Chopping The Hold

One of the most powerful ways I know to think about whether a sports bet is winning or not is to think about the hold. Sportsbooks win against their customers because they tack a hold onto their markets. If I can chop that hold down to zero and then turn it negative, then I’m the one who will win.

I could beat Mongolian netball markets with a negative hold.

You start with the 4% hold that the sportsbook has tacked on the market. Then you use every trick you know to try to chop away at that hold. If you can chop it below zero, you bet it.

You don’t have to get it much below zero. Remember the story about the guy on the Internet claiming to hit 60% of bets. Never mind that it’s a bullshit claim, you wouldn’t want to hit 60% anyway. Because to hit 60% you’d have to intentionally pass on 58% and 56% and 54% bets. Why the heck would you want to pass on bets that win? There are a lot more 54% bets floating around out there than there are 60% bets.

The main reason to pass on a “marginal” bet is when if you’re wrong about it, you end up eating most of the hold. An example would be if you found an obscure prop bet that is offered at only one sportsbook. They have an 8% hold on the market. You have a model, and your model says that you have a 0.5% edge on one side of the prop.

Don’t bet that. Yeah, the prop likely isn’t priced very well. But in the best case when you have the situation pegged exactly right,

you have a 0.5% edge. But if you’ve made a substantial mistake pricing the bet, then you could be betting essentially at random, which means eating the 8% hold. Those are the marginal bets to pass on.

The more market information you have, though, and the surer you are that you’re at worst betting into a small hold, the more you should err on the side of betting your ideas.

The first step is to open accounts at lots of sportsbooks and compare market pricing between them. You’re trying to create synthetic markets with low hold. If you compare only identical markets (like a 6.5 full game point spread only versus another 6.5 full game point spread), that’s like trying to buy a vacuum cleaner but limiting your shopping search only to brick and mortar retail stores.

If you expand your comparison shopping to related markets (like comparing a 6.5 full game point spread to a 6-point spread or a moneyline), that’s like adding in some major internet retailers to your search for the best priced vacuum.

If you expand further your comparison shopping to derivative markets (like comparing a full game point spread to a first half or first quarter point spread or moneyline), that’s like trawling Craigslist and hitting the garage sale circuit bright and early Sunday morning trying to find bargains.

The more you expand your shopping search, the better deals you will find—though at the cost of time and effort.

If you want to be able to comparison shop properly, you’ll need to be able to convert prices between different point spreads and across derivatives. If -6.5 is -110, what is the equivalent price for -6?

This sort of conversion is easy to do. You need some league data and then you need to build a push-rate chart like I described

earlier in the book. And with the same dataset you can build full game to first half and first quarter conversion charts as well.

You don’t have to do this work, but if you don’t, you’re going to be stuck shopping the brick and mortar stores, and you’ll find many fewer good bets.

So you’re trying to chop that 4% hold down to nothing. For most bets you find, most of the chopping will happen in this step—finding the synthetic low-hold market. Say you get a 4% hold market down to 1% by creating a market between a first half total at a retail sportsbook and a full game total at a market maker sportsbook. The retail sportsbook has a higher price on the total, so if you’re betting under, you’re betting it there. If you’re betting over, it will be at the market maker.

How do you get rid of the other 1% to make a good bet?

Maybe you have an angle play? What’s the weather? Say it’s moderately windy. Perhaps it’s not windy enough that all the sports-talk folks are making a big deal about it. It’s just a little windy. But you know that high winds push scoring down, so lowmedium winds should also push scoring down, but by a smaller amount. Is that worth 1%?

Maybe not. It’s worth something though—and if you notice something like that in a game, it should make you more inclined to bet with the angle and less inclined to bet against it.

Maybe you think it’s worth about 0.25%. Okay. So now we’re down to 0.75% hold if we want to bet under.

Was there any price movement at a market maker? Say the total for this game recently moved lower at the market maker you’re looking at. This is a steam situation—the price moved, but the retail sportsbook hasn’t adjusted or moved their first half derivative yet. That’s worth something due to the agreement effect—whoever bet the market maker total lower would likely also tend to agree with your first half under bet at the retail book.

Sports betting is a multiplayer game. If other folks who are moving markets would likely be on your side of a bet, that’s a good sign.

Maybe it’s worth 0.5% here. Whoever bet under didn’t keep betting it to move the market even lower, but there’s a chance they would have bet it if they could have gotten your (better) price.

Okay, you’ve got the hold down to 0.25%. Still not zero, but close. Maybe you sit on the bet for a bit to see if you can find one more arrow pointing in your direction to tip the scales.

Say the market maker moves down a couple more ticks on their total. Okay, go bet.

Say some injury news breaks—one of the better offensive players who was listed questionable is announced out. Okay, go bet.

Say the weather report changes and a little more wind is now predicted. Okay, go bet.

Say you can find what is clearly a good bet on a first half side at the same retail book that has the total you almost like—and you know that the side will be mildly correlated with the under. Bet the parlay.

Or, on the flipside, the market maker moves up a couple ticks on the total. Hold off.

Some injury news breaks the other way—that good offensive player who had been listed as questionable is confirmed to play. Hold off.

And so on.

Everything is in constant flux. Lines are moving. Synthetic markets with low hold are appearing and disappearing. News is coming in. Weather reports are changing. You’re looking for moments in time when the sports betting universe is cutting you a break. When it’s saying, “Sure, go ahead and bet either side, and

we aren’t going to charge you any hold this time.” When it’s saying, “Sure I see that sharp price at the market maker that’s been hammered into place with millions of dollars of action, but I’m going to offer you a closely related bet that I’ve priced myself and it’s 5% off the market maker’s price. Happy Birthday.”

I like this model of trying to chop the hold down to below zero on your bets because it keeps you out of trouble. You get the hold down to 0.25% and then you get a little overzealous on one of your angles and bet when you probably shouldn’t have.

Okay, big deal—you’re betting into a 0.25% hold market. You just can’t get it very wrong when you do that.

You only get in trouble when you try to be a hero into full hold markets.

This is the fundamental process for finding good bets. If you want to dive deeper, then you can add two more powerful tools to your toolkit.

Data modeling. It’s very hard to build a model that crushes major markets if you try to take them head-on. It’s much easier to build a model that’s useful for tipping the scales when you get close—like in the 0.25% hold example from above. Say you had a simple model using widely available data to project totals for this sport, and your model liked the under by a little bit. That by itself could be worth another maybe 0.5% to 1% on the hold, tipping it into negative territory and giving you an easy bet.

If you decide you want to take sports betting seriously, you’ll have to start working with data and building some models.

Subjective handicapping. We didn’t cover it yet in the book, but it’s a real thing that can help you win. What did the quarterback look like last game? Does that rookie pitcher on a hot streak appear to be the real deal, or does it feel like the magic is going to disappear at any moment? Does that basketball team

seem like they’re mailing in the rest of the season, or have they just had a series of tough results?

On its own, subjective handicapping isn’t enough to win anymore. But in-depth knowledge of a sport moves the needle. Putting in hours watching games on replay matters. Insights you get from doing this can be worth maybe 1 or 2% on the hold if your opinion is strong and reliable enough.

So, again, you don’t want to blast away into 4% hold on your pet theory about the backup quarterback who is starting the next game. But if you can get the hold down to 1% by line shopping, comparing related markets and derivatives, by using steam or other weak angles, then your opinion about the quarterback might then be enough to tip the balance.

F INAL T HOUGHTS

The more pieces you can bring together, the more likely you are to have found a good bet. All the ideas in this book work together. Any one idea on its own might not be enough to unearth a good bet, but several ideas working together can do it.

Think in terms of break-even percentages. How often does your bet have to win to be profitable? (That’s the basic breakeven percentage calculation from the beginning of the book.)

How often does the market think your bet will win? That’s a different question that requires you to draw inferences from prices you see at market maker books, recent line movement at those books, conversions between related and derivative markets, and more.

If the market thinks your bet will win in the ballpark of the break-even percentage you’re being offered, is there a reason you

might know just a little bit better than the market how often this bet will win? Do you have a little extra information? Are you analyzing widely available information just a little better? Are you betting into a weak sportsbook or weak market where your information advantage will be more reliable? Or are you thinking of betting into a stronger book or market where you may not always come out on the right side of the information equation?

If the market thinks you’re close, and you think you have an extra edge to put you over the top, then go ahead and bet. The worst you can be is wrong.