I’m not sure why I waited so long to add my “what is sports betting” post to my series of “what is gambling” posts. Sports betting, worldwide, is probably the biggest gambling industry in existence.
This is more impressive when you consider that in the United States, sports betting has been illegal almost everywhere since almost forever.
I’ll get more into the legalities related to gambling on sports later in this post, but for now—here’s an introduction.
If you haven’t read the other posts in this series, you might not understand what I’m up to here.
I’m trying to confront what’s essential about gambling itself and what’s essential about various aspects of gambling.
The idea is to explain these subjects to people who don’t understand what they’re really all about in a way that the reader will be able to make an educated decision about whether to participate in that activity.
Besides that, I want the reader who chooses to participate to be able to participate intelligently.
In other words, I want you to have the best possible chance of winning—even when you’re playing a gambling game with a negative expectation. (That’s most of them, by the way—including betting on sports.)
Sports Betting Can Be Really Simple
If you go to the bar with your buddy to watch a football game, and you bet him $20 (or even just a round of drinks) that the Cowboys will win, you’re engaged in betting on sports.
In fact, for some gamblers, that’s the extent of their involvement in sports betting. Some of those gamblers might even wonder at the necessity of a “how sports betting works” blog post.
These unsophisticated gamblers are almost certainly losing money in the long run from their sports betting activities.
Yes, the outcome of any sporting event has an element of randomness to it, but that doesn’t mean it’s entirely up to chance.
Obviously, some teams play better than others. It’s rare that a game has a 50% probability of winning for both sides.
In football, which is the predominant sport bet on in the United States, most sportsbooks even the odds by setting up a point spread on the game. (This is also often called “the line.”)
The underdog is the team which is more likely to lose. The favorite is the team which is more likely to win.
When you bet on an underdog with a sports book, they give them points. The number of points is agreed to when you place the bet. For example, if a team is a 3-point underdog, when it comes time to settle the bet, you get to add 3 points to the underdog’s score to determine if you won the bet.
The oddsmakers working at the sports books are good at setting the lines in such a way that there’s a 50/50 probability of winning. They’re also good at getting an equal amount of money on either side of a game.
That’s not the only way books manage these things, though. In other games, they adjust how much you must bet to win $100, or how much money you’ll win if you bet $100.
I’ll explain how that works in another section, but first, let’s talk about a more basic question:
What Is a Sports Book?
Maybe I should have explained this first, but better late than never. A sports book is a business that makes its money by taking action on sporting events.
Sports books will accept bets on either side of a contest.
You can bet with your buddies. You can bet with a local underground sports book. (A “bookie.”) Or you can bet with an online sportsbook that doesn’t care about the legality of their behavior in the USA because they’re located offshore somewhere.
Regardless of whether you’re dealing with a local bookie, a legal sports book, or an offshore, internet-based sports book, you’re dealing with the same (or similar) business model.
These companies are in business to make a profit, and they have a specific and reasonably easily understood means of doing so.
What Is Vigorish (The vig) and How Does It Work?
You can think of the vigorish as the commission that the sports book charges you to take your action. It’s how they make their profit.
It’s most easily understood in the context of a football bet. Remember how I discussed the point spread, and how it made a bet on either team a 50/50 proposition?
The sports book doesn’t bet even money on such a bet. They usually require you to risk $110 to win $100. (The amount doesn’t matter; the ratio does. You could bet $55 to win $50 or $22 to win $20.)
They always represent this as -110, which is the amount you’ll lose on a $100 bet.
Some books charge more vig than that. They might charge -115 or -120.
Other books offer discounted vig. You might only need to risk $105 to win $100 at such a book.
The vig is what makes the sports book profitable. Also, if you’re not a sharp sports bettor—an expert who wins money—you’ll lose money over the long run betting with sports books, even if you’re winning 50% of the time.
If you know anything about casino gambling or poker, you can compare the vig with the house edge or the rake, respectively.
The Legality of Sports Betting
I’ve also mentioned that sports betting is illegal throughout most of the United States. This is especially true of online sports betting.
I don’t want to discourage you from betting on sports at your favorite internet sportsbook, though—enforcement activities are almost always exclusively focused on the companies taking the bets—NOT their customers.
The Libertarian in me wonders why the government wanted to pass laws making something illegal to thwart organized crime when they could have just as easily legalized and regulated the activity.
When something is legal, organized crime doesn’t stand to make any money from it.
Don’t believe me?
Think about this:
Running numbers used to be a huge source of income for local organized crime figures. Running numbers was basically just a private lottery run by local crime figures.
Since the lottery is now legalized and regulated in 48 states, you don’t find a lot of gangsters fooling with it. There’s too much competition.
Criminals like profitable businesses with minimal competition. Laws forbidding something just serves to squelch competitors, making those businesses more attractive to gangsters.
But I digress…
The only hold-up in most jurisdictions is to wait for the state government to pass the appropriate laws legalizing and regulating sports book activities.
The Various Kinds of Sports Bets You Can Make
Earlier in this post I explained the most basic kind of bet you can make on a football game, where there’s a point spread and you win (almost) the same amount you risk when you bet. That’s called “spread betting.”
But that’s only one way to bet on sports.
It’s not even the most common type of sports bet worldwide.
In this section, I’d like to cover some of the other kinds of sports bets you can make.
The main other type of wager you can make is called a “moneyline wager.” In this kind of bet, to win, your team has to win outright.
The book makes up for this by changing how much you must risk and how much you win.
A bet on a favorite requires you to risk more money to win $100.
A bet on an underdog describes how much money you win when you risk $100.
Here’s an example:
The Cowboys are playing the Browns, and the Browns are listed as +300. Since there’s a + sign, we know that this is the amount you’ll win on a $100 bet. The Browns are the underdog in this example, so you risk $100 to win $300.
If you wanted to take the other side and bet on the favorite, you might see the Cowboys listed as -300. This means that you risk losing $300, and if you win, you get $100.
You could also think of these as regular old odds. A bet on the Browns would pay off at 3 to 1 odds, while a bet on the Cowboys would pay off at 1 to 3 odds.
Those are the 2 main kinds of sports bets you can make:
- Spread bets
- Moneyline bets
But those aren’t the only kinds of sports bets available.
Not by a longshot.
More Interesting and Unusual Sports Betting Options
Another popular football bet that’s available (although it’s not limited to football) is the over/under bet, or the totals bet. This is a bet on the total number of points scored by both teams during a game.
For example, if the Cowboys beat the Browns 21 to 3, the total number of points scored by both teams during the game is 24 points.
The book has a guess as to what the score will be, and you can either bet that the teams will score more than that or less than that.
For example, in that Cowboys-Browns game, the book might offer the over/under at 23.5. If the total score were 23 or less, a bet on the under would win. If the total score were 24 or more, a bet on the over would win.
A proposition bet is a bet that something specific will happened during a game or during a season.
For example, a proposition bet might be a bet that a specific player will score the first touchdown of the game. Proposition bets are usually only good for entertainment; it’s tough to make money placing proposition bets.
A parlay can consist of 2 contests or more. You could theoretically bet on 15 games in a week, and if you got all the winners right, you’d have a huge payout.
Of course, these aren’t the only kinds of bets you can make, but they represent the most common types of sports bets most gamblers make.
The thing to keep in mind is that no matter what kind of bet you’re placing with a sports book, they have a vig built in. This might take the form of odds that are skewed in such a way that the book will make a profit.
Becoming a Sharp Sports Bettor
You can group sports bettors into 2 types:
Sharps are sports bettors who use statistical information to only place bets where they have a positive expectation.
They win a high enough percentage of their bets that they show a profit—in spite of the vig. I’ll have more details about what it takes to accomplish that soon.
Squares, on the other hand, are the rest of the sports bettors. This is the general public, including your buddy who always bets on the Cowboys regardless of the line being offered.
Because of the vig, you can’t make a profit only winning 50% of your games.
Let’s look at the math:
You bet 200 football games this season, and you bet $100 on each game. You win 100 of those bets, but you lose 100 of them, too.
You’re dealing with a typical sportsbook that’s asking you to risk $110 to win $100.
A sharp sports bettor, on the other hand, will make a higher percentage of winning bets and a smaller percentage of losing bets. And it doesn’t take much of a difference to become profitable, either.
But sharp sports bettors still lose bets a lot of the time. In fact, a really good sharp might only be right 55% of the time.
How much does someone win in that situation?
That doesn’t sound like much, but when you think of it in terms of return on investment (ROI), it’s huge. Compare this with the kind of return you might see investing in the stock market.
If you’re investing in the stock market and seeing a 12% return over a year, you’re a superstar.
You might think that a difference of 12% and 5.5% isn’t such a big deal, but you’re not accounting for the time frame and the effect of compound interest.
12% over a year and 5.5% over a weekend are 2 entirely different things.
Think about it this way:
If you’re making 12% per year, you’ll double your money every 6 years.
Most investors would be thrilled with that kind of return.
But with a 5.5% return, you’ll double your money every 13 years.
You’re not seeing a 5.5% return every 13 years, though. You’re seeing a 5.5% return every week.
How much money would you make if you double your money every 13 weeks?
That’s mostly a single football season, so if you doubled your money every football season, you’d double your money every year.
Suppose you start with a $10,000 bankroll.
How long would it take to become a millionaire if you double your money every year?
That same $10,000 invested at 12% per year in the stock market becomes $20,000 by year 6—the same year our sharp sports betting made it up to $320,000.
Can you see now why someone might become interested in becoming a sharp sports bettor?
One criticism someone might point out with this plan is that it’s hard to find 200 bets per season offering value during the pro season.
That’s where that argument fails. You’ll find countless college games to bet on if you look, so 200 bets offering value per season is totally achievable for the dedicated sports bettor.
He probably had $300 on that game at 10 different books. He probably uses runners to place bets on his behalf so that the books don’t know exactly where the action came from.
As with most kinds of advantage gambling, there are all kinds of wrinkles involved in getting an edge at sports betting and making money from it. I’ve covered only a couple of them here.
As far as how to find bets that offer value?
The biggest piece of advice I can offer is to fade the general public. If the general public is doing one thing, the smart money is in doing the opposite. That tip by itself might be the most important sports betting tip you ever read.
Betting on sports is as American as apple pie, but it’s probably a surprise that it’s not more widely legal.
That’s going to change over the next decade, though, which represents a huge change in the environment of the hobby for U.S. citizens.
Finally, if I could leave you with one piece of advice—do everything you can to pay less vig. This might mean finding individuals who are willing to bet with you without requiring a vig. It might mean searching for bookmakers who are offering special deals.
I can’t overstate how important it is to pay as little vig as possible, though.
Do you bet on sports now? If not, do you think you might start after reading this post?
Why or why not?