Sports betting. For some it’s a great way to have fun but, for the professional “sharks”, it’s a way to make a living. I’ve been betting to mixed-success for 3 years now and want to share some resources so you can get started and learn from my mistakes. My worst mistake was losing when I was right 60% of the time when 52.4% should have cut it…
- 1 What You Can Bet On
- 2 How Sports Books Operate
- 3 Legality in the United States
- 4 How to Get Started Sports Betting
- 5 Sport Specific Information
- 6 Advanced Sports Betting Discussion
What You Can Bet On
The 3 most common types of sports bets you can place are spread, moneyline, and over/unders. We’ll cover each of these and go into a few strategies combining them so you can get started sports betting.
Betting on “spread” is a bet on how much a team will win by against the other team. A bookie will post a “line” like Detroit Lions -3, Chicago Bears +3. This is an attempt by the sports book to get an equal number of money on both sides to balance the book.
Typically the payouts will be equivalent on each side of the bet, -110, however this can change when the bookies are testing a line change.
A moneyline bet is to bet on which team will win regardless of the score. Bookies account for the unbalanced wager by changing the payouts for the winner. An underdog will pay over 2:1 whereas a heavily favored team like the Patriots could pay 1.65:1.
The over/under is a bet on the combined point total of two teams. Say the Vikings vs the Patriots. The over under could be 38.5 and if you decide to bet on the under you’ll win if the score is 21-17 (or anything else less than 38.5).
Over/unders are mostly the same payouts as spread bets with the exception being when teams have a “long-tail” in that the distribution of predicted point totals is unbalanced.
If you think you know the distribution of point totals for both teams, you can calculate an “implied spread” and look for statistical arbitrage opportunities. The Skellam Distribution is a good place to start but it’s better you just look at the data before getting overly theoretical.
Other Bets: Prop and Entertainment
I make the distinction between prop bets and pure “entertainment” bets. To me, a prop bet deals with an event that could affect the score of the game. On the other hand, entertainment bets are things like how many times will the broadcaster’s show Tom Brady’s wife — yes she has a name and is quite famous on her own merits but in football Giselle doesn’t mean much.
One cool thing about prop bets is you can create chained bets to offset decisions you might make in fantasy football. Say you see a prop bet for Jordan Howard that he will get 99.5 rushing yards in Sunday’s game. If you take the under you can create a hedge that makes it less risky to place Jordan Howard in all your lineups. If he gets over 100 yards you get 13 points (10 rushing and 3 for being over 100 yards), which greatly increases his odds, and all of your lineups, of having a monster day. And if he gets under, you win your prop bet.
<Graphic coming soon>
I really don’t care about entertainment bets, at all.
How Sports Books Operate
Everyone needs to know how sports books operate if they want to be successful sports bettors.
There’s a reason why the people offering betting odds are known as bookies. They don’t care about making money on predicting the true score of a game. Bookies only care about balancing the money on each side of a wager. They make money from the “rake” which is the percentage they take on every bet. For example, betting against your friend, you’ll each bet $100 on a team winning and if you win your bet you get your friend’s $100. But bookies take a cut. If both sides of a spread line are balanced, most bookies only give you 90.9% of you put in on “balanced” contests like spread bets.
So why are sports books so good at predicting the game?
Sports books are great at predicting games because of statistics. When you have a large number of unbiased estimators, in this case gamblers, the most likely estimate of the result is their averageMaximum likelihood can actually be a bit more nuanced than this because of the uncountability of the real numbers. In practice, the sports books will round the values toward a whole number or a 0.5. … Continue reading. This phenomena is called the law of large numbers.
Now that you know about the law of large numbers, you should learn about when it doesn’t apply. For betting, the LLN does not apply when:
- A large number of bets aren’t placed (the theorem makes no definition of what number of bets, N, is considered large)
- The bettors are biased
- This happens often because of the media hype and significance people give to recent events. Case and point 2015 NFL Playoffs: the Carolina Panthers were -3 against the Denver Broncos in the 2016 Super Bowl because of a dominant win against the Tyrann Mathieu-less Arizona Cardinals. The media hyped Cam Newton as being able to beat the Denver D even though the Broncos had exactly the team needed to shut Cam down. Yes I bet on this game and made money because the line was way off.
For now read this guide about payouts in sports betting by GamblingSites.org.
Just because you have data on the odds, that doesn’t mean you could have placed a wager against that spread. Bookies frequently change odds based especially once the injury report 1 hour before game time comes out. I’ve seen switches of 10 points in the NBA.
It’s important you know what type of odds data you have and if you know what sites the odds came from. Oddshark is a great aggregator for odds in real time. And I’m working on tracking line moves in 15 minute intervals from many of the major sites on Oddshark. Read my guide on sports data to learn more.
More coming soon. For now read about double up strategies and how sports books have implemented martingale protection.
Legality in the United States
The way I view legality is that betting is not forbidden. Most sport books take the legal risk of providing betting to users located in different states.
I haven’t heard of anyone being audited but just know you can’t write off your losses as favorably as you could with betting on stocks.
How to Get Started Sports Betting
Online Sports Books (They’re not your friend)
Think of sports books as a predatory cousin that keeps enticing you to keep betting. These sites are designed to make you forget about how much money you spend and convince you that you’re a winner. All of their opening deals may look like free money until you read the fine print. They tell you that you’ve won $90 dollars when in reality you spent $50 and won $40. You absolutely should keep a ledger of your bets. If you rely on the sites it will be very difficult to tell if you’ve won or lost.
Sports books also try to get you to “play” on other sports/sites. Bovada offers a discount once you play your first Casino game or horse racing game. Understand what you want to get out of betting. Money or fun. Don’t pick both or you’ll end up bullshitting your losses for years.
Don’t feel bad about cheating on your sites. You should have multiple accounts and compare the odds with a service like oddshark. You need multiple sites because
- Sites don’t always publish odds on closely contested games (often these are the games you want to bet on)
- Sites have different lines and odds
It would be stupid to bet $1,000 dollars on the Boston Celtics winning the NBA Championship next year on Bovada +900 when 5Dimes is giving you +1200. That’s a $3,000 difference in terms of payout.
Similarly, once you start betting you’ll be really excited about your position on a game. You think the Orlando Magic are way overhyped and want to take them against the Dallas Mavericks because the Mav’s have some key injuries. Sites like Bovada might not publish lines until other bookies lines start to stabilize — if they decide to publish them at all. If you only have a Bovada account you’re screwed and just wasted all that preparation.
Where to bet?
I’d recommend you start with Bovada or 5dimes, both are reputable companies that won’t lose your money.
Bovada is the most common one and has the nicest interface for beginners whereas 5dimes is best for bulk betting. The main issue with Bovada is that you’ll frequently see them not post lines on the contests you want to bet on.
I’m working on a more in depth review of your betting options.
Understanding a good bet
To be a good sports bettor, you have to understand that winning the big prize doesn’t mean you were “right”. The science of sports betting is to reason with incomplete information. Much like the stock market, you have to judge your decisions with the information you had at the time. Evaluate how you came to your conclusions, if you could have done a better job accessing and evaluating information, or accepting that the odds were in you’re favor and just didn’t work out.
This is really tough and messes with your brain. With every sports bet you should keep a journal of your betting rationale (specific and testable) and your reaction after the game.
I had a year when I was 60% accurate against Vegas on 1.9:1 bets but lost money sports betting. Imagine how much that sucks.
It sucked because I got fancy with my position sizing. Stick with fixed wager bets, i.e. bet $20 on every game, unless you’re a trader with daily experience risk taking. Otherwise you’ll just mess yourself up.
I’ll go more in depth on this topic later. For now read about gambler’s ruin, the Kelly criterion, and fractional Kelly bet sizing.
Sport Specific Information
- Read my guide to getting sports data.
- More coming soon
Advanced Sports Betting Discussion
Sport Specific Strategies
- NFL Combine Doesn’t Mean Much
- More in depth guide coming soon
Reasoning with Incomplete Information
You could write a whole book on this topic and some people have. Karl Popper, Daniel Kahneman, Jonathan Bales, and Nassim Taleb are good thought leaders to get started. Check out my book reviews on cognitive psychology.
Sports Betting Risk Management
More info coming soon. For now follow Aaron Brown on Quora.
More info coming soon
NFL Sports Betting Strategies
More info coming soon
Daily Fantasy Sports
Guide coming soon.
|↑1||Maximum likelihood can actually be a bit more nuanced than this because of the uncountability of the real numbers. In practice, the sports books will round the values toward a whole number or a 0.5. Because of this rounding, it’s possible to identify structural deficiencies in how sports books represent the wisdom of the crowd.|