Betting on the Barrels

Web bookie taking wagers on gas prices

WILLEMSTAD, Curacao -- A major Internet sports-betting parlor has began offering odds on rising gasoline prices. Pinnacle Sports, an international Internet bookie on the Caribbean island of Curacao, on August 6 began offering odds on future gasoline prices, said Knight Ridder/Tribune.

Gamblers can wager on three propositions:

Whether crude oil will top $70 a barrel by January 1. Whether the average price of gasoline in Los Angeles and New York will top $3 a gallon. Whether a gallon of regular unleaded gasoline will exceed a nationwide average of $2.50.[image-nocss]

Pinnacle officials will not disclose the number of gamblers who have wagered on U.S. gasoline prices but offer this comparison: Interest is about on par with betting on the recent Tour de France bicycle race.

Opponents of gambling view Pinnacle's activities as a vice, said the report, but they almost mirror what happens in the futures markets for oil. About 95% of the oil contracts trading hands on the New York Mercantile Exchange (NYMEX) are dubbed paper oil. They are bought and sold by people who never intend to take delivery. The remaining contracts often are bought by oil-dependent companies such as airlines and refineries as a way of hedging against rising prices.

Aside from questions of legality, one big difference between online gambling and the futures market is scale. An investor who buys a contract for future delivery of oil commits himself to purchasing either 1,000 barrels of oil or a mini-contract of 500 barrels, the report said. At $66 a barrel, which is 42 gallons of oil, that's $66,000 for a single regular contract and $33,000 for the mini.

Pinnacle's minimum online bet for gas prices is $1 and its maximum is $500, according to the report.

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