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For sports gamblers, this Saturday will be like Christmas come early. Between the Kentucky Derby in the afternoon and the Mayweather—Pacquiao fight that evening, hundreds of millions of dollars will be wagered across the country.
In Nevada, the welterweight match between Floyd Mayweather and Manny Pacquiao could generate upwards of $50 million in bets, which would be a Nevada record.
Michael Grodsky is director of marketing for William Hill U.S., which operates more than 100 sports books in that state. He says, "80 percent of the bets that have been made are on Manny Pacquiao, and that's also 65 percent of the money that's in bet. So, we'll be rooting for Floyd Mayweather."
The Kentucky Derby also stands a chance of breaking betting records, but if you want to bet legally on other sports this weekend, Vegas is king.
Johnny Avello is known as the “Wizard of Odds” on the Vegas strip. His official title: executive director of race and sports operations at the Wynn Las Vegas.
"Well, if you like horse racing, boxing, NBA, NHL and baseball ... I guess it’s a gambler's delight," Avello says.
However, it’s still just a drop in the bucket in terms of total betting. “I always estimate that Nevada's probably 3-4 percent of everything that's wagered in the U.S.”
Outside of horse racing, which is legal in other states, Avello says most sports betting in the U.S. is underground.
Gas prices have been under $3 dollars in most of the U.S. for six months now. Which put a load of unspent money in drivers’ pockets, available to spend. But that spending economic stimulus has hardly shown up.
Drivers who fill up can now leave gas stations with an extra $20 they didn't have to spend. Where does it go?
“At least a good portion of that has always been spent,” says Dean Maki, economist at Point72 Asset Management. “Consumers aren’t so disciplined they’re unwilling to spend additional income that they get. Typically they do spend at least a significant portion of that additional income."
But that spending hasn’t shown up in the numbers. Retail sales are tepid. One possibility is the splurge just isn’t here yet. Consumers have yet to be convinced low gasolines prices will last.
“Typically, consumers would want to wait for confirmation that low gasoline prices are here to stay,” Greg Daco of Oxford Economics says. “We still have yet to see the full benefit.”
That may come soon, now that the long winter’s over. But not every economist is expecting that.
“These predictions were wrong,” says economist Ed Hirs of the University of Houston and the oil and gas firm Hillhouse Resources. “There is no direct tie between low gas prices and GDP.”
Hirs argues that money not spent on gasoline has gone to pay off debt, and in some cases buy health insurance required by the Affordable Care Act. The Wall Street analysts who predicted a spending boom have a financial interest in such projections, Hirs says.
“They’re cheerleaders for the market,” Hirs says. “They are not going to stand up and say, ‘Hey this is temporary. Just take your 20 bucks and put it under your mattress.’ That doesn’t sell any shares or bonds.”
Make a bad investment choice, and it can feel almost as if you were kicked in the stomach. But then again, some investments can kick you in the gut — literally.
"They can kick, they can bite," says Sheila Rosenblum of her nine horses. Rosenblum is owner of Lady Sheila Stable and the head of the all women's racing syndicate Lady Sheila Stable Two. "I happen to have some very nice horses but some naughtier ones too," she says.
At 8:00 A.M. on a drizzly, muddy weekday morning, Rosenblum is at Belmont Racetrack on Long Island watching the grooms check her horses to make sure they're sound before they’re exercised. But aside from a small handful of women working as exercise riders, or in the stables, Rosenblum is the only non-equine female in sight.
Traditionally horse racing is a male dominated industry. But now, Rosenblum, and women like her, are changing the industry. All of the investors in both of the syndicates Rosenblum oversees are women.
“It's exhilarating, it's challenging," says Rosenblum of working in the mostly-male industry. "It's tough as heck. But I love it.”
According to the National Thoroughbred racing association, the average price of a racehorse is $60,000. But prices can go up into the millions. One of the most expensive horses ever sold, Seattle Dancer, went for $13 million as a yearling in 1985. But at his retirement, he had only netted about $150,000. Prospective owners beware.
“They’re going to have to find somebody to buy their horse. They’re going to have to find someone to train their horses," says Laurie Wolf, co-founder of the all female syndicate – Starladies Racing. "It's not like something you can just look up in the yellow pages," she says.
For newcomers, notes Wolf, horse racing can have a steep learning curve.
“It sort of seems like a secret club," she says. "Unless you're in the business, it seems like it's not an easy business to walk right into."
Last month, La Verdad, a horse owned by Sheila Rosenblum, won a $200,000 race. But Rosenblum acknowledges the business of horses is a risky one. While they may be huge and strong and fast, horses are also fragile. All it takes is one wrong step or a blown tendon.
“This is Wall Street for horses,” she says.
For owners, it can feel like they’re betting on the horses even when they’re not betting on the horses.
80 percent of horses don't earn a profit, says Dan Metzger, president of the thoroughbred owners and breeders association. But a lot of owners, he says, get into racing, not to make money. "Some people buy yachts. Some people join country clubs," he says. And some ... buy horses. Horse owners, says Metzger, are risk takers. "They're looking to hit lighting in a bottle. They're looking to hit the horse that's going to win a major race."
But since the financial crisis, investors have been less willing to take a gamble on a horse, says Alex Waldrop, President and CEO of the National Thoroughbred Racing Association.
"You're seeing people at every level, men and women, who are a little more risk averse, who are being a little more cautious," he says. As a result, more investors are seeking out opportunities to buy, not a horse, but a piece of one, investing in syndicates, like the kind that Sheila Rosenblum and Laurie Wolf run.
More investors, says Waldrop—men and women both—are good for business.
When she first became involved in the business of horses says Rosenblum, she faced pushback for being a woman in man's world. "It was a fact," she says. "I paid my dues. I'm still paying them."
And, she notes, many of the young thoroughbreds in the stable are also preoccupied by thoughts of females. But she says, it's a different breed, they're thinking about, altogether.
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