Variance of best-of-five series lost on NHL betting market

August 27, 2020 04:47 AM

Prior to the start of this best-of-seven series between the Vegas Golden Knights and the Vancouver Canucks, the Golden Knights closed as high as -325 (75 percent) series favorites with the Canucks carrying a plus-290 (25 percent) price tag into Game 1. The two teams split the first two games, however, which means this is now a best three out of five. 

Following the Canucks upset win in Game 2, adjusted series prices started to make their way to market, and we now know that the betting market isn’t putting enough stock into the reduction in the number of games that will be played in the series. The underdog Canucks are priced as low as plus-325  (22 percent) at some local shops, with the Golden Knights listed at -450 (78 percent).

Adjusted series prices for this matchup should be trending toward the underdog now that we’re dealing with a best-of-five, and the increased variance that accompanies it. It’s easier to win three games out of five than it is to win four out of seven and, by my estimation, splitting the first two games with the Canucks has reduced the Golden Knights chances of winning the series by about two and a half percent, from 71 percent to 68.5 percent. Heading into the series my projected price was approximately -250 in favor of the Golden Knights. Now, my projected price of -220 reflects my new estimate.

Hockey bettors are only a few short weeks removed from the qualifying round, where the variance of a best-of-five playoff series was on full display. Four underdogs won their way into the Stanley Cup playoffs. Now, here we are in Round 2 and the betting market has seemingly chosen to disregard the math behind pricing a playoff series in egregious fashion. Given that the market implied the Canucks had a 25 percent to win the series prior to Game 1, the fact that their odds now imply their chances have worsened by roughly three percent is enough to warrant placing a wager on them to win the series in and of itself.

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