Apr 9, 2020
Apr 9, 2020

The life of a professional sports bettor - Pinnacle Betting Podcast

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The life of a professional sports bettor - Pinnacle Betting Podcast

Having started out working for Las Vegas Sports Consultants, Rufus Peabody worked his way up through the ranks of sports betting. Now, thanks to a team he has built, Rufus is able to beat the markets enough to make a living from it. In this episode, Ben Cronin asks what it's like to be a professional sports bettor. Read and listen now.

Ben Cronin:

Hello and welcome to the Pinnacle Betting Podcast brought to you by Pinnacle.com. The online bookmaker that bring you the best odds, highest limits, and unique winners welcome policy. I'm your host, Ben Cronin and joining me today is someone who doesn't really need an introduction. There are thousands of people out there who claim they can beat the book makers, but this man actually does it for a living. It's Rufus Peabody.

Rufus Peabody:

Hi Ben.

Ben Cronin:

How's it going. You all right?

Rufus Peabody:

Yeah. I'm doing well. It's U.S. Open week, so it's an exciting time for me.

Ben Cronin:

Good stuff. You must be busy.

Rufus Peabody:

Not as busy anymore. It was a pretty hectic three days, but now I'm excited to relax and watch a little bit of golf.

Ben Cronin:

Nice. Sounds good. Before we get into where you're at now and what you're up to, let's go right back to the beginning and I guess the start of your journey. So, for you, where did it all begin, getting to where you are now?

Rufus Peabody:

I've always been into the numbers side of sports. I remember when I was in first grade we'd have a carpool to school, and my dad would stop at the newsstand and pick up a newspaper. And I would always just look at the baseball box scores. And I don't even think I knew what they meant originally, I don't even know if I knew how to read at the time. But somehow they fascinated me. I've always been into the numbers side of sports. I wasn't a statistician or a math major or anything like that, but I've always been comfortable with numbers. And I happened to read an article about Las Vegas Sports Consultants my junior year of college, LBSC, this company in Vegas that consulted for 90% of the legal Nevada bookmakers. And I just decided that was a dream job, I want to work there. It's academia for sports.

So I tried to get in touch with the CEO of the company, Kenny White. They basically were like, "Call back in three weeks, on Sunday at 3:30 P.M. And I did, and they had forgotten about that. But two months later I eventually got in touch, and ended up talking my way into an internship there. Actually that summer also I had applied for a summer research opportunity in the economics department at Yale, working with a professor. I interviewed and he didn't actually end up giving me the job, that would have been for the early part of the summer, for six weeks. He didn't give me the job, but I had been talking about stuff with sports betting and this internship and he said that he had to referee a paper on sports betting, and how it pertained to financial markets that fall. So he actually asked me if I wanted to do a research project for him and write a literature review on all the academic literature about sports betting, and pertaining to financial markets.

So honestly that was the best preparation I could've ever had. Going into that, I didn't know much at all about sports betting markets. I was just your average square, square that wasn't even betting, who just loved sports. And I really got a sense of how these markets worked, and then was able to take that with me when I went to Las Vegas for that summer. The summer was great. I got a crash course on sports betting, learned about correlated parlays, and everything. And was able to, I guess, prove my worth a little bit when the Tim Donaghy scandal broke, the NBA referee that bet on games he officiated. So I broke down the numbers and found some trends using, honestly, very basic methods. I found some trends in games he officiated.

So they were willing to hire me back on full-time after my senior year of college. So I went back to Yale for my senior year and ended up writing my senior thesis on psychological inefficiencies in the baseball betting market. So that was my first attempt at developing a model to beat the market. And it wasn't really a model to beat the market, as much as it was ... Well, it was a model to beat the market, but it wasn't a model to predict the outcome of sporting events. It was an outcome to predict inefficiencies in the market, so basically where there were biases that led to odds being miscast. I think that, obviously, the markets are a lot more efficient not than they were back then.

That was definitely my first model, and it gave me some encouragement that this is something that I could do. And so when I went back to Las Vegas full-time, I really started working really hard in the time I was not working for Las Vegas Sports Consultants, in developing these models myself. And I guess starting with NFL prop bets, and that upcoming baseball season I actually had a predictive model all set up.

It's kind of interesting to note there that you cast yourself as a square before you then went to LVSC. I'd be interested, was it that summer that was a shock to the system, or was it then what followed from that, that really opened your eyes to the betting industry?

I just knew nothing about it really, before that. I wasn't somebody that grew up betting. I grew up, I played in NCAA tournament pools, and even ran them for two years in high school. But I just didn't know anything about the industry. I guess getting the academic view of it first really helped, I think it formed my thinking, especially when I went to Vegas and got a very different perspective on things from these people that were setting the odds.

Ben Cronin:

So where did things go from Vegas then? What kind of route did you take? Obviously things have changed a lot since then, but what were the years that followed from then that gave you more experience in the industry?

Rufus Peabody:

I quit working at Las Vegas Sports Consultants after about a year, I think 11 months. Because I had partnered up with some professional bettors who basically were willing to take a chance on me. They offered me a 20% freeroll for the 2009 baseball season. And I ended up making the equivalent of my yearly salary in the first month, which was not very much, I'm just going to put it that way. It was barely above minimum wage, but it was a great job. I got to tell you that.

So at that point they were like, "Why are you still working for LVSC? You're slitting your own throat at that point." So they basically gave me an offer to work with them, be a full-time partner, and I said yes. It was the best career decision I ever made. At that point I was able to spend all my time developing models for other sports. I remember that summer, that first summer I put two months into trying to build an in-game wagering model. I was working on this in-game betting model for baseball. It had some success, actually, especially against Cantor. That wasn't a track that ended up being quite as lucrative. The bigger thing with the live betting is just how time intensive it is, especially where I was technologically at that point, it wasn't completely automated. So that took a lot of time.

But I got into other sports. NFL props is the first thing I think I got really, really good at. But that also was so time intensive. That first NFL season, working with these guys, I would sleep a total of three hours between Friday and Saturday nights on a given weekend. And then I would sleep 15 straight hours Sunday night. So it wasn't really sustainable. And looking back at it, I had this incredible drive, and I just worked so hard. I feel like I don't have that same drive anymore. I can't pull these all-nighters anymore either.

From there I continued betting baseball. I then, about a year after, started Massey-Peabody rankings with my former senior thesis advisor, Cade Massey, and we've been doing that ever since. That was an NFL model, and we do college football as well. I started betting golf in 2010 as well. Those are basically the three sports I bet: golf, football (both college and pro), and baseball.

Ben Cronin:

Just to go back there, you said in the early days when you were betting these sports, and your NFL props and things like that, was your work predominantly finding the edge and building the model, or whatever it might be? Or was there also some kind of boots on the ground, in the case of having to work to get those bets down as well?

Rufus Peabody:

So my work was primarily building the models and pricing the things. My partners were the ones doing the trading. I kind of liked it that way. When I was at LVSV I was betting on my own, in Las Vegas. But that was more just running around from shop to shop. These were the days before smart phones. I would run out and hope that the odds didn't change at a book in the next hour and half if I had a bunch of other books I had to hit first. It's funny how things have changed now, and how much faster everything is.

Ben Cronin:

It certainly sounds like a fascinating career. As I alluded to in the intro there, you only have to look at Twitter for a matter of minutes to see how many people out there are claiming that they can beat the books, and everything like that. But from your perspective, what do you think it is about you, whether it's personality traits, whether it's your skillset, what makes you suited to a betting career do you think?

Rufus Peabody:

That's a good question. I don't know, a lot of it is problem solving, and creative thinking. I wondered for a while why there weren't more people doing this. I remember back during the Sloan Sports Analytics Conference, I think this was maybe in 2012. We were considering hiring somebody. And so we actually met with a bunch of people and interviewed a bunch of people that had much more impressive quantitative credentials than I do, which is what I wanted.

I figured the best way to see if someone would be a good fit is actually giving them a problem that they would actually be dealing with. So I think at the time we were looking at someone doing in-game NBA, is the exercise, or tennis. We gave them a limited dataset, and if they wanted to actually try to come up with a model on their own in the time before we met with them, that was fine. Or if they just wanted to go through the thought process and how they'd approach it, that was also fine.

One guy said that to build an NBA model, live model, he'd use three quarters of the season as a training dataset, and basically see how the Lakers did when they were up by 10-12 points early in the fourth quarter, and build it. And I was like, "This guy's got a PhD in statistics from MIT, and this is how you'd approach it?" I think there's a certain way of being able to blend the quantitative skills, or at least some quantitative skills and familiarity with numbers, with a creative and logical approach to it.

Ben Cronin:

Are there people throughout your career that you say, "That person was so influential" I needed that person to get where I am today?"

Rufus Peabody:

100%. Yes. Those two people for me have been Kenny White and Cade Massey. Cade Massey was my senior thesis advisor. I met Kenny White first. He was the guy that originally took a chance on me, and hired me to come out to Las Vegas for an internship, and then hired me full-time. He introduced me to the industry, and was definitely a mentor to me. Kenny worked harder than anybody. He had these notebooks, he could tell you the backup long snapper at some high school, how good this player was. His ratings were incredibly detailed. His meticulous attention to detail was impressive.

I remember, he wanted me to quantitatively evaluate something he was doing with basketball ratings, what was the value of a rebound versus an assist, in some particular context. And he had the way he weighted these things, just from his own time spent in the industry, and nothing statistically. And so what was crazy to me was when I did it, my numbers almost exactly matched what he had been using for years. To me that says something. He'd been in the industry a long time.

Cade, obviously, was huge for me. He advised my senior thesis, and we're excellent friends. We started the Massey-Peabody ratings. And he's someone that is a great collaborator. There's no way I'd be where I am today without both of those guys.

Ben Cronin:

Just like to touch on what you said there, with Kenny White, and his handicapping ability. Do you think we're in a position now, with so many numbers and so much data, that that approach is almost dying out? Or do you think there's still people that are practicing that and will continue to practice that?

Rufus Peabody:

I think there are people still practicing that. But I do think it is dying, and I think it's hard to win that way now. There's just too much out there. I think before computers really were big people had these big notebooks and were tracking everything, and there was a huge value to that. And I think, in general, Kenny's still really good early in seasons because his research is so good. During the season I think it's much more difficult to keep up with how all these teams are doing and I guess the quantitative aspects. Now you just have so much more data, especially in the coming years, we'll probably all have access to optical tracking data, and I don't know how you fit that into the approach.

Honestly, that scares me too, because I'm not a stats PhD or anything. More data equals more difficult, so I'm going to be competing against a lot of people that are a lot smarter than me.

Ben Cronin:

I think now is a good point, we've got a very clear picture of what the landscape was like back in your early days. So much has changed since you actually started betting, so I'd like for you to talk us through some of the biggest changes within the industry, from your perspective.

Rufus Peabody:

Biggest changes in the industry from my perspective. Well in the United States, obviously, PASPA was repealed, which is a huge change. Just overall, the worldwide landscape, I feel like it's been a slow evolution. I think markets, everybody's been saying that in-game wagering is the next big thing, because it's so big in Europe, in soccer, or football I should say, football punters over that. It never really has taken off here in the United States. I kind of thought it would. Back in 2010 I sort of was like, "We need to be on top of this, because this is where the market is going to go." But it's still mostly pre-game betting, I believe.

I believe that markets are ... The markets are a lot more efficient than they used to be, and that's something that's going to continue. I remember back in 2008 being like, "Wow." I was back testing these models and I was like, "Wow. If I was around in 2000 or 1999, these edges were huge." Or even the 1980s. I think in the 1980s you could've bet every NFL home underdog and made money. Things were just that inefficiently priced. The market was not efficient. But at the same time, I wouldn't have had the computer and the technology to be able to do what I was doing in the 80s either, so it wasn't really a fair comparison.

Rufus Peabody:

But the funny thing is, now I'm like, "Wow. 2008, I didn't know how good it really was." The funny thing is, in 10 years I'll probably be like, "Man, 2018, markets were really not that efficient. I thought they were more efficient, but compared to now." So I think markets are always going to continue to trend toward efficiency. And it gets harder, and harder, and harder to win.

Ben Cronin:

You referenced there a divide between the European side of betting, and the American side. I know recently there's been a lot of stuff ... I've read Dave Hill's Ringer article about closing and limiting accounts, and stuff like that. So is that something you're beginning to experience, being over there?

Rufus Peabody:

Oh for sure. For sure. Obviously, in the offshore world my partners and stuff, we've dealt with that before. It's nothing new. And Pinnacle, obviously, is great because they don't limit winning accounts, and it's a true market making book. You have basically Pinnacle, and you have CRIS, and then you have everybody else, right. In the United States now I think a lot of people, probably outside the betting industry, didn't realize that the winning bettors do have these problems. I'm just going from my perspective, before I got into the industry I didn't really know that people were limited for winning, whereas I did know that people were banned from card counting. This is a debate Jeff and I, on our podcast, had earlier this week.

I definitely want to see legal betting in the United States succeed, and it's going to succeed. It's going to be very big. But I want it to be a true market. I'm hoping there will be a book like a Pinnacle style book that operates. Whether I'm a part of that or not, I really think there's a niche to be served.

Ben Cronin:

It's one thing, I guess, for the people taking the bets, the perception of those companies to change. But do you think it's also fair to say, potentially, that the bettors themselves, and people's perception of what it is to be a bettor, is almost changing? We've obviously had a lot of press around Jeopardy James, and I know Ed Miller and Matt Davidow's, their book's getting a lot of press at the moment. What does it feel like to be a professional bettor in 2019?

Rufus Peabody:

No, you're right. I think that Jeopardy James especially, I think we all seem smart by association. I couldn't answer three of the questions he got correctly right. It's funny, I think people have this perception of what I do as either I sit in my parent's basement and nerd out and grind away and basically have my parents pay for everything, or I'm this huge high roller.

As betting becomes more mainstream people will start to accept it as more of a regular job, which it basically is. It's not as 9-5, but it's a regular job. I do think having these really smart people, and Ed and Matt are two of the smartest people I know, and their book is incredible. If anybody hasn't read it, I really, really highly encourage you to read it. But having smart people like that helps give us a good name, us professional bettors.

Ben Cronin:

I guess having smart people like that within the market as well, then also makes your job a little bit more difficult. I know you kind of said that you feel like the market's getting more and more efficient, but just how different is it now, to say 10 years ago? How sharp is it nowadays?

Rufus Peabody:

How sharp is it? I'll give you an example. I used to bet second halves for football, NFL and college football. That used to drive my yearly earnings. It was an ATM machine, basically. The returns were just astoundingly good. Basically doing the same thing, and updating the models, the last three years I've basically just broken even there. I don't even know if I'm going to continue with it, just because the inefficiencies that were there are no longer there.

And part of the issue too is it seems like it's harder and harder to get down a good amount, too. I feel like 10 years ago you could bet more than you can now, which is kind of a sad state of the industry. You had more books willing to take bigger bets. And now, when these second half lines come out, you generally have ... I think Bet CRIS opens first, and then people wait for Bet CRIS to move, and for the sharps to hit it, and then everybody else opens a number that's already been bet into place by people betting $2,000 a game. So I have basically a situation where if I get down ... I'm either getting down small, if there's no market resistance. Or the games where there is market resistance, I can get down a lot. But those are generally not going to be my highest etches, because there's obviously something I'm not seeing.

In general, you don't want your biggest bets to be when there's market resistance. So it's been difficult. That's just an example of one area where it's gotten harder and harder to win. I think, in general, live betting becoming bigger is part of that, because second half betting is just live betting, it's just live betting at one particular time. But I think now that you see live markets on all these games it's much easier for bookmakers to price, and so those opening numbers aren't quite as far off, and you have more people competing to get the blatant mispricings.

Ben Cronin:

Yeah, there's obviously kind of a couple of, well more than a couple, a lot of components at play here. The big ones are the books are making their lines harder to beat, and then you're also competing against more people, people that are getting more intelligent to try and beat those lines. And then the third one I guess that I'd be interested to get your opinion on is sport in general seems to have developed so much, I mean talk about kind of the data that's available and things like that. So what developments have those had on your betting?

Rufus Peabody:

Well I think better data has been this great equalizer. I guess 10 years ago I think not everybody was using the same data that I am. And I'm not saying it was super advanced, but I remember when using football play by play was considered advanced, relative to just looking at a box score. Now there's the optical tracking data, there's sites like Pro Football Focus with individual player grades. Shot length, which is for PGA tour, with shot by shot. Baseball, obviously now you have Statcast and PITCHf/x. PITCHf/x as maybe 5-10 years ago. It creates edges in a way, but when everybody's using this data ... The marketplace as a whole is so much sharper. There's so many more people that are good with numbers doing this.

Ben Cronin:

The sports you are betting on, I guess there's a bit of diversity when it comes to available data that's out there. You touched upon baseball there, we're looking at a 10 year plus data boom, up until NFL and golf, probably a bit later than that. Of the sports that you are betting on professionally, what ones do you feel like you've seen the biggest development within the sport? And has that worked to your advantage or your disadvantage?

Rufus Peabody:

I would say baseball probably, just because of Statcast, it's the most advanced of any of them. You can see spin rates on pitches, and you have fielder positioning and things like that. I'd say probably baseball, but I think all of them to some degree have had these huge leaps in the technology and the data coming from that.

I guess where you haven't really seen that is some of these other smaller golfer tours. So the European tour doesn't have anything like ShotLink. Actually, I think they do, but it's just not available. You just have that for the PGA tour. But I think what we've seen so far is nothing to what we're going to see in the future with optical tracking data, which is going to, honestly, make the methods I have now kind of obsolete in a way. But I do think also having that tracking data, if you can work with it correctly, it'll be hugely beneficial.

But I do think a lot of people are going to be ... it'll be an overwhelming amount of data, and it's not going to be easy to organize and process, and figure out how to fold it in. I think there's going to be a lot of people throwing around terms like machine learning, and basically saying, "Oh yeah, our machine will just automatically take all this data and turn it into something good." That's just now how it works.

Machine learning is great. I'm not a machine learning guy, but things like Neuralnet, I basically understand ... I don't understand them, but I understand what they do a little bit, intuitively. And they make sense. They can be used for specific parts of a model, but you don't just suddenly stick this data in and it spits out this great model without ... you still need to be able to think creatively, and logically, and have a good process to create a good model, and that's not going to change. So hopefully I can just find some really smart machine learning people that I can work with, and then I won't become extinct.

Ben Cronin:

We actually had Matt from Data Golf on not too long. He kind of echoed those sentiments exactly, almost like this black box approach to betting where you kind of chuck a lot of data, and something gets spat out. Unfortunately some people don't even know what's going on inside there to get the results that they're getting, which I guess can be incredibly dangerous.

Rufus Peabody:

For sure. If you don't understand the limitations of your model, how would you know if there were any biases or something? Let's say if you have some model and its suddenly showing value on all these home teams, way more than it has in the past. How do you correct for that?

Ben Cronin:

We've done a great job of talking a bit about your past, and your insight into the industry, and what's changed. I'd like now to talk a little bit about what life is like for you now, at this moment. So can you tell us the day to day life of Rufus Peabody?

Rufus Peabody:

Well Ben, it really varies a lot based on the time of year. And it's been turned upside down a little bit by PASPA. There's been a lot of opportunities that have come up as a result of it, and I have a few irons in the fire, some projects in the works potentially, but they're moving slowly and it seems like it's a few meetings here and there, and nothing actually really being done yet.

I'm still doing my same stuff that I was doing, meaning I'm betting on football, and golf, and baseball. So there's a process every day, during the relevant seasons for those, and every week for golf. At this point I'm actually doing something right now, a project I'm working on getting my golf process more automated for traders, so that there'll be this private web portal where I'll run some code or a code will run and it will upload after the round, and they'll just have to press a button rather than having to ... Right now I'm doing it on a server. Basically I'm working on automating things to try to create more time for myself. Time is the most valuable asset you have, and it's something I feel like I have less and less of it, so I need to be more and more efficient with it. So that's one thing.

I'm working on a project in the works on a new sport. I don't really want to say what it is exactly, but I'm putting a team together, and that's something I'm excited about. I have the podcast I do every week with Jeff, which especially during the football season actually does take some prep, because it's not easy to talk about football games for me, if I haven't actually done any prep. Just because normally I say, "Oh, my number's -17. I can get -13, this is a good bet," and I bet it. And I don't really ever say, "Oh, why is the number -17?" So that creates a little work, and that takes some time.

If you want the specifics, I wake up, I work from bed in the morning for an hour or so, which makes me feel like ... I don't know. Working from bed sounds great, but it isn't actually that. I can get a lot done, but I don't feel like I've gotten anything done, because I'm still in bed. So then, shower, get up, go work at a coffee shop or in my office. That's a typical day. It's pretty boring. It's like writing code and looking at a computer screen.

Ben Cronin:

I was kind of half expecting some Mark Wahlberg daily routine of up at 3:00 A.M., workout, crunch the numbers, and all sorts.

Rufus Peabody:

No. Unfortunately I don't have anything good like that.

Ben Cronin:

I think it's quite good that that comes across, because certainly my feeling is the idea of betting for a living is romanticized to a point amongst people. From what you've just said there, would it be fair to say that you're not actually even doing that much betting nowadays?

Rufus Peabody:

Yeah. I've never been the one putting in the bets anyway, really. I have traders, and a business partner, they handle that part of things. I'm basically just doing the numbers, and developing these models, and creating these processes.

Ben Cronin:

So you've got those models that find an edge. Just how much time does it take to refine those models, and build on them, and make sure that you're ahead of that sharp market that we talked about earlier?

Rufus Peabody:

Well the key is, when you're building the models to make it so they can self-improve. My golf model, for example, does that. The regressions are updating with the new data every week. But, I still do need to improve in certain areas, in terms of there's some fundamental flaws, I believe, in my model. I shouldn't say flaws, but areas that I feel like I can be better at.

Those are these massive overhauls, which honestly I'm in the middle of one for golf. I created this new name database, because the problem is you have some golfers with the same names, and they're referred to different way. If I'm getting data from the Nordic Golf League or something like that, there's no player profiles either. So if there's a guy named Richard Lee, that's not a name you'd find in the Nordic Golf League, but there might be a guy named Richard Lee, and there's other Richard Lees that play professional golf or have played professional golf, and I'm having to try to figure out which one it is. So I'm trying to figure out a way to automate some of that stuff.

But these overhauls tend to be difficult because there's no real off season for golf. So it's like I'm trying to both develop something new, while also having to keep the current processes running. That's the hardest thing for me, disorganization and being able to balance the long-term and the short-term.

Ben Cronin:

You said there about what you'd call data cleaning I guess, getting hold of data and things like that. How does your data gathering work? Have you got partnerships in place, or is that something, again, that you outsource to different people?

Rufus Peabody:

It varies from sport to sport. I pay people in certain sports. In certain sports it's just scraped ourselves. I don't want to get into detail on that.

Ben Cronin:

Of course. So I guess just a little bit outside of betting, and I guess on a personal level, and you've kind of mentioned coding and stuff like that, how do you develop and learn? Are you learning new languages? Are you reading papers and stuff like that?

Rufus Peabody:

I'm sort of a self-taught coder. I'm not a good programmer. I'm a hack programmer. I learned PEARL, for example, by reading somebody's code to scrape baseball, to scrape baseball play by play. I knew I needed to scrape baseball play by play, and I saw there was freely available code someone else had written and I was like, "Okay, this is how I'm going to learn the language." So I learned how to do what I needed to do with it.

Honestly, I don't spend nearly enough time reading papers and improving, and learning, and developing skills as much anymore, just because there really isn't as much time. I don't know where it all goes. Maybe I'm getting dumber. I'm getting older and slower, so it takes longer to get things done, and then you have less free time. I used to read a lot of more academic papers on relevant topics, but it seems like I haven't been doing that nearly as much.

Ben Cronin:

I think a lot of people can relate to that running out of time feeling, and not enough time in the day.

Rufus Peabody:

As you get older you have more responsibilities, and your life becomes a little more complicated it seems like. I remember 10 years ago my life was so simple, I'd wake up, I would just do sports betting stuff. I had a little apartment I rented, and that was it. I didn't have to worry about a tenant in the place I'm renting out, or any other business endeavours or anything.

Ben Cronin:

You didn't have to worry about people dragging you on podcasts either.

Rufus Peabody:

Yeah. 

Ben Cronin:

I guess we've talked a lot about numbers and data, but there's obviously a lot more to think about in betting. One of the big ones that are at the forefront of my mind is psychological biases. Now obviously as someone who bets for a living and has big team working doing that, I'm sure that's something you're aware of. But can you talk to us a little bit about your perspective on biases and how important they are?

Rufus Peabody:

I believe biases are the reason there are opportunities in markets. Because if people did not exhibit these psychological biases, then their reasoning would be better, and markets would be much more efficient. I think the biggest bias, and honestly this is going back to my senior thesis, in general, is that people exhibit an outcome bias. Which means that they overvalue the outcome and undervalue the process generating it. And I think it's sort of this outcome-based thinking. We evaluate a decision largely, and sort of the media, based on whether it's successful or not.

I don't know if you remember when Bill Belichick went for it on 4th and one, this was maybe 2009. The Patriots were playing the Colts, and I think they were up one, in the fourth quarter late, around the two-minute warning. It was a high scoring game. If they gave the ball back to the Colts, Peyton Manning would probably win the game. So they went for it on fourth and one, I think at their own 25-yard line, and they didn't convert. And everybody thought it was such a bad decision to go for it because of that.

Bill Belichick probably was only able to go for it because he had so much job security, because it's one of these things where if you make the wrong decision or if it doesn't work out, you're the goat, everybody blames you. Whereas you don't get the same amount of credit if it works out. But it was the right decision, but people evaluated it based on the fact that it didn't work. And I think you see that in a lot of areas of life, not just sports betting. I think that's sort of a fundamental bias in the markets.

Obviously you have recency biases as well. So people overvalue recent swings, which a lot of time there are ... Hell, if I flipped a coin 50 times I might have a streak of six heads in a row at some point, and that doesn't mean that the next one is more likely to be heads. Going with that, regression to the mean, people not understanding randomness, and streaks, and all that. Just because you have six heads in a row doesn't mean that ... or just because a roulette wheel had 12 three straight times, we know that this is random, so those have no predictive power for future roulette spins or coin flips.

But I think people think that some of these weird trends do have predictive power. They're like, "Oh, teams coming off of a road loss by three or more, then facing a home favourite after traveling two time zones are 13-1 against the spread," like that actually means something. If you bet on every college football team that started with the letter O, the last 10 years you would've hit 56% over 900 games. So you can find all sorts of patterns in the data if you look. That's reading tea leaves, it doesn't mean they're actually predictive. It's just noise.

Ben Cronin:

Yeah. And especially when you're doing things in hindsight, it then becomes even more dangerous to find patterns that have gone before and then say, "Oh if I'd have done that, it would've come in or I knew it would've come in."

The final thing I want to speak about from betting, for you, is this idea of success. A lot of people out there have different ways and means to measure their success, but how do you do it? Are we looking purely at ROI? Are you constantly looking at your performance against the closing line?

Rufus Peabody:

So you're talking about success betting, not in life in general?

Ben Cronin:

We can talk about both if you want.

Rufus Peabody:

That's an interesting question, and it's something that I think I'm trying to figure out, in a way. In terms of betting, I don't consider it just how much I'm making, but whether I feel like I have an edge as well. I feel like there's ways of making money in sports betting ... you generate money from line shopping as well. So if I was betting everything against the closing line, widely available in big market, that is harder to do. Those are harder markets to beat. So I think, in general, being able to beat the hardest markets is a little more satisfying to me than if I figured out that there was a way to get down a lot on archery or something. So there's that.

Because I got in to this, not to make money. I took a job in Las Vegas making $25,000 a year because I really enjoyed the numbers side of sports, and it was something that I was really passionate about. So for me it's this challenge of beating a market. It's not the money that makes me feel validate, I guess, it's the winning, it's the competitiveness.

Ben Cronin:

I think we can save the philosophical question of success in life for another time, maybe. We've talked about the past, the present, and the industry in general. I guess the next logical step, just before we call it a day, would be to look into the future. Where do you want to go with your career? Where do you want to be in five, 10 years time?

Rufus Peabody:

That's something that I've been trying to figure out for the last year. I'm struggling with it a little bit because I don't envision myself doing the same thing for the next 20 years. Hell, the idea of doing anything for 20 years is scary to me. But at the same time, I feel like this is where my expertise lies. I feel like in a way I want new challenges, but at the same time I'm sort of like ... I don't want to say I'm lazy, but I don't have the same drive I used to. I feel like in a way I have more ambition, but less drive, which is not a good combination.

I think if something came up on the operator side that I was passionate about, I'd be interested in that. I feel very strongly that we need a market making book in the United States, and the books should treat bettors like Pinnacle does. Obviously there are a lot of operators that don't do that, so it's working out well for them I guess. I'm hoping to launch a non-profit soon, there's been some snags with that. But I feel strongly about consumer protection in the sports betting space. I think the way touts make a living, preying off of people's psychological biases, is something that really gets to me. Some people wonder why, but for whatever reason it does. It's my sense of fairness.

My first job was refereeing youth soccer, and I also was an umpire for Little League baseball. So I've always really ... I felt strongly about fairness. I'm realizing that now, but maybe that's why I don't like the tout stuff, or the books limiting people. But if I can find a way to make the sports betting space seem a little fairer, or actually be a little more fair, that would be something I would be really, really passionate about.

In terms of where I'll be in 10 or 15 years, I have absolutely no idea. I think I'll always have some gamble in me, you can't really take that out of somebody. But who knows what the markets will be like. I probably won't be able to win then. The markets will be so efficient that we'll just be flipping coins.

Ben Cronin:

Certainly the touts and the tipsters, it's a very hot topic in the industry. I think it'll be certainly interesting to see what the industry as a whole, and perhaps you yourself, do in that space. The final one I've got is, and we've touched upon it briefly. I guess in your answer a few things came up as well. That's the future of your own career. So for the betting industry in general, what do you think will happen? Or more so, what do you want to happen?

Rufus Peabody:

Well I think it's very difficult to predict. I don't know how long-term you're talking about. I think predicting what happens in the next two or three years is much easier than predicting what happens in 5-10 years. I think there's been a lot of research done that people can't predict oil prices in 20 years very well because you don't have a lot of feedback there. So I think it's the same kind of problem predicting where sports betting is going to be in 5-10 years. But I think it's going to be big, and especially in the United States, it's going to get bigger.

Hell, look, people ... Well, lotteries make so much money in the United States, and the odds are awful for, I don't want to call them bettors, but for people playing the lottery, but yet they still do. So people love to gamble. These sports books, these operators, online casinos, et cetera, are going to continue to make a lot of money. That's the one thing I will predict. I think that in terms of whether the U.S. industry ends up looking more like Europe or something different, I can't say. And I feel like what happens now, in the next year or two, is probably going to be really important in determining where the industry goes in the United States.

Where do I want it to go? I want it to be a true market. Honestly, what I would love to see is this big exchange where there's a ton of volume, and a lot of people are able to get down, and hell, operators can offload action if they want to, and it's good for everybody, like Betfair times a lot. But will that happen immediately? Probably not. Do we need the laws to be written in a certain way for that to be feasible? For sure. And I think for example, if you're placing a tax on volume, that type of framework is much less feasible.

Ben Cronin:

Unfortunately I guess it's a case of only time will tell. But for today, I think that's all we've got time for. I just want to say thanks so much for coming on, Rufus. It's so refreshing to hear someone that's out there, been through the grind, and is a real success story, so thanks for coming on.

Rufus Peabody:

Thanks for having me, Ben. And sorry, I'm not a professional talker, so hopefully your listeners can get through this.

Ben Cronin:

I'm sure it will be an easy listen, and they'll be grateful for the insight you shared. But as I said, that's all we have time for today. If our listeners out there want to hear more from Rufus, he's on Twitter @rufuspeabody. And as always, for anything related to betting follow @pinnacle, or just visit pinnacle.com/bettingresources.

Thanks for listening, and bye for now.

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