So you know a guy who knows a guy who happens to know the clumsy UPS guy…
From September 1 through the NCAA Women’s Basketball National Championship, there will be nearly daily opportunities to wager on Collegiate Athletics. Fans, alumni, sports investors, sidewalk alumni, crime families and random people on Twitch that play Blackjack drunk in the Netherlands all get involved in the action. Depending upon the sportsbook, there are different options available and even the opportunity to stretch out the wagering season all the through the College World Series. All sportsbooks offer odds on the College World Series, but very few offer odds for individual regular season games and Conference Tournaments.
Most Sports Bettors (Not Just College Athletics) are Total Marks… Here’s Why.
1. They don’t bet on Major League Baseball
Pete Rose should not have bet on Major League Baseball, but most bettors do not and that is a shame. Baseball offers an opportunity to bet on games every single day with the exception of the All-Star Break. Major League Baseball provides an opportunity to wager on 10 to 15 games per day and the variety of matchups helps with creating a quality bet card. Proper research, making the right adjustments and avoiding the run line are keys to profitability without a high winning percentage. Betting moneyline underdogs and favorites can pay off when done properly. Major League Baseball wagering is like an extension of a day trader’s day, but then again so is the Tokyo/Sydney/Wellington Forex session before the Tokyo Lunch Break.
2. They get married and divorced to their favorite teams and schools far too often.
Marriage is legally, financially, religiously and emotionally binding. Betting on one’s favorite team or school is like being in a combustible relationship and then having the off/on breakups and reconciliations with financial consequences! The benefit of the sports bet is that there is a set limit on the loss of the wager by the bettor, unlike marriage, which is an arrangement in which someone loses at least half of their assets in the worst case scenario. Often times, marriage results in a child, which results in losing half of one’s assets as well.
Blending together an emotional connection with a financial decision is a bad combination.
3. Bettors see spreads mentioned on TV/Radio and think that they have to bet to cover one way or another.
The media pushes spreads in Football and Basketball because -800 on the Moneyline Favorite is not interesting to discuss. The idea is to find an intriguing set of point spread lines that are worthy of discussion. They are not there to help the bettor make money, it is just a distraction point. Thus, bettors are left betting underdogs in Football that are +4.5 point underdogs at -110, which is rather horrible. The betting public is very stupid and suggestible, if they were not, the bookies would not go through the effort of setting lines in an extremely cutthroat and suppressed market.
4. Betting for Action
Many bettors bet for action, which if stated about the stock market would come across as weird and suboptimal. However, the sportsbooks, which are derivatives markets themselves can receive a willy-nilly approach because it is sports and sports are not to be taken seriously. (Yes, stocks are technically derivatives. Shocking right? To non-finance individuals, this would be a surprise.)
Any activity that involves an amount of money and the possibility of earning money should be treated like an investment endeavor, no matter how large the bankroll. The objective is to turn the bankroll into a monster just like that IRA.
5. Not Shopping Lines and Not Bonus/Free Play Hunting
After coming up with a list of sportsbooks that are not scams and make payouts in an immediate fashion. A serious sports bettor should have three to five sportsbooks in the fold. This sports bettor would take advantage of deposit bonuses and compare lines between the sportsbooks to bet on the most advantageous to the wager that they wish to make.
Many sports bettors just bet the one their friends are using, get hammered and place $100 on Georgia to cover at -110. Bad investment strategy.
6. Voting against their interests by supporting those that passed the UIGEA Legislation and are trying to pass RAWA.
These people are perhaps the biggest morons of the bunch. UIGEA (Unlawful Internet Gambling Enforcement Act of 2006) was thrown into the SAFE Ports Act that regulated port security. Anti-Free Market Social Authoritarian Populists stuck this major piece of legislation into a bill that was sure to pass.
Described in an article in The Economist as:
A 2006 law, hastily tacked onto the end of unrelated legislation, bans American banks from handling money related to internet gambling. The indictment against the poker sites accuses them of going to great lengths to hide the flow of payments to them, such as by disguising them as purchases of jewellery or golf balls, implying that they must have known they were on the wrong side of the line.
The SAFE Ports Act was signed into Law just as Congress ended their last session prior the November Elections in 2006. This 2006 Election would be remembered for landslide losses for the Republican Party and would prove to be the election that in retrospect, serve as the start of a significant leftward and authoritarian shift in voting habits of Americans and overall governance.
Online Poker Sites and Sportsbooks exited the United States market as banks were not permitted to handle financial transactions. Online gambling went underground and methods by which bettors/players could deposit and withdraw funds became very unusual. Checks issued from foreign banks that were presented as affiliate marketing earnings and obfuscating Bitcoin transactions are the norm in an industry by which those in the rest of the world would never understand.
There are still those that want to strengthen the laws against the scourge of Online Gambling under the pretenses of National Security and Morality, but are actually well-known to be kept politicians by brick-and-mortar casino magnate, Sheldon Adelson. Senator Lindsey Graham (R-SC) and Representative Jason Chaffetz (R-UT) are leading the charge in their respective houses of legislature to push for RAWA (Restoration of America’s Wire Act). RAWA would effectively end the intrastate gambling networks like those in the State of New Jersey.
All of the craziness experienced, Bitcoins purchased, paranoia, lack of transparency and fear would be eliminated if the United States had a mature approach to the idea of gambling.
These regulations and restrictions sure have entertaining benefits like fun exchanges to read between Tony Williams, the General Manager of 5Dimes and a bettor. Nothing says great bar story like being threatened to be harmed by a bookie in Costa Rica.
Eliminating Free Markets creates Black Markets. Black Markets put people at risk.
But at least most states have an education lottery! Bettors can pick numbers at random at bars, convenience stores, supermarkets, gas stations and other locations. Lottery betting has no skill involved and is completely random or so everyone thinks. Sports betting requires skill and knowledge and the possibility of rigged games exists whether the laws are in place or not. It does happen more often in College Sports because the student-athletes cannot be treated like ordinary students as far as their ability to be compensated for any labor or entrepreneurial effort. There still exists the possibility that the leagues rig games as well, most notably, the NBA.
ESPN has a vested interest in the Final Four of the College Football Playoff and their ability to recoup serious losses on the exclusive rights to the College Football Playoff has to be considered. Consider this, if the decision for the last team gaining a berth into the College Football Playoff was between an undefeated Washington State and a one-loss Texas team, the choice would be Texas. Washington State is a ratings loser for ESPN, especially in a year where the College Football Playoff semifinals takes place on New Year’s Eve.
7. Using Past Results with Completely Different Versions of the Same Team as a Betting Factor
Ever seen the stats that show that Team X has won their last nine games at Home against Team Y? These last nine games in the sports of Football and Basketball involve completely different coaches and players/student-athletes. How does the 2007 Georgia-Florida Football game effect the 2016 Georgia-Florida Football game? It doesn’t. It’s just filler stats that touts use to make it look like they are using metrics.
What’s more effective than betting unusable metrics and facts? Betting on situations. How do teams react to being in a particular environment or a particular matchup of metrics? How do teams matchup based on style of play or pace of play?
Rather than using inapplicable metrics and so-called motivational factors, bet on scenarios with a consistent and larger sample size like an actual investment.
8. Having Unrealistic Expectations
When just starting out, bettors think it is so easy to wager on sports and be profitable. Reality is that it is extremely difficult. For spread bettors, winning at a 52.4% clip betting exclusively at -110 odds is very difficult. That’s the breakeven winning percentage and it is hard. The best sports handicappers are able to reach 56%. Betting the underdog on the moneyline drops the break-even point down considerably and in a good number of situations serves as a better bet than taking points.
Return on Investment matters more than winning percentage. Irresponsible bankroll management, wagers, greed and an lack of awareness hurt the bettors significantly.
Sports betting is a grind. Not treating it as such will result in having a bad time.
9. Trusting the Touts
Touts exist to separate you from your money. Some are more obvious in their efforts than others. Touts that claim extraordinary winning percentages are lying. No tout wins 72% of the time. The first five minutes of this video are cringeworthy, but telling.
The three methods by which touts are compensated:
- Commission off winnings: No upfront payment just a 40% or 50% freeroll off the client’s wager.
- Subscriptions: Weekly, Monthly, Quarterly, Annually.
The logical question one would ask concerning touts is the following, “If these touts are so damn good, why are they selling their picks as opposed to just making the wagers themselves?”
The commissions deals are by far the worst that a tout can offer as they significantly raise the breakeven winning rate to an astronomical level. It’s a horrible investment in information by which the tout puts the client into a position where it is “Heads – I Win, Tails – You Lose”. Only uneducated suckers fall for this, right?
At least subscription and pay-per-pick touts charge a flat rate, but one could have done the research themselves.
The most honest participants in the “sports betting information” industry are…
Information software services in sports betting are much like obtaining financial/investment software services. In the end, the pick is up to the individual and it can be crafted based on the data in an easy to use SaaS platform. When used properly, it can result in long term gains. When used improperly, things go wrong.
Back to the idea that uneducated suckers are the only ones to fall for the commission scheme. Meet Lee Pappas, he has a Twitter account that is presumably his and he updated it only during the one season of the former television show “Money Talks” (he appears on it) that serves as an example of manipulated reality combined with an accidental exposé of how the industry operates at possibly its very worst. Here is an educated individual that is experienced and presumably very successful with managing portfolios that are designed to ensure the minimization of risk and maximization of expected return deciding to chase unicorns and negative expected value investments. Portfolio management is very heavy on statistics and there is even linear programming involved to ensure optimization (yes, that’s right there’s calculus). It’s more than just a ratio or formula here or there or even Modern Portfolio Theory. It’s a quant jock’s game.
Just watch the first five minutes below and recoil in horror.
Sample size matters and riding on relatively short lived streaks is a significant fallacy. Streaks are just cherry picked highlights of an entire distribution and typically are aberrations. Regression to the mean happens. “He’s 14-3… he was betting $500-$1,000 per game… now I’m going to get him to wager $30,000.” Why he’s getting him to wager more is because he’s freerolling off the sucker with his commission-based system. Think of the tout in this case like a broker, would it be acceptable for a swap broker/dealer to take a 40-50% commission on every transaction?
Hypothetical and unrelated example:
Commission-based tout takes 50% of the client’s winnings. Client has $100,000 to wager on games and bets spreads only. Client wagers flat amounts of $33,000 every game at -110.
Game 1: Client wagers $33,000 to win $30,000. Client wins! Yay! Client coughs up $15,000 in commissions to the tout. Client is up $15,000 just like the tout.
Game 2: Client wagers $33,000 to win $30,000. Client wins! Yay! Client coughs up $15,000 in commissions to the tout. Client is now up $30,000 just like the tout.
Game 3: Client wagers $33,000 to win $30,000. Client loses. Client is now down $3,000 and the tout is still up $30,000.
Tout walks away bragging about a winning weekend and taking two out of three games. Client is happy about the wins until realizing that their own Return on Investment is actually negative.
It may sound ridiculous, but these are actual terms that people actually enter. It does not matter what one’s educational or professional background may be, they still are capable of making HORRIBLE DECISIONS with their money and lives.
In this case of Lee Pappas, it is the equivalent of a well-reputed cardiologist that decides to smoke two packs a day.
So What’s the Best Way to Wager?
There is a silver lining and it’s not a system, but rather a philosophy. Following the philosophy should lead to long term profitability. Short term hot and cold streaks will happen, just ride them through and focus on the long run. Treating sports in a cold fashion is hard for many, but ROI matters most.
1. Treat it coldly, just care about the financial return only. Bet only on games that do not have an emotional tie.
2. Do not bet non-discretionary funds.
3. Money management with an eye on flat betting and gradual progression of wager growth as the bankroll rises.
4. Take advantage of promotions and free bet opportunities. Read the conditions involved and get into positions to wager house money.
5. Wager on generalized situations, not cherry picked past results. Situations repeat, past games and streaks involving a particular team/school do not just continue onward.
Great example: In Major League Baseball, moneyline underdogs are most profitable in April and September over the past decade. However, in July, heavy favorites are the most profitable play.
This September, just by betting on Major League Baseball Teams that are underdogs on the Moneyline that happen to have a winning percentage between 51 and 60 percent over the course of the past decade one could have had an 8.4% Return on Investment on an annual basis.
6. You’re not a professional handicapper. There are those that are, they use data and insider information to give them a 3-4% winning edge and double-digit annualized Return on Investment. Find where they jumped in.
“Sharp” money syndicates play around with lines frequently to get what they want in order to avoid detection by the sportsbooks. The “sharp” money is not some tough-talking greasy guy smoking a cigar nor is it a random guy that has $110 on the Tennessee Volunteers to cover. No, the “sharp” money are actually nerds that treat games like the way traders treat individual trades. Algorithmic wagering is not mainstream like algorithmic trading and “expert advisors”. However, games are simulated likely using a simulation method and a multi-factor model. 99.9999% of bettors would either not know where to begin with this or just do not want to go through the trouble. It typically involves using R and SQL or Python and SQL. It can be done in Matlab as well. One can use Excel and a statistics add-in package or Excel VBA after extracting and cleaning data through a CSV file. There are a good number of APIs as well, but still one has to code the file to make use of the API.
Doing one’s own research and then looking to see what the “sharps” have done with the market is critical. The most obvious activity are steam moves and reverse line moves. If the betting public wagers one way and then the line moves the other, it is a good sign the syndicates are going the opposite way. Sportsbook operators take particular wagers into account when setting their lines and offshore sportsbooks do often take their cues from Pinnacle. In Las Vegas, the sheer amount of money and semi-suspicious wager-runners make it obvious who’s taking action. It is not about balancing the amount of bets one way or another nor is it always a matter of balancing out the money on each side. Sportsbooks may take a vigorish, but they still have counterparty risk exposure. They sometimes are more willing to take risks to chase rewards knowing that the betting public is going to lose and it does not always work out well.
Sportsbooks do not operate like “A” Book derivatives operators. They operate closer to a “B” Book derivatives operator, which is to say that in some way sportsbooks are “bucket shops” (not scam shops nor boiler rooms). It’s an insider term, but plain and simple – not every wager is going to be matched by a countering wager. A pool of wagers at a certain line may not counter the other side, in fact, it likely never does. The casino tries to neutralize the profitable bettors and take their chances against them, they are filling the transaction and putting themselves on the hook. Hence, they are a market maker.
7. If you do want to create a model, backtest it. Perform Monte Carlo Simulations as well looking backwards using data that was previously available to confirm. Perform Monte Carlo Simulations when looking forward as well at the current wagering event.
8. Vote your conscience and don’t vote blindly.
Georgia Basketball Blog will much like last season provide game-by-game score predictions just like last season. Many observed that the picks were horrifyingly accurate after the middle of February. If one has watched an entire team play in College Basketball from the non-conference through mid-February and there are no significant shifts in the lineup, it actually becomes easier to figure out. KenPom score predictions are more accurate because of greater data. A KenPom score prediction actually picked Villanova over UNC in the National Championship Game, just to cherry-pick.
One major reason why it is so hard to win a bracket is not what people actually think. Even the most successful bettors know when to pass on games and in an NCAA Tournament Bracket, there is no passing on the games.
Projecting the outcome of a game that may never even happen is very difficult and the model results change over time, one or two games make a big difference. The NCAA Tournament Bracket is nearly impossible to predict 100%, but betting on the individual games provides a better chance at a solid Return on Investment.
Betting articles actually did quite well with the general public and starting November 11, there will be a “Game of the Day” that will picked and tracked for posterity. The “Game of the Day” will not be the Georgia game, it will be another game featuring two different schools. It should be fun and it will bring some nice exposure to bettors worldwide and also partisans of other institutions. The “Game of the Day” will conclude with the National Championship Game.