OOH BABY THAT’S MY CLICKBAITIEST TITLE YET. GOOD HUSTLE.
I’m going to lose about 90% of you after this next sentence, but that’s okay. I never liked any of y’all anyway.
I continue to believe that a disciplined sports better can make money over the long-term. I’m almost tempted to throw $100 at this strategy to see if I could actually do it.
The betting market isn’t concerned with coming up with the correct odds. They want equal action on both sides of the bet. This is how they ensure a steady profit. Essentially, the odds don’t quite add up to 100%. The bookie then takes that gap as their profit. In the gambling world, this is called the vig.
This ensures there will continually be opportunities for smart gamblers to get their bets in at advantageous odds. The bookies are quite okay with this, since they know the average wagerer can’t help himself. He’ll put those winnings back on some dumb long shot in no time.
This is what we’re going to talk about today. I’ve found a unique opportunity that will allow you to make a little money in a very quick period of time. It’s hardly worth it to open up an account for such a thing, of course, but I think it’s fun to look at these inefficiencies. Think of it as a special kind of special situations investing.
We’re going to go away from the sports betting market and enter something a little more predictable — politics.
Many of the top gambling sites will let you bet on the U.S. mid-term elections, which are happening tomorrow. There are potentially all sorts of interesting bets there, but I want to draw your attention to what I think is the biggest slam dunk out there.
We already know Elizabeth Warren is going to win the Massachusetts senate race. According to 538’s prediction model, she has a greater than 99% chance to win her seat. The latest polls have her at about a 55% vote share, while her Republican opponent is in the low 30% range. A 25% lead in the polls is massive.
Warren (or as Donny Trump calls her, Pocahontas) is an extremely popular senator. Her name is often brandied about as a potential Presidential candidate in 2020. She’s also a big name among various groups of progressive voters and her consumer advocacy has earned her praise from people who care about such things. That consumer advocacy is probably when you first heard of her.
Say you wanted to bet on Liz to win her senate seat. Here are the odds you’d get for doing so.
Fun fact: I have to use decimal odds because I still can’t translate what +110 or -4000 actually means. If I was made SUPREME GOD the first thing I’d do is make everyone do things my way.
Aw, come on Nelson. 1.02 odds? That means you’re getting a 2% return on your investment. Yawn.
I’m sure I’m not the only one surprised Italics Man can actually do math.
2% is nothing. I want some better action.
This is exactly why this situation exists. Nobody is excited about winning a whole 2%. The appeal of gambling is to quadruple your money on some obscure long shot. But all you need to do is come up with a few of these slam dunk bets a year and you’re looking at a 10-15% annual return.
Aside: how terrible is the other side of this bet? You’re getting 10-to-1 odds, which implies the Republican challenger has a roughly 10% chance of winning. His actual chance is less than 1%. Anyone who bets this underdog is a maroon. PUT YOUR MONEY AWAY, ITALICS MAN.
Turning to sports
During the last 30 years of March Madness, #1 seeds went 119-1 versus #16 seeds. Yet if you bet on a #1 team to win straight up (that means all they have to do is win the game), you’ll likely get pretty similar odds as our example above.
So if you bet on an event that has a 99.2% chance of happening and you’re getting a 2% payout, your long-term advantage would be 1.2% each time you bet.
There are just a few times a year where you can put your money to work, which is what limits this strategy. And who wants to put more than just beer money on some gambling website, anyway? Even if you found a way to grow your money at 20% annually, it still wouldn’t be worth your time.
Wrapping it up
So despite my confident sounding title, this isn’t a legitimate money making opportunity. It just isn’t worth the pain. The lesson here is to know inefficiencies exist in every market, just waiting for you to exploit.