'American Idol' Betting: The Game Behind the Game

April 22, 2009 — -- Millions tune in to the live broadcasts of "American Idol" for the singing, the suspense, the chance to select the country's new music sensation.

Others couldn't care less. They just check the results and then their bank accounts.

Meet the alternate breed of "American Idol" fan: the one who's in it to win it -- cash. Online betting communities facilitate the flow of funds between people who look at "Idol" like a horse race or football game, placing money on contestants most likely to benefit their bottom line, talent be damned.

As with any entertainment or sporting event, online gambling on "American Idol" is illegal in the United States. Offshore bookmakers who run Internet sites say they don't take bets from American accounts, but of course, U.S. citizens who want to participate could set up offshore accounts or use international bookies to place their bets (though their activity would still be illegal).

Instead of going through the rigmarole of placing bets through an online community, some American gamblers who want to participate set up their own pools among friends or co-workers and use online odds as a guide.

"I enjoy it because I enjoy gambling, and because it's funny to listen to my colleagues talk about their positions," said James (not his real name), who bets on "American Idol" with co-workers at a New York City financial firm. "I watched one episode this year to get an idea of the competition but I've never watched regularly."

"Intrade.com is a good guide to get an idea of values," he added. "But the guys I work with use supply and demand to determine what the marketplace is pricing in for the probability. Like if I suddenly started betting big on Matt Giraud, then they would say his probability is higher and change the odds for which I can buy him."

"We use the same settlement structure as Tradesports.com [now defunct] and Intrade.com," explained James' co-worker, Earl (also not his real name), who made $350 last season and is up $250 this year. "One contract either expires to zero (if the person gets voted off), or 100 (if they win). So if you buy five Adam Lambert's from someone, and he wins, you win $500 from that person."