Sports betting is an evolving market that has changed a ton in the past 5-7 years. Oddly enough, the wannabe sharps hanging out on betting forums apparently haven’t got a memo instructing them to catch up to modern times. I say this because many still use “fade the public” and terms like “the public” while attempting to engage in serious sports betting discussion. Considering such rhetoric has had no more than extremely limited relevancy to strategic betting discussion for going on at least three years now, I figure now is the time to set the record straight. In this article I’ll cover the evolution of sports betting in order to illustrate that sports betting is now a “near efficient” market.
What is Fade the Public?
Many years ago it was possible to beat sports betting by simply sitting in a Las Vegas sportsbook, observing who was betting what and watching how the lines changed. If you watched long enough you could gauge which direction the sportsbook had the line shaded. Let’s take for example a Major League Baseball game between the New York Yankees and Kansas City Royals. For many years the Yankees were the best, had a global fan base and the Royals were a pathetic cellar team. The theory was: the sportsbooks will take so many bets on the Yankees, forcing them to have large action on the Royals, they’d shade the lines in such a way the Yankee bets were largely –EV to the punter, and Royals bets were +EV to the punter. It was a simple system and made total sense.
Early Internet Years
In the early years of online sports betting, let’s say 1999 to 2004, sophisticated sports bettors made massive profits by simply determining fan biased, watching lines move and then acting accordingly. This concept was called “Fade the Public“. While it is slightly, and I do mean slightly, more sophisticated than mentioned here, covering it is of little importance because this system doesn’t work.
Modern Internet Years
Today, it is quite easy for sports bettors to get down six figures of action on a major market such as NFL football. For example Betfair.com is a peer to peer betting exchange where members can bet against each other with low margins for however much the collective other side is willing to stake. Meanwhile, Pinnacle Sports is a reduced juice online sportsbook offering punters the ability to bet up to $30,000 per bet on major markets, and… as long as the line moves after a max-bet, the punter is free to make additional $30,000 max bets. Bookmaker.com allows $40,000 in total bets on major games; 5Dimes.eu allows $10,000 in total bets on major sports markets. These are all highly reputable betting sites, so as you can see, getting six figures down on a side is not all that difficult.
The Pinnacle Lean
On October 28, 2005 the eighth addition of a popular weekly article series called the Pinnacle Pulse was released titled “The Pinnacle Lean”. This article explained that when Pinnacle has a line different than other betting sites it is not because Pinnacle has taken a position on the game (a lean), but rather this line moved due to sharp action. Considering Pinnacle Sports charges less vig than other betting sites, and has by far the highest limits, it makes complete sense that if a professional bettor disagrees with the market price; he’s going to bet large at Pinnacle rather than at another betting site. This is when the idea came about that lines move first at Pinnacle and then other sites follow.
This article also cleverly suggested sports bettors play the arbitrage. Monkey see, Monkey do, and guess what… it worked great. After a while sports bettors caught on that by arbing, more times than not, they were losing money at Pinnacle and winning at the other site. Eventually it became common knowledge all that was needed to beat sports betting was to find any line that could be arbed against Pinnacle and bet only that side.
To make sure no readers are lost, let’s say PinnacleSports.com has Giants -7 +111 and www.5dimes.eu has their opponent +7 -105. Albeit a small profit, a bettor could place wagers at each site in such a way they’d win money no matter what the outcome of the game. For example: place a $525.00 to win $500 max bet on +7 -105, and place a $485.78 to win $539.22 bet on -7 +111, and no matter which team wins you profit $14.22. This is called an “arbitrage bet“, or other times referred to as an “arb“, “scalp“, or “surebet.”
Again sports bettors soon realized Pinnacle Sports is where the professionals bet. Considering their limits are higher and their margins lower than any other site, when there is arb available involving pinnacle, 19 times out of 20, the other betting site (not Pinnacle) is the one offering a +EV wager. If you simple use stringent bankroll management and only bet the +EV side (skipping the arb) this is a near surefire way to make profit sports betting over the long term.
Sports Betting is Near Efficient Market
Whether or not sports betting is an efficient market has been debated to great lengths for many years. There has even been a study by Clemson University about whether literature about sports betting is outdated because of how efficient the market has become. You’ll find many articles in the source credits that cover that very topic. You can also go to advanced math forums and find discussion on the sports betting market that appears to use an alien like language and math symbols most have never seen before. Let’s put this all aside permanently, I’ll instead explain how sports betting actually works.
Sports betting lines are opened in most cases by either Pinnacle (www.pinnaclesports.com) or CRIS (www.bookmaker.com). Then, within minutes, the other early betting sites get their lines up including 5dimes, TheGreek and BetDSI. These early lines are considered “rough”, they represent the calculated opinion of a select few odds makers. The opening lines carry low betting limits and as bets start coming in, the sites adjust their lines to find a spot where the action is not lopsided. When this spot is found they increase the betting limits a little, and then the same thing might happen. In the case of NFL football, lines “sharpen” throughout the week and come Thursday or Friday betting sites start allowing high betting limits on their posted lines as they are confident the lines are efficient (sharp).
What would happen if Pinnacle Sports left a bad line up for betting? The most sophisticated bettors in the world would hammer it again and again, getting down as much action as they can $30,000 max bet at a time. What happens when a recreational betting site offers a bad line (public biased line)? The sharp bettors max bet, the legions of bettors good at capping the market see the lines is off just by comparing it to pinnaclesports.com and unload as well, and then all the arbitrage players grab that side and bet it off at other places. The truth is all the fans betting $50.00 and $200.00 per game do not come anywhere close to contributing the amount of money professionals, arbitrage players, and market cappers contribute to the betting pool.
What this means, if just before kickoff the line is New York Jets +7 -110 versus Tennessee Titan -7 -110 there is fairly good chance that the odds of the Titans covering -7 is around 50%. If however the bookmakers have shaded the line, it needs to be in such a way the other side of the bet is not +EV. So considering their juice, perhaps it is a 51/49 or 49/51 proposition. The idea however that sports betting can be beaten because fan biased has caused the line to get shaded one way or another so much so that one side is +EV borders on lunacy; it truly does. While that discussion might have been worth having in 1981, or 1994, or maybe even 2003, in 2011 it has little place in a serious sports betting discussions.
The conclusion I can give on the topic “fading the public” is the closing line (which means the line the second before the game started) represents the opinion of the smartest bettors in the world, of what a games true odds are, when you simply factor out the vig. The betting lines are efficient; they represent all “known” information. This includes trends, quirky things etc. All known information is built into the line and is how the closing price is determined. In other words, sports betting largely is an efficient market.
The good news is there are still plenty of ways to win at sports betting. You could pick up “Conquering Risk: Attacking Vegas and Wall Street” by Elihu D. Feustel, learn predictive modeling, and then bet opening lines while they are rough. Or, you can follow simple articles in published here at Online Gambling in layman’s terms which show how simple math combined with the understanding the market is efficient can combine for massive profits. It is so simple, anyone can follow these articles. To see an example I suggest my comprehensive guide to teaser betting strategy.
As a final tip I’ll leave you with this. The next time someone says the words “fade the public” or uses the rhetoric “the public” or “public bettors” in any capacity don’t correct them. For as long as the masses of “could be” winning sports bettors believe this flawed theory, there will be profits to be had in other areas they’ve yet to discover. With that this concludes our article on the evolution of sports betting, and as always: we at onlinegambling.co wish you the best of luck this betting season.