I discussed the below topic in Sunday’s TSP Daily Briefing and then cut and pasted it into Monday’s edition since it was open to the public. I think it is a very important topic to understand, so I am also publishing it here on the website for future reference.
Since launching and covering the Book Needs content over the summer, the High Level Book Needs performance has been very strong. However, over the past few weeks I have discussed the lack of performance from Book Needs in football outside the High Level Book Needs. High Level Book Needs have been a consistent performer for the past 5 years across all sports. The Book Needs analytic rates wagers based on Book Need (what the book wants to win based on potential profit) using a 1-100 scale. Book Needs ratings of 79 and below (non-qualifying and Low Level) are now -17.8 units as of the date of this writing (10/18/21). One might ask how does the book make money if Book Needs readings of 79 and below are down -17.8 units? I know people have told me…these low level Book Needs suck…how does the book make any money. Ah ha! Yes my friend, great question. The answer…the book gets the benefit of vig on all those losses and vig creates a huge difference in performance between player and book. Let’s take a look at how it goes…
If we assume 10% juice on player losses (so Book Needs wins), Book Needs with analytic readings of 35-79 (non-qualifying and Low Level) have 231 wins (meaning the bettors had 231 losses). If we assume 1 unit on those losses then that’s 231 units risked plus 23.1 units of vig on top. So, the book collected 23.1 units of vig from those player losses. It’s something we, as the player following the Book Need, do not get the benefit on. On top of that, when a Book Need loses…the book doesn’t pay the juice to the player…but anyone following the Book Need (like all of us) does have to pay the juice to the book. So, if we again assume 10% juice…there were 278 losses on non-qualifying and Low Level Book Needs (player wins)…which means someone following the Book Needs would have to pay 27.8 units of vig for the losses. Within all this vig lies the difference between the book making money off the Book Needs and a bettor following the Low Level Needs losing. The book has +23.1 units of vig collected on player losses (Book Need wins), plus the +27.8 units of vig NOT PAID on Book Need losses. It means there is a swing of +50.9 units in favor of the book on Book Needs…thanks to the book collecting vig on losses and not paying it on wins!! It’s a massive swing and you would never perhaps think or realize it until you breakdown the math. It is this big swing that obviously illustrates how while the player betting Low Level Book Needs is losing…the book is doing just fine on those same plays. The power of vig!
It is the above breakdown that also explains why fading specific handicappers or blindly fading the public just does not work except in very selective situations. The reason…it’s all about the vig! We might see the public go 0-5 one night and thereby they are down 5.5 units. However, those of us fading the public went a solid 5-0 for +5 units. The next day the public goes 5-0 for +5 units and those of us fading go 0-5 for -5.5 units. In the end, the book is 5-5 booking these bets and +0.5 units. We are 5-5 fading the public, but DOWN that 0.5 units which the book is profiting. So, yes the book is profiting from the public fade…we are not! The greater these numbers get, the larger the sample size, the larger the profit for the book and smaller the profit margin (likely a negative profit margin) being achieved by the fader.
Because the books have the power of vig on their side, should you not utilize Book Needs or assess action based on public concentrations? While I have always said that a blind public fade is rarely, if ever a good strategy, there is something important to knowing where the public is betting, to what degree, and what the book needs to win. Why? It’s all about another “V” word…VALUE. If the public is heavy on Team A -5 over Team B…likely there is no value in betting Team A. Why? Typically, if the public is heavy to Team A and the action isn’t being offset by sharp money, Team A’s price will get worse. If Team A’s price is getting worse…well, it doesn’t take a genius to realize that it means less value on Team A…sometimes even leading to negative value. Even if Team A’s price isn’t moving, but it isn’t due to sharp money on the other side, then clearly the book isn’t moving the price because they feel the current price shows no value or slightly negative value for Team A. So, while you aren’t using information about where the public is betting as a blind fade, you are using this public information to stay away from a side that likely has no or negative value. It doesn’t make Team B a “lock”, nor does it necessarily make Team B a value, but it does change the value dynamic within the market and in that way it is very important to know what the public is betting and also what the Book Needs to win.
Good luck in your action!
~TSP