AGAINST THE ODDS
AGAINST THE ODDS
By Keith Rosintoski
Sports betting is rapidly growing in North America, and perhaps it won’t be long until you can go to the bar or coffee shop to read the local paper and purchase a ticket for the outcome of a sporting event just like you were purchasing a lottery ticket. Sports betting was once frowned upon in the United States, but with New Jersey recently passing jurisdiction to allow wagering on sporting events and other states almost forced to follow suit, it will quickly become a part of everyday life for many sports fans. The reason Vegas survives is because most of those people in the sports betting industry, gamble for the sake of gambling or entertainment, not to turn profits.
The reason why sports betting is so hard to turn a profit is because the odds aren’t in your favor, or should I say they aren’t interpreted to be in your favor. Make no mistake, the house has the edge because they can book equal action and turn a profit, where equal action for you meaning 50/50 would eventually deplete your bankroll. I believe the single most important factor that contributes to the average sports bettor losing is they simply don’t do their homework, and I don’t mean on the matchups or eye test. Gamblers lose sight of the objective which isn’t to get the game right, but to make a profit in the long run. Most gamblers look at the odds of an event and place a wager, rather than assessing the probability of an event and placing a wager.
Many of you reading this have placed a monetary wager on a sporting event and chances are the odds were in favor of one of the parties but the wager was equal on both sides. Take a coin toss for example, the probability of a coin landing on Heads or Tails, is 100% or 1, or a 50% chance of each, and a probability of .5. Bookmakers don’t use odds to determine point spreads or money line odds, they use probability and then translate it to an easy to read more functional numeric value that makes it simple for bettors to understand. When people go to place a wager on a sporting event, most don’t use probability but rather statistical data or historical trends that often have no bearing on the outcome of a particular game to decide whether the “odds”. What needs to be understood is that bookmakers rely on risk measured probability to ensure they keep the “house edge” and it’s directly correlated to the odds they come up with.
The term you need to know and understand before you bet on sports is Expected Value or EV for short. Expected Value can be defined as what results you should expect if you were to place a wager on something with the same fixed odds over and over. For example, if you got 11/10 on coin tosses, you could just pick heads every time and you should turn a profit. Knowing that the house has the 11/10 edge, the odds of being able to profit on a wager at even the same fixed odds repeatedly becomes that much more difficult. But by using the formula below, you can figure out whether the wager you are about to make, has an Expected Value (EV) of that is positive or negative.
(Probability of Wining) x (Amount Won per Bet) – (Probability of Losing) x (Amount Lost per Bet)
While a negative EV doesn’t guarantee you’ll lose one particular wager, if you continually place wagers with a negative EV knowing the house has an edge it will be a recipe for bankruptcy as far as your wagering bankroll is concerned. Think about it, if you lost even an average $2 per losing $100 wager you made you would go broke, it may take a little time but you would go broke after a period in which you wouldn’t be making money. Conversely, if you made an average $2 on every $100 winning wager, which to most people that gamble would seem like a high risk low reward, you would be profiting in the long run and the more wagers you placed, the more money you would make.
The key to any successful wagering whether it be sports or horses is money management. But even with good money management, it could be tough to overcome numerous wagers that offer a negative Expected Value (EV). If the goal is to get a game right once in a while then keep doing what you are doing, but if you want to turn long term profits, Expected Value has to be an essential part of your handicapping or you’ll never know when the odds are in your favor and you won’t beat the game if you are always against the odds.
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