Learn to Read Between the Lines: How Vegas Sets Future Odds

Jason Lake

Monday, June 22, 2015 7:06 PM GMT

Even before the Golden State Warriors had won the NBA championship, the basketball odds were up on the board for the 2015-16 season. Where do these numbers come from, anyway?

Welcome to the “summer season,” folks. The NBA (and NHL) playoffs are behind us, and the NFL regular season doesn't kick off until September. For most North American sports fans and bettors, that leaves us with baseball, some tennis/golf/NASCAR, and of course, plenty of MMA. There's money to be made from each of these sports; even if you don't know a restrictor plate from an omoplata, you can use simple market-based principles to extract value from the betting public.

That doesn't mean you can't bet on the NBA anymore. There's always the futures market; basketball odds on who will win the next championship are available all year long. In fact, the odds for the 2016 NBA title were posted even before the Golden State Warriors had polished off the Cleveland Cavaliers in the 2015 Finals. The Cavs are the 11-4 favorites at Bovada as we go to press, followed by Golden State at 7-2. But how do the books come up with these numbers? Is it all guesswork?
 

Go West
There's some educated guesswork involved. As usual, the first NBA odds come from Las Vegas – the Westgate SuperBook is the go-to location these days. The experts at Westgate look at their own power rankings as they stand, then consider what changes are likely to take place over the offseason, and what teams the public is likely to bet on moving forward. It's not all that different from what pro handicappers do.

As soon as Westgate publishes its opening odds, other locations in Vegas hop on board, making whatever adjustments (if any) they feel are necessary to reflect their own clientele's betting habits, or simply to put a competitive price on the board and drum up some action. Same goes for the offshore books. In theory, these lines are soft and can be exploited, but almost all of the money coming into the futures market is from “square” bettors. Besides, the books have all year to tweak the odds and limit their exposure. Easy-peasy.
 

Vegas Doesn't Gamble
As always, the important thing for beginners to wrap their heads around is the business model the books have in place. When the first NBA futures odds hit the board, you invariably see stories like “Vegas favors Cavaliers to win 2016 title” get written up. Then people argue about whether the books are right or wrong about how good the Cavs are.

Poppycock. The books, Vegas and offshore alike, aren't making a prediction about how well the Cavaliers will perform – they're predicting how the public will bet (not a difficult thing to do), and setting their lines accordingly. With a straight bet, like the spread on Game 6 of the 2015 NBA Finals, the idea is to balance the action on both sides: Cleveland +3 and Golden State –3 in this case. Then the book can pay out the Warriors bettors with the money that came in from Cavs bettors, and keep the vigorish, usually –110.
 

Add It Up
With the futures market, the vigorish comes in the form of hold percentage. If you take the time to add up all the odds for the 30 teams to win the championship, you'll find it comes out to higher than 100 percent. How much higher represents the hold percentage, which is how much money the books can expect to keep after the title has been awarded. Something like 30 percent is not uncommon.

Most public bettors don't even notice this – they barely even blink when they have to pay $110 to win $100 on a straight bet. So when you're looking at making a wager on the futures market, make sure to shop around not just for the best basketball odds available, but for the books that have the most competitive hold percentages, as well. Shop smart.