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Sports Futures
Introduction
Propostion bets usually pay long odds that a specified team will win the playoffsor the season championship. For example before the beginning of the 2000 baseballseason a bet that the Baltimore Orioles winning the world series paid 35 to 1 odds.
To calculate the house edge on a set of futures bets follow these steps to
- Convert all winning odds to a fair probability of winnings. For example if the Orioles paid 35 to 1 odds then a fair probability of winning would be 1/36. In general if the odds pay x to y then the probability of winning is y/(x+y).
- Add all the probabilities form step 1. Call this total t.
- The overall house edge on all futures bets is 1-(1/t).
Lets look at an example. The Suncoast casino in Las Vegas offered the following odds to win the Pontiac Excitement 400, which ran on May 5, 2001. The following table shows total probability of 135.04%. The house edge is 1-1/1.3504=0.259496714, or 25.95%.
Odds to Win Pontiac Excitement 400
| Driver | Pays | Fair Probability |
|---|---|---|
| Dale Jarrett | 4 to 1 | 20.00% |
| Dale Earnhardt Jr. | 7 to 1 | 12.50% |
| Bobby Labonte | 7 to 1 | 12.50% |
| Tony Stewart | 6 to 1 | 14.29% |
| Mark Martin | 10 to 1 | 9.09% |
| Jeff Burton | 9 to 1 | 10.00% |
| Rusty Wallace | 5 to 1 | 16.67% |
| Field (all others) | 3 to 2 | 40.00% |
| Total | 135.04% |
The following list shows the house edge on Super Bowl futures at the major sports book families in Las Vegas, in order of lowest to highest house edge. This survey was conducted in August/September 2014.
House Edge on Superbowl Futures
| Casino | House Edge |
|---|---|
| CG Technology* | 21.90% |
| William Hill | 26.63% |
| Wynn | 27.96% |
| Caesars | 35.49% |
| Stations/El Cortez | 38.33% |
| Golden Nugget | 39.75% |
| MGM | 40.88% |
| Boyd/Coast | 49.35% |
| TI | 57.93% |
*: Formerly known as Cantor Gaming
Many groups of sportsbooks share the same odds on futures with each other. For example Ballys, the Paris, and the Flamingo Hilton all offer the same odds, which are all owned by Park Place Entertainment. There is not always an obvious connection among sportbooks. For example the futures at the Rio are much more competitive than at the Las Vegas Harrah's, despite the Rio being owned by Harrah's. The MGM Grand offers the same odds on futures as the Bellagio. The Monte Carlo offers the same futures as the Excalibur.