Since the Super Bowl, I have been busy working on my next book - Weighing the Odds in Sports Betting. I am hoping the book will be out in the stores by August 1st, in time for the football season. Here is a sample chapter which will be relevant in the next few weeks. It is on March Madness office pools. The chapter was first written as an article for the Two Plus Two Internet Magazine and was published online in the March 2006 edition.

If you have any comments or suggestions about this chapter, please email me at kingyao@comcast.net The book has not gone to press yet, so I can always make changes to make it better. In the next week or so, I may post another sample chapter, but I'm not sure about that yet.

sample chapter from Weighing the Odds in Sports Betting
Chapter 15: March Madness Office Pools

March Madness bracket pools are popular annual events. Many people who do not normally bet on sports will get involved in these pools. It takes a lot of luck to win a pool, especially when there are more people in the pool. Although luck is involved, there are methods to gain advantages over other participants. These methods do not require the ability to handicap games.

The two primary goals to focus on when making March Madness bracket picks are:

· Gaining positive expectation by picking teams that are more likely to win
· Separating yourself from the pack by picking teams that have a chance of winning but are picked by fewer participants

Gaining positive expectation by picking teams that are more likely to win is fairly well understood. No. 1 and No. 2 seeds are more likely to reach the Final Four than No. 15 and No. 16 seeds. The fact that the teams are seeded from 1 to 16 makes it easy for anyone to see who the favorite should be. The lower seed is usually the better team and thus the favorite to win the game. (For the rest of this chapter, the lower seed will be synonymous with the better seed; and the higher seed will be synonymous with the worse seed. So a No. 5 seed is a lower seed and a better seed than a No. 12 seed.) A pool participant who has no knowledge of any of the teams can get a lot of information by just looking at the relative seeds of the teams.

Separating yourself from the pack is useful if the team you picked wins a game and you get points for that team while few other participants do. When that happens, you get a leg up on many other participants, and in pools, it is useful to be on the extreme sides. You do not care about having a good record so much as you care about having a great record. Most pools pay off only the winner or the top few places. In a pool with 100 participants, placing 10th, 50th or 100th all pay off the same amount: nothing. You will not win a piece of the prize pool in any of those three positions.

The problem with separating yourself from the pack and making picks that probably deviate yourself from the rest of the participants is that it often means giving up too much expectation in any given game. Fortunately, there are some situations where you can get the best of both worlds. There are games where you can pick teams that are the favorite yet most participants think is the underdog. So the majority of participants may be more likely to pick the real underdog while you are separating yourself by picking the favorite.

March Madness involves many people that do not normally bet on sports. Many of the participants may not be fully aware of the betting line on the games. When looking at two teams, they will usually assume the team with the lower seed is the favorite in the game; and thus be more inclined to pick that team. More often than not, they are correct, but not always. In some games, the higher seeded team is the favorite in the betting line. These are the games where it is possible to gain a small advantage by looking at the current betting lines. This is market information that is readily available but not taken into account by most participants. Betting lines can be found in many daily newspapers and on the internet, such as USA Today and Covers.com.

The First Round
When one looks at the betting lines in the game, some games will jump out. A No. 10 seed might be a favorite over a No. 7 seed. In that situation, the No. 10 seed has a higher chance of winning the game. Picking the No. 10 seed helps achieve both goals:

gaining positive expectation by picking a more likely winner
likely separating yourself from the pack

The seed match-ups where this is most likely to occur are:

No. 8 vs. No. 9
No. 7 vs. No. 10
No. 6 vs. No. 11

Higher seeds that are small underdogs (2 points or less) in the betting line can also be useful in separating yourself from the pack without losing too much expectation. This is more useful when the difference in the seeds is greater. Taking small underdogs is more useful in the No. 11 seed vs. the No 6 seed than the No. 9 seed vs. the No. 8 seed. More participants are probably going to pick a No. 9 seed than pick a No. 11 seed because a No. 11 seed will seem like a bigger underdog to them due to the seeds alone.

Example: No. 11 seed is a 2 point underdog in the First Round

East Region:
No. 6 seed -10 points vs. No. 11 seed

West Region:
No. 6 seed -2 points vs. No. 11 seed

In the East Region, taking the No. 11 seed hurts the goal of positive expectation a lot since the No. 11 seed is a big 10 point underdog. A 10 point underdog has a very small chance of winning the game. In the West Region, taking the No. 11 seed hurts the goal of positive expectation just a little bit, as they are only 2 point dogs. Other participants in the pool are likely to consider both No. 6 seeds are equally likely to win their respective games. Picking a small underdog (with the help of the betting line) is a good way to separate you from the pack without losing much expectation. In picking the No. 11 seed in the West Region, you lose a little in expectation, but can gain a lot in separation.

The Second Round
Unlike the First Round, you will not know the betting lines for the Second Round games. But you can still make an educated guess on the future betting line in the Second Round. A good tool to use is power ratings. These can be found in some newspapers or on the internet. Not all power ratings are good, so it is important to determine if a power rating reflects the betting line with some accuracy. One way to make this determination is to compare the power rating’s projected line for the First Round and see if it is close to the actual betting lines. If it is close for the First Round games, then it is more likely to be close for the betting lines in the Second Round. Sometimes these power ratings will show that a higher seeded team will actually be a favorite over a lower seed team, or only small underdogs. Logically, this will occur most often in the match-ups of the No. 4 seed vs. the No. 5 seed and the No. 3 seed vs. the No. 6 seed. Using good power ratings, you can make similar judgment calls of weighing expectancy versus separation as you did in the First Round.

The Third Round and Beyond
The futures market is useful in looking at the Third Round and beyond. Look for teams that may be higher seeded but are given a good shot at winning their region and get to the Final Four. Usually the favorites in each region will fall right in line with their respective seeds. The No. 1 seed will be the biggest favorite, followed by the No. 2 seed and then the No. 3 and No. 4 seeds. But sometimes a higher seeded team will be given the same or better chance of winning the region than a lower seeded team. It may be due to a mistake in the seed placements by the tournament committee, the locations where they are playing (a No. 3 team could be playing close to home whereas the No. 2 seed could be traveling far from home, so the No. 3 team enjoys an unexpected home court advantage) or any other reason.

There are some offshore sports books that do offer two-sided lines and allow their customers to bet on and against certain teams to win their region. But most sports books only offer a one-sided line. They allow customers to bet on a team to win their region or the whole tournament, but do not allow customers to bet that a certain team will not win their region or the whole tournament. The combined vigorish that is built into the one-sided futures lines can cause a disparity in the odds that is not truly reflective of the market. For example, two teams that are both offered at +200 to win the region does not necessarily mean they have an equal chance of winning the region. It could be that one team opened at +300 and the sports book dropped the line to +200 on that team after just one relatively small wager.

Examples from 2006 March Madness
Most of this chapter was previously published in an online article for the Two Plus Two Internet Magazine, a couple of weeks before the March Madness tournament. When the teams and match-ups for the tournament was set, I wrote a few thoughts about specific match-ups as a follow-up to that article in my blog. Here is the post I wrote in my blog, which is edited for spelling and grammar, but the content remains the same. The sections in [] are results that we now know after the tournament.

In the first round, I suggested to look at teams that were higher seeds that were actually favorites or very small underdogs in the betting lines. The idea is that most competitors in pools are not going to understand the value of the betting lines and are going to be looking at the seeds and name recognition for their picks. The early lines show nine games with lines of 2.5 or lower. Although all the lower (better) seeded teams are the favorites, some of them are surprisingly small favorites.

Here are games where taking the underdog probably gives you more value in separating from the pack while giving up little expectancy.

Texas A&M vs. Syracuse: 12 vs. 5
Syracuse is a 5 seed, and Texas A&M is a 12 seed, but Syracuse is only a 1.5 point favorite! That is tiny for such a big difference in seedings. Syracuse also has the better college basketball name, having won NCAA Tournament championships in the past. They also just made a miraculous run and won the Big East Tournament which was featured widely on ESPN and other sports channels. Picking Texas A&M probably gets a lot of bang for the buck as they will give you value in separating from the pack, while giving up little in the individual game expectancy.
[12 seed Texas A&M beats 5 seed Syracuse 66-58]

Wisconsin-Milwaukee vs. Oklahoma: 11 vs. 6
Wisconsin-Milwaukee is a 11 seed and is only a 2 point dog to Oklahoma, the 6 seed. Oklahoma is a well known in college sports. They are regularly among the best teams in college basketball and college football. It is likely that the random picker will go ahead with Oklahoma due to the 6 seed vs. 11 seed, as well as the name recognition of Oklahoma.
[11 seed Wisconsin-Milwaukee beats 6 seed Oklahoma 82-74]

San Diego State vs. Indiana: 11 vs. 6
Indiana is a big name college basketball team while the layman probably has no idea that San Diego State even exists as a university. Yet San Diego State is only a 2.5 point dog. Although picking San Diego State is giving up a little bit more in line value, it is probably gaining more than its worth in separation value.
[6 seed Indiana beats 11 seed San Diego State 87-83]

Wisconsin vs. Arizona: 9 vs. 8
UAB vs. Kentucky: 9 vs. 8
Arizona is a 1.5 point favorite while Kentucky is a 2 point favorite. The 8 vs. 9 matchup is not always the best matchup to take the underdog since the small difference in the seedings allows the layman more reason to pick the underdog. In these two cases, both 8 seeds are big-time college teams that are recognizable by just about everyone as college basketball powerhouses. So in these two cases, picking the underdog is likely to get more separation value than other typical 8 vs. 9 match-ups.
[8 seed Arizona beats 9 seed Wisconsin 94-75]
[8 seed Kentucky beats 9 seed UAB 69-64]

Here are 3 games where the line is low, but I have more reservations about picking the underdog.

Wichita -2.5 vs. Seton Hall: 7 vs. 10
Marquette -2 Alabama: 7 vs. 10
California -1.5 NC State 7 vs. 10

In these three match-ups between the 7 and 10 seeds, all underdogs are better known college basketball teams. This means there may be a higher chance that the layman picks the underdog in these match-ups than other match-ups. If that is the case, then picking the underdog has less value in separating from the pack (because too many others are picking the same underdogs as you), while it still suffers from the same amount of individual game expectancy as the previous match-ups I listed.
[7 seed Wichita State beats 10 seed Seton Hall 86-66]
[10 seed Alabama beats 7 seed Marquette 90-85]
[10 seed NC State beats 7 seed California 58-52]

Here are some notes on two regionals.

Oakland Region
The 3, 4 and 5 seeds all seem to be valued the same. Gonzaga, Kansas and Pittsburgh are all getting the same respect in the initial futures lines that I have seen. So taking Pittsburgh (the 5 seed) to proceed further in the tournament than Gonzaga (the 3 seed) probably has the same expectancy as the reverse, but it has the value of separating from the pack.
[2 seed UCLA wins the Oakland Region]
[5 seed Pittsburgh was knocked out in the second round]
[3 seed Gonzaga was knocked out in the third round]

D.C. Region
From the initial lines, it looks like Tennessee and Illinois are valued about the same. Tennessee is a 2 seed and Illinois is a 4 seed. The tough issue with Illinois is that they are likely to meet the 1 seed – Connecticut. I would use this information by making sure not to pick Tennessee to go too far in the tourney.
[1 seed Connecticut won the D.C. Region]
[2 seed Tennessee lost in the second round, after only winning their first round game by 2 points against a 15 seed]
[4 seed Illinois also lost in the second round]


Conclusion
Winning a March Madness bracket pool takes a lot of luck. The more participants in the pool, the more luck it will take. Looking at the betting lines and futures lines can help in gaining small advantages. It is difficult to balance the two goals of gaining expectancy by picking the team more likely to win each game and trying to separate yourself from the pack. Keep in mind that with more participants in the pool, the more value there is in separating yourself from the pack and having an extreme performance. There is as much reward for finishing 10th as finishing 200th. The goal of positive EV for individual games is more important in smaller pools than in bigger pools. If you are in an office pool with people that are not avid sports bettors, then these strategies have value. If you are in a pool with people that do bet sports regularly, then these strategies have less value since this group is more likely to know what the pointspreads are for each game.