Market Simplification Theory

[uva3021]

Favorites are favored because they have been designated as having a higher probability of success. Therefore, assuming all the market vig is proportional to the outcome, finding a better number on a favorite than what the market has at fair value odds (or just getting a better number than pinny), should this not equate to long term profit?

Just a thought

[uva3021]

I guess I should provide some examples

Let's say Pinnacle has a line on an MLB game set at -130 for the favorite, and +122 for the dog

Adjusting the implied probability to fair value probability (discussed here), the probability is roughly 55.6% of success.

The expected value of this wager is

EV(X) = .556(1) + .444(-1.3)
EV(X) = -2.01% expected loss

Some other sportsbook that has gotten lazy with market awareness is offering the same team at -120. Therefore we have a team with probability of success marked at 55.6% with -120 odds.

EV(X) = .556(1) + .444(-1.2)
EV(X) = +2.4% expected return

Stating teh obvious, yes, but when laid out in presentable form the concept is much more enlightening

[IrishTim]

I agree that if you can get a number scalpable with Matchbook or Pinny (or even just a number better than their no-vig line), playing the off-market number would be blindly profitable. One thing to be careful of is what time you are doing this. About 10 minutes before the game is the most efficient period in a line's life, so that's when you can reliably do it without getting burned by having the line move against you and getting stuck with a position you had no opinion on in the first place.

[uva3021]

Originally Posted by IrishTim

I agree that if you can get a number scalpable with Matchbook or Pinny (or even just a number better than their no-vig line), playing the off-market number would be blindly profitable. One thing to be careful of is what time you are doing this. About 10 minutes before the game is the most efficient period in a line's life, so that's when you can reliably do it without getting burned by having the line move against you and getting stuck with a position you had no opinion on in the first place.

Yeah I guess the final movement would be a better determinant of the market's final position, and that's where things can get tough, because you have to have access to latest line movement and be around a computer or some other source of similar information at all times before the game of interest begins