VKG – A lesson in futures bookmaking
June 13, 2018 11:44 AM
by The Analyst
One of the favored bets by those of us who treat sports betting as if it were stock trading, is the futures bet. While as a standalone bet a sports futures wager is generally a sucker bet with the books generally targeting a comparably high hold (win) percentage on that pool of wagers, for the investment minded folk they are a beautiful bet-hedging tool.
From the sportsbook’s perspective the ideal sports futures wagers would look more like a pari-mutuel horse betting pool, where the tracks take the total betting pool, subtract out their profit percentage from the total betting pool, then pay out the winning bets based on the ratio of bets made on the winner to the remaining money left in the pool.
However, unless you are betting pari-mutuel sports, when you make your sports bet you are getting the odds offered at the time of the bet, which requires the sportsbook to constantly examine their pool exposure and make decisions about moving odds to attract wagers to other parts of the pool to try and balance their risk.
As most everyone should know by now, the Golden Knights were at one point 500 to 1 to win the Stanley Cup and as the playoffs progressed became at one point the favorite – creating a position that no book wants to be in – which is to see plus money on both sides of an event.
|Belmont handle up||VGK left with many options|
|Delaware in a rush||Fired up for U.S. Open|
Normally in gambling games the casino would never offer odds payouts higher than the number of events. The simple fact of the matter is casino win comes from paying odds less than the true number of events. For example, the true odds of winning a hard 8 bet on the craps table are 10 to 1 but the casino will generally pay out either 8 to 1 or 9 to 1, thus the house advantage on the bet.
Sports betting is different. A good bookmaker is looking to balance their risk such that regardless of outcome the book makes money. This means moving the lines or odds around to get money on both sides of the event.
So in futures bets, high odds are used to draw money to the opposite positions from the favorites and as people bet into those high odds the odds should drop or the odds on an opposing position should go up but usually the higher odds go down. Occasionally though the bookmaker will have such confidence in an event happening or not happening that they forget to remember the objective of the sportsbook is to balance risk and therefore take higher exposures than they should.
The object of the bettor should be to get the best odds possible. So when you can get odds greater than the number of teams that can get into the subject event there is an attractive betting proposition there, as it was with the Golden Knights at 500 to 1.
Space here does not allow me to get into all the hedging strategies that can be used on a high odds team throughout a season but getting 500 to 1 against a pool of 31 teams was just a little too tasty to pass up. Unfortunately the odds changed before I got a bet down and I had to settle for 100 to 1.
It was also equally tasty to hedge that bet with a wager on the Capitals before the final round started such that profit would be made regardless of who won the championship. While I will cheer as a fan, I bet like a stock investor and am happiest when I can win money no matter what happens.
So aside from teaching, in one short season, all the desert dwellers of Las Vegas what “icing the puck,” “checking,” “cross checking,” “high sticking,” “hooking,” “power play” and “empty net” all mean, the Golden Knights also reminded Las Vegas sportsbooks about the dangers/risks of offering long odds and taking higher exposure than perhaps they should.
By the way, the Golden Knights have opened up in some books at 8 to 1 to win the Stanley Cup in 2019, which shows the respect they earned over their great inaugural season.
Kirk Kerkorian, had he lived, would have been 101 last Wednesday and this Friday marks the third anniversary of his passing on June 15, 2015.
A man quite dynamic and fearless of risk, Kirk introduced the MGM Grand concept two distinct times in Las Vegas with the second iteration turning into the MGM Grand Resorts we know today. With roughly 80,000 employees and growing, imagine the direct and indirect jobs created by his vision and foresight.
While his estate is not yet settled, which seems to always be the case where large money is concerned, his desire was to see the vast majority of his estate donated to charity. If my estimates are correct, in life and death, Mr. Kerkorian will have given something north of $4 billion and probably closer to $6 billion to charity and thereby between jobs and humanitarian works touched countless lives around the world – now that was a life well lived and a world well served.