Issue No. 137 | Dec. 13, 2024

I first heard about Rufus Peabody when I was reading Nate Silver’s new book, On the Edge. Here’s how Silver introduced Peabody.

He went on.

A few months after I read this, I met Peabody in Las Vegas. In fact, we played in the same group at a golf tournament we both got invited to.

We had a wonderful time talking golf but an even better time talking life. I found him to be incredibly interesting as a person, and after I found out that his business (basically him and a handful of other folks) has bet somewhere around $1 billion over the last decade on professional golf alone, I had a LOT of questions.

Hope you guys enjoy.

But first!

We’re torn between “It’s beginning to look a lot like crispy milling” and “Ho Ho Hosel” so there’s both. Christmas came early.

Thank you to Meridian Putters for partnering with us to bring you today’s newsletter.

I don’t have $1 billion, but if I did, I would bet a large percentage of it on Meridian thriving as a business for a long time. Why? Three reasons.

1. They make great putters. Full stop.

2. They care intensely about their product. Rarer than you would think!

3. They are growing slowly and steadily. Listening to the customer and responding.

It is such a temptation to try and bypass all three of these steps because it is easy to do. But they work hand in hand, and we are proud to partner with businesses like Meridian who are engaging all three of them.

Check out their 12 days of Christmas giveaway on Instagram. Very simple to enter and potentially win. Also, we are giving away a Meridian putter this month as well.

How do you enter? Just become a Normal Sport member, and we will draw someone from that pool at the end of the month.

KP: Let's start at what I know everyone came for: What is the worst beat and best win you've ever had in the golf world?

RP: There have been so many bad beats, it's really hard to say. But one stands out above the rest, due to a few factors. I was younger and less experienced with taking these types of losses and it was a lot of money relative to my bankroll/net worth at the time.

Kyle Stanley -- 2012 Farmers Insurance Open.

Kyle, who we had bet pre-tournament to win about $150K, had a five-shot lead entering the final round and a three shot lead on the 18th tee, with his closest competitor in the clubhouse already.

Eighteen is the easiest hole on the course and all he had to do was make double bogey to win. I had been nervously sweating the final round the previous few hours, but at this point there was no sweat for me.

It didn't even occur to me that he could make a triple.

Nobody had made a triple on the hole the entire week.

Perfect drive. Lays up to 100 yards. Could have putted the rest of the way and made double bogey. Hits a wedge that lands past the flag, spins back off the green and slowly, painfully, descends the hill into Devlin's Billabong, the pond fronting the green.

Drop, wedge to back of green, lags putt to 3 feet, misses 3 footer. Loses on the second playoff hole to Brandt Snedeker.

I'm not sure if this qualifies as a second bad beat, but the following week, Spencer Levin, who we had a big pre-tournament outright position on, carried a 6(!) stroke lead into the final round of the Phoenix Open, only to do Spencer Levin things (chain smoke and fall apart). The beneficiary of the collapse? Kyle Stanley. Great redemption story, yada yada yada. Not for me. After the close call the week before, the market caught up and there was no value on Kyle the next week.

As far as two-week stretches, that has to take the cake.

Other notable bad beats.

• Adam Scott, 2012 British Open: blows 4 stroke lead with 4 holes to play (we stood to win 6 figures)

• Mito Pereira, 2022 PGA Championship: I think everyone remembers this one. Had $1k risked (spread across two bets) to win a total of $300,000.

• Jason Dufner, 2011 PGA Championship: blows 5-shot lead with 4 holes to play to lose to Keegan Bradley.

• Jon Rahm, 2021 Memorial Tournament: forced to withdraw with 6-stroke lead heading into final round due to positive covid test.

• Rory at this year's U.S. Open was a $450,000 swing to the negative having Bryson win instead of Rory.

There are plenty of others. But clearly I did something to anger the golf gambling gods from August 2011 to July 2012. 

Best win financially was this year's PGA Championship. Just had a lot of Xander exposure. But I'm also betting more now than I was a decade ago, so controlling for bankroll size, the 2011 British Open, won by Darren Clarke, was probably my biggest win. Clarke was listed in the "field" by sportsbooks, who at that time would only list odds for the top 50-100 golfers. The rest would be thrown into a FIELD category that you could bet on, and it was criminally mispriced.

I predicted a huge weather split between the two waves which came to fruition, and our tournament matchups went 16-4.

KP: How did the worlds of golf and gambling collide in your life? When did you fall in love with both?

RP: I didn't really grow up golfing much. I played tennis and remember being given a golf lesson once when I was a teenager, but I probably had played five total rounds of golf in my life growing up. I started playing golf semi-regularly when I moved to Las Vegas after college in 2008. It took about a full year before I broke 100 for the first time. 

I fell in love with golf pretty much immediately. When I'm on the golf course, it's the only thing that exists to me for those few hours. Whatever issues I'm dealing with in my life disappear. I love how present it makes me, and how it penalizes me when my focus slips.

I didn't start betting on golf until late 2009, when one of my betting partners bought some data, and I dove into it. Betting on golf only made me want to play golf more. And playing helped me understand the game better and ask better questions of the data.

KP: What is the biggest misperception about your job?

RP: There are so many misperceptions from people not familiar with the industry. Some think I'm some high roller who can see the future; others assume I must be living in my parents' basement. Sports betting isn't a competition of who knows the most about sports. It's a puzzle to solve that requires logical, creative thinking and curiosity. It's not super glamorous. I write computer code and operate on pretty thin margins. It's more akin to being a portfolio manager of a quantitative hedge fund.

KP: How do you watch and consume pro golf? (i.e. For fun? For work? Out of pleasure? Out of fear?)

RP: Most of my golf consumption is probably just looking at the leaderboard. If I was more disciplined, I'd cut down on that -- and the amount of time watching golf -- because it really is unproductive. Too often, I'll have golf on in the background, which means I basically get very little accomplished working. It's hard to keep me away from the TV during a major, and I also will watch occasionally if we have someone in the mix to win the tournament. But I love golf and would still watch if I didn't bet.

The only way watching golf actually helps me professionally is if I get some insight from something I see on the broadcast that takes me down a rabbit hole. More often than not, those insights come, not from the main broadcast, but from the feature groups streaming on ESPN+. Sometimes it's learning something about a player: a swing change, equipment change, coaching change. But more often it's a question: What is it about Alex Noren that makes him play better in tougher conditions? Are putters that die the ball into the hole better at the Masters (and more generally, on fast, undulating greens)?

And no, I don't ever watch out of fear. I do the opposite!

I didn't actually watch Rory's 3-footer on 18 at Pinehurst. I was in the locker room of my gym, chatting with the attendant and watching the end of the tournament, but stepped out before he putted. I didn't want to see him miss it.

And speaking of Rory, in the 2022 Masters, I didn't watch a single minute of the fireworks show he put on Sunday. No holed bunker shot on 18. None of it. We were a little overexposed on outrights (and each ways) that week -- we had gotten some HUGE fills from an operation we work with in the UK.

Going into the final round, our expected value was about -$500,000. So I decided to go for a long hike instead and leave my phone at home. Much to my delight, when I got back to civilization, I learned that in part due to Rory's epic final round, we had only lost $120,000. I've never been so happy to lose six figures.

KP: What are the biggest differences between, say, your work and the work of my financial advisor who is investing my money (hopefully) not on the RSM Classic but rather in the S&P 500? After talking to you, they honestly seem like somewhat similar jobs to me, but I'm curious about what differences you see in them.

RP: Great question, Kyle. There are some similarities and differences. First, the similarities. Your financial advisor, or a quantitative hedge fund manager, are trying to forecast the future better than the market. Both a hedge fund quant and I build predictive, quantitative models. But your financial advisor makes money whether or not you do. He or she could have no ability to beat the market (and that is the case for almost all of them!), and both you and they would still make money because markets typically go up. But if you're betting on sports with no real skill, you will lose long-term. I've always relished the fact that I have succeeded in an industry that is designed for me to fail.

KP: You seem ... quite open and congenial for the stereotype of someone who keeps a lot of closely guarded information. How difficult is it to balance being that person who is open and shares his life with others vs. serving your models and feeling more closed off to the world and the presumption that people are attempting to extract things from you?

RP: Another great question. I want to tackle this from two perspectives. The first is why I have been public-facing. I never got into this world for money. I took a job that paid me $25,000 a year out of college -- working for oddsmakers in Vegas -- because I'm a sports and numbers sicko. And it was a dream job for me. I never knew being a professional sports bettor was even a thing until after college.

So money was never my primary motivator. I cared just as much about recognition as money early on. I think I had a bit of a chip on my shoulder because I felt like everyone at Yale was smarter than me, so I had something to prove.

I was having success and wanted to be respected for that. Once I got some media coverage, it kind of just snowballed from there. And then you get a reputation beyond just from bookmakers in Costa Rica.

I could go on about how getting recognition actually ended up being unfulfilling and making me less happy (it's a drug!) and how Buddhism and therapy and betting have helped shape my view of the world, and how getting something you thought you wanted and realizing it wasn't enough was the best thing that could happen to me from a personal growth perspective .... but moving on .....

The second perspective is just that I'm an open person and an over-sharer in general. I try not to give away real "secrets" to the public. There are things I've developed in my golf modeling that I know nobody else has (not publicly, and certainly not reflected in the market). I'm not going to broadcast those to the world.

But I will occasionally share things in private, especially with people who are not competitors, because it makes me better. I've learned so much from so many people that I don't think I would have were I not so open. The best ideas don't just spontaneously appear. They are workshopped and iterated on. There's no magic formula. My edge doesn't come from my statistics or coding prowess (I am a total hack coder!). It comes from the way I look at the problems. The questions I ask. And when you are open and share with others, often times it comes back to you.

KP: Where are we at in the analytics revolution with golf? If baseball has been on a 20 year journey since Moneyball, where is golf on that arc?

RP: I think we're still early-ish in terms of its impact on the professional game. But golf does have a head start in one key area: data. The PGA Tour had the foresight (did I really write that?) to invest in the Shotlink system 20 years ago and it's provided a treasure trove of data. Golf is maybe year five of that Moneyball arc.

KP: Now that you have found success in this world, which has led to some freedom both financially and with your time, what do you aspire to do professionally that you have not yet done?

RP: That's what I'm trying to figure out, Kyle. I'd like to continue to have success betting, but that isn't fulfilling on a deeper level. I co-founded a company called Unabated that I hoped would help bettors find their own answers by providing real-time odds data and data science products that allow them to quantify their own opinions.

And that's done well, but it hasn't been fulfilling on a deeper level either.

I want to keep learning and growing. Where that takes me, I'm not sure. It could be in the same direction I've been pointed for the last fifteen years or it could be a 90+ degree shift.

Thank you for reading until the end.

You’re a sicko, and I’m grateful for it.

And thank you to Rufus for sharing and going deep on his world.

Go follow him on Twitter.