Betting against the odds, not the outcome

One of the first things I learned as a sports better was to bet based on the value of the odds rather than bet on a particular outcome.

Due to bookmaker margins, if you bet on every sporting event at random you would receive roughly $91-95 for every $100 placed. If you repeatedly bet your winnings and you get back 95% on your bets, your account balance will dwindle from $100 to $95 to $90 to $86, and so on, until you lose the last of your funds.

Fortunately for us sports betters, unlike casino gambling, the odds provided by bookmakers reflect their estimated, rather than known, outcome probabilities. Usually they get the odds right, but occasionally they get them wrong, and on a few occasions, very wrong. The lesson I have learned since I started sports betting is to only bet when I disagree with the odds on offer, and base the size of my bet on my level of confidence regarding the inaccuracy of the available odds.

Take for example the Monday Night NFL game between the Houston Texans and Tennessee Titans. The ESPN commentary panel was very divided on who they believed would win. An ESPN survey of American option also suggested a 50:50 split between who was predicted to win. Based on this and further research regarding the respective forms of the two teams, I determined that my expected odds were about 1.85 for the Texans, and 1.95 for the Titans, after factoring in a typical bookmaker margin. I looked at the Sportsbet odds and saw they offered 1.43 for the Texans and 2.70 for the Titans. While I expected the Texans to just edge out the Titans, due to the discrepancy between my perceived odds and those offered by the bookmaker I took up a bet on the Titans. In my own perception, I was taking up an outcome with a 49% probability of success and a 51% probability of failure, while the odds on offer meant there only had to be a 1/2.70 = 37% chance of success for it to be worthwhile betting on the Titans. My expected outcome for the bet was a 2.70*49% + 0*51% – 1 = 32.3% return on investment.

As it so happened, the game was very tight, with the teams locked at 17-17 in the fourth quarter, suggesting that the American public got the odds right. Luckily for me, the Titans defeated the Texans 20-17, so I won the bet, but given how close the game was, I would still have felt I made the correct bet had the Texans won. This is because if I can regularly pick events with positive expected returns on investment, I can defy the bookmaker’s advantage and make consistent, positive gains in the long run.

My tip is to look at an event, determine what you deem to be fair odds, and then look at what is offered by the various bookmakers. If you agree with the bookmaker’s odds, don’t bet! Due to their margins you will lose out in the long run. While it is difficult to resist temptation to renege on this system, on paper, it is a successful long run strategy, and it is one that has worked for me.

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4 Responses to "Betting against the odds, not the outcome"

    1. Sorry, the formula was supposed to be 2.70*49% + 0*51% – 1 = 32.3%. I have since fixed the mistake. You could also write it as (2.7-1)*49% + (0-1)*51%.


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