"Vegas knows best"
"Casinos aren't in the business of losing"
"Is sports betting even winnable long-term?"
Yeah, yeah. We’ve heard it all before.
In aggregate, it’s very hard for sportsbooks to lose. Duh. Since 2000, Nevada sportsbooks have won $3.6 billion, with an average hold of 5.7%. However, this is only a small fraction of total (legal and illegal) U.S. sports betting market. Market experts estimate that the U.S. black market takes over $200 billion in wagers annually, holding over $11 billion. Wowzers.
So how do they do it? Quite simply, sportsbooks have some built in advantages. We’ve covered this previously, but the primary advantage of a sportsbook is the vig that they charge. For spread bets, the typical sportsbook collects $110 from each side of the bet and pays the winner back his original wager plus winnings of $100. This equates to revenue of $10 for every $220 wagered, representing a 4.5% hold for the casino.
Thankfully players have a couple build in advantages that allow us to level the playing field.
The first advantage is simply this: no one is forcing you to bet. Let that sink in. If you don’t like a game or don’t feel like you have an edge, don’t bet it. Seems simple enough, but it requires a level of discipline that many players just don’t have.
The opportunity to shop for the best line available is the second advantage that players have. Line shopping isn’t the most complicated concept, but it is extremely powerful and far too frequently overlooked by sports bettors. It’s hard for me to overemphasize how important it is to get the best line available in the market. To quantify just how important line shopping is, we’re going to walk through a little example.
Preface: shopping for lines requires registering and managing multiple sportsbooks. Managing these logistics and shopping for the best line takes time. We get it. If you are a casual recreational sports bettor that just wants a little action on the Saturday night game, you might not want to invest that type of attention to line shopping, or frankly, even reading this article.
However, considering we are providing information on “How to Become a Successful Sports Bettor” and not “How to Place a Bet to Create Entertainment Value From a Crappy PAC-12 Basketball Game” it’s appropriate to remind you that it takes time and effort to be successful at anything in life. Sports betting is no different.
Consider an example where a bettor bets $100 per game on every MLB game during the period May 16-18, 2019 (40 games total, $4,000 wagered). For the purposes of this example, let’s assume this genius thinks that betting the money-line for the home team is a sound betting strategy.
What is the expected outcome at various sportsbooks? Without naming names, we’ve gathered the closing odds at six different sportsbooks. Let’s just call the books A, B, C, D, E and F. The vig at these six books averaged 2.3%, with a range of 1.8% to 3.9%. It’s worth noting that the hold is quite a bit less than the 4.5% on typical -110 lines. This is a feature of MLB betting; sportsbooks frequently offer 10-cent lines (i.e. +130/-140) for MLB moneylines, which is one of the reasons we love to bet the MLB.
Our home-team bettor, who wagered a total of $4,000, should expect to lose between $72 and $156 (1.8% x $4,000 and 3.9% x $4,000) in those three days.
How does line shopping improve our expected return? Now let’s say you have access to all six sportsbooks, and you can pick the best line to wager at. You can bring down the effective vig charged by the sportsbooks and therefore increase your expected return.
As an illustration, below we’ve displayed the closing lines on May 16th between the Cubs and the Reds. With Book A (and Book F) offering the best odds on the Cubs and Book E offering the best odds on the Reds, we have access to +131/-135 which is an effective vig of 0.7%. This is considerably better than any single book can offer you.
Over the course of the 40 games wagered, the average effective vig when shopping for lines is 1.0%. If our home-team bettor shopped for the best lines, he should improve his expected loss to $40 for those three days. Even if he was already using the book with the best lines, he will save $32 by shopping for lines. Not bad!
These seem like insignificant numbers. Is this even worth my time?
That’s up to you. Last season, we wagered nearly $1.4 million on the MLB. By reducing the effective hold from 1.8% to 1.0%, we increased our expected return by over $11,000. To us (and anyone aspiring to have long-term success as a sports bettor) these small edges can aggregate to significant differences in your returns.
So how many books should I get?
There’s no quick and fast answer, but you will notice diminishing returns for each additional sportsbook beyond the first three or four. We like to have access to at least five or six different books at any given time.
With the exception of Book E, all of the other books can be considered “low-vig” books, which means they take a smaller hold than most typical sportsbooks. This is a good thing for bettors.