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Draft Kings Are Making A GIGANTIC Mistake On Taking This Bet


By: Point Shaver Handzelek
Date: Oct 13, 2020
   
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Draft Kings Sportsbook took its biggest mobile sports bet ever. This is a GIGANTIC mistake! Here's the bet followed by the numbers crunched revealing the advantage. A $3 million three-team parlay: Packers to win NFC North (-360) Georgia to win SEC East (-110) Alabama to win SEC West (-670) Risking $3 million would yield a win over $5.5 million Here’s the math the bettor's using. Let's go market-by-market to figure out the theoretical hold% on these and the true probability. First, the Packers GB -360 CHI +425 MIN +1100 DET +2000 This market has an implied 9.42% hold. Not that the vig is evenly distributed, but we'll assume for this exercise it is. GB -360 = 78.26% implied Divide that by market over-round and you get 70.89% true probability for GB to win the North. Second, the Bulldogs GA -110 FL -110 TEN +550 KY +4000 MIZ +10000 SC +10000 VAN +25000 Implied 19.98% hold here. GA -110 = 52.4% implied Divide that by market over-round and you get 41.92% true probability for GA to win SEC East. Lastly, the Crimson Tide BAMA -670 LSU +650 AUB +1200 MS ST +1200 TAM +1200 MISS +2200 AR +5000 Implied 22.92% hold here. BAMA -670 = 87.01% implied Divide that by market over-round and you get 67.07% true probability for BAMA to win SEC West. Let's check in on that parlay again. The odds of all 3 of these events happening is: .7089 * .4192 * .6707 = .1993 = 19.93% The "fair odds" for a wager like this is +402, not +186 Quite a difference The bettor is betting into a house edge of 43% To put this in context: 19.93% of the time the bettor will win $5,579,671 80.07% of the time the bettor will lose $3,000,000 His expected value on this wager is: -$1,290,071.57 When you bet parlays, you compound the house edge, much like compounding interest. Had the bettor bet $1m on each of these separately, his expectation would have been: GB -$94,200 GA -$199,800 BAMA -$229,200 = -$523,200 But he'd have only a 5.57% chance of losing the full $3m. I'd say, "Draft Kings, you're in a heap a bit o' trouble boys!"
 


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