Few cities use data as much as Las Vegas. Walk into any casino and you'll see nothing sort of a paean to data. For instance, blackjack dealers use zero discretion when flipping cards. Pit bosses scour for potential cheats looking to move the needle just a few degrees. And that means you, Ben Affleck.
It should be no surprise, then, that many Vegas casinos took extreme action in light of LeBron James' decision to become a free agent on June 24, 2014. As Darren Rovell of ESPN wrote in LeBron opt-out impacts Vegas books:
As news of LeBron James opting out of his contract with the Miami Heat on Tuesday morning spread, some insiders in the gambling world took the ultimate measure to minimize their risk. They pulled all future odds on all NBA teams to win next year's title.
Several sports books in Las Vegas, including the Wynn, took the drastic measure.
"When Carmelo (Anthony) opted out we adjusted some of our future odds, mainly doubling the Knicks' chances and lowering teams like the Bulls, who are the favorite to land him, according to our odds," said the site's bookmaking manager, Kevin Bradley. "LeBron opting out has a much bigger impact and forced us to close down our odds until the dust settles a bit and we have a little more information on what his plans may be."
Analyzing the full basketball impact that landing the coveted James could have on a franchise is well beyond the scope of this post. (In a word, it's enormous.) Suffice it to say that the four-time MVP will could singlehandedly alter the power landscape of the NBA for next season – and others. Four years ago, teams gutted their rosters on the mere chance that LeBron might sign with them. For many general managers, the risk was well worth the reward. Yes, he's that good.
I do want to discuss, however, a few of the related data and business outcomes of King James' decision.
Data and dollars
Why did the Vegas sports books have to suspend all bets until LeBron picks a team? Three simple yet interwoven reasons: money, risk and data. Lacking the relevant information about where James would play, the casinos had only one move: to punt. (Yeah, I'm mixing my sports metaphors here.) The Miami Heat with James is a good bet to win the NBA crown in 2015. Without James, it's safe to say that the Heat is a much more of a long shot, and maybe not a even a playoff team.
Gambling 101 states that, over the long run, casinos make the most money on the vig. Someone who bet, say, the Clippers (sans LeBron) at 10-1 could make a killing if he signed with the team after the bet. And that's too big of a risk for even billion-dollar casinos to take.
Simon says: sometimes the best move is to do nothing
When key information is lacking, casinos aren't afraid to avoid taking half measures. No, the notion of perfect information doesn't exist. Still, if you are missing essential data and don't want to roll the dice, consider waiting until you do.
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