Betting on teams expected to lose can still have value
A few weeks ago I was asked “what is the single most important thing required in sports betting to be a winner?” and I replied that without a doubt value is the single most important factor when betting on sports.
I received a little push back in the comments section. Specifically, “… it seems to me that the most important thing to being a successful sports bettor is winning. No? I don’t understand how a wager that loses has value.”
I answered as follows:
The easiest way I can explain this is via an EASY example. Suppose someone offers you +110 payout on a coin flip. You choose tails and you lose. You just made a +EV wager because you’re getting +110 on a 50/50 proposition. In other words, the true odds for that coin toss is +100 (even money). Now if they made you that same offer again and again and again, etc., and you lose 10 times in a row, you’ve made 10 +EV wagers, but you’ve so far been “unlucky.” However, since you have been practicing excellent money management 🙂 you can continue to make this same wager over and over again … and eventually, once your sample size is big enough, say 500 coin flips, I can almost guarantee you are winning.
A few days later I received an email asking me “Hey Pez – I’d like more info about expected winning percentage based on odds – how to calculate and how to use.”
Since betting on value and understanding betting lines/odds are correlated, I thought I’d try and write a quick article addressing them both as they relate to each other.
Betting odds (lines, point spreads, etc) are nothing more than implied probabilities.
Using the 2019 NCG as an example, to calculate the implied probability of a minus money-line number (Alabama -220) you use the following formula:
Implied Probability = (-1 * Minus Money-line Odds) / ((-1 * Minus Money-line Odds)+100)
Therefore Alabama’s implied odds are (-1*-220)/((-1*-220)+100) or 220/320 = 0.6875 which converts to 68.75%.
To calculate Clemson’s implied probability (or that of a plus money-line number) use this formula.
Implied Probability = 100 / (Plus Money-line Odds +100)
Therefore Clemson’s implied probability is 100/(175 + 100) or 100/275 = 0.3636 which converts to 36.4%.
Knowing how to convert betting odds into implied probabilities, or expected winning percentages, is certainly helpful. However, I just use one of the many conversion charts or calculators that can be found on the Internet like Covers.
To calculate spreads to ML’s I use SBR Spread/ML Convertor.
As I mentioned in my article “How To Create And Use College Football Power Ratings To Beat The Point Spread”, I had Alabama -3.5 on a neutral field.
Therefore, based on my number Alabama should have been -174 on the ML and Clemson should have been +142. So, Clemson +175 appeared to be a nice edge.
One of the hardest concepts for novice or recreational sports bettors to grasp is that making bets based on value is the most important factor when determining “who to bet on.”
This sometimes means betting on teams that appear to have value, but are still expected to lose based on the implied probability of the current odds.
Based on the market number(s) for the NCG, Clemson was expected to lose nearly 64% of the time, and even my number had them losing 58.76% of the time.
So, had you wagered Clemson on the moneyline (I did, but for a much smaller amount than I did on Clemson +6), you were betting money on a team you thought would lose more often than they would win.
In this scenario Clemson won, so maybe this wasn’t the best example. However, if Clemson had lost, LONG-TERM this was still a smart bet because you had found a wager that was paying better than the true odds (or what you perceived to be the true odds).
I’ll close with a condensed version of a few sentences I have written before:
Wagering on value (wagering +EV bets) isn’t about “picking winners” per se but rather about associating probabilities with various outcomes.
Your probability estimates, taken in conjunction with available prices (point spreads and odds that, depending upon where you wager, may differ from book to book), will determine your edge.
That is pretty much the entire value wagering concept in a nutshell. Make +EV bets while practicing sound money management principles.
The point being we are looking for value. No one can predict that a team will win or lose they can only predict the probability of a team winning or losing.