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In the mid 1930s, Leo Hirschfield started a
company in Minneapolis, Minnesota called
Athletic Publications, Inc., that published and
distributed odds to bookies across the country
by telephone and telegraph. He had a team of
handicappers analyzing the matchups who also
studied newspapers across the country. The
company was a major provider of odds and prices
until it finally disbanded, under fear of
prosecution from the Federal Wire Act of 1961.
Today most sportsbooks get their opening
prices from other sportsbooks as well as private
companies like Las Vegas Sports Consultants.
They adjust prices based on the bets coming in,
news, injury, and weather information, and the
price movement by other sportsbooks.
When you buy a house, there are several reasons
for doing so. Besides the fact you need a place
to live (and watch football games on
television), a house is also an investment. You
take care of that house because, one day, you
hope to sell it for more than you bought it for.
You want a return on your investment.
But do you think of the return on your
investment when you wager on sporting events?
Most sports handicappers don't, and they should.
Sports handicapping can be compared to playing
the stock market. An investor (the bettor) risks
capital by purchasing a certain amount of stock
(or laying down a bet) in a company (or on a
team). And if that outfit performs well, either
in the business world or on the field, the
investor profits.
But while many stockholders make profits over
the long run, very few sports handicappers do.
And one of the main reasons is that few bettors
look at sports handicapping like stock buyers
look at the market. Whereas market players
purchase specific amounts of a stock at a
specific price, with specific gains in mind,
most sports bettors wager fairly
indiscriminately, betting on too many games and
failing to manage their money with much
discipline.
A run through of a few simple numbers may help the
average sports handicapper to better understand
just what they're up against as they try to turn
a profit over the long haul.
The return on an investment is calculated simply
as the profit divided by the total amount
risked. Let's say a sports handicapper makes 100
$100 bets. Then let's say 50 of those bets turn
out to be winners, and (of course) the other 50
are losers. Taking into account that the
vigorish (or grease or juice, or whatever you
call it) on most pick'em sports wagers is 11/10,
that means the bettor is going to be down $500
after those 100 bets come in. The return on
investment in this case is going to be on the
wrong side of good; -4.5 % (rounded off), or
$500 lost after a total risk of $11,000.
To profit by betting on sports (just by playing
the same amount all the time on straight-up
propositions), the handicapper, fighting the vig,
must win at least 53% of his wagers. This
percentage of wins creates a +1.2% return on
investment. Not great, but better than losing.
Following the same pretext, picking winners at a
55% rate creates a +5% ROI, and a 60% success
creates a +14.5% ROI.
Now, the trick is to project these figures on to
a "complete season," with a stated bankroll, a
standard bet, and strict discipline. That's how
many successful sports handicappers do it over
the long run.
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