentimes swirls. And just because the wind is coming from the north doesn't mean that it's going to be coming from the north inside the stadium because it might have gone around this building and create this wind tunnel that's going to come from the west. And the thing is, I'd actually been making money on these totals. And I was like, wow, I got so lucky. And I set about like, starting you like scraping the historical data from the air, like from the airport closest to the game. So I'd be comparing apples to apples. And then, you know, within a few days, I had had that and had basically redone, reworked the model, and it should have been great. And then I went from like up$150,000 betting totals to down 200,000 betting totals the next two months.
SPEAKER_01:All of the guys told me that they were hungry in their 20s, and they probably worked at an unsustainable pace.
SPEAKER_02:about that. Obviously, there's a difference between backtesting and actually putting something into production. And there's a leap of faith you take that there wasn't somehow some error in your data, but you can be pretty confident. And so I never really had that feeling. The bigger concern was, I mean, the thing is, when I was building a model, I was like, I was worried that I might not be able to build a model that actually showed edges in one. I mean, I cannot work as hard as I worked back then. I was putting in probably 80 plus hour weeks of Like my life, that was my life. I didn't really have anything else going on. You know, I hung out with those guys. We were like in a kickball league together. And, you know, I would go out, there would be nights when we would go bowling and then, you know, stay out till like 2 a.m. And, you know, doing things that young 20-something people do. But like football season, I still remember that 2009 season, I slept, I would pull an all-nighter every Friday night. And Saturday night, I would generally sleep about three hours. So occasionally it would be two straight all-nighters and then I would sleep like 16 hours Sunday night. But I could not do that now, obviously. I'm 35 and I'm not nearly as efficient as I was back then. But yeah, there was a lot of grinding, a lot of grinding.
SPEAKER_00:Here's Mark. It's not like you see in the movies. We didn't really have a lot of fun, to be honest. It was a lot of work. Even if I wasn't out on the strip somewhere, I was sitting on a computer, like a typical Saturday for college football. Man, it was up at 5.30 in the morning. You're not going to bed until after the Hawaii game's over. And then you're getting up and doing the whole thing, the same thing the very next day. So I think that we all realized that we had a great opportunity in front of us and it wasn't going to last forever. So we just really put everything we had into it.
SPEAKER_01:There's sort of an inverse relationship between the size of an edge and how deep the market is. Liquidity is the great eroder of edges. So these guys loaded up on the
SPEAKER_00:smaller
SPEAKER_01:markets.
SPEAKER_00:For the smaller market stuff, we just wanted to bet as much as we possibly could. And a lot of times that might be$500, so that might be$10,000. It just depended. When it came to the major markets where you could literally bet hundreds of thousands or if not millions... we weren't in that playing field. We had to kind of set a bank. We would basically establish a bankroll and establish a percent per play based off of that bankroll and try not to deviate from it, not have any kind of super risk.
SPEAKER_01:I asked Mark how they disguise their action so the sportsbooks wouldn't cut them off. He said sometimes they literally wore
SPEAKER_00:disguises. We would see that the national finals rodeo was coming to town and I went out and bought a cowboy hat and boots and, you know, Western wear. And I would walk around with an empty Budweiser and walk up to the counter with an empty Budweiser. And, you know, you can get away with more when you had a disguise. Uh, when the NASCAR race came to town, you know, I went out and bought everything Dale Earnhardt Jr. I had this t-shirt, I had the hat, I had the racing jacket, you know, the works, uh, But I would say 70% of the sports books, well, maybe half, they knew me no matter what. And I'd come in there looking like that and they'd laugh at me. But a lot of the strip books, they see so many people every day. And I'm a pretty just average, normal looking person. I don't have tattoos or piercings or anything to really distinguish myself. So I think that I just looked like Joe Schmo to a lot of these strip books. And if you could not be on a player's card when you bet, then that really helped out as well because the bets were always random. They weren't coming from one entity. There was an issue trying to get a bet in without a player's card. It was getting the money in without a player's card. So a lot of it was figuring out how much you could get away with betting without a player's card. A lot of things didn't require authorization at certain levels and you could sneak them in.
SPEAKER_01:Trading stocks involves pushing buttons on a computer, which causes money to electronically leave your account, and stock to be deposited in your account. But these guys bet with cash, and they receive tickets for that cash. Then eventually they receive cash for the tickets. It sounds like a nightmare to keep straight. But Zach says they're actually pretty good at staying on top of it.
SPEAKER_03:You know, balancing your bankroll is just something you've got to do, especially when you've got a lot of other people helping you and everybody's got a piece of it. So you want to be sure all the money's there. All the winners got cash and all the losers got recorded correctly. You know, being sure you're not dropping, you know, tickets out of your pocket or, you know, letting the bankroll fall out of your car door or something like that. We never had anything too major. We certainly had some members of the group who had some issues over the years, but for the most part, everything gets
SPEAKER_01:worked out. The group may have worked hard, But that hard work also produced a sense of satisfaction. I mean, it was a
SPEAKER_02:pretty organized operation, I have to say. It was fun to be a part of it. It really was. I look back on those years with so many good memories.
SPEAKER_01:I've heard it said that experience is expensive. These guys have paid for a lot of experience over the years, so I think it might be good to hear the lessons they learned. Mark says that some part of their success comes down to the order of events.
SPEAKER_00:Learning... casino games first was definitely helpful for me and the discipline, as far as discipline goes, really taught me to never, you know, don't really bet on something unless you think you're going to win and don't bet with any kind of emotion really ever. So I think because I was able to be gambling on things that I didn't really care about to start really translated well to when it came to sports, you know, I had to disown my Miami Dolphins and That's really the only team that I cheer for. So, you know, you really take the emotion out of it. You teach yourself that you have to prove to yourself that this is a good bet, basically through mathematics or through, you know, just history of doing things for so long.
SPEAKER_01:If you didn't know that hustling bonuses from internet casinos had been a thing and someone described it to you, you would probably think it was a scam. But that bonus hustling was extremely profitable for lots of gamblers. Although, to be fair, there were also scams.
SPEAKER_00:If it's too good to be true, it probably is. I had a casino that had like, you deposit 500, you get 2,500. And when I calculated my expected cash out on that, I was going to make like$2,200 on a$500 investment. And so I rushed to it and loaded up and started playing. And I lost all of that, my money and all of their money in like 45 minutes playing$25 hands of blackjack, which is pretty much impossible.
SPEAKER_01:Lots of gamblers have stories about getting burned doing something like card counting, and then it ends up costing them later. Here's Zach.
SPEAKER_03:You know, and to this day, it still has some repercussions for other things that I do that are obviously way more advantageous now. For example, like, I guess a year or two ago, when Mississippi first got sports betting, legal over-the-counter retail sports betting, the Beau Ravage game, had a sports book and it was obviously ran by MGM. And I went in there to go play some bets and they wanted me to get a player's card. I said, OK, fine. I didn't have an MGM player's card because out in Nevada, you know, the people at the Mirage all knew me and they immediately knew who I was when I walked in the door. So all my bets were tracked that way anyway. But 15 years ago, when the Mirage told me no more blackjack, that was a note that was stuck on my player's card. So I'm waiting in line to get a new player's card at the Beau Ravage, and they're like, well, there's a problem. It's just going to be another minute. You know, 10 minutes later, the casino manager comes out and says, hey, Mr. White, I understand you want to go bet some sports. And I said, yes, ma'am, I'm not going to go anywhere near your blackjack table, I promise. And she's like, okay, that's what I wanted to double check on. And it's just funny because it still has an effect that many years later. You know, for the$200 of EV I might have had that day on the blackjack table back in 2005, or whatever, it's still coming back to kind of haunt me.
SPEAKER_01:The guys were mastering their profession during a time when they were also becoming adults. So they learned lessons that would be familiar to anyone of that age.
SPEAKER_03:When we first started getting pushback from books limiting us or not wanting to take a certain bet or giving you a weird rule or a half limit or something stupid, A lot of times, you know, it would make you angry and you'd want to kind of argue or try to finagle your way into getting what you wanted. But a lot of times that'll just get you on that list that says, all right, well, we're done dealing with this guy completely versus just saying, okay, well, how much can I have and taking whatever you can get and smiling and being nice and So that supervisor or that manager that day doesn't remember you as the asshole, but like the guy that, yeah, we had to cut him back, but he's a super nice guy. And, you know, I would certainly take his action. If they move down the road to a new sports book in the future, you never know when that's going to happen. And it would behoove you to behave yourself in a better manner than getting mad and yelling and screaming and stuff like that. Because, you know, the personnel in Vegas and any jurisdiction definitely moves around. So, yeah. I've certainly had more goodwill from somebody saying, yes, I know Zach White. He's a good guy. We're going to take his bets. You don't want to be that guy that is automatically banned from somewhere because they knew you were a jerk at the previous place they worked at.
SPEAKER_01:There's at least a little hubris required to try to beat any market, whether it's the financial markets or betting sports. Taking a position is an implicit statement that you know better. But Mark says that humility is also required.
SPEAKER_00:You have to have a respect for the market. I had another occasion where I used to trade information with a guy from another country who was a very sharp tennis better. And I would give him some of my stuff and he would give me his stuff. And I knew nothing about tennis other than this guy was a winner. So he would tell me his bets and you would bet early in the week, like Monday, Tuesday or so, I want to say. It's been a while since I've bet tennis. And I would always wake up the next day and check to see what the odds were on the bets that I had made previously. And, you know, one time I took like a two to one underdog and I woke up the next day and he was like six to one. And I messaged the guy and I'm like, hey, you know, what do I do? How much more do I bet? And he's like, nothing. You bet the other side. And I'm like, what? You know, you told me to bet the underdog side at two to one. And now it's like six to one. It's going to cost me like minus a thousand to bet the other side. And he said that the match is fixed. If it moves that much, the match is fixed. So bet the other side. And of course, I didn't bet the other side and I lost. So respect the big moves in the market is definitely a lesson to learn. You don't know everything. And somebody knows something you don't just about all the time, really. So you have to have a very healthy respect for what the market tells you.
SPEAKER_01:Being a part of a team is one way to keep a good balance of confidence and humility.
SPEAKER_02:Basically, they noticed the places where my stuff seemed to be the most off market and kind of would push me sometimes and sort of, I mean, let me know and be like, is that right? Are you sure about that? And occasionally, it would be something I hadn't considered that in reality, there wasn't that big an edge. And sometimes it was like, no, the market just isn't pricing in at this point. thing that I'm pricing in.
SPEAKER_01:This perhaps unlikely team did eventually disband. Some part of it was that their personal circumstances changed, and some part of it was that the sports betting conditions in Vegas kept getting worse.
SPEAKER_03:I think at one point there was probably easily 20 unique books in Southern Nevada or in Las Vegas area, and now there's like seven or eight maybe, if that. Most of those will throw you out after two winning weeks in a row. So you're left with Circa, which is, you know, the best sports book in the world right now. And then the Westgate, former Las Vegas Hilton and South Point. South Point runs a good book. Everybody else out there is pretty risk averse. They're just looking for the casual gambler. They're not trying to book any sharp action or do any real bookmaking, really. It happens a lot faster at some places than others. And, you know, the William Hill thing, it was just too easy to get thrown out of there. They certainly threw out a lot of people that didn't have any business being thrown out. It seemed like if you just had one good week, the next day your account was locked. And then what kind of happened more so than just strictly getting thrown out is William Hill was buying these other places. So they bought Leroy's and they bought Lucky's and these other used to be independent outs are now included in this conglomerate, that's William Hill, that you're not allowed to bet at. And the same thing with Caesars and Bally's in Paris, and Caesars used to be a company, and then Hera's used to be a company, and they were two separate sportsbooks, and they merged. And Mandalay and Bay and Luxor and Excalibur used to be separate from the Mirage and GM Grand Group. So you went from two books to one there. And it was just the slow consolidation of the sports betting industry that led you from having 20 outs at one point to... Things
SPEAKER_01:deteriorated to the point that Mark was considering new careers. Then a number of states legalized sports betting and the trend reversed.
SPEAKER_00:Since then, you know, like I said, we used to have 20, 25 independent sports books in Nevada. And now I truly believe that there's only really like three. that have good wagering options, good limits, and let people play. So to me, it's like I live in Florida now. I used to travel quite a bit to go to Las Vegas. And now, instead of going to Las Vegas, I go to New Jersey because the wagering options are 10 times what they are, if not more, in New Jersey than they are in Las Vegas. It got to the point where a couple years ago, before New Jersey became legal, I pretty much was ready to move on and start a new career.
SPEAKER_01:Mark says that he's not working at the breakneck pace from his days in Vegas. Taking his foot off the gas means he has more time for the other parts of his life.
SPEAKER_00:You know, after a long day of, you know, you work 12 or 16 hours and then you lose your ass, you know, you hate it. But when you, you know, do really well, I get like an adrenaline rush like every time the plane lands in Atlantic City. And I literally utilize every second of the time that I'm there. And I'm usually only there for a day or two. But I'm up until 1 o'clock in the morning, 2 o'clock in the morning, and I'm back awake at 6.30. I just can't. So I guess it's kind of like a natural high for me. So yeah, I do enjoy it. But I've really scaled back these last few years to where I don't bet year-round. I've got a wife and three kids. And I know what I'm good at. And I work really hard for five months out of the year. And the rest of the time, we play really hard. And I think that helps with being able to really hunker down when it's the time to go to work. But again, a lot of that is I'm able to do that because I've had success in the past. I'm not as hungry as I was. In my 20s, I definitely was working nonstop all the time, trying to make as much money as possible. And now it's, you know, it's still a priority, but I'm not in the same position that I was before.
SPEAKER_01:Zach didn't think that his move to Vegas would be a long-term thing, but there was no way to foresee the group's stunning success. And at the time, you
SPEAKER_03:know, I loved it. I was single, moved to Vegas as a young, you know, 20-something-year-old kid, and he was having a great time and ended up, you know, a two-year plan. I was like, I'll do it for a year or two and see how it goes. And I ended up being out there for 11 years total. I just now have gotten settled back down where I'm from originally in North Carolina. Obviously, now I've got a family, so different things are important to me now. Super happy to be back in this state and not living full-time in Nevada anymore. Obviously, it's had its ups and downs, but mostly ups. I had a You know, it was it was paying the bills. You know, it's obviously been way more lucrative in recent years as the as our bankroll continued to build. And, you know, we got more aggressive and we've been able to have, you know, what most people would consider a tremendous success as far as the amount of money we've won recent years. You know, it's gotten to the point now. It's like not how much bankroll that not how much you can afford to bet based off your bankroll size, but how much you can just physically get down. Because, you know, you're running into that limit. There's not that many sportsbooks that still want the action. And when they do, they're trying to get away with selling you the smallest amount as possible.
SPEAKER_01:Zach and Mark flew under the radar for years and have only recently opened up about their success. But Rufus was interested in exposure almost immediately. So any history of the group should address this issue of notoriety in a domain where being known was frowned upon. It wasn't long after Rufus joined the group that he and one of his Yale professors, Cade Massey, created the football ratings, which bear their names and which appear in the Wall Street Journal.
SPEAKER_03:Well, we all knew Cade, the other half of Massey Peabody. We hadn't met him before. You know, we're all friends. And it wasn't, Rufus was initially like, I'm just going to put out top 25 ratings. Like, we didn't want anybody to be able to reverse engineer, like, our position on a college football game before we had a chance to get down on it. So when Rufus was talking to us about, hey, I want to do this website. I'm looking to get some exposure for these rating systems I'm working on. I'm like, well, can you wait until Thursday to put it out? Can you wait until Friday to put it out so we can be sure that we've got the position we want based off using some of that same information that you're going to share? Well, me personally, I don't have any big issue with him doing the Massey Peabody stuff. It was some of the other articles he did kind of early on. where I was always refused to have my name listed or anything because I'm still out there in the trenches in the sports books trying to get this action down. I don't need any more people scrutinizing me. And I certainly don't need anybody trying to whack me over the head and take my bankroll because they know I've got$20,000 in my pocket. So some of the earlier stuff that he did, I was kind of upset about because of the amount of exposure that he just made public. But yeah, the massive key body stuff, I never really had an issue with it because it wasn't like he was putting out like, true good data that we're using to make these final determinations about plays. It was like a rating system.
SPEAKER_01:Zach says that the Massey Peabody ratings weren't really a threat to the group's ability to get bets down. Any book thinking of kicking them out would only care if the group was winning. Whether or not anyone had been in the Wall Street Journal would be immaterial. But one of Rufus's other media appearances could have been more problematic.
SPEAKER_02:There was a Washington Post article that came out This was on Super Bowl Sunday. It was on the front page of the actual Washington Post, not the sports section, the front page of the Washington Post. Dan Steinberg, a reporter for the Washington Post who has a popular sports blog, came out to Vegas and followed me and my girlfriend, who was a runner for us, around for a week. And they were not happy at all about that. They tried to talk me out of it. They They thought that it made us a target. They thought legally it wasn't going to be good. They thought that it's not going to be good because everybody can recognize my car now and they know that I'm carrying money around. It's so funny now, though, how things have changed. Back then, it was all about staying under the radar. They thought that basically by talking about what I'm doing, there goes our opportunity in a way. That was at least the fear. It didn't end up actually happening. Their fears weren't realized, thankfully, because I would have, yeah, I would have been the one to blame. But, you know, now people are so public about it. It's so different than it was 10 years ago.
SPEAKER_01:These guys have known each other for a long time now. And so they understand each other and realize that their motivations will differ. A lot of times you'll hear
SPEAKER_03:somebody say, oh, I'm not in it for the money. You know, this is more important for me. Some other thing. Really, in the end, they are in it for the money. But truly, I don't think Rufus is sometimes. He'd much rather have an ESPN article than an extra 10 grand in his
SPEAKER_01:pocket, I think, sometimes. Rufus basically agrees with Zach. The money was somewhat secondary. I
SPEAKER_02:always craved external validation. And being recognized. Recognition, I think, is the better word. I craved recognition for what I was doing much more than the other guys. For them, it was... They were fine having nobody know who they were and making a lot of money. For them, it was about the money. Whereas for me, I would have rather made less money and felt like I had been responsible for it. And I guess I've always been kind of someone that likes sharing things and very open and... But yeah, I always, I always craved recognition a lot more than they did. I'll be honest. It's tough though, because I feel like my identity for so long was wrapped up in who I am, who I am as a better. I wanted to be the best at it. Like I worked, I had sort of this single-minded devotion to building these models to try to be the best at this. I wanted, as Zach said, I wanted that recognition. I wanted to be known as like, this is the best better out there. And so I think it's easy early on when you're, when you're still sort of further away from a goal, like obviously I'm not the best better out there or anything like that, but I've been very successful, I think. And I'm proud of what I've done, but it gets hard because there are going to be smarter people that come along and there's going to be people that are better than me. And it's like, if my identity is entirely wrapped up around that, then I'm going to feel threatened by other people. I'm going to stop having a growth mindset and I'm just going to be miserable and unhappy. And so it's been this like long journey to like understanding that I'm Rufus is obviously
SPEAKER_01:a smart guy, but there are lots of smart people in the world. Not all of them could succeed at sports betting if they tried. Being smart is probably a necessary but not sufficient condition. So why did Rufus make it?
SPEAKER_02:There are people way smarter at math than me. I wasn't a math major in college. I wasn't a stats major. I was an economics major. So, you know, I'm not a computer science, you know, I'm self-taught coder, you know, very hack coder. And so, I always thought, for a while, I thought that it's just that nobody else has really tried to do this. Like, nobody else with my background has really tried to do it. And if you got somebody who was a math person that you know decided to go into this field they would be way better than me at it and when my back i think it was the 2013 sloan sports analytics conference we were we we posted a job posting like i wanted to find someone else to do the same stuff i was doing basically um another person that was originating numbers in our group because i had a lot of my plate you know And we wanted to expand it to other sports. We wanted to build something for tennis, for example. We wanted to do something for live modeling for some major sports like the NFL and NBA. And I ended up getting a bunch of resumes and interviewing people. And before that, I gave them a challenge because I thought that the best way to find out if someone's going to be good at something is to actually give them that type of thing. And there was someone with a PhD in... from MIT that applied. I think one of the challenge was to basically create a framework for a NBA win probability model given the score differential and time remaining in the game. And I think the game, the pregame line And this guy was talking about how he would look at how, like, the Lakers had done in situations where they were up 12 in the fourth quarter before. And, you know, it was like he's got this– he clearly is way smarter than I am. And mathematically speaking, like, has all these techniques at his disposal that I didn't know. And yet he just didn't understand how to look at the problem in a way that would actually get a solution that would be– usable my value is is in a way being able to just get stuff done and and not being it's it's being creative and asking the right questions and having the tools to answer those questions
SPEAKER_01:I'll put a link to Unabated in the show notes, as well as links so you can follow the guys on Twitter.