• In order to be a profitable long-term bettor: it is crucial to take advantage of disparity in implied probability and the probability which the bettor assigns to an event.
• Why closing line value (CLV) matters: You get a better line on a game, and for a cheaper price, than those who bet minutes before kickoff.
• Not all bets are created equal: Nor should their sizing be equal. When one is more confident in the result of a game, this confidence should be reflected in the size of the wager.
• New users who bet $10 or more at BetMGM will receive a free year’s subscription to PFF+ — a $79.99 value.
Estimated reading time: 6 min
• A Description of Implied Probability
· Implied probability: This can be thought of as the likelihood that oddsmakers deem an event to occur, and is calculated via the price offered by the sportsbook. Because the sportsbooks themselves take a cut of earnings, implied probability will sum to over 100%.
· For plus-money bets: Bets that return more than the initial amount wagered have an implied probability calculated by the equation:
[ 100 ⁄ (100 + price) ] * 100
And otherwise, the equation:
[ (-1 × price) ⁄ ((-1 × price) + 100) ] * 100
· In order to be a profitable long-term bettor: It is crucial that one take advantage of disparity in implied probability and the probability which the bettor assigns to an event.
· Most Spread and Over/Under offerings will be priced at -110 to either side: This means that, for a pragmatic bettor, a straight bet on either side would be justified if one assigns a likelihood of an outcome to be greater than the implied probability of 52.38%
• True Odds
· ‘True Odds’ is in reference to the actual probability of an outcome.
· Consider a spread offering of -3 (-110) / +3 (-110): Because the implied probability of each event occurring is equally likely, it can be assumed that oddsmakers believe each outcome to have equally likely ‘True Odds’ as well.
· In most instances, against the spread (ATS) and Over/Under picks will be priced equally. In most instances, such pricing signifies that the sportsbooks deem each outcome to be equally likely.
• Arbitrage Betting
· Arbitrage Betting is when one has an opportunity to place a wager without any risk: Such opportunities are few and far between, especially in finely tuned betting markets.
· Consider one sportsbook offers the favorite at a price of -2.5 (+100): And another sportsbook offers the underdog of the same contest at +3.5 (+100). Were an individual to place an equal wager on both offerings, this is a risk-free bet with the potential for a massive payout.
· Arbitrage opportunities occur incredibly infrequently: However, as more sports books enter into such a competitive market, chances to cash on arbitrage bets will arise. Take advantage of different sportsbooks’ offerings in the unlikely event of an arbitrage bet cashing.
• Parlays
· A parlay is a bet which requires multiple successful outcomes in order to win: These bets rightfully offer a significantly higher return than betting on the result of one game.
· The higher payout is warranted: as with every leg of, or addition to, a parlay the chances of a successful outcome decrease.
· A five-legged parlay consisting of ATS and Over/Under picks priced equally at -110: A successful parlay of this kind would offer a payout of roughly 24-1, or +2400. In other words, a $100 wager would return $2,400 dollars.
· Not as lucrative as it seems: In this example, the chances of placing a successful parlay would be 32-1, and such return of 24-1 is significantly lower than the parlay’s chances of being successful.
· An estimated likelihood of a parlay can be calculated by multiplying together each event's true probability: For ATS or Over/Under picks priced at -110, it is reasonable to assume a true probability of 50% for each outcome.
• Hedging
· Hedging shares many similarities to arbitrage betting: Both practices involve wagering on conflicting outcomes of the same contest. The key difference between the two is that hedging is an attempt to mitigate risk, whereas arbitrage betting is an exploitative strategy.
Hedging — essentially betting against oneself — is common practice for those who bet parlays.
· Sports bettors will often bet against the last outcome of the parlay in order to guarantee a profit: However, were they to be fortunate enough to reach their last leg of a parlay, it is short-sighted to hedge out of the bet in most circumstances.
· About that five-leg parlay: If one were fortunate enough to have survived the first four legs, the result of the last outcome on its own will now offer a 24-1 return (+2400). Such a bet would be profitable if one assigns a likelihood to that outcome greater than the implied probability of:
[ 100 / (2400 + 100) ] * 100 = 4%
In the absence of information, it is assumed that our final leg will hit 50% of the time. And any bet against this outcome would decrease the profitability of the bet long-term.
• Buying Points
· Another tactic often employed by risk-averse bettors: Sportsbooks usually provide customers the ability to alter the spread, but at a cost. The price of buying a half-point is usually ten cents, but it can vary.
In layman's terms, a typical ATS pick priced at -110 would shift to -120 were the customer to buy a half point.
Buying a half-point at a price of ten cents naturally implies a change in implied probability.
· A price of -110 represents an implied probability of 52.38%: Electing to buy a half-point with an assumed price of -120 would now entail an implied probability of:
[ (-1 * -120) / (-1 * -120 ) + 100) ] * 100 = 54.54%
· Such deviation in implied probability essentially eliminates any value of this betting strategy: The winning percentage will improve if one elects to buy points, however the losses will count for much more. Oddsmakers are keen on the value that each half-point presents, and price these offerings accordingly.
Individuals who consistently buy points, or hedge their bets, are likely having their risk-aversion tendencies exploited by the sportsbooks.
• Closing Line Value
· Closing Line Value (CLV) is the difference of the closing line relative to the line taken by a sports bettor: Understand that, up until kickoff, all lines are fluid. Sportsbooks reserve the right to alter the offerings of any contest, and very often do so throughout the week. Oddsmakers continually assess bet disparity in order to mitigate risk of their own, and are usually forced to reassess lines in the presence of new information such as a key player's unlikely absence.
· It is reasonable to interpret positive CLV as indication of a profitable bet: Or at least that one has obtained an advantage over the sports books long-term.
· An underdog bet of +6 with the line closing at +4.5: Buying a line to such a price would likely cost a bettor thirty cents, and would require the individual buying points to be correct greater than 58.3% of the time, whereas the individual who gained 1.5 points of CLV would only need to be correct greater than 52.38% to turn a profit.
CLV matters: You get a better line on a game, and for a cheaper price, than those who bet minutes before kickoff.
• Bet Sizing
· Not all bets are created equal: Nor should their sizing be equal. When one is more confident in the result of a game, this confidence should be reflected in the size of the wager.
Many novice sports bettors fall into the trap of betting similar amounts on different bet types.
· A five-legged parlay like the one previously discussed is expected to be successful 1/32 times: But a straight bet priced at -110 would be expected to hit at a 50% rate. Betting equal amounts on severely unlikely outcomes is an effective way to donate money to the sportsbooks.
· With every leg added to a parlay: the likelihood of the winning lengthens, and the bet sizing should decrease in proportion to the size of one's usual straight bet.
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