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Super Bowl Sunday: For Vegas gambling 'sharps,' it's the year's busiest workday

By Dan Steinberg
Washington Post Staff Writer
Sunday, February 6, 2011; 12:08 AM

IN LAS VEGAS For Rufus Peabody, the Super Bowl's mundane first touchdown or inconsequential final field goal won't decide whether he wins a $100 squares pool or treats his office mates to pizza Monday afternoon. If the game goes well, Peabody's annual income could spike by tens of thousands of dollars. If things go poorly, his net worth could plummet.

To strangers, the 25-year-old Alexandria native and Yale graduate describes his vocation as "Las Vegas analyst," or some other euphemism. But to his friends, he's more blunt: He bets on sports for a living.

His lifestyle is a strange hybrid of the Vegas high-roller and the American post-college 20-something. His living room set was purchased for $300 from a Craigslist ad; the end table is now adorned with about $600,000 worth of losing sports tickets. Peabody and his girlfriend share a battered Honda Civic with a rubber-banded side-view mirror, regularly climbing inside while holding winning tickets worth five or ten times as much as the car itself. And he grabs his lunch from Subway or Chipotle, even while his partners are placing five-figure bets inside Nevada sports books.

Those books expect to handle around $90 million worth of wagers on Sunday's Super Bowl between the Green Bay Packers and Pittsburgh Steelers, making it their largest one-day event of the year. Much of that will be generated by tourists and fans, the "squares" whose action is balanced out by the professional "sharps." Square bets are often based on hunches, or rudimentary analysis, or alcohol.

But Peabody and his "sharp" peers - whose ranks are estimated at anywhere from a few dozen to a few hundred - don't care about the names on the jerseys, or their gut feelings about which team will win. They're looking for betting value based on odds they believe have been miscast, either by bookmakers or by the public's hunches.

The sharps are often secretive about both their methods and their identities. Peabody's three financial partners declined to be interviewed or identified for this story, and he asked that none of his exact Super Bowl betting positions be revealed.

But by using the sort of statistical and analytical techniques more often associated with Wall Street traders than sports gamblers, Peabody - a lanky, mop-haired former division I sailor who favors ripped jeans and hooded sweatshirts - is earning more money than almost any of his Yale classmates.

"I've been betting sports here in Vegas for 11 years, and nobody impresses me as much as him," said Michael Shackleford, a former government actuary who runs the gambling Web site WizardOfOdds.com. "The man is just a genius. I think Rufus is perhaps the greatest mind analyzing sports out there."

'Like a fund manager'

As a group, Peabody and his partners - who range in age from 25 to 30 - placed more than $1 million in wagers on last year's Super Bowl, accounting for nearly 2 percent of Nevada's total handle. They returned a bit more than 20 percent on that investment, and will have a similar (though smaller) amount at stake on Sunday.

Sunday's action will represent just a fraction of the group's monthly business. They bet on a host of other sporting events, from NASCAR races to golf tournaments to baseball and basketball games.

"It's like a fund manager - we're not putting all our eggs in one basket," Peabody explained while flipping between the NFC championship game and the Bob Hope Classic on his TV set two weeks ago. "We actually bet very conservatively, based on our bankroll size. We never have a big enough position on one event to handicap us."

The Super Bowl, though, is one of their biggest targets, based on the more than 300 exotic wagers available at some sports books. Many of these are unusual "prop" bets that aren't offered the rest of the season and are thus harder to calculate. How many yards will the Packers' fourth wide receiver gain? Will either team score in the first 6 minutes and 30 seconds of the game?

Their bets carry potential payouts from a few hundred to tens of thousands of dollars. And their wagers are based on the reams of data produced by Peabody from his couch, which faces a bookshelf filled with titles such as "Probability, Random Variables and Random Processes" and "Foundations of Financial Markets and Institutions." Also, a poster of dogs playing poker.

"I can't really go half-assed on something," Peabody said near the end of a recent three-day span in which he barely left his two-bedroom apartment while spending about 55 hours churning out projections. "I'm either devoting all my energy to it, or none. And the last few weeks, I've just been getting ready for the Super Bowl."

He has needed a haircut for weeks. The day after the Super Bowl matchup was settled, he and his laptop pulled an all-nighter, fueled by trail mix and frozen meals, before finally napping for a few hours the next afternoon. The fan on his laptop is broken, but he hasn't had time to fix it, so the machine buzzed angrily through the week as he scraped data sets and compared his projections to sports book lines, attempting to find inefficiencies.

He took a brief break one night to cook pasta, pausing to read a text alerting him to a bet one of his co-workers had made based on his data: that the Packers would have at least 2.5 more first downs than the Steelers, acquired at 9-5 odds.

Even as the group's wagers rolled in - all bet to the maximum limit, meticulously recorded on shared Internet spreadsheets - Peabody continued to search for betting value.

"I'm gonna do a [bet] I've never done: Will the team that punts first lose the game?" he said that night, staring into his rattling computer. "Now, what factors would there be in whether the team that punts first loses?"

A vocational calling

As a first-grader, Peabody would request that his parents buy The Washington Post during their 15-minute drive to grade school. He liked to look at the baseball box scores.

"He knew more about it than we did, even at the beginning," said his mother, Ginger Peabody, who works at Episcopal High School. "He kept his own private statistics, records on pieces of paper that were floating around our house, records of things players did on the field. I had a sense that it really represented him."

In high school, he earned varsity letters with the T.C. Williams cross-country, indoor track and tennis teams, and also for serving as the basketball team's statistician. He drew dozens of potential football formations and handed his work to the team's offensive coordinator, and sat in the back of his calculus class grading NCAA basketball tournament brackets.

Peabody went to Yale thinking he would study history or political science, but by his junior year, he realized his dream job involved both sports and data analysis. So that summer, he created his own internship with Las Vegas Sports Consultants, a firm that helps Nevada sports books create accurate betting lines.

That internship led to a senior thesis on the inefficiencies in the baseball betting market. Peabody found that bettors' preconceived opinions about starting pitchers tilted gambling lines, making the market less efficient than an empirical approach would suggest and leaving the sports books vulnerable to modern statistical analyses. When he shares copies of the thesis now, he deletes an appendix that could help rival bettors.

"It was extraordinary, really," said Cade Massey, an assistant professor of organizational behavior at Yale's School of Management, who advised Peabody on his thesis. "This is real, you know? It's not just theory. We're finding out whether biases make a difference in the real world."

After graduation, Peabody headed back to Las Vegas Sports Consultants, where he simulated NFL seasons, analyzed movements in college basketball betting lines and developed his own theories about using past results to project future outcomes.

He also started betting games with his relatively small savings, putting $50 here or $100 there, trying to build a bankroll. His first big hit came on the 2009 Super Bowl between the Steelers and Arizona Cardinals, when he borrowed tens of thousands of dollars from investors, used $8,500 of his own savings, and wound up with about $50,000 on a host of exotic wagers.

"He was making as much betting as he was working for the company. Why would you want to do both?" said Kenny White, a longtime sports betting analyst who hired Peabody at Las Vegas Sports Consultants. "After a while, he didn't want to share things he found with everybody. You're only cutting your own throat at that point."

'Just the scoreboard'

At 10:30 on a recent weekday morning, Lisa Clark sat in front of a "Kossack Kash" slot machine at the Wynn Casino, glanced down at a blue paper printout filled with tiny numbers, and called Peabody on her cell phone.

"All right," she told her boyfriend. "This is gonna take a while."

Clark, a 23-year old from Alexandria, is the team's unlikeliest runner. A former Division I soccer player at Cincinnati, she used to monitor prison toilets for handicap accessibility for a Georgetown architecture firm. Peabody told her he could use help with his sports betting operation, and on a whim she agreed, without having set foot in Las Vegas or even knowing what a point spread was.

When she first ventured into the almost exclusively male sports books, the other bettors would leer, or ask her if she wanted advice in making her wagers. That ended quickly, when she began laying down $10,000 at a time. Now, the ticket writers and regular bettors call her Hermione or Bam-Bam, recognizing that her money is sharp, and changing the lines based on her action.

After her long conversation with Peabody on the exact Super Bowl point-total odds, she called another partner to ask which discrepancies were worth exploiting. He gave her five bets, so she placed "a nickel" on each - $500 - using a $10,000 winning ticket she had placed on the Seattle Seahawks' upset victory over the New Orleans Saints in the first round of the NFL playoffs on Jan. 8. While the ticket writer counted out her $7,500 change, a supervisor quickly called an oddsmaker, listing the five totals Clark had bet.

Soon, the odds on each were changed. The new ones almost exactly mirrored Peabody's projections.

Peabody hasn't decided yet how long he'll be a pro sports bettor, how many more Super Bowl hell weeks he'll endure. He loves his job, and being his own boss, but he wonders how long he'll find satisfaction from finding inefficiencies in second-half college football point spreads.

Peabody and Massey, his collegiate advisor, began publishing the Massey-Peabody NFL rankings in the Wall Street Journal last season - those rankings, by the way, suggest the Steelers should be narrow underdogs on Sunday, rather than the 2.5 points set by Vegas. Massey and Peabody are hoping to expand their statistical rankings, with a goal of one day being included in college football's national championship calculations. Peabody also thinks he might like to bring his statistical analysis to a pro sports team, or even leave the industry entirely.

"I'd love to capitalize on the same strengths I'm using to do well on this, but for something that's a little more, uh, respectable?" he said during the NFL's conference championship games Jan. 23, when his group's bets netted more than $20,000. "What I like about this isn't the money. The money is just the scoreboard, the way to keep track of how I'm doing. I like the game of it. Saying I went 21-3 on props in a game? That's what's satisfying."

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