Signed by Kaplan: THE $20-MILLION HEDGE

Michael Kaplan mickap October 14, 2019

Mattress Macks’s $20-million hedge

It began with a voicemail. Anthony Curtis, formerly a card-counter and now the owner/publisher of Huntington Press, which puts out some of the best gambling books around, listened to a message left by a lawyer in Houston. It was mid-September, one or two weeks before the end of Major League Baseball’s regular season.

    Curtis returned the call and the lawyer revealed that he had a client needing to make large-denomination bets on the upcoming World Series. “I knew the lawyer was based in Houston and I immediately asked if his client was the mattress guy,” Curtis tells CasinoMir, referring to Jim “Mattress Mack” McIngvale.

    Based in Houston, McIngvale is the flamboyant owner of a retail chain called Gallery Furniture. He is known for splashy, low-budget commercials and wild promotions. In 2017, when the Astros were in the World Series, he generated headlines by offering refunds to anyone who spent $3,000 or more on a mattress set if his home-team aced the Series. Houston won and McIngvale paid out some $10 million in refunds.

Jim “Mattress Mack” McIngvale
Jim “Mattress Mack” McIngvale

     “The lawyer,” says Curtis, “told me that his client is Mattress Mack.”

     Previously, in 2017, Mack was able to buy insurance to cover the payout predicated on the Astros winning the Series. This year, though, with some $20 million on the line, insurance was harder to come by.

     According to Curtis, when the Astros picked up pitcher Zack Greinke in July, creating what Sports Illustrated later called “a postseason rotation for the ages,” insuring against Houston winning the World Series became untenable. “The acquisition of Greinke, which gave the Astros three powerful starting pitchers, made everything change in terms of the insurance possibilities,” says Curtis. “Mack was quoted prices and returns that were far below those of the gambling market. You can say that the insurance window closed on him.”

    Mattress Mack desired an alternative hedge. Through his lawyer, a long-time reader of Huntington Press books, he sought expertise in making bets that would hedge the $20-million or so promotion.

    The mandate was to cover as much as possible if Houston were to win the World Series and to lose as little as possible if the team failed. Out of the gate, it was a tricky proposition, more in the wheelhouse of elite Wall Street hedge-fund mangers than that of even the most seasoned sports bettors. Beyond that, the arrangement came with two major constraints: First, no bets could be made offshore (that is officially illegal in the United States and Mack did not want to break any laws). Second, Mack would not bet against his beloved Astros; even if it made sense from a gambling perspective, he was a diehard fan and could not do it.

     Curtis agreed to the conditions and negotiated a deal in which compensation would derive from the money that Mack saves by using professionals. But Curtis did not believe he could do this singlehandedly. He partnered with the sharpest sports better he knows: a savvy pro who goes by the name of Frank B. Together, they intended to create a Wall Street-worthy hedge for the Mattress King.

.   .   .

The two men got to work before the post-season began, knowing that bets would need to be made primarily in Nevada and New Jersey. “To take the temperature of this whole thing, Frank and I walked up to the counter at the Mirage and told the manager that we will want to bet the Astros to win the World Series,” remembers Curtis. “He asked what we want to bet. Frank said, ‘Mid-six-figures.’ I said, ‘Maybe up to a million-and-a-half.’ He asked for a players card, ran it and said we could have $10,000. Then he would adjust. We now knew that we could not just walk up to the betting-window if we want to go above the limit – something that Frank and I are unaccustomed to doing. We sometimes bet the limit but are not used to making wagers that need to be negotiated.”

     Curtis and Frank received a warmer reception at the less-corporate South Point Casino, located south of the glittering Las Vegas Strip. “Jimmy Vaccaro is the main guy there: old time, old school, maybe the only person on earth who calls me ‘Kid,’” says Curtis. “I caught up with Jimmy, asked him for his number and he told me it was +250 for the Astros to win the World Series [meaning that for every $100 bet, $250 will be paid out if the Astros take it all]. I told him we were betting for Mattress Mack and he knew all about Mack. He said he would give us $200,000 to $250,000 but he needed to clear it with Michael Gaughan [the veteran owner of South Point]. He didn’t want to hold the line for too long and said we would have to make the bet in the next couple days. I said I would bet it tomorrow. He cleared it with Michael for $200,000, which pays an even $500,000 if Houston wins the World Series.”

      Smart bookmakers, the guys at South Point took the bet and promptly moved the line to discourage action on the Astros. Soon after, Curtis and Frank were able to get +250 elsewhere around town. Caesars Palace took $100,000 and the rest was cobbled together with smaller bets until they got to just below $400,000 wagered at a price that was above market (which, often, hung closer to +220 – though the real number, without vigorish built in, would be around +290). “But that just scratched the surface,” says Curtis. Pointing out that he was offering positive expectation bets to the Vegas books, especially in light of Mack not being a sharp with inside information about his team, Curtis adds, “It was disappointing what the Vegas books were doing [in terms of their limits]. They didn’t think it through.”

      With the first round of playoffs nearing, Mack had just below $400,000 in action.  It was not nearly enough.

      Looking for more outs, Curtis and Frank set their sites on the East Coast. With sports betting freshly launched in New Jersey, there was potential that operators there would be looking for action and publicity – especially in light of the Yankees being contenders to win the Series. “But everybody on the East Coast was at +200 [for the Astros to win the World Series before the first post-season pitch had been thrown] and we needed at least +220,” says Curtis who turned to the state’s two biggest bookies. “We went to DraftKings and FanDuel and told each of them that if they can give us +220, they will get a big bet. FanDuel was reticent but Matt Kalish, the co-founder of DraftKings, jumped in for $3.5-million. Matt was getting a big bet with a lot of juice and he’s smart enough to know that he is in the business of taking bets.”

     Then Mack contacted FanDuel on his own and they came back to take $1.5-million. “So,” continues Curtis, “before any of the post-season play began, we had $5.5-million down at between +220 and +250. That was above market” – and a better price than Mack could have gotten on his own – “but we didn’t get over on the sports books. They lessened their advantages to get the wagers and, at the time, they had an edge.”

.   .   .

For all of that, when the Astros began their American League Division Championship series with the Tampa Bay Rays, Curtis and Frank were rooting for Tampa Bay to win. Despite their boss wholeheartedly cheering on the Astros, Curtis says that he and Frank had good reason to support the Rays.

     The professional gamblers understood that if Houston gets knocked out early, it will cost Mack a relatively small amount of money. Additionally, he would still have some wagers with the potential to generate cash, thanks to  a percentage of derivative bets that Curtis is not allowed to detail.  Also: Curtis and Frank know that the longer the post-season goes for Houston, the less likely it becomes for them to receive a six-figure windfall in money-saving commissions. “It’s heart vs. wallet,” says Curtis. “There is no heart for us. We’re all wallet. Mack, I’m guessing, is a combination of the two” – with what appears to be an emphasis on heart.”

     With the $5.5 million locked down, no other bets were placed – since it only made sense to wager when a good price could be gotten for the Astros – until the fifth game against the Rays. It was a make-or-break contest in which the winner would move on to face the Yankees for the American League Championship while the loser is eliminated. Played on Thursday night, October 10, it was what Frank characterizes as a “click game.”

     As per Curtis, “We look for click games. They click success for the project” – an acceptable amount of loss if the Astros get knocked out and none of the $20 million in refunds gets paid – “or put us in the desired direction in terms of the hedge that will come into play if the Astros win the World Series.”

     They placed total bets of $2 million on the fifth game at -252 to -260 (meaning that for every  $100 risked, they would win approximately $33.50). Among the bets made was one by Mack. “He flew into Vegas on his jet, placed a $1-million bet from the Tarmac and flew home in time to take 100 people to the game,” marvels Curtis.

    Part of the remaining million that needed to be wagered was gotten down at Circa sports-book in the D Las Vegas, a downtown spot where owner Derek Stevens has little aversion to calculated risk. “We redeemed Mack’s money at the cage, which got us 105 $5,000 chips; we needed to walk them up upstairs to the sports book,” says Curtis. “The cashier originally gave us the chips in two racks. Frank saw them and shook his head. Imagine what happens if you trip on the escalator and they go flying, He produced a knapsack, we poured the chips inside and brought them upstairs to make a $504,000 bet that would pay $200,000 if the Astros won.”

      Curtis and Frank were rooting for the Rays. Their hope was to shut the whole thing down, for Mack to not have to pay out the $20-million or so and for them to have saved him substantial cash with some $7-million wagered. But Mack was thrilled to see his team come through and the group collected $770,000 in winnings that will go toward the inevitable deficit.

      The Tampa Bay Rays were eliminated and the Astros moved up to play against the Yankees for the American League Championship, With the Astros an underdog to win the ALC – but not enough of an underdog to make betting on them worthwhile – Frank and Curtis ceased wagering, watched the first game of the series on Saturday night, October 12, and agreed to reassess afterward. They were pulling for the Yankees. The hope was that the Astros would fall behind by a game and that betting on them would be a bargain.

     That is exactly what happened. The first game of the ALC ended with the Astros trounced 7-0.  

     On Sunday afternoon, October 13, as this story is being written, Frank and Curtis are taking advantage of the new line, trying to get down around $1.5 million, at +210 or better for Houston to beat the Yankees. “We just got down $500,000 at the D,” says Curtis, sounding breathless, en route to his office that has been converted into a baseball-betting war-room. He and Frank are rooting for another Yankees win tonight: “If that happens, we’ll hope to make another bunch of bets. The farther it goes, the more we have to continue to bet – and the less we’ll stand to make. But, at this point, it’s not so much about the money we walk away with. We want to do it right. And if we do it right, we’ll always be at an equilibrium point, which is what will be best for Mack.”

    While Curtis admits that their payout can be close to zero if it goes to seven World Series games, he lightheartedly adds that there is an upside: “With all the bets we’re making on our players cards, we’re guaranteed to get a few free dinners out of this.”

   The night before this story posted, the Astros won, tying the ALC at one game apiece. We’re assuming that Frank and Curtis are sitting tight on their war chest, waiting to see what happens in the third game.

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michael kaplan

With four books (and more on the way) plus hundreds articles, Michael Kaplan is one of the most experienced writer in gambling related subjects.

He have covered big stories including famous gamblers such as Phil Ivey and Phil Hellmuth for publications including Wired, Playboy, Cigar Aficionado, New York Post and New York Times. Based in New York, where he regularly writes for the Post.

Read more about Michael Kaplan on his author profile.

About the Casinomir Writer

Michael Kaplan mickap
Author since August 30, 2022