How and Why We Wager on Sports: Three Basic Principles

UPDATE, 6/16/09: THIS POST HAS BEEN SUPERCEDED BY VERSION 2.0.

"If the fool would persist in his folly, he would become wise." -- William Blake

We spend a not-insignificant amount of effort predicting the success of wagers on sporting events and writing about those predictions here at Cleveland Frowns. Because this is not insignificant to us, we think it useful to set forth here three basic principles that underlie these efforts -- three basic principles that explain how and why we do this. We offer this piece in hopes that: (1) it will enhance your overall reading experience here at Cleveland Frowns; (2) making these principles explicit here will, in combination with your feedback, help us continue to develop them and apply them to increasingly successful ends; and, (3) developing these principles will help us better enjoy sporting events, and life, at least a little bit more. We can think of no more appropriate day to offer this up than NFL Opening Day in this lucky year of 2008, so without further ado, below is our explanation of three principles that we believe must be kept in mind for one to enjoy any consistent success in sports wagering:

Principle 1: You can win. Unlike blackjack, craps, and other forms of “gambling” that sports wagering is commonly associated with, when you play any given game against the spread, your odds against “the house” are not stacked against you. Unlike these casino games, your odds of winning are as good as the house’s. You just have to pick the right side. On any given game, people will wager on the losing side for the wrong reasons. If you can identify these reasons, you can play and win on the other side. If you can do this 56% of the time, you will earn a profit. And you shouldn’t feel bad about it. If some people want to put their money on the wrong side, other people should be allowed to have that money for picking the right side. Not only is that only fair, it’s probably better for society to have more money in the hands of people who, all else held equal, make better decisions when they risk their money on the outcomes of sporting events. As for potentially taking the money of someone who can’t afford to lose it, remember, if you didn’t take it, some wiseguy would. And you are more inclined than that wiseguy to donate your winnings to other unfortunates . . . whichever unfortunates you desire. And you might know unfortunates who are more worthy than, say, Joe from Metuchen who blew all of the “fun-money” that his wife allotted him for the entire fall on the Jets in the second week of the pre-season on an August weekend with “the Bros” in Vegas. If not, and you don’t know how to get in touch with Joe from Metuchen, you could make a donation to Gamblers Anonymous that is earmarked specifically for sports-wagering addicts. Think of all of the good you might do.

It is worth noting at the outset that this is all driven by a healthy human instinct to take risks. If our ancestors didn’t act on this instinct they would not have left their caves to kill saber-toothed tigers and wooly mammoths, and thus would not have had steak, coats, blankets, tools, and other essential things. The human race would have died out long ago.

*TECHNICAL NOTE 1 OF 2: Most sportsbooks take an extra 10% for losing plays. Importantly, this does not affect the probability of winning any given game, or even a series of games. That a line for a given game ends up at a certain number does not mean that each side has a 50% chance of winning, rather, it reflects the sportsbook’s attempt to attract equal amounts of action on each side of the play; sportsbooks move lines to get more folks to play the less popular side. When a sportsbook does this successfully, the 10% from the losers is its profit margin. Unlike games like blackjack and craps, where the rules of the game affect the average of how many times you can win, the rules of sports wagering do not -- the only catch is that you must win 56% of the time to win over the long term. No house rules can stop you from winning with that, or any amount of frequency.

Principle 2: You can’t win ‘em all. So don’t try. No matter how good a given play might look, you can never count on a winner. All that we really know about the mysterious forces that decide how the balls bounce and who is allowed to have money at any given time is that these forces are infinitely complicated things that we can only begin to approach an understanding of. Plato said, “never discourage anyone who continually makes progress, no matter how slow.” This is what we are after: Progress. Don’t let the perfect be the enemy of the good. Also consider that if the ‘sucker plays’ didn’t win sometimes, the ‘suckers’ would never play, the games would be no fun to watch, and the universe would collapse on itself. In these parts, “2 out of 3 ain’t bad” is an understatement. Winning 6 out of 10 is a reasonable and profitable goal.

Principle 3: Winning isn’t everything. Win or lose, we pick because we think picking makes us a better person. Because we believe in the existence of some kind of metaphysical order to the universe, we must also believe that there must be some order to how this entire sports wagering business goes down. So we pick, pay attention to the results, and get closer to our God* in the process. You might suggest that there are better ways to understand the order of the universe -- better things to pay attention to. We concede that this might be so at any given time, but we will not concede that every man is not entitled to his diversions. And we choose this as one of ours. Digital Underground said, “Doowhutchalike,” and this is what we like. Moreover, this is what we love. And it’s not just us. Our species in general pays a considerable, even remarkable, amount of attention to sporting events. Whether or not this attention would be better spent elsewhere, it is not so spent. As such, there must be something to be gained from better understanding how the market for wagering on these events reflects human ideas about their eventual outcomes. This must be a path to a better understanding of the mysteries of the universe, through a better understanding of our fellow man.

It is crucial, here, to note that we understand that this market is greatly influenced by experts -- people who spend a lot more time analyzing this market than we do, like MIT grads who get $500K entry level salaries at the sportsbooks, and the more dangerous ones who don’t work for the books, but make plays of their own. We realize that these experts might make decisions that influence lines in ways that we scarcely comprehend. But we want to understand how the ideas of these experts fit into all of this too. (Mustn’t these ideas see the light of day, if mankind is to evolve as a species?) Thankfully, there are two ways in which we believe we can do this -- two ways in which we might, by process of elimination, understand how the experts do influence the lines for these games by understanding how they do not. First, if the books are to succeed in attracting equal amounts of action on each side of a game, they must, at least sometimes, account for us average joes. Especially for the big games, when there’s heavy traffic in the sportsbooks. In games like this, the experts might all agree about an outcome within a certain range, but one bad (or irrelevant) idea held by the masses can drive a line outside that range -- say, for example, the idea, commonly held in January of 2008, that Tom Brady is the best quarterback in NFL history. So even if this “voice of the masses” is relatively insignificant, if it influences these lines even just a little bit, we can do a little bit better by understanding just how. And that’s progress.

But more importantly, and more interestingly to us, we’re sure that there is an order to these outcomes that the experts can never account for. And here we rely on Rule 2, above, which provides that nobody -- not even the most expert of experts -- will ever be able to fully predict exactly what’s going to happen in these games, or explain exactly why these things happen when they do. And where science fails, man has two choices: submit to chaos, or find religion. We gladly choose the latter course here, and accept our responsibility to attempt to bridge the gap between man and God by wagering on sports. We do this by making our picks based on what we think we want the world to be like, because at Cleveland Frowns, we believe in a God that wants us to be happy. And if we pick the Mets in Pittsburgh one weekend because we think that God wants to reward bold New Yorkers who visit Pittsburgh to see a ballgame and help to overcome anti-Heartland bias in the process, and the Mets end up winning, nobody is going to be able to tell us that it wasn’t so. And if the Mets don’t end up winning that game? Well, God has other things to worry about too. If our pick loses, we’ll at least be a step closer to understanding what those other things are. And we will enjoy ourselves, immensely. And if one day we find that we do not enjoy this, we will stop. In the meantime, we hope you will enjoy yourselves along with us as we watch these games together.

Excelsior.

*TECHNICAL NOTE 2 of 2: This philosophy does not require that one believe in any particular God. Any God, or team of Gods will do. Atheists might usefully substitute the word "chaos" for "God," above.