'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."

'Idol' Betting Like a Stock Exchange

James got into "Idol" betting last season. His winnings were paltry.

"Last year, I made around $50," he said. "I bet against the tiny Asian girl and against the woman with a bunch of tattoos. They both proceeded to lose."

You don't have to be a gambling expert to predict who'll win this year. As in the actual competition, in online betting communities, raven-haired musical theater veteran Adam Lambert is favored to win "American Idol." Two of the Internet's largest sites, Betfair.com and Intrade.com, give him a 65 percent and 66.3 percent chance of winning, respectively.

"It works like a stock exchange," explained Betfair's Michael Robb. The odds are created by users. So instead of Betfair setting the odds, we create a marketplace where someone goes on and says I want to bet on Adam Lambert at such and such a price."

CLICK HERE to see Betfair's chart of each contestant's chance of winning.

According to Betfair's calculations, at the start of this season, Lambert had a 15 percent chance of winning, with 6-1 odds -- meaning $60 won for every $10 bet. Lambert's high point was April 10, days after his much-lauded performance of "Mad World," when he hit 69 percent with 1-2 odds -- meaning $5 won for every $10 bet.

So far this season, the "American Idol" markets have traded $159,353 on Betfair, which is based in Britain.

Unlike Betfair, America's Line analyzes "American Idol" and creates odds, but does not take bets. They publish their odds online and in a nationally syndicated newspaper column. They started assessing "Idol," "Dancing With the Stars," "Survivor" and other competitions eight years ago, when reality TV gained popularity in earnest.

"We look at what's happening on 'Idol;' we look at past performances. We come up with an opening set of odds based on the early auditions, and those are tentative. You get a sense after doing it for a few years about who's going to be hot," said Ben Eckstein, president of America's Line.

"If one person had a spectacular performance, as Adam Lambert did a few weeks back, they'll get better odds from us, the same way we alter the odds after a game if one team beat the other by a good margin," Eckstein added.

Though Giraud's an underdog, financial trader James wants the 23-year-old who earned the judges' once-per-season "save" last week to clinch the "Idol" title this year, if only so he can bank $200. America's Line's Eckstein would probably tell him to give up hope and move his money elsewhere.

"Adam Lambert started out somewhere in the middle, but he's absolutely the odds on favorite now," he said. "Unless he gets convicted of a felony, he'll win it."