Gambling on MMA 103

It's been awhile but my good buddy Chad is back to pluck some fruit from the tree of wisdom and magic it down to the hungry masses.  All made more remarkable by the fact that he has no personal computer at the time being.  How did he write this you ask?  I'm not saying Satan was directly involved, but I wouldn't rule it out either.  Also, make sure to check out the prior installments.  Gambling on MMA 101 and Gambling on MMA 102

So in Gambling 101 and 102 we've established 3 rules so far.

1. The public will gamble on fighters based on their feelings, which in most cases are wrong. This presents a chance for a misrepresented odd.

2. Oddsmakers don't always place the right odds on the fight. Especially the first website or two to place odds on a fight. This gives us a chance to catch odds before they move.

3. We figured out what chance American odds imply for a fighter to win and how to calculate that percentage (referred to as %SBO).

Now in part three before we start any fighter assessments, it's important to understand how bookmakers win money taking bets for fights, which will further our understanding of how odds are placed, why they move, and how to anticipate their movement.

4. Sportsbooks change their odds on a fight depending on the volume of bets that come in for a fight.

It goes without say that sports books are in the business to make money. No matter the outcome of the fight. So with an only a very basic understanding of the how and why, we should be able to anticipate odds.

Now for a concrete example, the first sportsbook to put odds on Cain Velazquez vs. Big Nog had the fight at around

Velazquez +145
Nog -120

or something to that effect, the exact amount isn't important. Now, I mentioned that the odds move on the public's view point, but keep in mind, professional gamblers are much fewer in number, but gamble a lot more money. They also check odds much more often than the public, and wait especially for immediately after the odds have been posted, to get opportunities like this. So when I saw the fight was announced, I had Velazquez as a 2-1 favorite in my mind, so my %YO was 66%. Obviously the bookmakers were anticipating the more known fighter would be the favorite. But with odds of +145, the %SBO was ~41%. That's a difference of 25%.

So I believed I had a large profit margin on this fight, so did other people obviously, so lots of bets came in on Velazquez. How does the sportsbook compensate for this? They needed to entice people to beg on Nog to have money to pay the people who bet on Velazquez incase he won. They do this by giving Nog more favorable odds (making him a bigger underdog) and giving Velazquez unfavorable odds (making him less of a favorite). The day before the fight happened, the dust settled somewhere around

Velazquez -160
Nog +125

So to outweigh the large amounts of bets coming in on Velazquez they gave Nog more favorable odds. So long story short, for the sportbooks to make money as bets come in, they adjust the odds so they can make money no matter which fighter wins.  (You'll notice they never give -100/-100 odds on a fight even if it's a coin flip to call. it's always -110 vs. -110, this is so they have a base profit margin, but that's another story).

So how does this pertain to me as a gambler?

Anticipating movement in odds.

So back onto my first point in gambling 101, people are stupid.

You have to anticipate that fighters that have the hype train on them will have more favored odds on them. The trick is knowing how to spot the hype, and how to anticipate how odds will move based on their performance. We know this through being knowledgeable in the basics of MMA.

So, for the easier examples, the mega-popular fighters will always be overvalued. Mega-stars like Chuck Liddell and Quinton Jackson, for example. Quinton Jackson is bloated right now, took ages off of fighting, has broken his hand(s) or wrist in just about every fight since Dan Henderson, and has not improved as a fighter since he came into the UFC. The last time he came back from a long layoff and was battling the same problems was his fight with Forrest Griffin, and that didn't end well for just about every gambler who said it was a sure thing with Jackson in the -350s. We were also witness to a lot of overhyped and overvalued fighters as a result of strikeforce. Cung Le, Kimbo Slice, and Gina Carano all had the hype train running on them because of the sheer mass of people watching their fights, and the amount of hyping strikeforce did.

Rule 4.A. Megastar fighters will almost always be overvalued.

Now if megastars are overvalued, then the inverse must be true (if we are following logic)

Rule 4.B. Boring, unliked, and or unknown fighters will almost always be undervalued. (Especially when fighting someone with more star power).

Luckily for us there is not always a correlation between skill and star power. The ability to dictate where the fight will take place has more impact on a fighter's ability to win a fight than ANY other skill in MMA.

This is typically called wrestling. This should make you giddy if you read rule 4.B. That's because wrestling which is the most important skill in fighting, and is also thought to be the most boring. Lay N' Pray ain't pretty, but it wins fights. It also causes fans to not watch decision fights all the way through.

Now read rule 4.A. again. What type of fighters become megastars? Kimbo Slice, Gina Carano, Cung Le? The megastars tend to be strikers. Striking is the most unreliable aspect of MMA. With 4 oz gloves, that provide little protection when covering up, the margin of error is so slim that anybody can knock anybody out.

How does this help us? Especially in a striker vs. wrestler battle. The striker will more often than not tend to be overvalued while the wrestler will be undervalued. However, the wrestler will typically have a better chance to win the fight. Here is a good chance for profit.

Now join us next time when I dissect fighting styles in MMA.