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Beating the Money Line -- Value and Volume
by Hollywood Sports - 08/22/2012
Betting baseball, soccer or hockey requires successful money-line wagering. It is important to understand the question a money-line bet is asking since it is different than the question asked by a point spread. Appreciating this difference is not only fundamental to long-term success, but it should change how and when you make money-line wagers.
Point spread bets appear straight forward -- but it does require at least a 52.4% success rate to overcome the likely -110 money-line investment (more on that later). If Alabama is installed as a 2.5-point favorite to defeat LSU in the BCS Championship, the question basically is: do you think Alabama will win this game by more at least 3 points or do you think LSU will either win this game straight-up or lose by less than 3 points? Money-line propositions ask a different question. If the New York Yankees are a -120 money line favorite to defeat the Boston Red Sox, then what is being asked is: do you think the Yankees would win this game more than 54.5% of the time? This is how that percentage is determined. With a -120 money line, a $120 wager wins $100 which then sees an overall return of $220 (that $100 win plus the original $120 investment). The fraction 120/220 produces that 54.5% profit threshold. To use another example with underdogs: +130 underdogs have a profit threshold of 43.5% since $100 wagers win $130 and return $230 -- the fraction is 100/230. But here are two caveats to this analysis. First, given that most point spread bets require a $110 wager to return $100, that Alabama bet is really asking this: do you think that the Crimson Tide will win by at least 3 points 52.4% of the time (110/210)? Second, it is not uncommon to see higher money-line requirements combined with point spread propositions -- this often is seen in soccer where a heavy favorite may be a -1 1/2 goal favorite that still requires a -140 money-line investment. The important lesson from this is that money-line propositions are often asking something much different than just "will this win at least 50% of the time."
This understanding leads to the problem of betting on heavy money-line favorites. Justin Verlander pitching at home for the Tigers is very attractive -- but that investment typically brings with it a money-line price in the -175 range. What that proposition then is really asking is whether Detroit with Verlander wll win that game at least 63.4% of the time (175/275) -- and that requires a fundamentally different decision calculus than assessing point spread situations. This is precisely why I make it a rule to avoid big favorites that are priced higher than -150 since the requirement to win at least 60.0% of those propositions (150/250) is too steep for my tastes. Put another way: I want a 60.0% win percentage to ensure a profit rather than just breaking even or, even worse, not enough to overcome losses. Granted, a -155 money-line only needs a 60.8% win percentage (155/255) which is statistically not very significant -- but you need to draw the line somewhere. So, while in practice I may not sweat having to pay a -155 price for a heavy favorite if that -150 is just not available to me, I choose to arbitrarily draw my cut off line at the 60% win expectation in general. By the way, baseball offers a nice solution to the heavy favorite problem with Run-Line bets where the favorite lays -1.5 runs at a much lower price (and often at underdog prices). If I think that a big favorite is still being under-valued despite being priced at higher than -150, then there is good chance that I like the situation enough to expect that favorite to win by more than one run -- making the Run-Line wager an attractive alternative.
Beating the money-line requires appreciating Value and Volume. When taking a +130 underdog, successful bettors need to identify that this underdog will be victorious more than 43.5% of the time given the situation at hand. Taking that -120 favorite requires siding with those favorites that will win that game more than 54.5% of the time. Recognizing these facts is why I often label my baseball recommendations as "Under-Valued Favorites" since that is the requirement to generate profits from these wagers. If the baseball favorites I will consider are found in the -105 (51.2%) to -150 price range (60%), then winning at least 60% of those plays ensures profits (since I know that most of my recommendations are priced below -150). That is the value side of the equation -- but maximizing profits from that model also requires maximizing volume. For $100 bettors, is it better to finish a weekend a "perfect" 1-0 or an ambitious 11-9 for a solid but "unsexy" 55% winning clip? Assuming that all these bets were priced at -110, the perfect 1-0 weekend brings home $100 while the 11-9 record sees a $110 profit ($1100 in wins and $990 in losses). Winning in baseball requires a long-term mentality that successful poker players share: maximizing long term value. Successful poker players constantly make risk-versus-reward assessments regarding the bet requirement versus the expected money return in the pot. Similarly, money-line baseball investments make similar risk-versus-reward decisions. If one determines that a -105 favorite will win even just 52% of the time, while that is only marginally above the 51.2% profit threshold, because it is, in fact, a profitable proposition, that bettor is rewarded by making that wager as often as possible.
Most bettors stick to football -- and then identify success based off their win percentage. But understanding money-line wagers exposes the importance of volume in the formula for profits. Appreciating what a point spread and its accompanying money-line is really proposing allows for a more sophisticated perspective as to when to invest in a wager -- and that is the formula for more profits. Best of luck for us -- Frank.