NBA futures: Creating an edge

Everyone has an opinion on who will win the NBA Championship. The differences in that opinion are what makes a betting market. With the start of the NBA season fast approaching, this is a good time to discuss some strategies to use when betting into a futures market.

Unlike a typical two-way wager on a specific game, the number of possible outcomes in a futures pool tends to be much larger. In the NBA, we have 30 teams, which means we have 30 different wager options available in this pool. We have a handful of teams at the high end of the spectrum. This year we have a hard group of four that includes the Lakers, Clippers, Nets and Bucks. These four teams range from +250 to +650, which gives them all about a 15-25% chance of being crowned king of the NBA at season’s end.

We have another dozen teams with odds of +1500 to +8000 that have about a 1-6% chance of taking home the crown. These are the very likely playoff teams like Denver, Miami, Boston, Golden State and range down to the lower end with teams like the Suns, Blazers and Rockets.

The other 15 teams have little to no chance to win the NBA championship. Many in this group have odds of +10000 or better, meaning you get 100-1 or more for every dollar wagered. Every team here is being given a 1% chance or a fraction of that to win it all. This is where we find hopeless franchises like the Knicks and Cavs. 

How to find the best NBA futures bets?

In order to understand where the value is, we need to understand how the pricing of these markets work. We have 30 NBA teams and one of them has to win the title. Each team has odds to win and those odds can be converted to a percentage probability of winning. In a rake-free world, those percentages would add up to 100%. In reality, they add up to more than 100%, because the sportsbooks need to charge some kind of rake to make money. They figure out the odds based on 100% and then offer a little cushion for themselves on each payout. The lower the chance of a team winning, the less room the book has to adjust the price to make some rake off of it.

The Knicks at +40000 have just a quarter of a percent chance to win the championship. Even if they decided to cut the odds to +20000, it does not really do much for them as that only adds an extra quarter of a percent to the total market. Plus no one would be betting the Knicks at that book at those odds if you can find them at the original +40000 somewhere else. The books also know that very few, if any, bettors will be taking the Knicks to begin with.

On the other end of the spectrum, we have the Los Angeles Lakers. Everyone is going to be willing to risk money on them, even if the odds offered are likely to be lower than the true odds they should be offered at in a market where the probabilities added up to exactly 100%. Take the difference between the +300 price on PointsBet and the +250 price on DraftKings. PointsBet is giving the Lakers a 28% chance to win, while DraftKings has them at 25%. Right there we can see how just 50 basis points on the payout can change the hold by 3% from 28% to 25%. The books tend to offer worse deals on the teams they know are going to take the most action, meaning betting on favorites usually means you are getting back less than you should be based on the true odds. 

Where is the soft spot in futures markets? 

If the books can’t do much to the back end of the curve with the super longshots and they overcompensate on the front end of the curve with the massive favorites to pad their cushion, then the value must be in the middle. This is where we tend to find the teams with payouts offered being closest to the true odds of winning, that second tier of teams behind the elite tier. The playoff teams that are not among the biggest favorites at the shortest odds to win it all. This is the tier where you find the biggest swings from site to site on the payouts and by line shopping, you can gain an advantage over the field. Here are some charts to illustrate the example. 

(DK: DraftKings; PB: PointsBet; FD: FanDuel)

The chart shows the individual markets for three books currently offered in New Jersey. The first column is the odds offered and the second is the probability of winning based on those odds. At the bottom of the probability column is the sum of all those probabilities added together. Remember in a perfectly efficient market, that number would equal 100%, so anything above that number is the rake that each site is charging to play into that market. All three of these sites are hovering around 23% takeout. 

Can we lower the rake on futures markets?

If you look at the odds offered and probability of winning, you will notice that different sites have priced teams at different numbers. We talk about the advantages of shopping for the best lines and here’s how it can actually help you be a better bettor. 

To the right of the individual books' numbers, we have the highest payout any of the three books are offering on each team. We then converted each of those odds to their probability. As we did above, we then took the sum of all those probabilities. As you can see from the results, we took three books with about 23% rake and combined the best parts of them to create a synthetic market with only 13% rake. That’s still a big number, but it’s a lot better than it was. Remember, if we are able to get the rake down to 0%, you could theoretically place a wager on each team so that no matter who wins you would break even doing so. It would be pointless to bet every team just to break even, but the rake-free market would mean you have an expected value that is now zero as opposed to the negative expected value market we are normally betting into as evidenced by the rake charged in our examples. 

Can we lower the rake more?

Betting into a market with a 13% hold is definitely preferable to betting into one with a 23% hold, but both are still negative expected value. We actually can lower this even more by using a variety of deposit bonuses and odds boosts the various online sportsbooks are offering. If a book offers to match your deposit, you can deposit $500 and get $1,000 to bet with. If you bet it all on the Lakers for example at +300, you would return $4,000 on $1,000 bet. Remember though, you only deposited $500 to make this bet, so the $4,000 return would actually mean you were paid 7-1 on your initial deposit. At odds of +300, the probability of winning is 25% in a combined market that adds up to 113% for a 13% rake. At 7-1 or +700, we are looking at a probability of 12.5%, meaning we effectively lowered the rake from 1.13 to 1.005 or just 0.5%.

We can take this another step here two by combining some odds boosts bonuses. You may see a site that offers you a 20% profit boost on any bet. If you took the Brooklyn Nets at +600 and added 20% to that payout, you would now be effectively getting +720 odds. At +600, the implied probability would be around 14%. At the new +720 number, the implied probability is now 12%, thus helping us lower the rake by another 2% if we combined the offers. Now our 100.5% rank is down to 98.5%. We have now created a +EV situation. This is the holy grail. A market that has implied odds that add up to less than 100% means we should expect to profit over the long term as we effectively swung the odds into our favor. 

What’s the catch?

There is no such thing as a free lunch. This old adage holds true in sports betting as well. Is what I am showing you here possible? I just proved to you that it is. Remember though, you are capped by the max boost odds bets and maximum deposit bonuses on these synthetic markets we created. Even with line shopping, odds boosts and bonuses, it’s not often you will be able to build a synthetic market using the best numbers from various sportsbooks that will cross below the 100% break-even point. It also should not discourage you from betting if you cannot. The goal here is to utilize every possible advantage you have to get that rake as low as possible. Even though a market with implied probabilities over 100% is still negative EV to bet into, your expected loss is only pennies on the dollar if you utilize these tricks. That is opposed to losing about 20 cents on the dollar by wagering into any one book without shopping, boosts, or bonuses. 

Who should I bet on?

If you want to know who to bet on once you create your optimal market from your available outs, check out FTNBets NBA bet tracker to see where our experts are putting their money. Knowing how to bet is as important as knowing who to bet. We have you covered for both here at FTN Bets.