Which is Better Bet Question

**u21c3f6** · 02-19-16, 11:48 AM

Assuming all wagers are at the same odds, I would make the 12% wager. It would require a much smaller bankroll and would be safer from a variance point of view. It may seem strange to say but as a gambler I am (extra) risk averse.

Joe.

**hus7ler** · 02-19-16, 04:22 PM

Option c: 4k on 12% edge

**hus7ler** · 02-19-16, 04:23 PM

Its super rare to find such high of an edge but when you do, you should br hammering it

**jds07v** · 02-19-16, 06:41 PM

I would bet the 12% true edge for 1k (or higher). With a true edge of 12% and at -110 odds you would want to lay as much as humanly possible

**indio** · 02-19-16, 08:00 PM

Questions like this are meaningless because they have incomplete information, and really has no point.

In the spirit of which is the better bet?, I pulled out some old papers I wrote for a betting quiz that actually has correct and incorrect answers.

Joe and Fred are basketball players who have each attempted over 20,000 free throws a piece. Joe makes his at an 80% rate, Fred makes his at a 70% rate. On a neutral court, they will have a contest and shoot 10 free throws each. They get a bonus for every one they make, so they'll try to make every shot no matter what. The local Bookmaker is offering vig-free wagers, so of the following bets, which do you take?

A.Combined Free Throws Made

Over 15 +100
Under 15 +100

B.Joe vs Fred ML who will win

Joe -300
Fred +300

C.Joe vs Fred handicap line

Joe -1 +100
Fred +1 +100

Each bet (A.B.C.) has a correct side that has an edge to the player, and an incorrect side that has an edge to the bookie. Remember, these are juice free, so which sides do you take on these 3 bets?

If there are any guesses in this thread, I'll reveal the answers some time in the early A.M.

**indio** · 02-19-16, 09:01 PM

Originally posted by blueguitar

Let's say you are a sports bettor and you find 5 edge bets in one day. In 4 of those bets you perceive a small edge of 3%. And in one bet you perceive a larger edge of 12%. Of course, an edge on a sports bet is only theoretical but for the purposes of this question we will say that it is a true edge; not theory. Many bettors would probably make all of these bets in different amounts but let's say you have only 2 choices. You can either make 4 1K bets with a 3% edge which will give you an EV of $120 or you can make one 1K bet at 12% which will give you the same EV of $120. All of the bets are priced at -110. If you make 4 1K bets with a 3% edge you have a much better chance (I think) of being a net winner but when you have a very bad day you can lose much more - 4k. If you make the one bet of 1K at 12%
you have risked much less but you will lose it all (I think) much more often. Which bet would you choose and why?

You need to learn what EV is, because you have figured it completely wrong. Using your assumption that the edges are actual and not theoretical, we first have to establish the probabilities of winning each individual bet. We will also assume that a tie on any bet is impossible to keep things simple. Since you said every bet is a $110/100 wager, that means standard or break even win chance would be at 52.38%. A 3% edge would calculate to a 53.95% chance (.5238 x .03 = .0157 +.5238 = .5395) and a 12% edge would calculate to a 58.67% chance.

This means that for every $110 we bet, we can expect $129.07 for the 12% edge bet, If we make four 110/100 bets on four contests with a 3% edge on each contest, our expectation is $114.12 for every $110. However..........

the question you asked is if we should make one $1100/1000 bet on the 12% edge, or four $1100 bets totaling $4400 on four 3% edge bets. You fail to tell us what our bankroll is, are we making future bets, etc...so it's an incomplete question which has no correct answer.
We can however display the chances of both options.

Option A. Making one bet of $1100/1000 on one contest with an expected win chance of 58.67%, our chances are simple

+ $1,000 = 58.67% chance
- $1,100 = 41.33%

Option B is making four $1100/1000 bets on 4 contests all with an expected win chance of 53.95%, our chances are

-$4,400 = 4.50%
-$2,300 = 21.07%
- $200 = 37.03%
+ $1,900 = 28.92%
+$4,000 = 8.47%

**indio** · 02-19-16, 09:14 PM

Originally posted by jds07v

I would bet the 12% true edge for 1k (or higher). With a true edge of 12% and at -110 odds you would want to lay as much as humanly possible

Humanly possible would mean everything you own and can borrow. You have a 41.33% chance of losing. So your advice would be to take a chance with an over 40% possibility of losing everything you have and being in debt to boot? OK. I sure hope you're not in the financial planning industry, although you would have fit right in at Long Term Capital Management, Bear Stearns, and other infamous brokerage firms.

**hus7ler** · 02-20-16, 03:14 AM

Originally posted by indio

Questions like this are meaningless because they have incomplete information, and really has no point.

In the spirit of which is the better bet?, I pulled out some old papers I wrote for a betting quiz that actually has correct and incorrect answers.

Joe and Fred are basketball players who have each attempted over 20,000 free throws a piece. Joe makes his at an 80% rate, Fred makes his at a 70% rate. On a neutral court, they will have a contest and shoot 10 free throws each. They get a bonus for every one they make, so they'll try to make every shot no matter what. The local Bookmaker is offering vig-free wagers, so of the following bets, which do you take?

A.Combined Free Throws Made

Over 15 +100
Under 15 +100

B.Joe vs Fred ML who will win

Joe -300
Fred +300

C.Joe vs Fred handicap line

Joe -1 +100
Fred +1 +100

Each bet (A.B.C.) has a correct side that has an edge to the player, and an incorrect side that has an edge to the bookie. Remember, these are juice free, so which sides do you take on these 3 bets?

If there are any guesses in this thread, I'll reveal the answers some time in the early A.M.

a. over because of the bonus incentive to make more in.
b. pass because even tho fred has more value, less likely to win
c. pass because neither side has an edge, virtual coin flip

**blueguitar** · 02-20-16, 05:00 AM

Originally posted by indio

Humanly possible would mean everything you own and can borrow. You have a 41.33% chance of losing. So your advice would be to take a chance with an over 40% possibility of losing everything you have and being in debt to boot? OK. I sure hope you're not in the financial planning industry, although you would have fit right in at Long Term Capital Management, Bear Stearns, and other infamous brokerage firms.

One of the founders of Long Term Capital Management (they lost billions) was Myron Scholes who developed the model for options pricing for which he was awarded the Nobel Prize in Economics.

**indio** · 02-20-16, 07:53 AM

Originally posted by indio

Questions like this are meaningless because they have incomplete information, and really has no point.

In the spirit of which is the better bet?, I pulled out some old papers I wrote for a betting quiz that actually has correct and incorrect answers.

Joe and Fred are basketball players who have each attempted over 20,000 free throws a piece. Joe makes his at an 80% rate, Fred makes his at a 70% rate. On a neutral court, they will have a contest and shoot 10 free throws each. They get a bonus for every one they make, so they'll try to make every shot no matter what. The local Bookmaker is offering vig-free wagers, so of the following bets, which do you take?

A.Combined Free Throws Made

Over 15 +100
Under 15 +100

B.Joe vs Fred ML who will win

Joe -300
Fred +300

C.Joe vs Fred handicap line

Joe -1 +100
Fred +1 +100

Each bet (A.B.C.) has a correct side that has an edge to the player, and an incorrect side that has an edge to the bookie. Remember, these are juice free, so which sides do you take on these 3 bets?

If there are any guesses in this thread, I'll reveal the answers some time in the early A.M.

Answers :

A. Combined Free Throws Made OVER 15 +100

The chances of them combining for 16 or more made is 41.39%, whereas the chances of them making 14 or less is 38.23%.
The chance of them making exactly 15 is 20.38% Over 15 at +100 is a slight edge to the bettor.

B. Joe vs Fred ML bet FRED +300

Joe's win chance is 60.41% , Freds win chance is 21.57% , and the chance of a tie is 18.02% So since the real money line would be -280/+280, Fred at +300 is a slight edge for the bettor.

C. Joe vs Fred handicap line JOE -1 +100

Joe's chances to beat Fred by 2 or more are 42.76%, Fred's chance of winning or tying is 39.59%, and the chance of Joe beating Fred by exactly 1 is 17.65%, So lay the basket with Joe at +100, and you'll have a slight edge on the action.

**indio** · 02-20-16, 08:00 AM

Originally posted by blueguitar

One of the founders of Long Term Capital Management (they lost billions) was Myron Scholes who developed the model for options pricing for which he was awarded the Nobel Prize in Economics.

Yeah, I always found that fact pretty funny. Needless to say, there is a long list of Nobel Prize winners that has tarnished that prize beyond repair. Some described their strategy as picking up nickels in front of a bulldozer. There are those that feel the Federal Reserve's secret meeting in 1998 to bail them out (which was ultimately done by other firms) emboldened others that they could be bailed out on the off chance that they got destroyed on shorts, which is exactly what happened ten years later.

**blueguitar** · 02-20-16, 08:36 AM

Originally posted by indio

Yeah, I always found that fact pretty funny. Needless to say, there is a long list of Nobel Prize winners that has tarnished that prize beyond repair. Some described their strategy as picking up nickels in front of a bulldozer. There are those that feel the Federal Reserve's secret meeting in 1998 to bail them out (which was ultimately done by other firms) emboldened others that they could be bailed out on the off chance that they got destroyed on shorts, which is exactly what happened ten years later.

Victor Niederhoffer a respected academic writer formed a hedge fund selling naked calls and puts and was so proud of himself and his high returns that he wrote the book entitled The Education of A Speculator. Then in '97 the market dropped 7% in one day and he lost all of his clients' money and all of his own money. Now his education is complete.

**jds07v** · 02-22-16, 08:25 PM

Originally posted by indio

Humanly possible would mean everything you own and can borrow. You have a 41.33% chance of losing. So your advice would be to take a chance with an over 40% possibility of losing everything you have and being in debt to boot? OK. I sure hope you're not in the financial planning industry, although you would have fit right in at Long Term Capital Management, Bear Stearns, and other infamous brokerage firms.

Wasn't meant to be literal but you took it how i wrote it. I was saying that the I preferred the single bet and if you're using some sort of variable-staking br management, obviously you would bet considerably larger on a 12%.

Since these edge %'s are known, the kelly calculator is useful here and shows that the 12% side is the better option of the two. The kelly spit out over 13% of the BR on this one play, which is way far and above what I would put on a single event. Full kelly on the smaller edges resulted in about 3% stake per play. After the single series the 12% side showed more profit per series.