“IF you’re playing it at $1.85 why aren’t you playing it at $1.75? They’re basically the same things.”
I get this question a lot, and it almost seems unreasonable to leave a winner on the table for such an insignificant difference – but, this can be the difference between a market edge and a gamble.
Our plays work on algorithms. We project outcomes using our data and then use those projections to create a market and compare our line/totals with the bookmakers numbers/ prices to find our edge.
Everyone has their own methodology to making plays, but whatever it is it should always involve having something that you feel can give you a genuine edge on the market.
Remember your notes from Lecture 2? This is where they come in handy.
We use OUR market prices created using our algorithms to create a probability on each event that we’ve highlighted. If the bookies odds’ offer a great enough variance in our favour we highlight that edge and play the probability that works in our favour.
This works both ways as well (favourites and underdogs) and the number we get is important for long-term ROI and profit. By forgoing value and taking a team/player regardless of the price you’re ultimately playing against the odds every time.
If I flipped a coin and you had your heart set on taking heads, would you still do so at the price of $1.82 just for the sake of it? Even though you know you’re not a 54.9% chance at winning?
Far too often people will back what their head/heart tells them irrespective of the market price and implied probability. I see it in group chats, I see it on timelines and I see it in person.
“Money’s coming in on them now, time for me to get in on this”.
Ah, no. Your time has long gone and unless you’re finding perceived value by going against the steam you best be sitting out and waiting for your next opportunity.
Bookmakers use their algorithms to ensure they always have a house-edge – it’s why “even money” lines are priced at $1.91 and not $2.00 despite the fact each side is meant to represent a 50% chance.
So why play lines if they’re priced incorrectly? Well, you play them because your methods have told you the number should sit differently to where it currently may be. This means that a +6.5 that you feel should be +4.5 allows you to grab a price on a number that should be closer to $1.65-$1.70 depending on the sport.
If you’re surrendering your edge by playing a market that’s priced to it’s “accurate” probability then you’ve essentially gone from playing an edge to taking a gamble.
If you think there’s an 80% chance that Team B beats Team C, and you then find that the market has them set at $1.20 (83.3%) are you still including them in your multi/parlay?
If so, you’re giving the bookies an edge on that play by securing a price that isn’t reflective of your own valuation.
Now, I know a lot of people are saying, “why would I not take them anyway at such a minuscule difference?”
Simple. Over time, the maths will catch up with you and the edge that the house owns will only get greater with every advantage you give them.
On the flip side, you can find long-term profit taking underdogs at huge odds when you feel there’s an overreaction to the betting favourite.
If you have a team winning 35% of the time (and as far as I’m concerned you should ALWAYS value an MLB team winning at least that often) but see them open at $3.60 (27.8%) then you have every reason to grab them at that price knowing that over time you’ll see return on your edge. *
That being said, you also wouldn’t play a team you valued at 35% if you’re getting $2.60 (38.5%) knowing that the market isn’t offering you appropriate odds based on your probability.
Ultimately, the right price is the difference between using an edge to your advantage and gambling at odds that aren’t in your favour. Next time you go to jump on that market mover, make sure you consider whether the price is truly reflective of your valuation of the team.
*Note: This doesn’t mean going and betting any $3.60 underdog you see in the MLB. Please have some common sense and use a process to ensure you’re getting accurate value.
Also, shoutout to @TheSharpPlays for inspiring this lecture.