June 1, 2006
Hurricane Outlook Draws Betting Surge
By Michael Christie
MIAMI -- If he believed the smart money, online gambling commentator Christopher Costigan would move out of his oceanfront pad on Miami Beach right now.According to the odds given by the multibillion-dollar Internet betting industry, it's almost a dead certainty that Florida will be struck by a big hurricane during the 2006 Atlantic hurricane season, which officially opened on Thursday.
But Costigan says he is staying put. "I will be betting on the reverse ... I'm looking right at the ocean," he said.
The intensity of the last two Atlantic hurricane seasons has triggered a mini-frenzy this year of storm-related bets online, where gamblers can make so-called "proposition wagers" on anything ranging from "will life be found on Mars?" to "who will win the next presidential election?"
"Betting is funny," said WagerWeb.com chief executive Dave Johnson. "If there's enough things in the news, people want to bet on them.
If you want to win big money, Costigan said, you should bet on the United States escaping a major hurricane strike over the next six months after two ferocious seasons that saw eight hurricanes lash Florida and Hurricane Katrina devastate New Orleans and kill 1,300 people.
"In terms of will a Category 3 (hurricane) not hit the U.S., actually there's some great value in those odds," Costigan said, referring to the five-step Saffir-Simpson scale of hurricane intensity.
"Six hundred was the last I saw, 6 to 1 odds or $6 paid for every dollar bet. Those are actually great odds considering the fact that in the last 16 years, there's only been six years in which a Category 3 or higher has hit the United States," said Costigan, of the Gambling911.com Web site, which reports on the online betting business.
Some U.S. media commentators have slammed the industry for insensitivity -- about 1,300 Americans died and tens of thousands of lost their homes when Katrina swamped New Orleans and shattered the Mississippi coastline last August.
Thousands more in Florida, Texas, Alabama, Mexico and Central America suffered as 2006 spawned a record 28 tropical storms, of which 15 became hurricanes.
The online gambling industry says betting on the weather is as legitimate as betting on a baseball game. None, however, are offering odds on death tolls or home destruction.
"I'm not looking to profit off destruction, believe me," said Mickey Richardson, chief executive of Costa Rica-based BetCris.com. "I guess there's a thin line between what's appropriate and what's not and I'm trying to stay in that gray area without offending people."
The Web sites base their odds on predictions by expert forecasters, statistics of past seasons and to a lesser extent on how their customers bet.
The National Oceanic and Atmospheric Administration, the U.S. government's climate agency, forecasts up to 16 tropical storms, of which up to 10 will become hurricanes.
NOAA expects four to six of the hurricanes to be Category 3 storms or above, so-called "major" hurricanes. The long-term average is for just under 10 storms per season, of which six become hurricanes.
Costa Rica-based WagerWeb.com puts the chances of more than 21 tropical storms this year at plus 130, meaning if you bet $100 you could win $130 if you're right. The odds of there being less than 21 storms are minus 160, which means you have to bet $160 to win $100.
According to BetCris.com, the greatest likelihood is for three major hurricanes to strike the United States. The odds on that are at plus 165. By contrast, the odds on just one major hurricane striking the United States are plus 400 -- a long shot.
Whether the popularity of hurricane bets continues depends on, well, the weather. "If this year comes out and it's a very inactive season and people lose interest in it ... I don't think there's going to be as much talk about it next year," Johnson said.