It’s Paul Williams vs. Kermit Cintron at 154 this Saturday. I see this as an easy win for Williams, and for once the line agrees with me; he’s a -650 favorite.
Checking the line got me to wondering about what the bookmaker’s take might be. I’m not a sports bettor by habit, so this will probably seem naive to you if you are, but I think it’s an interesting exercise nonetheless.
Expected Value
The current line for Williams/Cintron is Williams -650, Cintron +475. That means if you place a $650 bet on Williams and win, the total payout will be $750. For Cintron, a $100 bet will result in a total payout of $575, if you win.
Let’s say (for the sake of argument) that you want to place a set of bets that would guarantee a payout of $X. You would place a $100 * X/575 bet on Cintron, and a $650 * X/750 bet on Williams. For instance, if you wanted to guarantee a payout of $17,250 you’d place bets of $3000 on Cintron and $14,950 on Williams. That comes to $17,950 wagered to guarantee a payout of $17,250: a sure $700 loss for you, and $700 profit for the bookmaker. That’s about a 3.9% profit, which isn’t too bad.
In case it’s not obvious, my justification for this thought experiment is that the bookmakers adjust their odds so as to eliminate variance in their payout, creating a situation identical to that in which all bettors followed the “guaranteed payout” strategy. I’m sure a better analysis could be done; this is just what came to my mind.
