Category: Sports

Should gambling be functionally separate from professional sports leagues?

In my latest Bloomberg column I consider the NBA:

A conservative estimate is that sports betting in the U.S., both legal and illegal, amounts to about $150 billion a year. How much of that is on basketball is an open question, but the NBA generates about $8 billion of revenue a year. It is quite possible that betting on the NBA already generates more revenue than the NBA itself, so integrating betting money into the sport could have a major influence.

The appeal of all this betting money brings me to my second worry: that the NBA, for commercial reasons, will create more bettable events, such as a mid-season tournament. Tennis is well-suited for betting (and corruption) because there are so many discrete wins and losses distributed across games, sets, matches and tournaments. Very frequently something decisive is on the line.

I prefer the longer story arc of a basketball season. Unlike the French Open, which takes place over the course of two weeks, the NBA season is nine months long, and the ongoing stories often are the relatively small events, understood primarily by the harder-core fans. That requires more patience, but it makes for a richer long-term narrative.

To be clear I think sports betting should be legal, but simply done apart from the leagues, such as in Las Vegas or through non-league-affiliated apps.  And this:

The backdrop is that in 2018 the Supreme Court struck down federal restrictions on sports betting, clearing the way for states to allow the practice. State laws vary, and even when sports betting is legal, it may be restricted to casinos or to mobile devices. But the trend is to allow more betting, not less.

Finally:

Again, the question is not whether sports betting should be prohibited. It’s how much official sanction it should receive. What would you think of a university that allowed betting on which students passed their exams? Like schools, sports leagues play roles as rule-setters and impartial referees. Maintaining that role is more important than pursuing the gamification of everything.

A simple and stupid one variable theory of this year’s NBA playoffs (so far)

It is typically worth trying on such theories for size, no matter what their defects.

It is hard to avoid noticing that last year’s finalists — Miami and the Lakers — both exited this year in the first round, and ignominiously.  Injuries and fatigue were part of the reason why.

The teams that are doing best — Phoenix, New Jersey, and Atlanta — had minimal or zero playoff responsibilities last time around.  Usually of course playoff performance is positively correlated from one year to the next.

We will see if this theory has predictive value moving forward.  In any case, it does seem the league has discovered the margin where player fatigue truly is a binding variable.

Addendum: ESPN provides the data on injuries to stars.

Solve for the football culture equilibrium that is Mexican

Many fans shrug off accusations of homophobia and insist the chant is just a joke. “We do not scream at the goalkeeper because of his sexual preference, we don’t even care about it,” a YouTube commenter on a 2016 public-service video denouncing the chant wrote. “We shout to create chaos, because it is part of the atmosphere of a stadium in Mexico.”

For some, the chant merely illustrates wider homophobia in society.

Here is the proposal of an American academic:

“Convince fans that it brings bad luck to their own team,” Doyle said, “and this nonsense will stop.”

Now that’s a plan.  The actual (new) rule is to stop play if the chants become too extreme:

Nearly two years ago, FIFA approved a disciplinary code that allows referees to end matches if fans use chants or display behavior deemed to be homophobic or racist. However, because of COVID-19, Mexico’s national team has played few games in front of fans since the rules were adopted.

But when the team returns to the field May 29 to face Iceland in Arlington, Texas, Yon de Luisa, the Mexican federation’s president, said the new code will be strictly enforced.

If you are feeling just a bit generous in interpretation:

There is vigorous debate over whether the chant is offensive since the offending word is said to have many meanings in Spanish, one of which is a derogatory slur used to demean gay men.

Some countries should be just a bit more woke!

Paul Krugman or…LaMelo Ball?

Charlotte Hornets guard LaMelo Ball will become the first athlete to enter the world of dynamic nonfungible tokens (NFTs) when he releases a set of 500 prior to the announcement of the NBA Rookie of the Year in June, ESPN has learned.

NFTs are unique blockchain-based tokens that give owners specific rights to the asset — photograph, video clip, artwork — they represent. Dynamic NFTs are a recent technological advancement and, unlike conventional NFTs, have the ability to change over time. If Ball is named Rookie of the Year, the 500 NFTs will automatically update to include the award, which is expected to increase the value of the collectible.

“As I learn more about blockchain, I realize this is the most powerful and unique way to engage my fans in a way that’s special to them individually,” Ball tells ESPN. “I see this as the future for fans and athletes connecting together.”

Here is more from ESPN.  In the meantime, “UC Berkeley Will Auction NFTs for 2 Nobel Prize Patents.

My Conversation with Mark Carney

Here is the audio, video, and transcript, definitely recommended.  Here is part of his closing statement:

COWEN: Last question. You wake up each morning. Surely you still think about central banking. What for you is the open question about central banking, where you don’t know the answer, that you think about the most?

CARNEY: I gave a speech at Jackson Hole on this issue, and I started — which is the future of the international monetary system and how we adjust the international monetary system.

I’ll say parenthetically that we’re potentially headed to another example of where the structure of the system is going to cause big problems for the global economy. Because it’s quite realistic, sadly, that we’re going to have a fairly divergent recovery with a number of emerging, developing economies really lagging because of COVID — not vaccinated, limited policy space, and the knock-on effects, while major advanced economies move forward. That’s a world where rates rise and the US dollar strengthens and you get this asymmetry, and the challenge of the way our system works bears down on these economies. I think about that a lot.

And this:

COWEN: If you’re speaking in a meeting as the central bank president, do you prefer to speak first or speak last?

CARNEY: I prefer — I tend to speak early. Yes, I tend to speak early. I’m not sure that’s always the best strategy, but I tend to speak early. I will say, one thing that’s happened over the years at places like the G20, I noticed, is the prevalence of social media and devices. The audience drifts away over time, even at the G20, even on a discussion of the global economy.

And from the horse’s mouth, so to speak, do note this:

CARNEY: …I think you’re absolutely right on that, there wasn’t. It is revealed that there wasn’t a liquidity trap.

Rooftops!  Finally, on more important matters:

COWEN: Are the Toronto Raptors doomed to be, on average, a subpar NBA team due to higher taxes?

And:

COWEN: What’s the best Clash album?

CARNEY: Fantastic question. London Calling, and one of my best memories — I was very fortunate; they came to Edmonton when I was in 12th grade in high school. I went to the concert and that was fantastic, yes.

COWEN: I also saw them, I think in what would have been 12th grade had I been in school that year. But London Calling is too commercial for me. I much prefer the Green album, like “Career Opportunities,” “Janie Jones.”

CARNEY: Well, “I Fought the Law” was the best song at the concert. I have to say, they had got to Combat Rock by this time, which was relative — [laughs] Combat Rock was more commercial, I thought, than London Calling, although they threw it all out the door with Sandinista!

Again, here is Mark’s new book Value(s): Building a Better World For All.

Maradona Plays Minimax

This paper tests the theory of mixed strategy equilibrium using Maradona’s penalty kicks during his lifetime professional career. The results are remarkably consistent with equilibrium play in every respect: (i) Maradona’s scoring probabilities are statistically identical across strategies; (ii) His choices are serially independent. These results show that Maradona’s behavior is consistent with Nash’s predictions, specifically with both implications of von Neumann’s Minimax Theorem.

From Ignacio Palacios-Huerta.

Offense vs. defense in the current NBA

…I do have to grudgingly admit the evidence seems to suggest that defense has become less important during this unusual regular season.

One way to look at this is the spread in ratings on both ends of the court. The standard deviation of teams’ defensive ratings relative to league average is the lowest it’s been since the 1984-85 season, while the standard deviation in offensive ratings is the second highest we’ve seen since 2007-08. That’s one way of showing that offense is not just winning the battle with defense but also controlling it.

Another way to show that is the correlation between a team’s defensive rating and its overall win percentage (.546). That’s the lowest it’s been since 1985-86. Meanwhile, there’s a far stronger correlation between a team’s offensive rating and its win percentage (.848). In general, offense tends to relate better to winning games than defense in the NBA. Typically, the two figures are much closer together than we see now.

That is Kevin Pelton, there is further discussion at the ESPN link.  Good news for the Wizards!  It also means you can’t trust your usual intuitions about who might be most likely to win the NBA title this time around.

NFT virtual horse markets in everything

Is it simply that we have made gambling too much fun and too intriguing?  Or should we upgrade our view of the welfare consequences of gambling?:

On Zed Run, a digital horse racing platform, several such events take place every hour, seven days a week. Owners pay modest entry fees — usually between $2 and $15 — to run their steeds against others for prize money.

The horses in these online races are NFTs, or “nonfungible tokens,” meaning they exist only as digital assets….

“A breathing NFT is one that has its own unique DNA,” said Roman Tirone, the head of partnerships at Virtually Human, the Australian studio that created Zed Run. “It can breed, has a bloodline, has a life of its own. It races, it has genes it passes on, and it lives on an algorithm so no two horses are the same.” (Yes, owners can breed their NFT horses in Zed Run’s “stud farm.”)

People — most of them crypto enthusiasts — are rushing to snap up the digital horses, which arrive on Zed Run’s site as limited-edition drops; some of them have fetched higher sums than living steeds. One player sold a stable full of digital racehorses for $252,000. Another got $125,000 for a single racehorse. So far, more than 11,000 digital horses have been sold on the platform.

Alex Taub, a tech start-up founder in Miami, has purchased 48 of them. “Most NFTs, you buy them and sell them, and that’s how you make money,” Mr. Taub, 33, said. “With Zed, you can earn money on your NFT by racing or breeding.”

One implication here is that automation is never going to destroy all of the jobs.  Here is the full NYT story.

Model this NBA coaches and Adam Smith

Of all the head coaches in the NBA in either 2019-20 or 2020-21, there was a combined one All-Star appearance as a player, by Doc Rivers. At the league’s high point of former players as coaches, in 2001-02, there were 13 different former All-Stars walking the sidelines who had combined for 60 appearances.

Here is more from Kevin Pelton at ESPN.  Is it that data analytics matter so much more?  A general increase in the division of labor?  Or are today’s stars so prominent, perhaps because of social media, that a team does not need recognizable coaches to bring in the fans?

The Pelton posts considers further issues in mechanism design, such as whether a single free throw should be used to determine both points late in NBA games.  I would think that leads to an overinvestment in fouling from teams that are behind?

Sobering Up After the Seventh Inning

Drunk people commit more crime. Not surprising but here’s a clever identification strategy from Klick and MacDonald. Baseball stadiums stop serving alcohol at the bottom of the 7th but the time from bottom of the 7th to the end of the game varies so sometimes people have sobered up by the end of the game and sometimes they haven’t. So what happens when the game runs long or short?

This study examines the impact of alcohol consumption in a Major League Baseball (MLB) stadium on area level counts of crime. The modal practice at MLB stadiums is to stop selling alcoholic beverages after the seventh inning. Baseball is not a timed game, so the duration between the last call for alcohol at the end of the seventh inning and the end of the game varies considerably, providing a unique natural experiment to estimate the relationship between alcohol consumption and crime near a stadium on game days.

Crime data were obtained from Philadelphia for the period 2006–2015 and geocoded to the area around the MLB stadium as well as popular sports bars. We rely on difference-in-differences regression models to estimate the change in crime on home game days around the stadium as the game time extends into extra innings to other areas of the city and around sports bars in Philadelphia relative to days when the baseball team plays away from home.

When there are extra innings and more game-time after the seventh inning alcohol sales stoppage crime declines significantly around the stadium. The crime reduction benefit of the last call alcohol policy is undone when a complex of sports bars opens in the stadium parking lot in 2012. The results suggest that alcohol consumption during baseball games is a contributor to crime.

The equitization of human labor, Fernando Tatis Jr. edition

Fernando Tatís Jr. was 18 years old, just a low-level prospect from the Dominican Republic trying to work his way up in the San Diego Padres farm system, when he made a financial deal that would impact his entire baseball career. And it wasn’t with the Padres.

Tatís signed a contract with Big League Advance, an unusual investment fund that pays minor-league players money up front in exchange for a share of their future MLB earnings.

Tatís, now 22 and widely viewed as one of the sport’s best young stars, today knows what those earnings will be. He agreed to a record-setting 14-year contract with the Padres on Wednesday night worth an eye-popping $340 million, the third-highest total in MLB history.

His new contract also creates a significant obligation for Tatís: to pay a sizable chunk of his new bounty—perhaps close to $30 million—to Big League Advance.

Here is the full WSJ piece, via Rick Pildes.

The canine culture that is Miami

The Miami Heat are bringing back some fans, with help from some dogs.

The Heat will use coronavirus-sniffing dogs at AmericanAirlines Arena to screen fans who want to attend their games. They’ve been working on the plan for months, and the highly trained dogs have been in place for some games this season in which the team has allowed a handful of guests — mostly friends and family of players and staff.

Starting this week, a limited number of ticket holders will be in the seats as well, provided they get past the dogs first.

“If you think about it, detection dogs are not new,” said Matthew Jafarian, the Heat’s executive vice president for business strategy. “You’ve seen them in airports, they’ve been used in mission-critical situations by the police and the military. We’ve used them at the arena for years to detect explosives.”

Here is the full story, the first game under this regime is Thursday.

LaMelo Ball What Price Fame?

Ball, though, wasn’t content with just having been a solid player in Australia. Instead, he raised some eyebrows last spring when he attempted to buy his former team.

The talks eventually fizzled out.

It wasn’t a typical move for a teenager, but Ball isn’t a typical teenager. He has already lived on different continents, starred in his own reality show, worn his own signature sneaker and watched both of his brothers play professional basketball.

And at age 19, with only limited playing experience or credentials:

…he is already more famous than most professional athletes, with more Instagram followers than the majority of N.B.A. players. His highlights had been viewed by millions on social media before he was old enough to drive a car.

Of course the NCAA should pay its players.  This year it is possible that at least half of the top ten draft picks will have bypassed the NCAA altogether, Ball included.  Arbitrage!

Here is the NYT article.

The decline in pandemic sports viewership

It is not mainly about NBA politics:

  • US Open (golf) final round: down 56%
  • US Open (tennis) was down 45% and the French open is down 57% so far
  • Kentucky Derby: down 43%
  • Indy 500: down 32%
  • Through four weeks, NFL viewership is down approximately 10%
  • NHL Playoffs were down 39% (Pre Stanley Cup playoffs was down 28% while the Stanley Cup was down 61%).
  • NBA finals are down 45% (so far). Conference finals were down 35%, while the first round was 27% down. To match the viewership, activity on the NBA reddit fan community is also down 50% from the NBA finals last year.

That is from Daniel Frank, here are a few of his hypotheses:

  • Sports are very social. People love talking about sports with their peers and without interacting with as many people, people have less opportunities to talk about sports with others. This has the effect of making fans feel less engaged and more casual fans less likely to start watching, creating a cascading effect on engagement.
  • Watching sports is a great way for people to tune out, relax and distract themselves from normal life. With so many people working from home, having a less defined break from work to non-work, and potentially working less hard, watching sports feels like less of an escape than it used to.
  • People have started consuming politics like they do sports and their interest in sports has been cannibalized by political fanaticism.
  • Lots of people are experiencing mental health challenges and struggling and don’t have the same interest in things they used to enjoy like sports.

My intuitions are quite close to Daniel’s — what do you all think?

Jimmy Butler markets in everything

You’ve heard of Bubble Tea?  Well, this is Bubble Coffee:

In a recent interview with ESPN’s Rachel Nichols, Butler said coffee was hard to find on the NBA’s Orlando campus. He and his French press are keeping his teammates caffeinated, one extremely overpriced cup at a time.

“You can’t get coffee nowhere here,” [Jimmy] Butler said in the interview. “So I might bump it up to 30 bucks a cup. People here can afford it.”

…According to the menu outside his Walt Disney World hotel room, Butler’s offerings include a latte, a cappuccino, a macchiato and more. A small cup goes for the hefty price tag of $20. (A medium and large go for the same price, so you might as well spring for the venti.)

Here is the full ESPN story, via Christina.