How to Win at Sports Betting
Do you really want to? I explore who wins at sports betting and how
When I watch sports on television, it’s usually golf. But when the 49ers get into the playoffs, I start watching football, mostly because my friends and family get more involved. Since we lived in the Bay Area for decades, most of us are San Francisco fans, and many of our relatives here in Utah are also. Of course, rooting for the 49ers didn’t work out so well the last time they met the Chiefs in the Super Bowl 2020.
But what will happen this time?
This year, we want to have some friendly betting using one of those grids where you put $5 on the square with the expected score. So I need a little info to make the call. The sports betting sites and sports journalists seem a little mixed. Naturally, my friends and family have their opinions. Does Mahomes’ experience count for more than Purdy’s? Do San Francisco’s early struggles in the last two playoffs mean trouble? What will be the effect of injuries?
While I’m not that much of a football fan, I am a data science fan. So these predictions got me curious. I never risk more than $20 in a slot machine because I know you can’t consistently win. But what about football? Surely there is a lot more team knowledge, variability, and statistics that come into play. What if, rather than mere entertainment like slot machines, you intended to win? How would you make your prediction?
More Information Is Not Always Better
Naturally, it seems to make sense to talk with one’s knowledgeable football friends and get their views. The more the better, right?
But whoa. A Princeton University study called “The illusion of knowledge: When more information reduces accuracy and increases confidence” led by Crystal Hall asked participants to predict the outcomes of NBA basketball games.[1] All the participants were provided with statistics (win record, halftime score), and half were additionally given the team name.
And guess what? The group that had the team names fared worse. Hall and company explained:
Knowledge of names increased the confidence of basketball fans consistent with their belief that this knowledge improved their predictions. Contrary to this belief, it decreased the participants’ accuracy by reducing their reliance on statistical cues. One of the factors contributing to this underweighting of statistical cues was a bias to bet on more familiar teams against the statistical odds. Finally, in a real betting experiment, fans earned less money if they knew the team names while persisting in their belief that this knowledge improved their predictions.
In the example, the participants who knew the names of the teams introduced other non-factual information into their reasoning. Yet they tended to believe that because they knew more about the team, they could predict the outcome better.
These findings align with several similar studies done on this topic over the last couple of decades, showing that having too much information and talking about it a lot with others leads to worse decisions. In psychology literature, this is called the illusion of knowledge. It refers to situations where people believe they possess a comprehensive understanding of a subject or topic when in reality, their knowledge is limited or flawed.
So our finding #1: Ignore your friends and probably most sports journalists.
Next Up, Statistics
Ok, so what about betting apps and sites? They have plenty of statistics and fancy, fun interfaces like this one from Sportsline.
So I thought, “What do these statistics mean” The big problem here is that those are not the real statistics. Those are odds designed to incorporate the vigorish or the betting site’s advantage. This is how the vigorish works:
The sportsbook sets odds for each outcome of a sporting event, but these odds do not represent the true probability of that outcome happening. They adjust them slightly to include the vigorish, typically expressed as a percentage.
The goal is to attract equal bets on both sides of an event (wins and losses), regardless of the actual outcome. This ensures they collect the vigorish regardless of who wins the game.
If you win, you receive your original bet amount plus the winnings based on the adjusted odds. However, if you lose, the sportsbook keeps your entire bet amount.
So now we get to the interesting part: How does a regular person like us win then? With our understanding of the vigorish, we can see that we are not betting on which team will win. Rather, we are betting that we know the odds better than the sportsbook.
The problem is that sportsbooks have mega computers, reams of data, sophisticated statistical models, and AI. As Sports Information Traders summarizes, “The companies in charge of making lines have too much data at their disposal to be taken down by gamblers who go off of gut feelings.”
This means you have to make your own models and use your own statistics. But of course, given the resources the sportsbooks have, what chance do you actually have? It’s a pretty big job to try to beat the sportsbooks at predicting the outcomes of sporting events.
Ok, it’s hard but still, can you win?
The betting site ElitePickz claims you can make money betting on sports—if you are willing to put in a lot of work. But, even for pros the win rate only averages about 52-55%. Even worse, only about 3% of all bettors win. So in short, ElitePickz nicely summarizes it this way:
The 3% of winning bettors put in a ton of work studying stats, matchups, and trends to gain an edge. They specialize in certain sports or leagues and become true experts. They also exhibit patience and discipline, never chasing losses or deviating from their system.
Okay, so finding #2: It’s virtually impossible to beat sports betting sites and it’s getting harder.
And The Real Winners Are…
It’s probably getting clear now that the real winners in sports betting are the betting companies. And they are doing it pretty well. While historically sports betting was kind of hush-hush and mainly done in backrooms or in Las Vegas, a 2018 U.S. Supreme Court decision legalized betting and since then betting has taken off in the U.S., with 38 states now legalizing it. According to CBS News,
Americans have spent more than a quarter of a trillion dollars sports betting… that's the GDP of Greece… leagues have cashed in. Networks, too.
This chart below from The Business of Apps gives the picture from 2018 for sports betting apps alone.
And so who are the big winners? This chart from The Motley Fool shows the top companies with the ones highlighted that they recommend as good buys for 2024.
Of course, I’m not an investment advisor, so consult an investment advisor first. While investing also entails risk, betting on the betting companies looks a lot less risky and more lucrative than trying to bet against them.
So finding #3: if you want to win at sports betting, consider investing in sports betting companies.
Cautionary Thoughts about Betting on Sports Betting
Before going forward with investing in sports betting though, we can ask ourselves if just because it might be profitable, is it a good use of money. There are a couple of factors here.
Addiction
First, there are signs that much like other social media, gambling, particularly via apps, can be highly addictive. This is made worse because not only do the sports betting companies use sophisticated methods to crunch a lot of sports data, but they also gather a lot of data about their users. They use this data to make the apps more engaging and further entice the users into making bets that are favorable to the sports betting company.
More research is probably needed before making definitive conclusions. But as one indicative point, a recent 60 Minutes episode explored the apparent rise in gambling addiction among young men. They found:
There are distinct signs of trouble. According to a Siena College poll, which we can report for the first time now, of the young men wagering online, nearly half feel they're betting more than they should… in the five years since New Jersey legalized online sports gambling, calls to the state's problem gambling helpline [have] nearly tripled. The largest caller demographic? 25-34.
You can see the whole report by clicking below.
Social Impact
And finally, in deciding where to put your money, you should probably consider one more thing: Are there alternative, better places to invest? Sports betting companies are encouraging betting, and they might be using addiction-inducing techniques to prey on people’s weaknesses. Is this a good social outcome? Also, where are the profits of sports betting companies going? In general, the whole operation is not contributing much to the wellbeing of anyone except the employees and shareholders.
The Bottom Line
So there you have it. To win at sports betting, you’re probably better off investing in the stock of the betting companies. But if you are also concerned with social impact, you have to consider whether your dollars would be just as profitably invested elsewhere in a way that also improves the social good. For that, you could check out this list, also from The Motley Fool.
Then again, it might prefer to just stick to casual low-dollar betting-for-entertainment with family and friends.
Good article. I’m sure you are right