Sunday, February 03, 2008

SuperBowl, Sportsbetting, Odds, and the Sportsbooks

Well, this is it today....this is the "black Sunday" for the US based sportsbooks. The day when they can potentially rake in more than any other day of the year and a big sendoff to the football season, which is still the most lucrative time of the year and sport for the US based books.

I'd wager it's also a big day for worldwide sportsbooks, notwithstanding their prediliction for better on the "other" football (futbol).

Years ago, when I was more in tune with the happenings at the offshore sportsbooks, I noticed a strange phenomenon (or thought I did at least). That I was going to mention in light of the setup for this superbowl.

Before I get into that however, I need to give you some background (for the uninitiated) on how a sports book operates.

Sports books are in the business of matching betters with each other and acting as a "broker" of sorts. The return for his work in matching up bettors (or punters as the brits say) he is given the "juice" a commision of sorts, also known as the "vig" or "vigorish". I have no idea where they got the term vigorish. The vig typically amounts to 5% of the total wager and in theory is paid by the winner. But if you analyse the situation it's technically paid by both sides with a reduced expectation of return.

Well, this seems pretty easy for the sports bettor, right? All he has to do is pick the winner, and give 5% back to the bookie for taking the transaction.

Not so fast. The reason that so many people get into trouble with the bookies and end up getting kneecaps broken (in the movies at least) is that the bookie isn't a total knucklehead. He realizes that his optimum total return on dollars wagered over the long haul with minimum risk is maximized if he can find people for BOTH sides of the wager.

But how does he get both sides of a wager filled when there are some obvious favorites out there?

There are some "tricks" they use to accomplish this. Two typical ones are to pay a moneyline, or "lay odds" and the other is to create a "line". A specialist either evens the possibility of a win by adding points to a teams outcome -- or they attempt to even the betting by paying out larger dollars for "underdogs" -- or outcomes that are judged as less likely.

Laying odds, I'm not as familiar with, but you see it at where matches are a binary result. Examples of this are the craps table, prize fights, cock fights, etc.

You hear, "3 will get you 5", or some combination of risk vs. payout.

The bookie will attempt to tailor the odds so he matches the betting and gets the "vig" or "juice" from either outcome resulting in a payout that is less than what he took in.

Horse racing is similar, however the handicapping method of payout is a sophisticated "on the fly" calculation of payout vs. wagered. I have read somewhere that the "juice" at a racetrack can be as high as 18%. While this sounds very high, it is understood that games that are more expensive to organize and present and games that take longer to unfold have a higher payout ratio to the house.

That is on of the reasons, no pass in craps pays the house about 1%, and a game of keno or bingo can run 40%. Craps is very fast and bingo is very slow

Point Spread

The point spread is the other method the bookies use to even out their betting. The "line" or point spread is determined by a few different wizards that work in the larger sportsbooks....and most (if not all) the smaller books follow suit with that published line. These wizards are incredibly talented at finding the line before the bettin begins in a given week, and absent a big middle of the week injury (previously unknown to the bookies) these lines are relatively stable.

Moving the line by the bookie is problematic (although necessary sometimes) because he runs the risk (espcially if the line moves enough) or having a bettor place two bets at different times with different point spreads and winning them both. This happens when the outcome falls between the two point spread quotes and is called "getting middled" by the bookies.

(I call "getting middled" when you end up with seat "B" between two obnoxious fellow travelers on a cross country equally uncomfortable feeling.)

The online casinos have a application that feeds them the vegas lines when they are published and any changes to the moneyline.

You will hear this quoted something like, "The Seahawks are favored by 6 1/2 points". The quotes for lines tend to hand around the numbers represented multiples of 7 or 3 points (or some combo) which represents touchdowns and field goals of course.

The point spread however almost always involves a half point. Why is this?

Well, the only thing worse for the bookie than getting middled or being stupid and going into a big game with very lopsided betting -- the good bookies have arrangements to "lay off" big betting to bigger books just like insurance companies and re-insurance do -- is a "push.

A "push" is when the book declares a favorite by some number of points and that ends up being the difference in the game.

A "push" by rule means that all wagers are returned to the players and there is no VIG or JUICE to collect for the bookie. Basically he did a bunch of work for nothing. Not good.

For this reason you *rarely* see the spread an even number.

In a VERY rare case, the Rams and the Titans were in a superbowl (perhaps in the year 2000) and the initial line came out at Rams -7 meaning that the Rams were projected to win by one touchdown.

No matter how hard the book tried to move the line to either 6 1/2 or 7 1/2 they couldn't. It created a massive inbalance of betting on one side or the other.

It turns out that game...through a SERIES of spectacular plays, close calls, a photo finish, etc, the final outcome was Rams -7...they won by exactly one touchdown as predicted. amazing. The books made NOTHING on the superbowl game and the vegas casinos had to be happy with the slop over betting and extra traffic the superbowl brought in.

Do the bookies always get the line exactly right? Well, no...however, at times it is *amazing* how accurate the published point spread is....The point that I need to emphasize here is that THEY AREN'T TRYING TO PREDICT THE OUTCOME.

They are, technically, trying to predict what point spread will give them exactly even betting on both sides.

That is a fine, but very important distinction -- which brings me to thing i "noticed" some years ago -- although i have only anecdotal evidence to back me up.

It seemed that teams from large population centers would receive a larger porportion of betting...and teams from large population centers would receive a larger percentage of "homer" betting...meaning you bet on your favorite (home) team to win whether you really believe they will beat the spread or not....because you want to root for them presumably.

Cities with large populations that were really into gambling -- especially big cities from the northeast seemed to have enough "homers" betting to actually move the spread beyond what regular betting should be.

So, a game with the NY Giants and AZ Cardinals would (sometimes) seem to have an inordinate number of bettors taking the NY Giant, plus or minus whatever the line happened to be.

The result was that someone could simply bet against the giants with the line and come out ahead.

Of course, this was years ago, and I never took the time to do a deeper analysis -- and if there was an anomoly, i'm sure it was gobbled up by the big swingers who try to make a living off of sports betting.....The lines are so accurate, and the vig is high enough that there is only a small small small number of people in the world who can make a living sports betting...although many try.

So, how does that effect the superbowl line?

I would guess that the NE Patriots, bein that they are unbeaten and receiving an incredible amount of press -- their QB was on 60 minutes -- the number of bandwagon jumpers have more than likely swamped the numbers of even the "homers" from NY.

This is an unusual game from that persepctive. It's not like a regular season NY Giants, AZ Cardinals game.

So Superbowl predictions, I have none -- though underdog + points can sometimes be more fun to watch for me. I'm a sucker for an underdog.

After Superbowl predictions, I have one -- bet against the return of a "spring bounce" in US residential Real Estate usually marked as beginning the day after the SuperBowl.

Not withstanding the efforts of the Treasury, the Whitehouse and the Fed, I'm taking Recession (minus the points).

ciao for now,

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