Thursday, Sep 21st

Odds and Units

I mentioned the term “unit” above because that is what we use to describe the amount of money we are willing to risk per event. In general, it is important to keep this amount of money rigid for long periods of time (months, not days). It is usually suggested as 1% of your total Bankroll. Think of your bankroll as the amount of money you have put aside to risk in the sports betting bucket. If you lost all of it, you would stop betting. The total amount of quarters you used to put in the pinball machine before you walked away and never went back. In theory, using this 1% bankroll measurement system will give you 100 kicks at the can to play with before you go broke if you were to lose every single bet. Or, to use another metaphor, 100 flips of the coin in which you had chosen heads and came up tails. While 100 flips of a coin is still a relatively small sample size, you are much more likely to get an accurate representation of the true 50/50 odds associated with a coin than if you were to flip it just four times, a scenario in which 3/1 or even 4/0 wouldn’t be overly uncommon. In fact, in a sample size of 100 flips, we would be likely to see numerous 3/1 or 4/0 outcomes (potentially even higher). This shows the importance of starting small in terms of the percentage of your bankroll and outlines the long-term aspect of prop betting coin flip-like outcomes (for more information and guidance on unit sizing and bankroll management, check out our bankroll management article from last season).

For those of you coming from the DFS space, think of prop betting like cash games. We don’t care about beating the cash line by .1 points or 100, as long as we beat it. There is no more money to be won because the player we bet an over on had a career night. The bets that miss act in a similar way, a very simple yes/no result. With this in mind, the payouts we receive are usually (give or take a little) doubling your bet, with the odds the sportsbook is offering and the vig they charge taken into consideration and affecting the payout.

The vig (short for vigorish and sometimes called juice) that a sportsbook charges fluctuates from book to book. Think of it like the rake in a DFS tournament. Instead of charging you a fee for each wager you make, they hide it in the odds themselves. It’s a built-in amount, usually 10 to 20 cents on the dollar, and can be determined by looking at opening lines released by the sportsbook. An example of how to determine vig at a sportsbook is below:

Nick Chubb Rushing Yards: 87.5
Over -115   Under -115

Both options above have an equal payout no matter the outcome, both requiring $115 to win $100, or $1.15 to win $1.00, expressed as 15 cents on the dollar vig, or the cost of doing business on that particular sports book.

The dreaded American odds system – some people love it while others despise it. Once understood, the most common language for North American sports bettors, and the language you are most likely to come across on advertisements, talk shows, and default settings. American odds are presented as both favorites (with negative money numbers) and underdogs (plus money numbers). Favorites are considered more likely than not to come through so you must risk more money that you will win if the bet is successful. When betting a favorite, you will be betting negative number odds, such as -110 or -120. In these examples, you would need to bet $110 or $120 dollars to win $100 profit resulting in $210 or $220 total dollars returned ($110 risked +100 profit and $120 risked + $100 profit respectively). While using the $100 unit as an example is the easiest way to convey in whole numbers, many people within our OWS ecosystem use $20 units, $50 units, and some higher than our recommended baseline of $100. Start small, get familiar with the space, and adjust accordingly as you grow your bankroll over time.

Since we now have a better understanding of the odds, here’s a full example of a bet you can expect through the OWS Props package:

Christian McCaffery UNDER 67.5 Rushing Yards -115 DK, MGM -115, FD -120. Good to -125.

In the example above, we’re betting that Christian McCaffery runs for 67 yards or less, and we are willing to bet $115 dollars to profit $100. The most we would be willing to risk at the 67 or less number is $125 dollars to profit $100. Once you need to bet $126 or more, we don’t think that it is a good bet anymore, meaning it isn’t profitable over time.

But why? Well, to be profitable over that 100 flip sample size we were talking about above, CMC would need to record 67 or fewer rushing yards 54/100 times risking $115 at -115 (implied probability 53.5%) while needing to record 67 or fewer rushing yards 56/100 times to be profitable at -125. Here’s the math below.

100 wagers at -115
$115 x 100 wagers = $11,500
54 wins =  54x $100 = $5,400
46 loses = 46x ($115) = ($5,290)
Profit = $110 ($5,400-$5,290)

Remember, because you are paying $115 to profit $100 on favorites, the losses hurt more than the wins help. In this example, we believe we have an edge on this event happening at least 54% of the time if this event was played 100 times, and even an edge on 56/100 times, but that edge evaporates once we require 57 times or more to come out profitable over time.

This works the opposite way for underdog bets where we see a positive (+) attached to an odds provided, such as +120. Here’s an example.

Cooper Kupp OVER 7.5 Receptions +120 FD, +115 DK/MGM, +110 Cz. Good to +105.

Here, the sportsbook believes it is more likely that Cooper Kupp will finish with fewer than 8 catches, so they are offering us more profit than needed to risk in order to get bets to the over. With plus money bets, we need to win less than 50% of the time to break even and earn profit. Below is an example of how this bet would be profitable winning only 50% of the time.

100 wagers at +120
$100 x 100 wagers = $10,000
50 wins = 50x $120 = $6,000
50 loses= 50x ($100) = ($5,000)
Profit = $1,000 ($6,000-$5,000)

Keep in mind that an odds of +120 has an implied win percentage of 45.5%, meaning we shouldn’t expect to win this bet 50% of the time based on the sportsbook line, but we only need it to win 46/100 times to see profit over time.