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!"
Click here to view all of Mike Handzelek 's premium picks.
