Photo: USA Today Sports

Gambling on the NFL is big business, especially after a 2018 Supreme Court decision striking down a federal ban on sports betting. Recent estimates suggest that as many as 46.6 million people will place a bet on the NFL this year, representing nearly one out of every five Americans of legal gambling age. As a result, there's been an explosion in sports betting content, most of which promises to make you a more profitable bettor. Given that backdrop, it can be hard to know who to trust.

Fortunately, you can trust me when I promise that I'm not going to make you a more profitable sports bettor. And neither will any of those other columns. It's essentially impossible for any written column to do so, for a number of reasons I detailed here. (I'm not saying it's impossible to be profitable betting on the NFL, just that it's impossible to get there thanks to a weekly picks column.)

This column's animating philosophy is not to make betting more profitable but to make betting more entertaining. And maybe along the way, we can make it a bit less unprofitable in the process, discussing how to find bets where the house's edge is smaller, how to manage your bankroll, and how to dramatically increase your return on investment in any family or office pick pools (because Dave in HR and Sarah in accounting are much softer marks than Caesar's and MGM).

If that sounds interesting to you, feel free to join me as we discuss the weekly Odds and Ends.

"Unders" Update

I figure we'll just make it a weekly feature to track the performance of "under" bets through the season. Last week the unders went 6-7, which leaves them 58-55-1 since we noticed how well they were performing six weeks ago. This has been a really fun example to track; unders were killing it early in the year, but by the time everyone noticed Vegas had also noticed, updated, and closed the edge. Now we're back to the status quo, which is less "Vegas doesn't anticipate how low-scoring this season is going to be" and more "Vegas has a great read on the scoring environment but unders retain the most marginal of edges-- not even enough to beat the vig-- just because people prefer betting the overs".

Seeing the Future(s)

The season is nearing its end, and futures bets are starting to pay out, so I wanted to take this week to talk about what they are, why they're not all that great for professional gamblers, and also why those same reasons make them pretty fun bets for recreational gamblers like ourselves.

To start with, a "futures" bet is just any wager that won't resolve in the near term. If you bet today on who will win the Super Bowl this year, that's a futures bet. If you make that same bet in February, it's just a regular bet.

The most common examples of futures bets in the NFL are season win totals, award winners, and the Super Bowl champion. Award-winners and Super Bowl champions are fairly straightforward, but since the field of potential winners is so much bigger early in the year (theoretically, all 32 teams have a shot) than late in the year (only two teams can still potentially win it by the time it arrives), you can get "longer" odds by betting it early.

For instance, a team might be listed as +3000 to win the Super Bowl. This means a bet of $100 will return $3000 (plus the original $100 stake). These odds are substantially higher than even the longest-shot moneyline bets. (Last week, the Cowboys were favored by 17 over the Texans, the largest spread of the year so far, but Houston's betting odds to win outright were still just +1100.)

The primary problem with futures bets is that whole "resolves in the future" thing; this is why high-volume gamblers don't tend to like them as much. If you commit money to a futures bet, that money will be tied up for months or potentially even longer. This increases the opportunity cost.

Over the last 30 years, the S&P has grown by an average of 7.42% a year, which is 0.598% a month. Over the last 20 years, that's 6.6% a year or 0.534% a month. Over the last 10 years, that's 8.0% a year or 0.644% a month. Obviously, on a month-by-month and year-by-year basis, that can vary quite a bit; it was up 26.9% in 2021, it's been down 16.2% so far in 2022. But the long-run expectation is a gain of about 7.5% a year and 0.6% a month. That means if you tossed your $100 in the market instead of a futures bet, your expected payoff in six months would be $103.65. The opportunity cost of a 6-month futures bet is almost as large as a typical vig (standard -110 odds translate to a 4.54% vig.)

Because of this opportunity cost, for futures bets to be worth it, you need to find an edge that's not just enough to beat the vig in expectation, but enough to beat both the vig and the market. And the longer the timeline, the bigger that edge needs to be. If you were betting today on who would win MVP next year, your money would be tied up for thirteen months and the opportunity cost of not putting it in the market would be 8.1%.

The other problem with futures bets for serious bettors is that they resolve in the future. No, this isn't just restating the same problem all over again; if you remember from earlier in the year when we discussed optimal bet sizing (or "Kelly" betting), gamblers with an edge who bet optimally should be expected to make an average percentage return on every "cycle" of bets, leading to geometric growth (where your bankroll grows faster and faster over time).

When bets resolve in a week and give you your money back to allocate again, you can go through 16-20 "cycles" in a year, getting 16-20 periods of exponential growth. Small growth, for sure, but the point of exponential growth is that it compounds over time. If you have just a 1% edge and manage to compound it 20 times, you'll go through 200 "cycles" in 10 years of betting on the NFL and increase your bankroll by 632%. If you instead limited yourself to one "cycle" a year (say by tying all your money up in preseason futures bets), you'd only get ten "cycles" of compounding growth and your bankroll would increase by just 10.5% over the decade. That's... a pretty stark difference.

(This is, of course, contingent on you actually having a 1% edge; if you don't have an edge, betting weekly just ensures you go broke that much faster.)

This isn't to say that professional bettors never make futures bets. It just means they need a substantially larger edge before they'll commit money there. I've heard some bettors have had success with correlated futures bets (betting on two events where if either one occurs, it makes it more likely that the other occurred as well), for instance. But futures will never be the bulk of their betting strategy.

Of course, all of these things that are liabilities for professional bettors can be viewed as assets for recreational gamblers such as ourselves. If you have an edge, futures bets will limit the amount of money you can win. If you don't have an edge, they'll likewise limit the amount of money you'll lose.

Futures bets can drag out the suspense and tension (which is primarily where the fun is), doling out the tension and release in drips over weeks instead of in a flood over hours. This gives them a strong return on investment from an entertainment standpoint.

Also, because futures bets can get such long odds, they can easily tickle some of the same pleasure centers as the lottery, which is simultaneously the most popular form of gambling and also the least rewarding. You'll lose a lot less money in the long run betting it on 3,000-to-1 events than you will spending the same amount buying MegaMillions tickets.

One of the most famous bets of all time came in 2016 when Leicester City won the Premier League in soccer. No team out of the traditional soccer powers had won the league since 1993, and Leicester City had only joined the league the year before. As a result, they were given 5,000-to-1 odds (or +500,000 in more standard American terms), which meant tossing $10 on them before the season would have returned $50,000, and dropping $100 would have paid out a half-million dollars. It's not quite as lucrative as winning the lottery, but that's still a pretty massive return.

(As an aside: the fact that the lottery pays out even more is a point against it; 70% of lottery winners wind up broke within seven years and many have their lives ruined by the sudden influx of money. A half-million dollars is a lot less likely to ruin your life than $232 million.)

Now, I want to reiterate: the overwhelming majority of 5000-to-1 bets are not going to win. You'll lose money betting futures just as easily as you will betting sides. But even the bets that don't win can still provide plenty of excitement along the way.

In 2017, Las Vegas was awarded an expansion franchise in the NHL. Excited to finally have a hockey team, many locals bet on it to win the Stanley Cup at +50,000 (or 500-to-1).

They were more betting on the team as a show of support than as a serious bet, but the Golden Knights broke all records for success by an expansion franchise and made it all the way to the finals, where they lost in five games. That +50,000 bet didn't ultimately pay out, but the excitement in the city became more and more palpable the further the team advanced as those life-changing payouts became easier and easier to imagine.

Plus, once a team outperforms its preseason futures, there are ways for bettors to "hedge", essentially pivoting to betting against the team to ensure that you get a big payout if they win and another big payout if they lose instead.

Before this season, the New York Jets were worse than +10,000 to win the Super Bowl. They probably won't win it all still, but the fact that they're still alive (and more than that, have looked positively feisty even against the best teams) means you still have plenty of hope. If they make the playoffs, you could place smaller bets on the other eleven teams in the field to lock in a smaller, guaranteed profit, or you could "let it ride" and keep hoping for the big payday. Plenty of options are available.

As I said, most longshots lose; if you'd instead put $10 on the Houston Texans to win the Super Bowl at +29,000, that money's already up in smoke. But for recreational bettors, this isn't a dealbreaker; all of our bets are more likely to lose money than not.

In terms of maximizing the amount of enjoyment we get per dollar staked, though, futures bets can be a powerful tool.

Lines I'm Seeing