“Acting is a tough business, and the percentage of people who make it is very low – it’s about 1 percent.” – Lee Majors.
Speaking to a bookmaker friend of mine, his estimate of the proportion of sports betting customers that are profitable long term is of a similar level to those that have found success in acting.
It shouldn’t be so low.
Nothing is surer : turning a profit from sports investment takes work and involves a unique mixture of skills and temperament. Yeah, it’s not easy… but… there is certainly a lot of game-changing improvements you can make in your approach – just through the acquisition of some betting-market theory and fundamentals.
One of those is taking into account a market’s percentage – which quickly serves as an indicator of the quality and/or competitiveness of a betting market.
Betting into a market with a margin built into it that disadvantages you (ie a bookmaker’s market with their margin built in), means that you cannot afford to take anything but the most competitive prices on offer. Sports investment is a difficult enough game already, without giving away our potential profit to a bookmaker who is reluctant to post a competitive market.
If you convert betting prices to a “percentage chance” figure, you can calculate any market’s “overround” – or the bookmaker’s margin. This is best illustrated using examples of two identical real-time markets, at different betting agencies.
The first is the 2012 AFL Premiership Market as taken from a typical Australian Corporate Bookmaker. [Note : Bookmakers prices are converted to a percentage chance by taking 1 and dividing by the bookmakers number.]
Notice the figure in pink. This is the total of the percentage chances of each outcome occurring. The higher above 100% this figure is, the larger the bookmaker’s margin is. In this case the bookmaker has built in a 21.9% margin- so for every $121.9 taken from punters, the corporate will return $100 in payouts (assuming equal wagering on each available option). Using some more simple math, this translates to a profit margin of 17.96%.
Compare this to the same market accessed at the same time, but instead coming from a Betting Exchange.
Obviously, betting into 103% (even when considering betfair’s commission of between 2-5% charged on winning bets), is a far better option. Betting Exchanges almost always offer extremely “punter friendly” markets for sports investors with a margin that is far far lower than is provided by corporate bookmakers here in Australia.
Sometimes however, placing bets with a bookmaker is necessary when betting exchanges do not have the liquidity* to take your wager – such as when betting larger amounts on US sports on exchanges such as Betfair. At times like these, the bookmaker’s margin is accepted a cost of doing business in getting your wager accepted before prices disappear.
*[note : betting exchanges function by matching individuals on either side of a bet. In some instances there is no-one willing to take the other side of your wager. In this situation, there is said to be no liquidity.]
Again, it is wise to minimise the bookmaker’s overround, and shop around for the best price.
Compare the following:
In this typical line offered from an Australian corporate bookmaker for an MLB total, 1.90 is the price offered. 2 x 52.63% = 105.26% for this contest with two possible outcomes – “over” or “under”.
In this situation above – to win $1000 sports betting requires a wager of $1111 (rounded cents)
$1111 x 1.9 = $2111 then… $2111 – $1111 = $1000
Alternatively at a competitive offshore book such as pinnacle the same market:
In this same game for the same betting options we have a far better price available to us. 2 x 51.22% = 102.44%. Winning the same $1000 at this book only requires a wager of $1050 (again, rounded cents).
$1050 x 1.952 = $2050 then… $2050 – $1050 = $1000.
Obviously if available at a betting exchange with sufficient liquidity to bet, you will do better still 😉
Without delving in any deeper, the benefits of betting into less overround – therefore better lines – is clear: you are risking less to win the same amount. This situation also has further significance: you do not have to win as often to turn a profit over the course of a year betting into these reduced margin/better value lines.
It adds up.
Good luck hunting lines.