Summary

  • Betting content is represented as profitable suggestions or predictions

  • It is incredibly difficult to provide positive expectation value (+EV) predictions over the long term

  • Predictive information is hard

  • Entertainment focused betting content is easier

  • +EV is hard to explain

  • Predictive and +EV is boring

  • Does the inherent conflict matter?

 

The Inherent Conflict with Betting Content

In April 2017, the Business of Betting podcast was launched, partly, with the objective to try something new in a space that is not dripping with innovation. That being the betting, gambling and wagering content space.

At that time and arguably still very much the same today, a typical betting content show (radio, tv, podcast etc.) is around 30min and consists of picks, tips, brief handicapping analysis, best bets, morals, locks and guarantees. This is then cut up into 30sec clips and reduced to 140 characters for broad distribution. By its very nature and putting aside the actual intent of the producer, betting content in 2019 is catered to the recreational bettor as an entertainment and fan/bettor engagement product.

Don’t get me wrong, I am not critical of this approach and completely understand the business objectives producing this type of content for the proposed audience. In saying that, it is not necessarily sustainable in a world where there are no bandwidth barriers (unlimited YouTube videos and low-cost podcast creation to a worldwide audience) and no distribution barriers (social media and blog/website creation is inexpensive or free). Someone will always be able to do it better, cheaper, faster and more intelligently.

It is very difficult to truly know the answer but something like 1-3% of bettors (let’s go with 2%) are able to win long term. If you estimate that most of the 2% have no interest in sharing their secrets or models, you are left with a very select few that may share some of their information publicly and for the rest, they are in the 98%.

So, what is the conflict?

Generally, betting content is represented as profitable suggestions or predictions that will empower the bettor to make winning selections (and money) in the short term.

Generally, it is incredibly difficult to provide positive expectation value (+EV) predictions over the long term, therefore, the betting content is very hard to categorize as anything other than entertainment or negative expectation value.

There are some people who are able to take certain betting content for what it is, that being entertainment. For the vast majority, it is viewed as actionable and treated as such, leading to bets being placed or financial decisions being made based on the betting content.

The stark reality is that the 98% are usually representing their information as +EV predictions.

Predictive information is hard

The 2% are not sharing what they do, how they do it and the proprietary information that comes with that. The problem for the media ‘gambling expert’ is that they probably don’t bet their own selections or have skin in the game to fully appreciate how hard it really is to climb into the 2% category. It is probably not simple to convince certain so-called gambling experts that they are harming the bottom line of their audience rather than augmenting it.

The issue with the general gambler is that they believe that their favorite gambling expert is really able to give them an advantage or ‘the right side’. Further, it is not hard to see or find those who boast small sample size positive results as evidence of legitimate betting expertise (rather than what is probably is….luck). The ability to market this luck is prevalent across the internet and it is not a new phenomenon.

Short term variance and luck can be as long as an entire NFL season where anyone can go on a winning streak (see Personal Gourmet’s 70% ATS record in the Westgate Super Contest – this is not a betting market but used for illustration purposes of how widely distributed short-term results can be). Even if you can put together some sterling results, you still need to battle the typical barriers like getting outs to bet and disciplined bankroll management to ensure you don’t over bet your edge and deplete your bank, even with +EV selections.

Predictive and +EV is really hard for the 98%.

Entertainment betting content is easier

The wrong team is favored and I love this team as a home underdog. They are coming off extra rest and the defense has been impenetrable so far this season. I will be taking them on the money line and expect them to win the game.

This analysis is easy to find and will probably resonate with inexperienced gamblers. The problem remains that the information mentioned is clearly known and therefore included in the price or line available, usually at a rate consistent with its impact on the result. It is also impossible to understand the size of the edge based on the above analysis or what number this person has for this game (if they have done that work).

The vast majority, some would say all, doing their analysis or public explanations in this simplified manner will find it nigh on impossible to win long term against the house edge. Major betting markets, such as the NFL or NBA, are very efficient and without sophisticated and modern technology, mathematical, analytical and process driven betting systems, the odds may not be in your favor.

It may be pertinent to note that this does not mean ‘gut feeling and only watch games’ guy is always inferior to ‘math model nerd’ guy (sorry for the stereotypes), it just means that over a large enough sample size, the reality is that generally you are far more likely to be successful with a more modern approach. This is due to a number of factors and biases that exist, including ‘our eyes lie’, recency bias, loss aversion, confirmation bias and so on.  

+EV is hard to explain

Betting shows that have 30 minutes to get through the high-profile NFL games, a few tantalizing college football fixtures, Warriors at Rockets, some college basketball futures and a recap of Heisman trophy line moves, certainly do not have time to extrapolate on why their models like a certain game or why and how a team of researchers, data scientists and analytical minded traders are about to extract value from certain games (shout out to the more qualitative professionals who can make that method work).

In addition to that, models typically contain vast amounts of information, variables and levers, which will generate a price or number on a certain team/game. Even if you wanted to, it is not always possible to identify the exact levers that have resulted in a game or team representing value. A single WR/CB matchup is not the sole or major reason for a betting opportunity in most cases.

Predictive and +EV is boring

Another element that is relevant is that well explained +EV predictions and staking plans are generally boring. It may not be boring for a sophisticated bettor or professional who is looking at picking up information from other smart quantitative professionals, but for the average fan looking at placing a bet on a game, it is not likely to be as compelling with all the caveats and exceptions that legitimately need to be considered, compared with the hot take betting content personality, with generally no accountability for their selections.

Due to many factors and variables within the model, we have the home team priced at -9.75 with a current edge over the market price of x%, being our biggest edge even after regression back to the market price.
Oh, but don’t forget, you may not have the same staking philosophy, we are using quarter Kelly, and perhaps are not interested in regressing back to the market as much as we do (or at all), so please factor that in to calculating your final numbers and edge on the game.
Also, I see variations in price/spread from -6.5 -120  to -7 +105 and a few other prices across the screen so it will also depend on how much you value 7 in today’s NFL and what outs you have among other considerations.”

Does the average bettor want to hear this analysis every time an expert explains their position on a game?

The other critical element that is relevant for the 2% is that they will only bet a game or team when there is a discernible edge. As a result, they are selecting their bets based on when there is value rather than what a producer tells the media personality the games that are to be covered. If the Super Bowl is to be covered, you might find a professional bettor saying:

I don’t have an edge on this game so I won’t be betting it.”

This is not an option for the media personality and would make for a pretty boring Super Bowl eve gambling show.

Forecasting

If I have not been able to convince you yet, let me give it one more try. As Tetlock astutely found when studying subjects who were asked to predict certain events, the media expert is no better than a dart throwing monkey at forecasting. Of course, this is not exactly the same as betting markets but the study shows how media experts have struggled due to the way media pundits and so-called experts are selected (and often rewarded).

Daniel Kahneman when commenting on this topic from Thinking Fast and Slow, “People who spend their time, and earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys”.

Instead of acknowledging and embracing the uncertainty in betting markets, whether it be selecting the winner of a horse race, the next NBA champion or the winner of an election, experts and pundits often are struck by overconfidence, impaired by the illusion of control and they are rewarded for acting more confidently than they should.

Does the inherent conflict matter?

As you will have noticed, this article does not propose any perfect solutions or even condemn those who produce entertainment betting content. The reality is that we as humans are often hardwired to take the easy option. We don’t always want to do the hard work and be critical. Low hanging fruit can still be delicious, even if we lose money over time eating it.

If the average gambler is going to lose at the rate of average hold in a given market or worse (due to poor bankroll management and bet sizing) does it really matter if they continue this behavior for the life of their betting account?

Of course, it does!

Education is critical, on a number of fronts. Firstly, we need to educate those who are taking certain information and treating it as +EV when it is clearly not. Secondly, we need to educate ourselves far more on the nuances of betting markets and gambling in general. The unfortunate reality is that we succumb to so many cognitive and other biases that constant learning is critical to overcome our own mind, before we take on the bookmakers. Finally, when we have a solid foundation, we should continue to arm ourselves with all the tools and information we can get in order to approach betting in a more professional manner, if that is the intent.

For those looking at betting as a recreational endeavor, by all means, follow your favorite media personality with a $5 bet and enjoy the ride, but be aware of the realities that come with it.
For the rest, understand the marketplace of betting content is skewed to entertainment and negative expectation value predictions that won’t be the sweet elixir to your betting success.

 

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