There are Always Smarter People than You in the Sports Betting

So far, we’ve discussed two reasons why you’ll lose: the bookmaker takes a cut; and the bookmaker doesn’t set fair odds because the bookmaker has better information than you do. Now, let’s add a third reason. It’s not just that the bookmaker knows more than you do, it’s that the top gamblers do. There aren’t many top gamblers, but they move a lot of money in the gaming market.

A very important gambler is the University of California, Berkeley (University of California, Berkeley ) dropout students named Bob Stoll (Bob Stoll). Bob Stoll, known by his professional stage name Dr. Bob, has been a major influence in the gaming industry. Dr. Bob’s clients subscribe to his email service and receive weekly picks of specially recommended soccer bets. According to the Wall Street Journal, these clients send the sports gaming industry into a panic each week when they bet millions of dollars on the odd cold college game. In Dr. Bob’s best-performing season, the National Collegiate Athletic Association soccer betting selections reached an unbelievable 71 percent; even those who make a living from sports gaming rarely reach 55 or 56 percent. In four of the eight college soccer seasons from 1999 to 2006, Dr. Bob hit over 60% of his betting picks, and in only one of those seasons did his betting picks fail to pay off.

Sports gamblers hate Dr. Bob because he has better information than the sports gamblers and takes away from the sports gamblers. But other gamblers (other than those who subscribe to Dr. Bob’s services) should also hate Dr. Bob because Dr. Bob is in the same market as other recreational gamblers, but he takes their money and the casino acts as a middleman. Dr. Bob is the Beane of National Collegiate Athletic Association betting (as in the Moneyball books and movies), better at analyzing situations than his competitors and able to use the casino and other gamblers to his advantage.

Just as other teams have caught up with Beane’s sports teams and now have the same analytical skills as he does, the casino has followed in Dr. Bob’s footsteps by hiring more analysts and using more computing power to make the odds setting system a match for him. Since the end of the 2006 season, Dr. Bob’s betting picks on college soccer games have had good success rates, but the results are no longer far ahead of the competition. In his eight glorious years, he had a total of 212.3 “net stars” (1). In the next seven years, from 2007 to 2013, he had only 13.8 more net stars. The next seven years, from 2007 to 2013, he only gained 13.8 net stars, which means he went from 26.5 stars per quarter to 1.5 stars per quarter. This means that he slipped from 26.54 net stars to 1.97 net stars per quarter. That means he slipped from 26.54 net stars to 1.97 net stars per season. His fifth best season was from 1999 to 2006, which was more profitable than the other years.

Whatever advanced models made Dr. Bob so successful, these models were eventually replicated by the bookmaker’s mathematicians. The odds actuaries were able to include Dr. Bob’s clients in their predictions of what to bet on and what they would bet on. Dr. Bob’s posting of his method on his website is actually unusually avant-garde (though perhaps not as avant-garde as Beane’s, who after all made his books and movies openly confidential). Dr. Bob loses the advantage of having better information, and the casinos become better informed, also increasing their advantage over the average gambler.

In general, more informed gamblers (especially Dr. Bob) are becoming less of a problem because the gaming market is getting bigger and more complex. So much money is flowing into this market that, like the stock market, the lottery gaming market attracts very sophisticated people who use analytical data to identify opportunities to take advantage of, even if the odds are slim. Instead, market makers devote more resources to chasing after these experienced and skilled gamblers. Although these “lottery horsemen” like Dr. Bob become popular from time to time, it is very rare to outperform the bookmakers by as much or as long as Dr. Bob. Dr. Bob said, “A couple of years ago, this trick stuff really worked, and the odds are getting more and more refined now. But don’t worry about Dr. Bob, he makes his picks public on his website and in his articles, and his main income comes from his articles and website subscriptions.

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