Time for a refresher course on how to make your own odds.
Unfortunately, the recent blizzard of coverage blanketing pro basketball’s free agency free-for-all has been full of bad numbers.
- Journalists new to sports betting wanted to provide their assessment of the odds that a player will sign with a particular team.
- Vegas sportsbooks, which aren’t allowed to take odds on free agency, loved the publicity that came from seeing major media entities “report” their “no action” assessments. Some of these were head scratchers as well.
Hey, it’s all in good fun. Part of the discussion. Everybody has an opinion…and the engine of current media largely runs on takes. But the numbers should make sense!
Here’s a quick example. Earlier this week, a sports betting media source suggested the following odds for Kawhi Leonard landing at four various teams: Los Angeles Lakers 2/3 (-150), Toronto 1/1 (even money), LA Clippers 3/1 (plus 300), and New York 8/1 (plus 800).
Nothing wrong with the order. And everyone’s entitled to their opinions even if there were qualms about how the totem pole was structured. The issue is…the Lakers were seen as favorites, winning the Kawhi sweepstakes 60% of the time. Toronto had a good chance too, at 50%. And there’s the problem right there!
We’re already at 110% in possibilities when there was only a 100% certainty that Leonard would sign somewhere. Even with “more than what’s possible” already gobbled up, the Clippers were still at 25%, and the Knicks at 11%. The chances of the four teams at up to 146%.
This is elementary school math, right?
And it matters. If you’re hoping to make smart bets on future prices, you need to remember math you learned as a kid that explained how fractions and percentages work. How are you going to recognize a bad futures price if your math is even worse?
The easiest base for making your own odds is to start with percentages. You instinctively know that the elements should add up to 100%. Nobody would say “I think there’s a 60% chance Kawhi signs with the Lakers, and a 50% chance he signs with the Raptors.” (Well, we hope not, anyway).
Maybe you’d see it as: Lakers 40%, Raptors 30%, Clippers 20%, Knicks 10%. That adds up to 100%. Though, those might strike you as too condensed. Maybe upon further reflection, you’d go with Lakers 50%, Raptors 35%, Clippers 10%, and Knicks 5%. If those work, turn them into fractions.
That would be Lakers 1/1 (even money), Raptors 10/3, Clippers 4/1, and Knicks 9/1.
We’ve talked in the past about how sportsbooks build universes larger than 100% to create a house edge. That’s how they make money. You’re not a sports book! You’re on the other side of the counter. You need to work with 100% universes to defend your bets against that house edge.