Sports Bettor Vs. Sportsbook - Pt. 2

In part one of this two part part post we looked into the advantages a sportsbook has over the sports bettor. We went into the biggest factors that can give the sportsbook it's edge. If you have not read Part 1 it would be good to go back and dive into what we went over here. To briefly recap we placed the advantages sportsbooks have into three categories as follows...

• 1) Sportsbooks have more capital than you.
• 2) Sportsbooks can charge you to make wagers.
• 3) Sportsbooks can pick and choose who they allow to place wagers.

This is not an extensive list and part 1 was definitely not an all-encompassing text. Well shit, after reading that post someone may think "What chance do I have?" Very fair concern and one I hope we can alleviate today. I hope to show that focusing on our strengths as an individual bettor we can turn this edge around to our side. If we have a consistent edge we can make money. Exciting right?! First we need to understand what these advantages actually are. Let's get started by narrowing them down to 4 distinct, but sometimes overlapping categories.

• 1) Self-Reliance and Direction
• 2) Bet Sizing
• 3) Bet Selection
• 4) Free Information
• …for those of you following along we have one extra category than the books which may or may not be on purpose.

1) Self-Reliance and Direction

Self-reliance and direction is probably the most broad category we have listed here. Let's jump into this one first. A sportsbook is a company. They are a business that employees people. These employees are working together to achieve the main goal of taking your money and putting it in their accounts. Anyone that tries to explain their function differently is flat out inaccurate (we're going to leave out small exceptions.. E.g. where a parent company may use a book for marketing or customer acquisition) This does not sound like an advantage to me, you say. There are potentially 100's of people against little ol' me trying to squeak out a profit. Hahah, ok I hear your argument. Let me counter what you're thinking though. Every single one of these employees is being paid by the sportsbook. That is not only money they have to make up but a lot of potential mistakes by people they have to head off. We'll focus on the former. If the sportsbook has 0 bets made on its platform their AGR (adjusted gross receipts) will also be $0. Meaning that this business will be paying its employees, but making no money. Not a great business model right? Knowing this we can deduce they are incentivized to keep the lines tight and have participants on their platform. How so? Having 0 people bet on your platform yields a 0% chance of the sportsbook becoming profitable. Now if they post tighter lines that attract more bettors, even at less than normal vig (juice), let's say just 1% rather than the normal 4.5%, their probability of profit is incalculably higher now. I understand this is an extremely exaggerated example, but I'm hoping you can see how this will trickle down and lead to a directly applicable edge we have. They need to make money. Leaving aside professional bettors, we do not. If we make $0 in bets we have no employees to pay, no marketing partners who are sending us invoices, no technological infrastructure costs... This is where a low cost tool gives you an edge and makes you a smart bettor. The minimal cost is nothing compared to a sportsbook like Draftkings, for example, who have a cash burn of $1.59 billion on an annualized run-rate basis for 2022. Simply put, that means they need to make money, a lot of it. Not to single out DK either, they are just an easy information source being a public company. This bleeds into the next factor. The sportsbook's are competing for your business.

This factor is huge. The existence of multiple sportsbooks creates natural competition amongst them leaving you as a bettor to reap the benefits. The lines stay tighter, the marketing dollars going to your pocket stay higher (think profit boosts, free bets…), the opportunities and options to bet stay broader. They want you to use their platform, not the competition's. Let's imagine an example. You are looking to bet the Golden State Warriors -4 against the Memphis Grizzlies at anything better than a -115 line. FanDuel has this bet at -110, and Bet MGM has the bet at -105. Which book are you going to bet it on? My hope is your immediate answer is Bet MGM. You're not the only one. A lot of people are going to use Bet MGM instead of FanDuel. Remember from before though, Fanduel has to generate revenue. The FanDuel traders seeing this may have to tighten the markets and bring this line into -110 or even lower…maybe -108?? to compete. They want need your business.

Let's look at one more example of this category. With the legalization of online sports betting we have been gifted the ultimate opportunity. Bet from anywhere (within your legalized state) at anytime. Is 4:30 p.m. a good time for you to make bets? Stick to that time then. Are you like me and get an early start to your day? Schedule that early morning time to put in your research and make your bets. There is not any sportsbook that can force you to bet at a certain time. Though they will entice you to bet at specific times through marketing and tighter lines. Why's that? Well maybe we can go into that topic in another blog post. For now I've left myself a great segue to the next category of advantages the sports bettor has over the book so let's get into it.

2) Bet Sizing

Brigning to our next topic, not only do you choose when to make your bet, you can choose how much to bet. Every sportsbook has limits. Some books will advertise that they have no limits, but no limit books do not exist. Mathematically they can not unless they are taking bets with the understanding they may go insolvent and not be able to pay out. As an aside there are definitely books with higher limits though and this is information for the sports bettor to take note of. Why would choosing the bet size be an advantage? One way is using capital management techniques to increase your profitability trajectory. A specific example of this is using the Kelly System. With a system like this we can maximize our profit potential by relating our bet size to the calculated edge we possess. There are a number of papers and articles on this topic. I have included a couple suggestions here if you want to get a deeper understanding of the Kelly System or money management systems in general.

Let's look into another simple, but maybe overlooked example of bet sizing. In its most basic form, if you do not want to bet the full limit size on a bet…don't. Wager whatever size you want, $1,000…$500…$100…$50…maybe $5?! Whatever fits your risk appetite with respect to your bank roll. No judgement here. On the opposite side if the book does reject your limit bet, they risk the chance of losing a customer. And if you are betting limits, to them this means someone with potentially more money for them to take. Remember when wagering, the book does not choose how much you risk, you choose how much the book is risking. This is a big advantage that is often overlooked.

3) Bet Selection

Here's the biggie. The one, for sure, undeniable advantage we as a bettor have. We can choose which bets to make or even more importantly which bets not to make. Let's go back again to the books competing to get your business. They will want to put up as many lines as possible to keep you on their platform. This is advantageous to you as it provides the potential for more opportunity, but doesn't mean you have to bet them all. Focus in certain areas such as a specific bet types, sports, prop categories… can keep the research and analysis manageable for a one man operation. Being able to only take the bets that lineup with your focus can provide that edge over the books who are busy making, copying, babysitting and modifying thousands of bet offerings across hundreds of different sports leagues. Let's jump into a breakdown of a couple different scenarios.

Imagine we are a sports bettor who is very focused on College Basketball Totals…a hypothetical situation right?! It's 8 weeks into the season, our models are dialed in, our risk management strategies are in place and we have been achieving profitability. Duke is about to take on North Carolina, but our model is spitting out a number we are not really trusting. It says to expect a Total of 135, but we know the game is at Duke and the Cameron Crazies are going to be pumping up the volume and energy in that place. Duke is the better team this year and they run an offense that averages 70 possessions per game. With the extra energy we expect that it will be a bit more for this rivalry. Likely hitting 72-74 possessions, the better team generally controlling the pace of play. This could add up to 8-12 points bringing the total to 145. This is a huge difference from what the model is showing. Well, what do we do in this situation? It's simple. Do not bet the game. Now on the other side. The sportsbook. Let's say they are having a similar problem with their model. The traders or handicappers are not agreeing with the models. Does this mean they will simply not post a line for one of the biggest college basketball games of the year? Survey says…they're going to post a number. Knowing the model may be off, the number might get hit hard, they could be on the ropes for a big loss here why would they do this? Simple they have the disadvantage of having to post lines like this to stay competitive against other sportsbooks while us as individual bettors can just brush right by this one and wait for the next opportunity. Maybe that opportunity comes from this exact scenario with a book posting a bad number, but in the next bet our model is agreeable to us! Huge Right?

It doesn't end there though. Let's look at another hypothetical about selecting our bet at a more advantageous time. We will shift our imagination a bit. For this scenario let's assume we are a MLB first 5 innings specialist. Max Fried is taking the mound for the Braves today facing off against the lefty Blake Snell for the Padres. Now for this scenario we are not the type of bettor who has advanced simulation models or machine learning factors to set a line. We're doing it the old fashion look and see method. We look into the stats it shows that Fried is 3rd in the MLB in ERA. We've seen the past few games that he comes out hot and ready to go from first pitch. At times lately Snitker will extend his duty because the Braves bullpen has been beat up with injuries. We've seen he starts to struggle a bit in these extended outings and it factors into his stats being diluted a bit. It's decided that we are going to take the Braves in 5 on the Moneyline. The best books are showing the Braves line at -120, with one outlier sitting at -115. The other side we see best bet for the Padres showing +110. Remember, we are a look and see bettor who's not getting their edge from analytics so we are expecting that the market is "probably" underpricing the Braves first 5 but we don't have a very accurate way to calculate what that line should actually be. Using sportsbettingintel.com free juice calculator we see using these best 2 lines, this still implies a hold of 1.11%.

Not bad but its early in the morning and the game doesn't start till later. We're going to sit back and take our chances. After watching the 1st five odds closely on SBI across all the major sportsbooks throughout the day we finally see a market come in at Padres 1st Five +115 on not only 1 but 2 different books. This is excellent news because now we know that we have found a synthetic hold of 0%. This theoretically allows us to make a bet juice free at current market rates with a lean on our side likely being the off odds. If this sounds like gibberish to you have no fear. We will be posting a blog article on synthetic holds in the near future. The key here is that we have a good indicator that we are making a bet at fair odds. Along with our above average ability to bet First Five innings we now have edge. This all came about because we were able to wait to place that bet until we had enough information to calculate a fair odds bet and be comfortable that we have an edge. Our counterparties, the sportsbooks, did not have this luxury. They had to post the line early morning, if not religiously overnight these days, and had no control over what line we took or when we took it. Starting to see how the bettor does in fact have advantages over the book now? We're not even done yet with my personal favorite category yet to come.

4) Sportsbook Disadvantages

Over the course of this article we have already touched on a few of the disadvantages the sportsbook has. It's not as simple as them posting a line and collecting the juice to be profitable. A lot more goes into than that. We mentioned earlier the cost of their employees being a big factor to them having to ensure bets placed on their platform to be profitable. This is not the only cost though. In order to be successful they have to know, quite accurately I'd like to add, the probabilities of all these events occurring. Here in the US most of the sportsbooks are receiving their lines from another data provider who's doing the heavy lifting, but either way it still works the same. They either need to pay talented data scientists, computer engineers, machine learning coders… or they need to pay a service who pays those people in order to come up with the betting lines we see across all the platforms. Now I know more seasoned sports bettors will say a lot of that is just copy cat lining. That is likely a true statement, but even with this the book will need computer engineers and highly trained people familiar with mathematics to ensure the copy cat lines are accurately "digested" and checks and balances are put in place. All of this equates to a lot of money being spent. How does this help us as a sports bettor? Obviously most of us do not have the bank roll and a big enough edge to employ 5 data scientists, a couple engineers, a well trained mathematician and 2 guys working in the machine learning department. Putting everyone at $150k a year would entail spending $1.5 million. That's a tough number to cover for most all bettors. Even the sharpest ones with big pockets would have difficulty justifying that. Enter sports bettors advantage.

We do not need all those people on our payroll to create these lines for us. That's right, these costs are all for the purposes of setting a line (many lines in actuality). How do we as a bettor get all this information then? Simply look at the line the book has already spent all that money to calculate. They have it sitting right there on their platform ready for you! You don't have to pay a single cent. I understand looking across 8 books on all these different sports/events and updating the calculations constantly may be very time consuming. Well enter tools like sportsbettingintel.com. Currently for $25 you can have this all done for you, calculations and everything. Beats $1.5 million or 25 hours a day of line grinding if you ask me, but I may be partial. Ok sales pitch is over. A bit funny when you think about it that they spend all that money, whichever route they choose, to get the line and then they give that information to you for free. Take advantage of it. "Information is the most valuable commodity in the world". How does one use that information? If you haven't put it together yet we used this free information combined with our bet selection advantage in the Braves example earlier.

Our entire goal here at SportsBettingIntel.com is to even the playing field the best we can. It is entirely true that the sportsbooks have a number of advantages when it comes to taking money from their customers. Here we have gone over and proven how the bettor also has his/her own set of advantages to be cognizant of and put to work. Now that we understand the idea of free information we can easily see how combining our strengths can create an edge such as the Braves example already mentioned earlier. Don't be the person sportsbooks are taking money from, we want to turn the tables and in turn be profitable bettors ourselves. If anyone tells you sports betting is a one way road to losing your money, well maybe they are right in aggregate. What I can tell you with absolute certainty is that not all sports bettors lose over time. The journey of a successful sports bettor generally goes something like this…

• 1) How do I not lose
• 2) How do I win
• 3) How do I win more consistently
• 4) How do I avoid being kicked off a sports book for being too profitable

At stage 4 the sports bettor no longer worries if they will be profitable. That answer they already know. Their focus shifts on how to maintain their profitability without being marked as a sharp at which point the sports books will no longer take their bets. (or perhaps find alternative ways to make their wagers) Those just starting off on their journey will likely not believe this is possible to achieve, but those sharps reading this will likely snicker and simply say to themselves, "Yep".

Wager Wisely