NBA futures: Betting on Rookie of the Year

With the start of the NBA season fast approaching, now is a good time to start taking a look at the futures markets. Last week we discussed the best way to create an edge in the futures for NBA Champion. This week we are going to talk about gaining an edge in the Rookie of the Year vote. 

The market for Rookie of the Year has some major differences from the NBA champion futures market. The first major difference is that one is a closed market while the other is technically open. We only have 30 teams in the NBA and one of those 30 has to win the NBA championship. You will see in the chart below that we do not have a closed data set for NBA champion. All three sites have the main guys listed, but each site also has a few other guys some of the other sites do not. None of these guys is a chalk play to win the trophy, but the fact that some players are not listed on any or even all of the sites and are technically eligible to win the award means the rake is actually higher than posted. For the sake of simplicity, we will assume that the winner is one of the listed players, as it would be extremely unlikely someone not on the list or even only on one or two of the lists wins the award. 

We also do not have a clear-cut favorite this year. Many times, you will see someone who is such a massive favorite to win the award that they end up at or even below even money. The highest implied probability we have for a winner here is LaMelo Ball, and he ranges from 20-22% likely to take it home based on his odds on various sites. Anthony Edwards is second on a few sites, although Obi Toppin of the Knicks and James Wiseman of the Warriors also hold the No. 2 spots behind Ball on certain sites. Edwards is second on DraftKings with an 18% implied probability, Toppin is second-best on FanDuel with a 17% probability, and Edwards and Wiseman are tied for second on PointsBet at 18%. 

The last thing I want to talk about is the hold, or the rake. With the NBA champion, we had an orderly market across the board with about 23% rake on each site. The numbers were different enough that we were able to lower the total takeout down to 13% by combining the best numbers offered on each site into a synthetic market. That is not the case with the ROY numbers. FanDuel has the lowest hold of any of the three sites we looked at with a 29% rake. DraftKings and PointsBet are price gouging even worse with a 48% and 52% hold on their markets. When we combine the best numbers from the three sites into a synthetic market, the best we can do is get that hold down to 26%. Put in plain English, you are better off taking a swing at NBA champion than you are at ROY as we can lower our expected loss the most with that market and it’s closed to unlisted surprises. I will say that you have a lot of variance from site to site behind LaMelo Ball. If you are a LaMelo hater, you will be able to get some nice prices by shopping across various sites on the guys just behind him. Here’s the chart with all the numbers: 

Just a quick explanation of the chart here. The three columns after the names are for DraftKings, FanDuel and PointsBet. The next market on the right of the empty column is the Synthetic market with the best number offered on each player blended together. At the bottom of the page you see the market total line. The probabilities would add up to 100% in a break-even market. Anything above that 100% is considered the hold, or rake the book takes out of the market as a built-in cushion. The final number in the last column is the lowest we can get the hold down to if we take the best number on each player offered in the market. 

Will LaMelo Ball win Rookie of the Year?

He is the shortest price on all three sites, so he’s the early favorite. As with most futures markets, the favorite tends to be an underlay. An underlay means he tends to be shorter of a price than the true odds would expect him to be. In other words, he’s a crappy bet. I’m not arguing against him being the favorite to win it, just against the price we are being offered to take him to win the award. You have better value behind him and that is where I would take my chances. 

Where is the value?

Due to Ball being a clear No. 1 option, but not by a wide margin, we have other guys who are better bets to take. Anthony Edwards, Killian Hayes, Obi Toppin and James Wiseman are all 10% or better to win the award. They are longer odds on some sites than others. The spread between Ball on the three sites is very small. The +350 to +400 odds at his high and low are all pretty much the same. All four guys behind him have bigger spreads between their high and their low. This is why I think these guys are just much better options to wager on.

If you price shop for the highest odds, you can see the difference between the best and worst numbers being offered. The spread between high and low for these second- to fifth-best options is wider than the spread between sites on Ball. That foursome has the combination of things I like in futures bets. They are head and shoulders above the bulk of the field behind them, and the true odds for them winning vs. the best odds being offered is the smallest margin. I deal in probabilities, not absolutes. I’m not trying to tell you guys I have one clear-cut option to win ROY. That’s not how my mind works. I look for the best values and know that over time playing the best values will add up to profit. The best values are the ones behind Ball. If you are going to wager into this high-rake market, that is where I would be looking to make a play.