August 24, 2012 - by David Hess
This is the first post in a preseason series on football pick ’em contest strategy, which we are updating from original posts published last year. We also post advice on NFL survivor pool strategy, as well as weekly pick’em and survivor contest analysis during the NFL and college football seasons.
Case Study #1a: The Cumulative Impact Of Randomness
OK, here’s the situation. 49 monkeys and 1 IBM Watson supercomputer are competing in an NFL pick’em contest this year. They are picking against the spread.
Watson makes picks by analyzing 20 years of historical NFL data, current Vegas betting lines, and every bit of news that has ever been published about teams, players and coaches. As a result of all this awesome data and computing power, the ultra-nerds at IBM have gotten Watson to achieve a long term win rate of 55% against the spread, picking every single NFL game. That’s really impressive. In fact, IBM is just about to send Watson to Vegas to open an account at Cantor Gaming and go to town.
The monkeys, on the other hand, pick their winners by throwing banana peels at one of two targets, each representing an opposing team. But first, they each get to drink four quarts of Michelob Dark. So it’s a safe assumption that these inebriated primates will be picking their winners at random.
You are offered a side bet on this competition. At even odds, you can bet $100 that Watson wins the pick’em contest, or that the field (i.e. one of the 49 monkeys) does. Which side of that bet do you take?
The monkeys, of course. Watson may be the best picker (by far) in the contest, but randomness dictates that over the course of 256 NFL regular season games, the odds that one of those 49 drunk monkeys beats him in a picking contest are actually quite good. Around 70%, to be exact.
Winning a weekly football pick’em contest, like most any sports picking contest, requires a combination of luck and skill. The bigger your contest is, the more luck you will need to win. Period. Even if, like Watson, you are clearly the most skilled picker in your 50-person office pool, you are not going to win that pool every year. In fact, Watson would only be expected to win the monkey pool once every three years or so.
Nevertheless, the fact that you need luck to win does nothing to diminish the importance of skill when it comes to pick’em contests. Some people truly believe that because Larry in Customer Service who knows absolutely nothing about college football won the office pool last year, it “proves” that winning these types of contests is all luck. That’s baloney.
In fact, skill plays a tremendous role in maximizing your odds to win a football pick’em. And unless you are playing in gigantic pools — say, 500 or 1,000 people or more — effective use of picking strategy can mean the difference between winning one (or many) of these contests over the course of your lifetime, and passing on to the netherworld without ever tasting the glory of pick’em victory. O how we shudder at the thought of that!
Case Study #1b: The Long Term Impact Of Skill
If you need further proof, consider this fact. In our Watson example above, if those IBM engineers were to find a way to improve Watson’s picking skill just a little bit more — from 55% against the spread to 57% — he would then become the better bet to win the contest, over the field of 49 monkeys. And if Watson’s long term skill level was 60%, we would expect him to beat all 49 monkeys in the contest four out of every five years! Even a relatively modest boost in skill has a tremendous impact on odds to win an NFL pick’em.
The best part about pick’em contests is that you don’t need to be right a certain amount of the time to win. You just need to beat the rest of the people in your pool, and that’s a completely different story.
In a way, pick’em contests and bracket pools are like poker for people who like to wager money on sports. You’re not playing against the house; you’re playing against whomever happens to be sitting at the table. The most skilled pick’em players have a quantifiable edge, and are privy to very attractive expected returns.
Let’s compare a college football pick’em contest with betting on college football games. If you’re in Vegas betting college football point spreads at typical payout odds (bet $110 to win $100), you need to pick winners about 52.5% of the time in order to make money. It’s that simple, yet it’s far from easy.
Consequently, more people who bet on college football lose money than win money. Last time we checked, Vegas sports books were still in business.
Case Study 2: ROI Comparison of Pick’em Contests vs. Sharp Betting
Let’s assume you’re a fairly sharp college football bettor, though. During a typical regular season you can usually identify around 100 games (about 7 or 8 per week) where your point spread pick has a solid 55% chance to win. Since you’re not reckless, you also discipline yourself from a money management standpoint, betting no more than 2 to 2.5% of your total bankroll on any one game.
Once you do all the math, assuming you go 55-45 against the spread on the season, your total return on your bankroll (the capital you initially set aside to bet on college football for the season) would be around 12.5%. There’s absolutely nothing to complain about there — way to go, Mr. Sharp Bettor, that’s over 25% a year when annualized, which kicks the crap out of stock market returns these days.
Still, in contests, an expected ROI of 100% or more is by no means out of the question, assuming you’re playing against an “average” field of competitors. We’ve done extensive simulations of bracket contests, and especially in larger pools, applying intelligent picking strategies can generate odds to win the contest that are two, three, or even five times better than a typical competitor in the pool.
Of course, the risk profile of contests is much different than the risk involved in betting individual games. Your odds of winning a pick’em contest, even just a tiny 10-person office pool, are far lower than the 55% chance that sharp bettor had to win his point spread bets. If you make three individual game bets and enter three contests with the same amount of money, you’re odds of going bust are way higher with the contests.
However, if you can find ways to diversify your risk within contests — split your bankroll among lots of different pools, enter bigger contests multiple times using a different picking strategy for each entry, etc. — you can put yourself in a very appealing risk vs. reward position.
Coming Up Next In Part 2
Now that we’ve established that pick’em contests offer a great opportunity for skilled players to profit, in the next post, we will reveal the source of our skill: a data-driven approach to pick’em strategy that requires both smarts and guts to apply. Check back on Monday.
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