Odds and Ends: Week 14

Photo: Imagn Images

Gambling on the NFL is big business, especially after a 2018 Supreme Court decision striking down a federal ban on sports betting. Recent estimates suggest that as many as 46.6 million people will place a bet on the NFL this year, representing nearly one out of every five Americans of legal gambling age. As a result, there's been an explosion in sports betting content, most of which promises to make you a more profitable bettor. Given that backdrop, it can be hard to know who to trust.

Fortunately, you can trust me when I promise that I'm not going to make you a more profitable sports bettor. And neither will any of those other columns. It's essentially impossible for any written column to do so for a number of reasons I'll detail over the year. (I'm not saying it's impossible to be profitable in the long-term by betting on the NFL, just that it's impossible to get there thanks to a weekly picks column.)

This column's animating philosophy is not to make betting more profitable but to make betting more entertaining. And maybe along the way, we can make it a bit less unprofitable in the process, discussing how to find bets where the house's edge is smaller, how to manage your bankroll, and how to dramatically increase your return on investment in any family or office pick pools (because Dave in HR and Sarah in accounting are much softer marks than Caesar's and MGM).

If that sounds interesting to you, feel free to join me as we discuss the weekly Odds and Ends.

Checking In On the Unders

In Week 7, I noted that unders had been hugely profitable so far this season and discussed structural reasons why unders tend to outperform overs (though usually not by enough to beat the vig). I also said I'd track the performance of the unders going forward to see if we could be profitable merely by mass-betting them every week. (My hypothesis was that unders would win somewhere from 50-52% of the time going forward.)

Unders gave us our first awful week of the season, finishing 4-9 for a 41.3% loss (a total of $53.64 lost if you bet $10 on each game). Overall, unders have gone 51-46-3 since we started tracking; if you bet an equal amount on every game (and you saw all the same lines I saw, and all action was at -110), you would have turned a 0.4% profit. At $10 per bet, your total profit to date would be $3.64. If you had instead started with $160 and invested an equal percentage in every bet every week (rolling over your winnings or losses), you'd be down $31.77, or 20% of your starting bankroll.

These two betting strategies have typically produced fairly similar results; why have they suddenly diverged? Because percentage-based betting leaves you heavily exposed to bad weeks. This is why the Kelly percentage is typically so low. If you were trying to maximize long-run growth, you definitely shouldn't be betting anywhere near 1/16th of your bankroll on any given game.

Does this mean the percentage-based betting strategy is bad? No; it offers other advantages. The biggest is that it caps your potential losses much lower than a fixed-bet strategy. If your starting bankroll was $160, the most you can possibly lose in a season is $160. If you bet $10 on every game, your maximum possible loss is $2720, or 17 times higher. (Hitting this maximum loss would require losing every single bet you place, which... simply won't happen. Expected losses over the season would be closer to $140. But it's possible to lose much more than that.)

Percentage-based systems also offer higher upside if you string together an especially strong season, though your odds of hitting that upside are significantly lower.

For most bettors, I think a fixed-bet system is the best fit, but if you know you have trouble budgeting and tracking your bets, a percentage-based option is a nice alternative, even if you're betting higher percentages than could be considered "optimal".

Checking In on That Bankroll

I've been saying all year that gambling can be a good way to add excitement to football. You're not likely to be profitable at gambling, but then again, I've never turned a profit at Netflix, either, and I still don't regret paying for it. In matters of entertainment, "profitability" is rarely the point.

With that said, it's important to know the true costs of what we're buying. I may not make money at Netflix, but I lose a predictable amount every month. This makes it trivially easy for me to decide if the benefit I receive is worth the cost. Gambling doesn't work like this; our true costs are often obscured, and we'll experience periods where our costs actually go negative (meaning we make money). This is... actually kind of a bad thing.

Every compulsive gambler can tell you about hot streaks where they were way, way up. The reason they keep gambling is that they know it's possible. If everyone just lost 10% of their wagers every week like clockwork, you wouldn't get people going bankrupt and ruining their lives because of a gambling addiction.

As the season draws to a close, I'd recommend looking back and tracking how much money you actually wagered and how much you are really up or down. If you're up, that's awesome, and congratulations. I'd caution against reading too much into it-- our pseudo-random number generator spends much of its life in the black, too.

If you're down... I'm sorry, though again, I'd caution reading too much into it. If you're picking against the spread, the long-run expectation is you will likely hover around 50% and lose about 4.5% of your total amount wagered to the vig.

But however you're doing, it's good to know and take stock. Certain products are restricted because they're potentially dangerous. As a society, we have decided they will only be available to people we believe are capable of making responsible choices about them. We don't sell guns, alcohol, or cigarettes to children. We don't let children drive or get married. And we don't let children gamble, either.

This isn't to say that guns, alcohol, cigarettes, driving, marriage, or gambling are necessarily bad. I'm not interested in moralizing; in fact, I happen to regularly take advantage of three vices on that list. I'm just saying it's good to make informed decisions. To do that, we need to know the true costs of the choices we make. Even if we're going to make the choices anyway.

If you find your gambling is starting to become problematic -- if you're losing more than you can afford or finding it difficult to set and maintain limits -- there are resources available to help, starting with the National Council on Problem Gambling.

Lines I'm Seeing