The premise of the movie “Dumb Money” (great watch by the way), is that an army of small retail traders could concentrate their cash into buying one stock (GameStop), going against some of the biggest powers in hedge funds, and win. It was the small traders…retail traders…you know…”dumb money”…that was pushing the price of GameStop stock…despite some of the best efforts of the smart money (i.e. hedge funds) pushing hard against the other side of the trade. Yep…the public moving prices.
I bring this up because I always enjoy people who talk out of their asses. These folks know absolutely nothing, beyond what some other idiot told them, yet they take it on gospel with no facts. These folks have never managed betting markets nor worked in a sportsbook, but one day they heard some jackass in the media talk about how the public doesn’t move prices. Welcome to the age of social media…where everyone is an expert with zero experience!
The public can be a powerful force in the investment markets and in the gambling markets when they are concentrated on one position. I see it happen week in and week out. Sure, 80% of the time sharp money is the reason for prices moving in the betting markets, and the book’s respect for that money. The other 20% of the time, in markets lacking material sharp action OR due to overwhelming one sided public money…it is the public which moves the prices. I have no problem with someone saying, “a vast majority of the time the lines move because of sharp money”….that’s correct. I do have a problem when people say, “the public doesn’t move prices”, as in…”the public never moves a number in the betting markets”, because that is patently false.
The greatest example of this is what I call “The Big Score”. It was a wager where the public was absolutely HAMMERING one side of a bet and sharp money kept hammering the other side. It was the ultimate Pro’s v Joe’s and it was easily one of the largest transfers of wealth in the betting markets in history…from John Q. Public to John Q. Sharp. What am I referring to? It was back in August of 2017…Mayweather vs. McGregor. The public love for McGregor was overwhelming and the public kept hammering the +400 and up on McGregor. The money from the public on McGregor dwarfed the sharp money that kept buying Mayweather around -500 and -550. It makes it sound like the sharps had little money on Mayweather, but that wasn’t the case. It was the largest amount of sharp money on one side of a boxing bet that I had ever seen since I began making markets in 1999.
No matter how much sharp money bet Mayweather…the public was betting McGregor at a 4:1 ratio. I do not remember an overall handle this high in boxing (a distant 2nd would have been Pacquiao/Mayweather) in my experience. Sharp money was able to get such a volume of money down that I know a couple sharp bettors who revel in that match as their absolute greatest score ever…taking well into SEVEN FIGURES in profit on the match across a couple dozen books. Despite the sharp success…the book’s still made out like bandits on the result. A massive amount of money left the public bettor’s pockets and went right into the sharp’s and the book’s pockets!
Why was it such a success for the books and the sharps? Any intelligent sharp bettor would tell you that the line should have been Mayweather -1500 to -2500. The book did not hang -1500 or -2500 because they knew the public was going to hammer McGregor…so why give them such a good deal?? There was always a chance McGregor could get lucky. Nothing is guaranteed in gambling. So, the book floated the lines at -1000 to as low as -700…and the public…not caring about value or true odds, but just the fighter they liked…poured in on McGregor and pushed the line down to -500 and -550. It was at this point that the book got sharp action on Mayweather, but even heavier public money on McGregor. So, for the book, it (-500 to -550) was the perfect line. The book took in an overwhelming amount of public money at the +400 to +425 price, but enough Mayweather sharp money to minimize their risk too. At -700 or above the sharp money was minimal. By minimizing their risk due to the immense handle, if McGregor pulled the shocker, it would not be anywhere near as painful as if the price was Mayweather -700 or higher…and at the same time if it played out as expected, the sharps would make a fortune…but so would the book.
When the fight was over, it was a very big day for books and for the sharps. I know traders who bought cars and homes on their bonuses just from that fight. It’s one that will live in the memories of anyone who was involved until the day they die. For so many sportsbooks, traders and pro’s…it represented one of their greatest and easiest wins…and it was all provided by immense public money keeping the price low compared to what the true price on the match should have been.
It also breaks the glass on another bullshit belief that sharps don’t bet heavy chalks. If an outcome on one side of a wager has a 92% chance of winning, but the book is hanging that bet at -525…that’s a HUGE VALUE! The fair value moneyline for something with a 92% probability is -1150! So, you are getting a wager at -525 that should be -1150…that’s a 50% off sale by the book. What self-respecting sharp would not take such a deal. It doesn’t mean the bet will win. However, if you are constantly taking discounts based on the probability, over time you will NEVER lose at sports gambling…just like the casino will never lose at Craps or Roulette…it’s just the math at work.
Of course, not every day presents this sort of opportunity. However, every day does see some media pundits or sports services lining up on a team…which then prompts the public to follow along…and in light of no material sharp money on the other side…the public will move the prices all by itself. Sometimes the public will move prices so well that it creates value for sharps to take the other side.
The sharps will be the reason for pricing moving most of the time, but to say the public has zero power to move prices in the betting markets is one of the biggest fallacies going. Back when I was a public bettor and made a large, but not exactly monumental wager at MGM Grand, the book moved the price by a half point. I was no professional bettor, just a larger table games player who was placing a wager on an average NBA market…and I moved the MGM’s price by half a point.