Every time you make a bet you should be thinking about 3 things:

1. Probability

2. Price (Odds)

3. Proper Size

Probability –

What percentage chance do I have of being right?

If you think you have a 100% chance of being right, you may need to go back to the drawing board.

In the NCAA, 75% of bookmakers favorites win – meaning only 25% of underdogs win outright.

For the NFL, 67% of betting favorites win – conversely only 33% of underdogs win.

These percentages should be used as starting points, when thinking about favorites and underdogs for football.

At the end of the blog is an example of how to think about probabilities for the Oklahoma @ Texas game this weekend leveraging the crowdsourced content TCL offers.

Price –

Price is another way of saying “odds” – what are the odds I am accepting from a bookmaker?

Theoretically, the bookmakers set the odds where the outcome is 50/50 for each of the teams covering – in practice the line is set where the bookmaker thinks they can achieve as close to “equilibrium” as possible (meaning, the same amount of money on each side of the bet). Bookmakers also think about one games odds in light of a portfolio of bet offerings – the bookmaker offers odds on lots games and think about one games “odds” as one “asset” in a bookmaking portfolio – and in isolation too.

After thinking about probabilities, you need to think about the odds you are willing to accept.

If you have a game that is a toss up (50/50 chance) between two awesome teams – like Alabama versus Clemson-  last year National Championship Game – and you like the underdog – Clemson in this case – and you get +6 points. This a great spread bet because the odds are in your favor with a 50/50 outcome AND +6 points of room for error.

Proper Size –

This is where the rubber hits the road.

Folks get into a lot of trouble when dealing with proper sizing of bets.

Each human is subject to cognitive bias where we are more confident than we should be when it comes to betting and – in turn – we make bad decisions – particularly when it comes to sizing bets.

Simply put, bettors speculate too much by overestimating the occurrence of unlikely scenarios.

In order to counteract cognitive bias, you need to approach a bet from the standpoint – I am probably wrong so how can I bet without getting smoked and are the teams involved in the game of the highest quality or poor quality (this relates to randomness – we’ll discuss more in later blogs).

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When it comes to assessing probabilities, prices and proper sizing – there is no greater tool than crowdsourced date.

I repeat – there is no greater tool than crowdsourced information.

That is what TCL offers/

How do I know?

I sat on a trading desk for 15 years and stared at prices and data all day long.

I used data to make 1000’s trades which were both super-sized and small.

Said differently, I have been around the block a few times and I have thought about the P’s my entire adulthood and have created crowdsourced tools to crush the 3 P’s and identify value opportunities.

You should show your buddies The Crowd’s Line – if you want to help them understand risk, reward, randomness and the Three P’s.

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OKLAHOMA  @ TEXAS

This is very simplistic – but a good example nonetheless.
Using the crowdsourced data BELOW, please notice a few things:

• – 30% of the Experts (9 out of 30) like TEXAS to WIN

• – 70% of the Experts (21 out of 30) like TEXAS to COVER

• – The Moneyline is +300 or 3/1 or a there is a 25% chance of Texas winning – so if you bet the Texas Moneyline you pick up value as 30% of the Experts (who are extremely predictive) like a moneyline that offers a 5% absolute value because 30% – 25% equals 5% of value. The moneyline offers 20% of RELATIVE value (5%/25% = 20%).

• – Remember, in theory – the spread is set where each team has a 50% chance of covering – in our case 70% of the experts see Texas covering – so there is an additional 20% of absolute value (70% -50% = 20%) – or 40% of RELATIVE value (20%/50% = 40%)

• – I will bet medium on TEXAS to Win and Cover – If I was betting $100 I would bet $70 to WIN on TEXAS and $30 on the TEXAS Moneyline.

• – TEXAS may lose – even get blown out – also TEXAS may cover and/or may win and cover – regardless, I know using crowdsourced data that I am assessing probabilities properly, evaluating prices (odds) properly and I am not going nuts on the size (because TEXAS is not an “A” – I’ll get more into that later.)