Sunday, June 6, 2010

When it comes to target betting, most questions worth asking begin with the words "What if...?" So, What if we backed both Faves and Dogs every day?

One of the hazards of swimming upstream is that every so often, someone comes at me with the accusation that since the results I am getting defy mathematical expectation, I must be fudging my numbers.

That's been happening off and on for almost 30 years now, with the attacks intensifying since I first published the principles of target betting on the Internet in 1997.

There's not a whole lot I can do about it, beyond hoping that from time to time, players with open minds will stumble on this blog and take away from it the realization that losing is not the inevitable long-term consequence of challenging the house advantage.

The results from the 7-dog trial from November 1 through May 31 beg a number of intelligent questions, most of them opening with "What if...?" - words best answered by processing actual outcomes and variable rules through a spreadsheet program.

Some examples:

What if...the 7-dog trial rules could have been applied to all 7,500-plus actual games in the pro-sports database?
What if...the data were sorted in chronological order, and every underdog paying odds of 1 to 1 (even money or +100) or more had been backed?
What if...the same actual games were organized so that as many daily bets as necessary could be tracked in separate series (numbering far more than seven, for sure!)?
What if...the same target betting rules were used to back favorites instead of underdogs in all those real-world sporting battles?
What betting backed favorites AND underdogs every day?

Good questions all.

You will find some answers below.

But first, let's look at the last idea above.

Try picturing a betting situation where you can back both sides by following a strict set of rules that determines bet values by referring to the wager that preceded it...and achieve a long-term profit in both the Favorites and Underdogs categories.

If "hedging to win" sounds far-fetched to you, remember that bookies do that a thousand times a day, in theory offering inducements to encourage punters to collectively match the sums ventured on both the road team and the home team in any given game.

The bookies make a buck or two by setting odds that favor them either way.

Target betting delivers long-term profits by happily accepting whatever odds are offered (there's no choice, after all, except when a bad bet can be thrown away for a better one) and then calibrating wager amounts according to a set of rules every bit as strict as those that protect the book.

Sports betting offers just about the only opportunity for a solo punter to play both ends against the middle.

It's possible in a casino at baccarat or craps, but it would take two players seemingly betting independently to avoid setting off alarms in the pit.

And sports betting has another huge advantage: large bets that might otherwise attract attention can easily be spread across as many books as it takes.

I live in an area where there are probably 20 sports books within an hour's drive, but the expansion of online options offers everyone an array of choices that don't guzzle gas!

Personally, I love the idea of draining a tiny percentage of their profits from online outlets because I know at least one - Bodog - that I believe blatantly cheats with its "virtual" table games (see the note at the end of this post).

But this is not about animus, it's about math!

Speaking of which, it's worth reminding ourselves that bookies do a happy dance when underdogs win, because in most situations, more than 70% of punters will put their money on the favorite.

On June 6 (yesterday!), for example, the San Diego Padres won at +110 against the Philadelphia Phillies at -130; those odds suggest perhaps a 70-30 bias towards the favorite, meaning that in every $100,000 of action, $30,000 backed the Padres and $70,000 went on the Phillies; so, $33,000 was paid out on the dog and $70,000 was collected on the losing favorite - a nice little $37,000 (37%) profit for the book.

Had the game gone the other way, $63,700 would have been paid out on the Phillies, offset by $30,000 contributed by losing dog bettors: a net LOSS of $33,700.

An over-simplification, perhaps, but it helps explain why sports books not only expect dogs to win around 45% of all games, but count on it to fatten their bottom line and salve the sting from winning favorites.

The intricacies of odds-setting are usually explained by supposing that action is equally divided between two options. But that is, to use a non-technical term, a load of old cobblers.

If that were so, the bookies in our Padres/Phillies example would have paid out $55,000 on the dog and raked in $50,000 on the favorite - still not a model business plan, with a 5% loss on the deal.

But it ain't so.

At Scores and Odds dot com, among other excellent online odds sites, you will find a daily breakdown of how the money splits on each game. And while there is no need to let betting trend-lines affect your picks, they supply useful intelligence that confirms the unsurprising inevitability of so-called surprises.

Here's today's breakdown about five hours ahead of the first game, with thanks to the source:

On average, 73% of bettors have their money on favorites, and 27% are bucking the odds. The standout here (the exception that proves the rule?) is the number for the Texas Rangers, who are underdogs at about +105 but have more money on them (61%) than the Seattle Mariners.

It will be interesting to see how that turns out...

Followers of the conventional wisdom (I call them CoWs in recognition of their herd mentality and their bovine stubbornness!) reject the target betting concept entirely and would have fits at the very notion of hedge-betting, and of course that's their right.

They will not be swayed by evidence such as this:

The charts above speak for themselves, but the data needs to be interpreted as follows:

Favorites won 65% of the 467 games in the data set, and target betting delivered an overall win of $11,400 (8.6%) against exposure of $800 and an average bet value of $285.
Underdogs won about a third of their games, risked $13,220, and with target betting made an overall profit of $75,500 (34.6% of all action thanks to routine paybacks far exceeding even money). The average dog bet was $470.
Favorites and Underdogs combined risked $4,700 to win $86,900 (24.75%) on an average bet value of $760.
Underdogs had to battle against a "house edge" of 34% and in consequence had to lay out much larger wagers when target betting was applied, to a maximum short of the permitted $50,000 but not by much: $41,000.
The highest target betting wager on Favorites was a relatively conservative $5,000.

Please try to contain your response to the bet values shown above.

Although the supporting data are real and easily verifiable, this is for our purposes a purely academic exercise intended to dramatically demonstrate that target betting overcomes negative expectation and routinely delivers a "player's edge" against the house advantage that is inherent in all gambling situations.

Here are 12-series summaries for target betting on dogs and faves separately throughout the two-year period reviewed:

No doubt I will be hearing from Cows that all this information is anecdotal and irrelevant because a data set of 7,500 games is not a representative sample.

All I can say to that is...Mooooooooooooo!

An important reminder: The only person likely to make money out of this blog is you, Dear Reader. There's nothing to buy, ever, and your soul is safe (from me, at least). Test my ideas and use them or don't. It's up to you. One more piece of friendly advice: If you are inclined to use target betting with real money against online "casinos" such as Bodog, spend a few minutes and save a lot of money by reading this._