NFL Futures Betting: Understanding the Basics of Value

The NFL season is underway and the ‘usual suspects’ are ruling—at least at the betting window.  If you look at the NFL futures odds at BetOnline.ag the teams at the top of the market for Super Bowl champion, AFC Champion and NFL Champion are no surprise.  For the Super Bowl, the Kansas City Chiefs and New England Patriots are essentially co-favorites priced at +800 and +750 respectively.  The Chiefs and Patriots are also at the top of the AFC Conference Champion futures while the four teams priced at single digits on the NFC Championship board offer no surprises:  New Orleans (+500), Philadelphia (+650), Chicago (+750) and Los Angeles (+750).

These teams may eventually win their respective conference championship and even the Super Bowl but that doesn’t mean you should bet them.  There’s just no value in betting these short priced teams.  The concept of value is one that novice NFL betting enthusiasts sometimes struggle to get their head around.  Once you get a handle on it the value equation becomes very simple and is fundamental to being a successful bettor in any sport.

Here’s how it works:  most people understand that a coin flip is a 50/50 proposition.  If we write that in moneyline terms, the ‘true odds’ of a coin flip should be +100 for heads or tails.  If you were to bet on the Super Bowl coinflip, however, you won’t be getting +100 on either side.  Most likely, you’ll be laying -105 with either heads or tails.  Every moneyline has a corresponding ‘implied probability’.  As we’ve seen, at +100 it is 50%.  At -105, however, it is 51.2%.  This means when you bet ‘heads’ or ‘tails’ at -105 you’re betting on a proposition that has a 50% probability of occurring and paying a ‘price’ for a proposition that has a 51.2% probability.

Now let’s assume that you’ve somehow you’ve been offered the ‘coin flip’ bet only with highly unusual odds:

HEADS:   -130
TAILS:   +110

We can plug the implied probability of these prices back into the equation discussed above.  At -130, the implied probability is 56.5%.  Yet the ‘true odds’ of tossing a coin and having it land on ‘heads’ is 50%.  Once again, you’re paying the price for an outcome with a higher probability than the true odds of the coin flip occurring.  Now look at the other side:  at +110 the implied probability is 47.6% for the ‘tails’ toss with true odds of 50%.  The ‘true odds’ of the outcome we’re betting on is greater than the implied probability of the price we’re betting it at.  That makes the ‘tails’ a good value bet.

It is admittedly a bit trickier when you try to apply the same concepts to events like the Super Bowl winner since it’s impossible to conclusively determine the ‘true odds’ of a team winning.  At +750, the implied probability of the Patriots winning the Super Bowl is 11.8%.  At the other extreme, the Miami Dolphins are +25000 to win the Super Bowl which carries a 0.4% implied probability.  In both cases, the bettor is likely getting the ‘worst of it’.  Even if the Patriots have a 10% chance of winning the Super Bowl the price you’re betting them at is still an underlay.  For a bet on New England to be a good value, you’d have to be getting them at +900 or higher. Miami’s chances are much closer to zero than they are even to 0.4%.  For the sake of an example, say the Dolphins have a 0.1% chance of winning.  For them to be a good betting value you’d have to be getting a moneyline price of +99900 or higher.

For the handicapper, the trick is determining the ‘true odds’ of each team winning the Super Bowl.  As there’s no ‘right answer’ this requires the handicapper to be confident in his numbers and methodology.    It also helps to give yourself a bit of ‘margin for error’ and the place to find that betting futures odds is in the middle of the pack.  In our next article, we’ll start looking at these concepts in practice and come up with some picks for the NFC and AFC Conference Championship.