If I told you I would give you $110 if you could guess heads or tails on a coin flip but you would owe me $100 if you were wrong you would probably take that bet. Especially if you were able to play it over and over. In one flip of course you might lose but you know over time you will come out a winner. That is the same logic we need to have when betting money lines.
As someone who has made a career on Wall St. I fully understand the importance of a spread. Not a spread bet but the spread on a money line. In my world of foreign exchange the spot EURUSD price may be quoted as 1.12612/1.12617. That is a bid/ask or the price in which you can sell or buy at the market. The difference in the two prices is a spread. That spread is the profit the market maker is making on your trade. You are buying at a price higher than they are buying at. It works the same as walking into a retail store and buying a shirt for more than the store bought it for. It just happens at a much faster pace with an ever changing price.
Somewhere in between the retail store and trading is the world of sports betting. Specifically in this case betting on money lines. Most of you are familiar with a typical baseball money line. Below is an example from today.
April 14, 2016
973. Detroit Zimmermann +125
974. Pittsburgh Cole -139
In this game there is a 14 cent spread at my book. Some books may be tighter or wider. The tighter the book the better. Most locals will have prices 20 cents wide and move in 5 cent increments. It will be a lot tougher to get a good price with a local although not totally impossible. They may be skewed to a side we want to take. With all sports gambling, having several outs to choose from is helpful and can save you in the long haul.
Despite what many touts will tell you they are not clairvoyant. Nobody knows who will win any game or bet. What a professional gambler is looking for is an edge. Every edge a professional gambler can get they are going to try and exploit within their bankroll constraints.
So in the above example we have to determine the Pirates and Tigers implied probability to win.
Based on the odds we now must figure out if either side is a profitable bet.
This is the part of the equation most amateurs do not pay attention to. The amateur bettor has no real concept of what is the proper line for that game. They may not like Cole for whatever reason and think “Well I am getting plus money to go against a pitcher I want to fade.” But have you determined how often Detroit wins this game out of 100? If not then how do you know that +125 is a good price? Lets say in 100 games with this pitching matchup Detroit wins it 40% or 40 times.
You bet all 100 games for 80 to win 100.
40 wins = 4000 and 60 losses = -4800.
Over 100 games you can expect to lose 800.
The correct way to look at these games is to say you are willing to bet either side if the price is right. After all we do not know who will win the games we can just try and get a good price based on what we feel the odds are of each team winning. Over time if our calculation as to what percentage of the time each team will win is correct then we will make money.
I have a system as to calculating a teams probability to win. From there I can come up with what I think is a fair line on the game. I then give myself 5% of wiggle room. That is I am willing to bet the game if my line and the Vegas line are >5% apart.
Lets say on average I am betting games at a 7% edge and I am a 100 bettor. If my numbers are perfect I should expect to make 7% ROI.
Every game I bet is exactly a coin flip on my numbers or +100 both sides
I will only take a game is if is +110 or better.
MY EV on this bet is (.50 * 114)+(.50*-100) = 57-50 = 7
7/100 = 7%
If I make 100 bets for 100 each I will expect to make 700.
That seems kind of low but when you compare it to other investments it is actually quite good.
To ramp up returns you could try this. If 5% is your min your min edge you are willing to bet then an edge of 10% is twice as good. If you have 2x the edge why not bet 2x on the game?
So now our game that we have as +100 shows a line for the dog of +120. We have a 10% edge on this game. Our normal unit is 100. We play this game for 2 units. If we have a 15% edge we play it for 3 units. You can modify this to fit your risk but understand the concept.
So we bet 100 games again at an average of 7% edge.
60 games at 5%
40 games at 10%
For 60 games we bet 1 unit for a return of 300
For 40 games we bet 2 units for a return of 800
Both examples are averaging a 7% edge but in the second example we have 1100 in profit as opposed to the 700 in the original. This second example is much more aggressive and you need to be confident in your numbers.
The moral of this story is every cent matters. If you are following me on twitter it is important to get the price I tell you to. If you can not get that price then pass on the game. I am not predicting the games I am taking advantage of a price discrepancy.