Hawaii Lawmakers Consider Gambling

Legalized gambling often is seen by states as an easy way to get additional revenue without raising taxes. To an extent, they are correct. Many states opt for lotteries as opposed to casino gambling, or if they allow casino gambling, they allow tribal gaming.

Hawaii is one of only two states with no gambling (the other state is Utah). With an estimated budget deficit of a billion dollars, some of the Hawaii legislature is considering legalizing gambling to make up the shortfall.

A story from KHON discusses this effort. What gambling would do in Hawaii is not just provide some additional revenue due to gaming. It would have a positive economic impact on the tourism market. Hawaii is awesome, but is suffering from lower tourism levels, due to the economy.

Imagine Las Vegas with lush gardens, water, sand, mild temperatures - and gaming? Very nice. I think that the time is right to make this move. With gambling growing globally, Hawaii can keep up with those that wish to gamble, but combine that with the outstanding locale to create a "winning" combination.

Typically, gambling operations tend to be the most busy from late afternoon to a bit after midnight. There is not as much gambling in the morning hours. This would work out great for Hawaii hotel resort/casinos. During the day, the patrons would be on the beach and doing the typical resort/tourism activities. At dusk, when the beaches clear, the casinos fill.

It is unknown if Hawaii will ultimately legalize gambling for thier hotel resorts, but they should.

Kentucky Court Stops Governor's Move To Seize Online Gambling Domain Names

An AP story today reports that a three-judge panel of the Kentucky Court of Appeals rejected the move by the state to seize the internet domain names from 141 online gambling and related websites. This move by Kentucky was done to stop these sites from being accessible by Kentucky residents. You would think all they had to do was just ask the sites to block Kentucky-based IP addresses. Nope. Seems like some folks aren't that bright in Kentucky, particularly the Governor.

Governor Beshear's apparent intent was to keep out gambling competition from hurting the state's horse racing industry, but the way he went about it was very unusual. Quoting from an article in the December issue of CAP Magazine, attorney Martin Owens describes that the person expected to enforce state laws, the Attorney General, was not the person who filed suit. It was done by a state agency named the Justice and Public Safety Cabinet, whose charter covers prisons, public defenders and coroners. The agency does not have charter that covers telecommunications or gambling. It gets more unusual. The agency actually hired an outside, private law firm to file the suit. Now there's a wise use of taxpayer dollars in this economic environment.

The AP quotes Judge Michelle Keller, who wrote the majority opinion, "It stretches credulity to conclude that a series of numbers, or Internet address, can be said to constitute a 'machine or any mechanical or other device ... designed and manufactured primarily for use in connection with gambling,'" So, in other words, an IP address is not a gambling device.

Mr. Owens in his article cites Kentucky Revised Statutes Section 528.010 which defines gambling devices. Gambling devices are defined as those things which, "...when operated may deliver, as the result of the application of an element of chance, any money or property, or by the operation of which a person may become entitled to receive (them)." 1

It is extremely plain that a website address or domain name doesn't even come close to the definition of a gambling device. Mr. Owens also makes very clear the nonsense being attempted by the Governor. He equates the logic of this suit to trying to arrest the house address numbers of a building where gambling occurred.

I think Kentucky better stick to raising horses and making bourbon rather than trying to set unusual legal precedent. But they won't. The Governor's office has already stated its intent to appeal the ruling.


References

1. Owens M. (2008, December/2009, January), All Eyes On Kentucky, CAP Magazine, 51-52.

Fantasy Sports Prognosticators Not So Accurate

The 2008 NFL regular season is now over, which also means that for the most part the fantasy football season is over. In a previous post, I mentioned that it would be nice to have some measure of accuracy of player projections.

Now this is not by any means determinative, but I took a few fantasy football magazines I had for this year, and compared their QB projected rankings to how they actually turned out. The stats were based on total performance (passing and rushing), not just TDs. The league I was in counted passing TDs for 3 pts instead of 6 pts, so QBs that maybe didn't pass as well but got some stats rushing may show up higher in this list than the rankings your league has. The ranking lists of the magazines also were based on a performance model, not just TDs, to keep the comparison consistent.

To be fair to the magazines, since I used as my sample what I had on hand, I omitted the actual names of the magazines and list them as A, B and C. The table below shows the fantasy QB rankings at the end of this year's regular season, along with the projected rankings from the 3 fantasy football magazines. Also, I averaged the ranking error for the 3 magazines under the "Variance" column.

Where the QB was not included (ranked too low) in a particular magazine's rankings, I insert an "N/A" and assume a ranking of 50. Magazine A had a longer list of QB rankings compared to magazines B and C.

Here's the results (table is at the end of the post):

• Correct within 5 or less spots - 10 (31%)
• Correct within 10 or less spots - 13 (40%)
• Incorrect by 11 or more spots - 19 (59%)
• Average ranking error - 15 spots

What is striking is how inaccurate the various fantasy magazines are with their rankings. It is interesting that these magazines, supposedly independent, are very similar with regard to their rankings. They by and large all predict the same performance. So what is the real difference between these various magazines?

On a whim, I wanted to see if the final QB stats ranking for the 2007 season was used, as is, for the 2008 QB stats ranking, how that would measure. For those QBs that ended up ranking too low for measurement in the final 2008 regular season stats, I assumed a ranking of 65. No changes were made to the 2008 projected rankings based on off-season changes. I took the final 2007 regular season rankings verbatim. In other words, Cleo Lemon was projected 25th, Josh McCown was projected 31st, etc. The results are:

• Correct within 5 or less spots - 10 (31%)
• Correct within 10 or less spots - 15 (46%)
• Incorrect by 11 or more spots - 17 (53%)
• Average ranking error - 17 spots

Pretty much the same. So, at least compared to the magazines considered, you could have simply taken last year's QB stats rankings as your cheat sheet and likely not done any worse. I didn't do the work, but from a cursory glance, taking the 2007 rankings and simply swapping QBs that took over from the previous year's starter, you likely would have been more accurate than the fantasy football magazines (at least the ones evaluated).

I did not look at the other positions, so it is possible QBs have a greater variation but that would have to be verified and I'll leave that to others to research. As of now, here's some evidence that fantasy football magazine projections (crafted by "experts") are not statistically more accurate than just saying what happened last year would happen this year.

#	QB Name	Mag A	Mag B	Mag C	Variance
1	Drew Brees	5	4	4	3
2	Aaron Rodgers	16	19	19	16
3	Jay Cutler	8	8	8	5
4	Philip Rivers	18	13	13	11
5	Kurt Warner	37	36	36	31
6	Peyton Manning	2	2	2	4
7	Matt Cassel	64	N/A	N/A	48
8	Donovan McNabb	7	6	6	2
9	Tyler Thigpen	N/A	N/A	N/A	41
10	David Garrard	9	15	15	3
11	Chad Pennington	27	30	30	18
12	Tony Romo	4	3	3	9
13	Eli Manning	13	12	12	1
14	Brett Favre	N/A	N/A	45	34
15	Matt Ryan	N/A	34	34	24
16	Jason Campbell	17	25	24	6
17	Kyle Orton	31	38	39	19
18	Joe Flacco	33	37	38	18
19	Ben Roethlisberger	6	7	7	12
20	Jake Delhomme	21	14	14	4
21	Matt Schaub	12	17	17	6
22	Jeff Garcia	22	23	23	1
23	Trent Edwards	24	28	28	4
24	Kerry Collins	50	N/A	N/A	26
25	Shaun Hill	38	40	40	14
26	JaMarcus Russell	26	22	22	3
27	Marc Bulger	15	11	10	15
28	Ryan Fitzpatrick	66	N/A	N/A	27
29	Gus Frerotte	45	N/A	N/A	19
30	Seneca Wallace	53	N/A	N/A	21
31	Derek Anderson	11	10	11	20
32	Dan Orlovsky	N/A	N/A	N/A	18

Question: How Do You Spell Failure? Answer: Montana Sports Action

The NFL regular season is over, and so is the first NFL season for Montana Sports Action. The weekly handle is shown in the chart above. It doesn't look very pretty. Problems with this game have been discussed in previous posts. You can read those posts here and here.

For the entire season, Montana Sports Action didn't even generate $100,000 in handle. The estimate, based on prize amounts, is approximately $87,510. If you read the hype regarding the revenue potential of this game, it should have been generating $87 thousand per week in wagers. Not even close. The results are so poor, that it is likely that the total amount held back for horse racing, the lottery and the retailers wasn't even enough to offset the costs of the fantasy sports statistics feed. However the cost of the statistics feed can not be covered by the fees to the retailers, or by the fees given to the Board of Horse Racing, so the network operator (Lottery) has to cover an approximate $20,000 charge with their gross revenue of about $5,250.

There is nothing positive with these results. Even the trend is in the wrong direction. If handle was low, but steadily increasing, you could make the claim that the future looks brighter. Not with Montana Sports Action. The trend is downward, with lower handle as the season progressed.

The total revenue amounts to the various entities after paying prizes are approximately:

Montana Board of Horse Racing (MBOHR) - $14,000
Montana Lottery - $5,250
Retailers - $3,500

Assuming 150 retailers, each one generated on average a whopping $23 in commissions - $1.37 per week.

As stated in a previous post, probably only the statistics supplier made money on this game.

On a related topic discussed in a previous post, if this game is truly a lottery game, and not a pari-mutuel game, as the Lottery seems to be moving their positioning toward, why pay MBOHR any money? If the game is a lottery game, that game would be outside the purview of HB 616; therefore no need to pay MBOHR. Quoting Forrest Gump, "stupid is as stupid does."

Keeping with the topic of stupidity, the Montana Lottery is looking to launch a similar game for the NASCAR racing season. Recent research from the Fantasy Sports Trade Association estimated that there were about 4 times as many fantasy NFL participants as fantasy NASCAR participants. Given the poor results of the NFL game, which by far is the most popular fantasy sport, it is fair to estimate that the NASCAR game will generate about 1/4 the handle. Even Forrest Gump would be scratching his head at that.

Given this assumption, and the assumption that the Montana Lottery or their vendor partner isn't bright enough to make sufficient changes to the core game, a similar handle chart is expected. Some initial interest, realization that the game is poor, and a steady gradual decline in handle. Albert Einstein defined insanity as doing the same thing over and over again and expecting different results.

There are rumors of legislation that will be proposed in the new year to put an end to this insanity. Let's see if the Montana Legislature has more sense than the Montana Lottery and the Montana Board of Horse Racing. Time will tell.