Looking at Futures Bets
Over the past month we've looked at a number of different futures bets, ranging from odds on how many games each NFL team will win to the odds of winning each division for both the AFC and then moved to the NFC.We've looked at odds on winning the Stanley Cup and odds on NASCAR, and plenty more.
But the one thing we haven't really done is look at the concept of futures bets and the house advantage. That's what we'll do here.
Advantages of Futures Bets
There are two primary advantages of futures bets. The first is that they often provide the opportunity to win a lot of money on a smaller wager and the second is that they offer the casual sports fan/bettor rooting interest for an extended period of time.Since the most common futures bets, such as odds to win the win the Super Bowl or odds to the win the World Series will start off at 5-to-1 or better, those who see their team come through stand to do pretty well financially, especially if they hit one of those teams paying 10-to-1 or better.
Those with limited resources can also make a futures bet and ensure themselves of rooting interest all season long. Since season-long bets usually have a team or two that the bettor will want to see lose, they will have a little more cheering incentive.
Disadvantages of Futures Bets
Just as there are advantages to futures bets, there are several drawbacks, as well. The first is that your money is tied up for a long period. Even if you end up winning, you will not be able to use that money for other wagers. This is probably more important to those with smaller bankrolls.The second reason futures bets may be poor wagers is due to the increase house advantage, which is what we'll look at in depth.
House Advantage on Futures Bets
House advantage is a concept that is used frequently in casino gambling but is present in sports, as well.In theory, a sportsbook will take an equal number of dollars on both teams. If you wager $11 to win $10 on Team A and I come in behind you and wager $11 to win $10 on Team B, the sportsbook collects $22 and pays out $21 (the winning $10 bet plus your initial stake of $11), which gives the sportsbook a 4.55% advantage.
The house advantage on craps and blackjack is less, provided the gambler is taking full odds on craps and playing basic strategy blackjack correctly. On other casino games the house advantage can be much greater.
In horse racing the concept is referred to as track take and it typically ranges between 17 percent on straight bets up to 25 percent for exotic wagers, which is enough to keep many bettors away from the ponies.
When it comes to futures bets, the house advantage can be a lot more. To figure out exactly what the house edge is, the first thing you need to do is convert the odds from the money line into fractional odds.
A team that is +300 on the money line is 3-to-1 or 3/1 odds using fractional odds. The next step is to use the odds to calculate the chance of winning. A team that is 3/1 odds mathematically has a 1-in-4 chance of winning. A team that is +400 has a 1-in-5 chance of winning, while a team that is +900 has a 1-in-10 chance of winning.
Next, we convert each team's odds of a winning into a decimal number. A team with a 1-in-4 chance of winning has a .25 (which is 25%) percent chance of winning. Once you do that for all the teams odds are being offered on and add them up, the number above 1.00 is the house advantage.
We'll look at an example using four teams. First we'll give their odds:
Team A +100
Team B +200
Team C +250
Team D +800
Team A is even money, so they have a 1-in-2 chance of winning, which translates to 50 percent or .5 for our purposes. Team B is +200, or 2-to-1, so they have a 1-in-3 chance of winning, which translates to 33% or .333. Team C is +250 or 5-to-2 odds, so they have a 2-in-7 chance of winning, which is 28.6% or .286 and Team D is 8-to-1, meaning they have a 1-in-9 chance of winning or 11.1%, which becomes .111 using decimal numbers.
When we total up our four decimals we get .500+.333+.286+.111=1.230, so the house advantage is 23 percent. That's definitely a bit more than the 4.55 percent for a straight wager, especially considering that the sportsbook gets to keep your money all season long.
The house advantage on futures wagers normally will be in the 20 to 25 percent range, but some sportsbooks will have advantages of 50 percent or more. They should be avoided in most instances, unless they are offering the best odds you can find on the team you like, which is unlikely when you consider their advantage.
So while futures wagers may be fun and an enjoyable way to enjoy a full season's worth of action for one bet, they should not be considered a solid investment when you factor in the house take, as it's tough enough to beat 4.55% over the long haul, let alone 20 to 25 percent or more.
The best thing you can do is shop for the best odds at as many places as possible and wager accordingly.
