Last week, I discussed some of the factors involved in betting on preseason football. One portion of that column featured an interview with Bodog’s top bookmaker Kent where I quoted him as saying we just follow the money and try a lot harder to balance action in reference to moving lines on preseason games. This week I want to explain line moves from the House’s point-of-view in more detail. Much of this comes from a similar article I wrote last football season, but I think it is important enough for bettors to understand how a sportsbook operates that I will publish it every year!
Remember that sportsbooks make their money by withholding a small commission on winning wagers. If Player A bets on Atlanta -4, risking the standard $110 to win $100 and Player B bets $110 to win $100 on Buffalo +4, then the sportsbook makes $10 regardless of the outcome, as long as the final score isn’t Atlanta by 4 points (in which case both wagers would be pushed and nobody makes any money). Since the total wagered is $220, the house’s gross profit % in this simple scenario is about 4.5%. This number is the Theoretical Hold Percentage (or THP for short) for a straight wager. Now lets discuss a couple of reasons why this number is only theoretical.
First, in the real world, action is very rarely perfectly balanced and sportsbooks almost always have a vested interest in the outcome of every game. When action isn’t balanced, and the outcome of an event could lead to a loss for the house, the sportsbook is exposed. Each sportsbook determines how exposed it can be on any given event. It is a combination of this tolerance for risk and the sportsbook’s wagering action that drives line changes. If a sportsbook has $5,500 wagered by its clients on Atlanta -4 and $2,200 wagered on Buffalo +4, then the sportsbook stands to lose $2,800 if Atlanta covers (collects $2,200 from players who bet on Buffalo but has to pay $5,000 to players who bet on Atlanta) but stands to win $3,500 if Buffalo covers (collects $5,500 from players who bet on Atlanta but has to pay $2,000 to players who bet on Buffalo). This may not seem like much risk, but if you multiple these numbers by 10, 20, 50, 1000 or more, you can appreciate why sportsbooks move lines to balance action. One sportsbook might move to -4.5 when it is exposed by $5,000 on Atlanta where another sportsbook might be comfortable at -4 until it is $250,000 offside. It depends on the anticipated total handle, the game, the sport and the book’s tolerance for risk.
Some sportsbooks handicap the games themselves and may shade the line a half point or more in a direction to generate more wagering on the team they think will not cover. If they like Atlanta to cover the -4, they may open the line at -4.5. If they like Buffalo, they may open the line at -3.5. Or, they may open the game at -4 and simply decide to allow more risk on one team then the other. For example if the house likes Atlanta and has a normal risk tolerance of $25,000 on a given line, the house may then decide to move to -4.5 after only being $10,000 offside on Atlanta, but would wait to be $40,000 offside on B before moving to -3.5.
Right now, other than cursing me for too much math, you may be thinking: why don’t sportsbooks just keep moving the line until they are balanced? The reason sportsbooks don’t balance action at any cost is because there is also a risk involved every time a line is moved. Lets use some very simple examples to demonstrate the risks.
Example #1: There is $110 on Atlanta -4 so the house moves the line to -4.5 to attract action on Buffalo (now at +4.5). Someone bets on Buffalo +4.5 for $110 so the house is happy. However, there is an unpleasant side effect if the final score is Atlanta -4. The player who bet on Atlanta has his wager pushed, but the player who bet on Buffalo wins and collects $100, so the house loses $100. When the final score lands on one of the outer extremes of the range of pointspreads for a game the house is said to have been sided.
Example #2: There is $110 on Atlanta -3.5, so the house moves the line to -4 to attract action on Buffalo. At -4 it takes $110 more on Atlanta and decides to move to -4.5. Someone bets on Buffalo +4.5 for $220 so the house is happy ($220 total on each team). In this case, there is a very unpleasant side effect if the final score is Atlanta -4! The player who bet on Atlanta -3.5 wins $100, the player who bet at -4 has his wager pushed and the player who bet on Buffalo wins and collects $200 so the house loses $300! When the final score lands between the outer extremes of the range of pointspreads for a game the house is said to have been middled.
It is the risk of getting sided or middled that keep books from moving lines, and it is the risk of having a position on a losing team that force them to move the line. Books that move lines too far can suffer heavy losses with a bad outcome, as will books that don’t move lines enough. The difficulty in knowing when to move lines is what makes bookmaking an art and not a science.
At the start of last season I asked Kent, Bodog’s head bookmaker, what level of risk he is comfortable with. At Bodog, we don’t like to gamble! even though we’re in the gambling business. To minimize risk for ourselves and for our players, we take reasonable measures to balance action by making calculated line moves. We don’t move lines recklessly to balance at any cost because of the risks of sides and middles. Our players will occasionally find value in the lines but can be comfortable knowing we aren’t risking the house on any game. This week I asked him if there were any changes in his strategy. No, we have had success in the last year and even with the heavy growth we’ve experienced, we will be sticking to the same basic philosophy! the numbers are just a little bigger.
Every book moves lines a little differently and so every day there are differences in the lines between books for the exact same game. I will talk about the opportunities presented to sports bettors as a result of these differences in next week’s column on shopping lines. I will come back to the topic of balancing action in two weeks when I discuss key numbers (spreads of 3 and 7 in football).
The enjoyment of your wagering experience with us is my number one priority. Should you have any questions, concerns, or comments, I will personally ensure you are satisfied with your Bodog experience.
Good luck with your wagers!
I always welcome comments, questions and suggestions via email at rob@Bodog.com
Rob Gillespie is President of Bodog Sportsbook & Casino