Vegas Still Isn’t Buying The Orioles
A new list of World Series and playoff odds is up at Bovada. There are, at this point, few surprises. By September, we have a good idea of who the contenders and pretenders are; we know the teams on the periphery and we know the teams right in the thick of races. Seeing Texas and Cincinnati favored to win their leagues shouldn’t surprise anybody.
There is one particular bet, however, that caught my eye.
MLB Special – Will the Baltimore Orioles make the playoffs in 2012?
Yes -115 (bet 115 to make 100)
No -115
The Orioles at even odds to make the playoffs? You would be laughed out of the room back in April, but in September, with Baltimore tied atop the AL East and 3.5 games clear of the Angels for the Wild Card, it’s a sign that Vegas still isn’t buying the Orioles.
Even with the litany of numbers-based arguments against the Orioles’ quality — most prominently Pythagorean record and run differential — numbers-based playoff odds calculators give the Orioles a much better chance than Vegas. The number that matters most for the Orioles right now is 3.5, the lead over the Angels. As such, there are reasonable scenarios that see the Orioles still making the playoffs going under .500 down the stretch.
CoolStandings puts the Orioles’ playoff odds at a healthy 72.0%; Baseball Prospectus prognosticates a lower but still robust 62.4%. If you believe either of these, there’s a significant amount of expected value to be had in betting the Orioles to reach the postseason. The expected value of a $115 bet on the Orioles to make the playoffs comes out to $154.80 (.72*215) with the CoolStandings odds and $134.16 (.624*215) with the Baseball Prospectus odds. Bookmakers rarely offer 135% or even 117% return on investment bets like this — Vegas wouldn’t survive if they did.
And so that’s why I do a double take when I see an offer like this. CoolStandings sees Baltimore as a negligibly under .500 team. Baseball Prospectus sees Baltimore as a .455 team going forward. What does that mean Vegas has them at? A .400 team? .350? Is Vegas doing a better job of accounting for things like the Nick Markakis injury? Or is the betting public just slow to react to Baltimore grabbing hold of the second Wild Card? Baseball Prospectus says the Orioles added 36% to their odds with Thursday’s victory over the Rays; CoolStandings says each victory in the Orioles’ sweep over the Rays was worth about an extra 10%.
Is Vegas right? I’m not sure. They usually are, though, and so when I see a betting line like this one that differs significantly from what our other data sources are telling us, I think it can be telling — either telling of our data sources or telling about what the betting public thinks. In this case, I think we’re seeing just how little the sporting world believes in Baltimore. The Orioles get their chance over the next 19 games to prove them wrong.
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We should remember that Vegas doesn’t price based on the actual odds of the event happening. They price based on predicted betting behavior. It’s not that they think the Orioles are .400 team. It’s that they thing the betting public views the Orioles as a 50-50 shot to make the playoffs.
And because the betting public doesn’t understand the odds in situations like this, you get a nice little arbitrage opportunity.
Bingo. This is why the Yankees always come out of the gate in April at the team with the highest odds of winning it all, regardless of whether more analytical baseball minds think they’re the best team (I’m guessing Texas was the favorite of the sabermetrics crowd on April 1st).
Back in 2008 (while I was in business school, incidentally), I began to wonder if one could build an algorithm to take advantage of this arbitrage opportunity. Specifically, how much money bet on the Rays vs. the Brewers vs. the Phillies vs. the Yankees would guarantee you a profit…
Exactly. Vegas doesn’t care and doesn’t actually try to predict who is going to win or lose. They just want an equal amount of money on both sides.
A more accurate title would be “Vegas odds show that people who bet on baseball still aren’t buying the Orioles.”
Not true for futures, because the public is only allowed to bet one side.
You are able to bet the other side of futures. You can bet either they will make the playoffs or they won’t. Even in cases where you can’t bet the other side directly, the sum of the other team bets has the same effect. If everyone bets the Yankees to win the WS, there odds drop, every other teams odds go up.
Vegas doesn’t like to gamble
Gaming industry guy here: Sports books do not try to balance their books, despite the popular notion.
They are trying to win money and actively take positions, more like traders than anything else.
Don’t believe me? Look at their monthly results, filed with NGC and open to the public.
I always, always get confused anytime anyone discusses betting lines. Like this. Bet $115, and if you’re right, you get $100? Who would do that?
You bet $115 to make $100 profit. So a bet of $115 would return $215.
Oh, okay! That makes more sense. Thanks for the explanation.
Oh, and also, I don’t think BPro is actually saying the Orioles added 36% yesterday with their win over the Rays. If you’ll scroll down, you’ll also see it says the Braves added about 60% odds last night, when they were idle and the Cardinals won. BPro’s deltas are just all screwed up. Ignore them.
Good point – I wondered about adding 36% without it being in the last day or two of the season; that figure jumped out as being rather unlikely.
The books don’t have any interest in whether an event is likely they just want a 50/50 split so they break even and net the vig. The only thing that moves the lines is heavy action on either side, so really its the betting public that isn’t sold.
When the author writes about what “Vegas” believes, the betting public is what he’s talking about; similar to when people talk about what “Wall Street” believes.
The idea that they want 50-50 action is a myth. Although it isn’t too far from the truth.
They actually go for a profit maximizing spread that is in between the line that would give 50-50 action, and the line that would be true 50-50 probability. By taking a small position on the event in the opposite direction of the bias of the betting public they can increase profit slightly.
They can increase profit enormously; it’s profit margin they’re only increasing slightly.
They can increase profit enormously alright:
Step 1: post crazy-low odds on the O’s making the playoffs
Step 2:
Step 3: PROFIT.
What Coolstandings and Baseball Prospectus fail to consider but what Vegas has correctly accounted for is the chance that Bud Selig, realizing that the Red Sox and Yankees might for the 3rd year in a row not make the playoffs, uses the best interests of baseball clause to mandate a rule change requiring 2 of the 5 American League playoff teams be the Yankees and the Red Sox thus protecting MLB’s revenues. This highly plausible scenario would make the Yankees and Red Sox playoff teams, the 2nd wild card would go to Oakland, and the Orioles would be staying at home come October.
This line is probably profitable for the smart bettor, but it’s a bad ROI because of the length of time involved. If you want to make expected profit off of the Orioles over the rest of the season the way to do it is to just keep betting on them each game.
I know some serious profitable bettors do sometimes place futures bets, but it’s still never the right thing to do.
Unless you thought it was likely that they could play sub .500 and still make the playoffs. For example if their wildcard lead was more like 5 or 6, I could see that happening.
Did any take the bet?
Bovada is not a sharp sportsbook
Bovada is also not in vegas
Does the 1-game wild card play-in count as “playoffs?” To me, that seems more like the “post-season,” but winning the game puts you in formal “playoffs.” If that’s the case, I can’t say I feel much stronger than 50/50 about the Orioles winning that play-in game. But to just make it to that game, I’ll take those odds.
Excellent point. That effectively would cut the odds in half, depending on which counts as the “playoffs”.
I think this proves that the people of Baltimore make far fewer legal sporting bets than the people of NYC. Considering the difference in wealth and size of those cities this makes sense. I’ll bet the Orioles are under-priced every April and the Yankees are overpriced.