Monday, December 16, 2019

How do Sportsbooks Make Money on the Moneyline?

October 22, 2010 by  
Filed under General Information

The moneyline does not offer sportsbooks the same opportunity to make a profit as the point spread. In a standard favorite/underdog scenario, the sportsbook will make money only when the favorite loses. That’s because the difference between the odds on the favorite and the odds on the underdog are normally at least 10 points. For example, the favorite might have moneyline odds of (-130). The underdog facing them would have moneyline odds of (+120). The only exception to this would be the unusual circumstance where neither team was the favorite and the point spread was thus zero. The moneyline would probably be (-110) for both teams in that case.

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In the example above, a loss by the favorite would give the sportsbook $130 from a bettor who was wagering on the favorite. They would need to make a payout of $100 to a $120 wager on the underdog, and the result is a $10 profit. If the favorite wins however, they would owe the winner $100 on a $130 wager, and would collect $100 from the loser who was hoping to win $120. The sportsbook makes no money in that event.

In the article How Sportsbooks Make Money on a Point Spread we discussed the need for sportsbooks to get the right amount of money wagered on both teams. Usually they are able to, but sometimes the sportsbooks are not successful in their attempts to do this. One memorable example of that is the stunning defeat handed to the New England Patriots by the New York Giants in Super Bowl 42. The Las Vegas sportsbooks are said to have lost $2.6 million that day, the first time in more than ten years that the betting houses lost money on the Super Bowl.

The simple reason for the sportsbooks losing money from a Giants victory was the high volume of bets placed on the Giants. The Patriots were a huge favorite to win the championship that day. They were 18-0 coming into the game and were considered by many to be the best team in the 40 year history of the NFL. But Vegas grossly underestimated the public desire to bet on the underdog. Bettors placed wagers on the Giants in numbers far in excess of what the sportsbooks had expected.

The bad news for the sportsbooks was not the volume of bets on the Giants, but the fact that a similar amount of money was not being wagered on the Patriots. In order to encourage more bets on the Patriots, the point spread for New England dropped more than 2 points during the week before the Super Bowl. The point spread had started out at 14 and then dropped as far down as 11½ points. But it seems that it hadn’t dropped far enough The fans apparently didn’t think that New England would win by such a wide margin and they bet on the Giants +11½ points instead.

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The moneyline however is where the sportsbooks really took the biggest hit, as again the sportsbooks lacked volume on the Patriots. The moneyline on the Giants which had been as high as (+475) dropped to around (+350). The Patriots meanwhile had a moneyline of about (-425), and speculation abounds that the lack of a decent return kept people from betting for New England on the moneyline. To make a profit on the moneyline, the sportsbooks would have had to collect bets such that the amount of money being risked on the Patriots equaled the amount that would be won in the event of a Patriots defeat.

For example let’s say that the moneyline was (+400) on the Giants and (-420) on the Patriots. If one moneyline bet was placed on the Giants for every moneyline bet placed on New England the sportsbooks would have made a profit on that segment. That’s because a win by the Giants would have resulted in a $400 payout while the income would have been $420 from the losing bet on the Patriots. Even if the Patriots won however, the sportsbook would only pay $100 to a winning wager while collecting $100 from wagers on the Giants. They would have at least broken even.

But 60 to 70% of the money the public wagered was placed on the underdog Giants. Had the Patriots won the game even by less than the 12 points the sportsbooks would have had to pay off those bettors who bet on the Giants using the point spread odds. But they would still have collected a lot from players who bet on the Giants using the moneyline. With a Giants victory however their betting distribution was completely unbalanced, and the result was a huge loss for the sportsbooks.

The importance of Recordkeeping

October 12, 2010 by  
Filed under General Information

If the mere mention of keeping sportsbetting records conjures up images of a pointy headed geek pushing a pencil amidst mountains of data, you are not alone. Few bettors are capable of keeping from yawning when a discussion about tracking your betting results begins. But it is a given that anyone who bets on sports in a rational manner designed to earn profits regularly must have a method of measuring their success. Tracking the results of your wagers is the only approach that really makes sense.

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Keeping track of your bets may be boring, but without doing it you will have no concept of which types of bets are your strongest winners. And without that information, opportunities that could boost your winning percentage will simply pass you by.

You can always find websites out there that give you simulations of sportsbook sites but these can be rather limiting. You may not be able to enter the bet sizes that you usually use and you may not even be able to list the types of bets you are most used to placing. The real value will come only from a system that accurately reflects every single bet you make and there are several important ways that your data must be arranged in order to give you a clear picture of your accomplishments.

The first category to be tracked is the bet type. Straight bets, totals, Over/Under bets, Parlays and Teasers should all be defined in your database so you can sort your bets accordingly. It is critical that you get a handle on whether you are winning or losing at each of these types of wagers. You may find halfway through the season that you are losing on totals and parlays on a regular basis. The obvious fix is to drop those types of wagers from your routine. After that you should probably see improvement in your overall winning percentage using all other types of bets.

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Advice such as eliminating losing betting types is simple common sense but it escapes many sports bettors, some of whom fail to track even basic numbers like wins vs losses. But keeping track only of your wins and losses is just the beginning of good data management. Are you betting way too many underdogs on the road when your success rate on home favorites deserves more action? Or maybe you are winning handily when taking price with low point spreads but you miss the mark when the spread hits double digits. Ideally you should be breaking down your betting results into many more categories to get the full story on the trends in your own wagering history.

Another important area to focus on is your record with particular teams. Most sports bettors have good instincts when it comes to certain teams and may not even be aware of this fact. Tracking your success by team and adjusting your betting to accommodate it is one of the easiest ways to improve your bankroll. And it doesn’t matter whether the team of interest actually wins or not. You may find that you are winning at a very high percentage when betting either for or against the Pittsburgh Steelers for example. It’s an indication that for some reason you have a good read on how the Steelers will perform on a weekly basis. The right move in that case is naturally to place more wagers on games involving Pittsburgh whether they are favored or not. By the same token, think about reducing the number of bets on games with teams that you have had a difficult time getting a read on according to your tracker.

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In short, you need to pay attention to the trends and warnings showing up in your own betting records in order to improve them. As misleading as statistics can sometimes be, the successes you have had with different betting types, teams and situations are a different story. They are most often the best reference points when looking to analyze your own strengths and weaknesses. Even the minimal amount of effort required to update your tracker each week will ultimately pay off. You may need to track your progress for several weeks before you start to see patterns that are useful. But certainly by midseason you should have a much clearer picture of how you are doing with various moneyline odds for example or with NCAA versus NFL teams. Keep a sharp eye on this valuable data and let it help you earn the best possible return on your sports wagers.