Rollover Impact
Written by Matt Lindeman (follow him on twitter @lindetrain)
With the latest edition of March Madness on the horizon, bettors have begun to turn their attention towards finding potential gold mines in the upcoming NCAA tournament. Most of those one shining moments (they believe) come in the form of futures—taking stabs at long shots potentially equipped for a deep (or respectable) run in the field of 68.
What they don’t realize is, more often than not, these “value bets” are anything but. A much easier—and more profitable—approach is right in front of them: rolling a team’s money line over from round to round.
To prove my thought process, here are two examples from both the past and present: VCU in 2011 (when they made their remarkable Final Four run), and California this year (a suddenly popular futures dark horse).
According to sportsoddshistory.com, 11th-seeded VCU entered the 2011 tournament at 300/1. While some believe these large odds provided ample room to hedge and rake in profits when they made a run, a closer examination shows that rolling over the money lines would’ve paid significantly more handsomely.
We’ll assume a $100 bet to start, rolling that—along with the winnings—into each game. Now, before we get into the astronomical numbers the caveat should be added playing 5 figures on a moneyline is difficult logistically but similar limitations could also impact your ability to hedge a straight future bet as well.
(Money lines provided by scoresandodds.com; projected title game money line based on semifinal spreads)
Start amount: $100
1st round (+165 vs. USC) — $100 to win $165
2nd round (+220 vs. Georgetown) — $265 to win $583
3rd round (+400 vs. Purdue) — $848 to win $3,392
Sweet 16 (+170 vs. Florida State) — $4,240 to win $7,208
Elite 8 (+620 vs. Kansas) — $11,448 to win $70,977
Final Four (+150 vs. Butler) — $82,425 to win $123,637.50
Championship (approx. +220 vs. UConn) – $206,062.50 to win $453,337.50
End amount: $659,400
So, if VCU were to win the title that season, a future bet would’ve paid 300/1, while a ML rollover approach would’ve paid 6,500/1!
This year, California is a team many have labeled as dangerous in March if they receive a bid. I’ve seen futures prices ranging from 150/1 to 400/1 to even 1,000/1. While these—especially the latter two—appear to have some value at first glance, another examination of potential opponents and money line payouts prove that the ML rollover approach would be much more fruitful.
Below is Cal’s potential road to the title based on Joe Lunardi’s Bracketology (as of 2/28), and money line payouts based on Sagarin point spreads:
Start amount: $100
2nd round (+120 vs. Memphis) — $100 to win $120
3rd round (+160 vs. Marquette) — $220 to win $352
Sweet 16 (+600 vs. Indiana) — $572 to win $3,432
Elite 8 (+220 vs. Miami) — $4,004 to win $8,808
Final Four (+600 vs. Florida) — $12,812 to win $76,872
Championship (+380 vs. Duke) — $89,684 to win $340,799.20
End amount: $430,483.20
Now, obviously this example assumes the most difficult possible road for Cal, facing the highest seed in every round—but regardless, even the best price on a futures bet (at 1,000/1) doesn’t come close to the payout of over 4,000/1 rolling over money lines in this scenario!
One of the best arguments for those who choose to take the futures route is that with a future, it gives them the opportunity to hedge at any point, whereas this approach does not. What they may fail to realize is that by playing the rollover you can hedge by simply STOPPING! If a bettor has decided they’re content with their payout of 4.72/1 once Cal reaches the Sweet 16, for example, they can stop right there and take their profits home. If they want to continue on while keeping part of the profits already earned (like a hedge), they can bet only a portion of what they’ve made thus far in the following round.
The way I see it this is a far easier approach than hedging because A) you don’t have to worry about your hedge structure and determining what future opponent MLs may be when deciding how much you can/will hedge off, and B) you don’t have to worry about having necessary funds in the event your team does make a deep run and you’re hedging for incredibly large amounts. It also pays better at every turn than betting a future and hedging (unless you take a strong stance against your team in a particular round and hedge heavily, which is incredibly dangerous and could prove costly if wrong).
This all said, there ARE a few scenarios where betting a future this time of year could provide value as opposed to rolling over MLs. If you can identify a team that might make a strong conference tournament run and, as a result, will drastically improve their tournament seeding, you may be able to find value in a future. Similarly, if you can identify a vulnerable region with top seeds that may be prone to upsets prior to facing your team, you may find some value with them. These are essentially the ONLY times you may make more from a future, however—and even then, they still may not pay more than a ML rollover approach.
Be sure to keep this in mind as your books hang tempting numbers in the following weeks. Hold percentages on futures will almost always result in a loss of value and it’s virtually guaranteed that you’ll have more success with this alternative.
