Sunday, December 25, 2005

Sports: Betting favorites in futures

Futures: Playing the favorites in most type of bets is negative EV, but not always in Futures.

It is fairly well known that favorites in the NFL do not perform well in individual games, on average. This is probably because they are the better teams, so it is easier for people to bet on them. Historically, favorites have done worse than underdogs in the pointspread and the moneyline. This year has been an odd year where the favorites are covering much more often than in the past, so keep that in mind. It's possible the linemakers have adjusted enough (or maybe too much) so betting against the favorite is no longer the good side.

With that said, there has usually been one solid way to bet the favorites - and that was to bet them to win the Conference or the Super Bowl. It's important to shop when looking at futures, but after seeing the best lines at a few books, it is often the favorites that are the better bet than the big dogs. For example, a team that is -120 to win their conference likely has better value (or less negative value) than a team that is offered +600 (6 to 1). Here's why I think it is:

When teams get in the playoffs, the public mistakenly think every team has a chance. Although every team has a chance, the probabilities can vary wildly. For example, a Wild Card team would have to win 3 away games, likely against the 3 best teams of their conference. If they are 30% to win in every game (a probability that is probably too high), that makes their chances only 2.7% or 36-1. You will be hard pressed to find odds that high for any team when the playoffs start. It's even worse than that, when they play against the #1 seed, they are likely to be even bigger dogs. So it could be as bad as this: 25% in the first game, 20% in the second game, 30% in the last game....which is only 1.5%.

The books know they are getting big value when laying odds of 15-1 to the public, but still, it's a tough number to shake in case those underdogs do win. Nobody likes to lose on 15-1 or 20-1 odds, even the bookies. So one thing they do, if they are trying to balance their book, is to lower the odds for the top seeds (in terms of percentages).

The favorites won't always have value, but it's a place to look. It will depend on the teams, the books, and how well you are in anticipating lines. But it is one of the rare cases where the sharp bettor can focus on searching for lines on the favorite rather than shopping for lines on the dogs.

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