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FROZEN ASSETS

EXPLAINING THE EXCHANGE (2) AND THOUGHTS ON THE FUTURES

Welcome to Frozen Assets. Every week I offer tips for successful futures wagering and I examine odds in the hockey futures market. Last week I explained the concept of the betting exchange and provided you with my top wagers as of November 9th. This week I will explain the advantages of using a betting exchange for futures wagers. I will then bless you with some random thoughts on NHL futures betting this week.

Why use a betting exchange?

1. The format of a betting exchanges enables you to buy and sell wagers:

One important advantage of a betting exchange is that you can bet on a team to win or lose the market you are wagering on. You can bet on a team to win or lose the Stanley Cup. Betting on a team to lose a market is a valuable tool if you are trying to hedge a previous wager.

Example:

You read my October 11 edition of Frozen Assets where I identified odds on the Philadelphia Flyers to win the Stanley Cup at +8000. You then placed a $20 wager on the Flyers to win the Stanley Cup for a payout of $1,600.

You find odds on the Flyers on a betting exchange to lose the Stanley Cup at -2000. By betting $400 on the Flyers to lose the Stanley Cup you will win $20 if they lose the Stanley Cup.

Thus you are guaranteed not to lose money: if Philadelphia wins the Stanley Cup you will net $1,200. If they lose you break even. If you want to bet more than $400 on the Flyers to lose the Stanley Cup you can guarantee yourself a profit either way.

At this point you may be rolling your eyes at this article and saying “Ari, I don’t have $400 to tie up for months every time I want to bet on a team to lose a market.” Well, fortunately for you…

2. A Betting exchange factors in your net profit and loss for the entire market, not just the original bet.

Continuing with the Philadelphia Flyers example, let’s assume you bet the $400 on Philadelphia to lose the Stanley Cup. You then read on illegal curve that Scott Niedermayer is not going to play in the NHL this year (note: this situation is hypothetical) and you would like to bet against the Anaheim Ducks before the odds adjust. Anaheim is -1000 at the betting exchange to lose the Stanley Cup and you would like to bet another $400.

On a betting exchange you do not have to deposit another $400 because software on the betting exchange calculates the effect of all of your wagers for the entire market.

In simple terms: it is impossible for Philadelphia AND Anaheim both to win the Stanley Cup. Thus it is impossible for you to lose both of your $400 bets. Therefore there is no need for you to bet $800 when the most you can lose is $400 (actually the most you can lose in this situation is $380 if Anaheim were to win because you would win $20 by Philadelphia losing).

Are you still rolling your eyes? Are you thinking “Ari, I still don’t have $400 to tie up for months even though I can use it to make multiple $400 wagers?” Even if you don’t have the bankroll to bet against teams, you should still consider joining a betting exchange because…

3. Unlike a traditional sportsbook, a betting exchange does not confer an advantage on the house.

While sportsbooks make their money by providing customers with odds less than true odds, in a betting exchange you set the odds! Betting exchanges profit by taking a % commission from winning wagers.

Continuing with our Philadelphia Flyers example, let’s assume (hypothetical) that the true odds on Philadelphia to win the Stanley Cup are +2000. Sportsbooks profit by offering you odds less than the true odds. The best odds offered by a sportsbook will
be around +1500. A betting exchange will reflect the true odds of +2000. Even at 5%
commission, you are still getting the Flyers at +1900.

Finally,

4. Playing at a betting exchange loosely resembles the financial market.

I constantly refer to futures betting as the futures market. The reason I refer to futures betting as a market is because the odds on teams go up and down (like stocks) depending on the performance of the teams. The goal is to buy a team while their odds are high and (if you have enough of a bankroll) to sell them when their odds are low.

If you were fortunate enough to bet on the Carolina Hurricanes at Betfair (a betting exchange) during the first week of the season at +4300, your bet would have approximately doubled in value. Regardless of the size of your bankroll, you could sell them at double what you paid for them.

Example

You do not have a large bankroll. You deposit $20 at Betfair and bet on Carolina to win the Stanley Cup at +4300 for a payout of $860. You then watch them get beat at their own game by Tampa Bay 6-1 and would like to sell your bet on Carolina. If the odds are currently -2000 on Carolina to lose the stanley Cup, you can bet $820 against the Hurricanes for $43, giving you an overall profit of $21 ($20 if the ‘Canes win the Stanley Cup – you have doubled your money and only exposed yourself to $20 in potential losses). You can then use the $40 in your betting exchange account to place additional wagers.

I hope I have been able to convince you to consider a betting exchange next time you are thinking of joining a sportsbook. Besides, a betting exchange is only as good as the people playing the market – the more people using the betting exchange the better it functions.

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Here are some random thoughts on NHL futures betting this week:

–Those of you that read my column last week know that I see value in the St. Louis Blues. Imagine my surprise when Carib offered St. Louis at +5000 to win the conference and +10000 to win the league. Take them to win the conference at +5000. I beg of you!

—Stan James no longer offers division odds. William Hill briefly offered them last week. Currently there is no way to bet on NHL division odds.

—The Anaheim Ducks continue to play .500 hockey this year. They are missing the presence of Scott Niedermayer and (to a lesser extent) Teemu Selanne. The best odds on them to win the Stanley Cup is +1400 at Canbet. I would pay close attention to the return of Scott Niedermayer and I would jump on Anaheim as soon as he announces his return. If he decides he is not returning I would bet against Anaheim to win the Stanley Cup at a betting exchange.

—The New York Rangers have been playing better hockey lately and have won two in a row on the road after starting the season 0-6-1 away from MSG. They were once available at +1850 to win the Stanley Cup. I suspect the +750 currently offered by Canbet on the Rangers to win the Eastern Conference is as good as it is going to get.

—The Atlanta Thrashers have gone 8-4-0 since Don Waddell took over as coach. They are only two points out of a playoff spot. How long will the odds of +10000 to win the Stanley Cup at Carib last for?

—The New York Islanders have the fifth best winning percentage in the league. They are still available at Canbet to win the Eastern Conference at odds of +3500.

–Suddenly the Nashville Predators are in seventh place in the West after going 7-2-1 in their last 10 games. The Predators, like the Blues, are available at +5000 to win the Western Conference at Carib.

–After the hot start of the Montreal Canadiens, odds on them to win the Stanley Cup have dropped from +6900 to +4000 at Betfair.

Next week we will enter the second quarter of the NHL season. I will be celebrating this momentous occasion in next week’s edition of Frozen Assets by counting down the 10 futures bets you should have made during the first quarter of the season.

For illegal curve, I’m Ari Baum-Cohen

About the writer: Ari Baum-Cohen’s first sports betting victory came in 1989 when he won his father’s office pool at age 8. Since then, he has been interested in many different types of sports betting. His first major futures win was at the end of the 2001-2002 hockey season when he selected “field” (field included Jarome Iginla) at odds of +3000 to win the National Hockey League goal scoring title.

FROZEN ASSETS November 9, 2007
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FROZEN ASSETS October 25, 2007
FROZEN ASSETS October 18, 2007
FROZEN ASSETS October, 11, 2007
FROZEN ASSETS October 4, 2007
FROZEN ASSETS September 27, 2007
FROZEN ASSETS September 20, 2007

Ari