Old-school wiseguys bet a frustratingly high percentage of underdogs. Frustrating, because there seems to be so little variation.
It’s underdog or pass. It’s natural for the next generation to want to renounce the “limitations” and “dogma” of the past. It’s natural for the young and fresh to want to strike out in a new direction.
Sometimes new information or new realities make such a change warranted. Other times, the reasons for the prior generation’s intractability are rooted in fundamentals that simply do not change.
One time on the Mary Tyler Moore show, Lou Grant was betting the NFL heavy, and newscaster Ted Baxter wanted to get involved. Every week, Mr. Grant – the grizzled veteran – would slave over his handicapping, considering many sophisticated factors.
Ted, on the other hand, would simply pick the three biggest underdogs of the week. As the episode progressed, Lou kept losing, and Ted kept winning. When asked to explain his approach, Ted said: “Since the favorite is a professional team, and the underdog is a professional team, why not take the professional team that also gives me extra points?”
Most certainly the wisest thing Ted ever said.
You can’t win by blindly betting underdogs – but winning is so much easier that way. Winning 52.38% of the time is required to break-even when laying 11 to win 10. In the last 25 NFL seasons, underdogs have covered 51.1% of games (while favorites have covered 48.9%).
So, when betting underdogs, to reach the break-even percentage, your handicap has to uncover market mispricing that totals 1.3%. When betting favorites, your handicap has to find market mispricing that totals 3.5%. Which means winning with favorites is far more than doubly difficult (heck, it’s almost triple) – 169% more difficult to be exact.
Imagine a race to “break-even,” with underdog bettors starting 1.3 miles away from the finish line – and favorite bettors have to start 3.5 miles away. You better have a stunningly good reason to be betting favorites if you care about winning.
Why do favorites cover so much less? Remember, odds are simply the way the betting market “prices” each of the possible bets. The opening number is the bookmaker’s guess at the right price, and then the market tells the bookmaker when it disagrees by “buying” teams through bets.
When a team receives a lopsided amount of action, the price is made less attractive – and vice versa. For example, if you don’t want Tampa Bay at +1 vs. the Eagles, maybe you might want them at +3. No? How about at +4?
Since bettors are setting the price, then bettor’s bias will affect the price. Bookmaker Jimmy Vaccaro has often said: the average bettor bets teams, the professional bettor bets numbers.
If you are team focused, then it makes total sense you would want the better team on your side. The average bettor wants Denver, New England, Seattle, and San Francisco – which means those, and other popular teams, will be priced differently because of their popularity.
Think about that! When backing them, you are forced to not only “pay” for how good they are, but also give an additional amount for their popularity. That extra charge is what separates the winning percentage of underdogs and favorites.
If you were looking to buy a suit, would you buy a polka-dotted one for 30% less? I wouldn’t, because even at the cheaper price, the polka-dots would take away more than that percentage of value in my opinion. No value is being taken away by betting an underdog other than the “fun” of being on the side of the better team.
Personally, I’m on the side of the high-value underdogs. Me and Ted Baxter.
RJ Bell is the founder of Pregame.com – and co-host of FIRST PREVIEW, heard Monday through Friday at 10 am on ESPN 1100/98.9 FM. Follow on twitter: @RJinVegas. Discussion of this article continues at Pregame.com. Contact RJ at [email protected]