Sports Betting in America Part I
Before I start getting into specifics about what exactly I plan to do when betting basketball, I need to cover some of the basics of sports betting. There hasn't really been much written about it, and part of the reason for that is that informing the public of exactly what to do is bad for you if you make your living as a sports bettor. I--on the other hand--do not make my living as a sports bettor. Furthermore, I enjoy writing about and discussing such topics, so I will present them here.
Basics of Any Gambling Situation
Suppose I offer you a game where I roll a die. If the die comes up 6, I give you $6, if it comes up tails, you give me $1. Is this a good deal for you? Many people will see that you'll lose 5/6 of the time and be hesitant to play such a game. However, if you have the bankroll, you should ALWAYS play this game (assuming you don't mind taking money from the person offering the game).
To figure out if something is a good bet, we need to understand how much we should expect to win on average. This amount is called Expected Value (EV). Bets that offer positive expectation are called +EV and bets that offer negative expectation are called -EV.
Now lets look at the above example and figure out why it's a +EV bet. Suppose you roll the die six times. On average, you expect to roll one 6 and roll something other than a 6 the other five times. So over six rolls you will win
5*(-1) + 1(6) = $1
Thus, every individual roll has an EV of $1/6 or about 18 cents. Therefore our bet is plus EV.
It is important to note that this is on average. Obviously, you can easily go six rolls without rolling a 6. You could also roll the die 6 times and get six 6s!
This brings me to the two basic rules of solid gambling that should be applied to any gambling endeavors.
1. Try to make only +EV bets
2. Make as many of them as you possibly can.
These are the two rules that make casinos tons and tons of money. Everyday they make thousands of slightly +EV bets. If you only make a few bets, then your results can tend to be effected by random noise.
Take the above example again. Instead of $1, this time you're betting $1,000,000 and winning $6,000,000 if a six hits. If you only make this bet once, you will lose 5/6 on the time. On the other hand, making a $1 bet a million times, it's almost impossible that you'll end up losing money, because it's extremely unlikely that you'll end up behind.
If you understand everything I've written so far, then you already understand more about gambling than your average person. +EV
American Betting Notation
If you're going to continue to reading my stuff here, I'll be using American Betting Notation. There are other forms such as European, or just using a ratio. However, I like this notation and will continue to use it, so make sure this makes sense.
If you go to a sports book, you will often see something that looks like this:
Minnesota -2.5 pts -105
San Antonio +2.5 pts -105
What does this mean?
First, the -2.5 pts next to the Timberwolves means that they're a 2.5 point favorite. What it means is that you're betting on Minnesota's score minus 2.5 points to be higher than San Antonio's score.
The -105 next to that means that you need to wager $105 to win $100. If the number had been -110, it would mean that have to wager $110 to win $100.
On the other hand, if you see something like this:
Miami -7.5 +105
It means that you can bet $100 to win $105 on Miami winning by more than 7.5 points.
Make sense?
How the Sportsbooks Make Their Money
Let's look at the above example again.
Minnesota -2.5 pts -105
San Antonio +2.5 pts -105
Suppose the Book gets the same number of $105 bets on each side. Let's call this number T.
When they Timberwolves cover the spread, the books will make $105T for everyone that bet on the Spurs, and lose $100T for everyone that bet on the Wolves. This gives them a net $5T. The math is exactly the same on the other side, when the Wolves don't cover, the books make $5T.
The funny thing about this example is that it doesn't even matter what percentage of the time the Wolves cover the spread. If they do it half the time, the books make $5T. If they do it 60 percent of the time, the books make $5T. So you could actually change the line to look like this:
Greek House, Petey, and a bunch of middle school girls -2.5 pts -105
San Antonio +2.5 pts -105
If the books got the same number of bets on each side, the books will make a profit no matter what. Of course, as a bettor, you would see San Antonio to be an obviously +EV bet since they will win here way more than 51.2% of the time. I'll leave it as an exercise for the reader to figure out where I got that 51.2% number from.
So now comes the cliffhanger. These types of bets occur daily. (OK, maybe not that bad, but you get the idea) So why would the sportsbooks who are incredibly good handicappers offer you a bet that they know to be -EV for them?
Basics of Any Gambling Situation
Suppose I offer you a game where I roll a die. If the die comes up 6, I give you $6, if it comes up tails, you give me $1. Is this a good deal for you? Many people will see that you'll lose 5/6 of the time and be hesitant to play such a game. However, if you have the bankroll, you should ALWAYS play this game (assuming you don't mind taking money from the person offering the game).
To figure out if something is a good bet, we need to understand how much we should expect to win on average. This amount is called Expected Value (EV). Bets that offer positive expectation are called +EV and bets that offer negative expectation are called -EV.
Now lets look at the above example and figure out why it's a +EV bet. Suppose you roll the die six times. On average, you expect to roll one 6 and roll something other than a 6 the other five times. So over six rolls you will win
5*(-1) + 1(6) = $1
Thus, every individual roll has an EV of $1/6 or about 18 cents. Therefore our bet is plus EV.
It is important to note that this is on average. Obviously, you can easily go six rolls without rolling a 6. You could also roll the die 6 times and get six 6s!
This brings me to the two basic rules of solid gambling that should be applied to any gambling endeavors.
1. Try to make only +EV bets
2. Make as many of them as you possibly can.
These are the two rules that make casinos tons and tons of money. Everyday they make thousands of slightly +EV bets. If you only make a few bets, then your results can tend to be effected by random noise.
Take the above example again. Instead of $1, this time you're betting $1,000,000 and winning $6,000,000 if a six hits. If you only make this bet once, you will lose 5/6 on the time. On the other hand, making a $1 bet a million times, it's almost impossible that you'll end up losing money, because it's extremely unlikely that you'll end up behind.
If you understand everything I've written so far, then you already understand more about gambling than your average person. +EV
American Betting Notation
If you're going to continue to reading my stuff here, I'll be using American Betting Notation. There are other forms such as European, or just using a ratio. However, I like this notation and will continue to use it, so make sure this makes sense.
If you go to a sports book, you will often see something that looks like this:
Minnesota -2.5 pts -105
San Antonio +2.5 pts -105
What does this mean?
First, the -2.5 pts next to the Timberwolves means that they're a 2.5 point favorite. What it means is that you're betting on Minnesota's score minus 2.5 points to be higher than San Antonio's score.
The -105 next to that means that you need to wager $105 to win $100. If the number had been -110, it would mean that have to wager $110 to win $100.
On the other hand, if you see something like this:
Miami -7.5 +105
It means that you can bet $100 to win $105 on Miami winning by more than 7.5 points.
Make sense?
How the Sportsbooks Make Their Money
Let's look at the above example again.
Minnesota -2.5 pts -105
San Antonio +2.5 pts -105
Suppose the Book gets the same number of $105 bets on each side. Let's call this number T.
When they Timberwolves cover the spread, the books will make $105T for everyone that bet on the Spurs, and lose $100T for everyone that bet on the Wolves. This gives them a net $5T. The math is exactly the same on the other side, when the Wolves don't cover, the books make $5T.
The funny thing about this example is that it doesn't even matter what percentage of the time the Wolves cover the spread. If they do it half the time, the books make $5T. If they do it 60 percent of the time, the books make $5T. So you could actually change the line to look like this:
Greek House, Petey, and a bunch of middle school girls -2.5 pts -105
San Antonio +2.5 pts -105
If the books got the same number of bets on each side, the books will make a profit no matter what. Of course, as a bettor, you would see San Antonio to be an obviously +EV bet since they will win here way more than 51.2% of the time. I'll leave it as an exercise for the reader to figure out where I got that 51.2% number from.
So now comes the cliffhanger. These types of bets occur daily. (OK, maybe not that bad, but you get the idea) So why would the sportsbooks who are incredibly good handicappers offer you a bet that they know to be -EV for them?
