An interesting story came out of this past weekend of NFL games. In the second quarter of the Chargers-Jaguars game, with the Chargers winning 27-0, a gambler placed a live bet on the Chargers to win. Since the Chargers were pretty much a sure thing at that point, the moneyline he got (in real time, based on the game situation) was -12500. That means he had to bet $1.4 million in the hope of winning just $11,200. But it was a sure thing, right? Nope. In an epic collapse, the Chargers fell to the Jags, 31-30, and the gambler was out $1.4 million.
The first question is, why? Why would you risk such a large amount of money, to win such a small amount?1$11,000 may not seem small, but relative to $1.4 million it is. It’s the equivalent of risking $140 to win a buck and change.Well, actually, this happens all the time. Insurance companies do it every day, collecting small premiums from lots of people and occasionally having to pay out big sums. State lotteries do the same thing, “winning” a bunch of small bets (lottery tickets that lose) but occasionally paying out a big sum.
The thing about those examples is, the odds are in their favor. Insurance companies and lotteries can afford the occasional big payout, because they have set the premiums and payouts based on probabilities. Over time, they will make a profit.
So maybe the guy who made the large bet was in the same boat? He (or more likely, the syndicate he represents) is wealthy enough to take the occasionally big loss, but makes a profit with a bunch of other “sure thing” bets. Nope, that theory doesn’t work, because the odds are always in the sports book’s favor. The implied probability of a -12500 moneyline is 99.21%. But the actual odds of the Chargers winning at that point, according to ESPN Analytics (which takes into account the score, remaining time, quality of the teams, and so on) was 98.5%.
That doesn’t seem like much of a difference, but it is. Let’s turn the numbers around by subtracting them from 100%, to determine the chances the Chargers would lose. Analytics say the chance was 1.5% (100-98.5), but the bet was based on a chance of 0.79% (100 – 99.21). So the Chargers were almost twice as likely to lose as his bet implied. A “fair” bet would have cost him only $730,000, not $1.4 million.
Of course, the odds are stacked against you no matter which way you bet, so making a profit betting against the sports books is hard work. But risk/reward of “sure thing” bets seems doubly dubious.
