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Here's some math on what is going on with sports betting and takeout, in case anyone is interested in it.
The traditional model of a sports book is as follows. You set a point spread at a point where you get about half the action on each side. If you do that consistently, the book never loses. It is basically just like pari-mutuel betting-- the winnings get paid out of the total amount bet, and the sports book keeps a takeout of about 4 1/2 percent, calculated as follows:
Losing bets X number at 110-100 = 110X.
Winning bets X number paid out at 100-100 = 100X
Takeout = (1/11) / 2 = approximately 4 1/2 percent
The books are doing three things now to increase that takeout:
1. Setting lines with money spreads other than 110-110.
2. Setting lines with unbalanced money spreads.
3. Using computer simulations to increase takeout on bets that attract "dumb" money.
Let's go through these in turn.
Thask starts out by talking about 120-100 lines. A 120-100 line sounds like the same as a 110-110 line. But it isn't. It has a higher takeout.
The takeout on a 120-100 line is the average of the take on the 120 side and the take on the 100 side. The 120 side's takeout is 20/120, or .167. The 100 side's takeout is 0. So if equivalent amounts are bet on both sides, the sports book is getting over 8 percent of the total money back in takeout rather than 4 1/2 percent. The book has almost doubled its profit margin while making it look like it did nothing other than adjusted the odds.
Now, if the book can set the odds at 120-105, as the Trop did, they are printing money. Because now it is getting 16 percent of the money bet on the 120 side, plus 4.5 percent of the money bet on the 105 side. A takeout of more than 10 percent!
It's the exact same logic that gets you to 6 to 5 blackjack. Casual players don't care, they just want to bet the game. So you can attract plenty of money with higher takeouts.
But all that assumes the sports book is taking equal action on both sides. But what if the sports book isn't doing that. What if the sports book could find a way to get the "dumber" money to overbet? Well, it turns out there's a way you can do that. With a computer, you can set up models for setting spreads so that more money is bet on the side with the higher takeout. In other words, you can set the point spread so that the 120 side will look like a more attractive bet, and the bettors, taking 4 points instead of 3, will bet more money at 120-100 than is bet at 100-100. If the sports book can set the line where it gets 55 percent of the money at 120 and only 45 percent at 100, it can achieve a 9 percent takeout rather than an 8 percent takeout.
This is exactly what they are doing. And as a result, they are taking a lot more money out of the hands of football bettors than they used to. And while this is happening, an experienced gambler like thask isn't even aware that it is happening. Nor are most bettors, I would imagine.
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