Sports book odds not a 100-percent game
john grochowski firstname.lastname@example.org April 4, 2012 5:00PM
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Updated: May 7, 2012 8:09AM
If you’ve been in a casino with a sports book, you know the temptation. “As long as I’m here, why not put down a few bucks on the Cubs/White Sox/Bears/Bulls/Blackhawks to win it all?”
I know I’ve succumbed. Cleaning out a desk drawer last week, I found an old slip from Las Vegas showing a $10 wager on the Cubs to win the National League pennant in 1991. Oh, well.
Betting on a season’s outcome rather than on an individual game is called a “futures” bet. Like any other bet in the casino, a futures bet makes money for the house by paying less than true odds.
Let’s look at a current example. As major-league baseball season gets under way, one sports book lists the following odds to win the National League Central Division: Cincinnati Reds 8-5; St. Louis Cardinals 2-1; Milwaukee Brewers 9-4; Cubs, 15-1; Pittsburgh Pirates 25-1; Houston Astros 100-1.
To evaluate the house edge, we convert those odds to percentages. Saying the Reds are an 8-5 favorite to win the division is the same as saying the house is paying winners as if the Reds have five chances in 13. Divide 5 by 13, then multiply by 100 to convert to percent, and that means payoffs are based on a 38.46 percent chance of the Reds being the NL Central champs.
For the rest of the division, the conversion works out to 33.33 percent on the Cardinals, 30.77 percent on the Brewers, 6.25 percent on the Cubs, 3.85 percent on the Pirates and 0.99 percent on the Astros.
If all those figures added up to 100 percent, a sports book offering those odds would be giving bettors an even break. But you’ll notice they add up to much more than 100 percent, at 113.65 percent. That means the house is paying bettors less than the real probability of anyone from that field winning the division.
The house edge is 1 — (100/113.65), which, when multiplied by 100 to convert to percent, gives us a house edge of 10.11 percent. That’s pretty hefty, and I’ve often seen futures books with more than double the house edge.
If the house was paying more money at bigger odds to winners, and figures added up to less than 100 percent, that would mean players had an edge. That’s not going to happen. The house is going to make sure the total is more than 100 percent, because paying less than true odds is how casinos make a living.
John Grochowski is a local freelance writer. Look for him on Facebook (http://tinyurl.com/7lzdt44); Twitter (@GrochowskiJ) and at casinoanswerman.com.