How to Bet: Futures Bets
How to Bet: Futures Bets
A futures bet is defined as “any bet where the outcome will not be decided until the distant future.” As opposed to a typical moneyline or parlay bet, where the bet is paid out later that evening, a futures bet is not decided until a much later date. To clarify, this does not mean placing a bet on a game that will be played weeks later, but rather a futures bet is mostly based on a team either winning a division or championship of some sort.
This could include betting a team to win the NHL Championship prior to the season or potentially which team will win the NL Central Division in the MLB.
The important aspect of these types of bets is the focus not on one game or series but is based on the outcome of the entire season up to the determination of an eventual winner. These bets typically stretch months and involve funds being put on hold for an extended period of time. This bet is recommended for those with spare liquidity in their bankroll since the reward is delayed and not instant.
As an example, an MLB bettor would place this bet prior to the first game of the season on the team of their choice to win a championship, and they would only get paid once the champion was determined. If any other team but the team on their ticket ended up winning the MLB Championship, the bet would result in a loss. Naturally, these bets are extremely difficult to predict, but they typically offer large potential payouts as a result.
Normally, futures bets are placed prior to the start of the season, but many sportsbooks will continue offering bets into the season and once the playoffs begin. The odds will change throughout the course of the season and teams performing better will decrease in odds accordingly. To put it differently, the potential payout on bets will shrink with teams performing well and will increase with those performing poorly as a general rule.
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How to Calculate Futures Odds
Futures bets are often listed in the form of “__/1” with the blank being a wide range of numbers. Whatever number is listed before the one is the multiple the bettor will make if the bet wins. For instance, if the Cubs are listed as 30/1 to win a Championship, then a $1 bet would pay $30 if it were to win. Other times, bets may be based on slightly less clean fractions, such as 7/2, 15/2, etc. In those examples, a $2 bet would net $7 and $15 respectively.
Calculating the true odds of a bet is slightly more complicated and there are multiple ways to go about doing so. Odds calculators can be helpful in the conversion process, and using one of them is the easiest method, but calculating them by hand is also possible.
According to GamblingSites.com, The implied probability of the fractional odds equals the denominator divided by (the denominator plus the numerator).
Here are four potential bets that could be made prior to the NFL season:
Odds to win the Championship
To calculate the odds for the Bears, the equation would be as follows: 1/(20+1) = 1/21 = 0.0476 = 4.76% chance
To calculate the odds for the Broncos, the equation would be as follows: 1/(15+1) = 1/16 = 0.0625 = 6.25% chance
To calculate the odds for the Colts, the equation would be as follows: 1/(4+1) = 1/5 = 0.20 = 20% chance
To calculate the odds for the Texans, the equation would be as follows: 1/(35+1) = 1/36 = 0.0278 = 2.78% chance
The percentage at the end of each equation equals the true odds of the wager the bettor would be placing if taking the futures bet on those respective teams.
Popular Futures Bets by Sport
There are different variations of futures bets that can be made by sport. Here are popular futures bets associated with each league:
-NFL: Super Bowl Odds, Odds to Win Division, Regular Season Win Totals, MVP and Rookie of the Year
-NBA: Championship Odds, Odds to Win Division, Regular Season Win Totals, MVP and Rookie of the Year
-MLB: Similar to NBA
-NHL: Stanley Cup odds
-Golf and Tennis: Futures odds for majors or grand slam
Player futures work the same way as team futures where payouts are made at the end of the season when the awards are announced. Other potential props could include those who lead the league in a specific statistic. In the case of a tie, bettors will want to double-check with sportsbook rules as it is possible they treat them differently in the cases of statistical ties. In the case of champions and award winners, there is always only one, so there is no confusion in that sense.
Hedging Futures Bets
One of the most important concepts to future betting is the concept of hedging. Especially if betting relatively large sums of money on a future, bettors need to strongly consider hedging their bet as it gets closer to becoming a reality. For bettors who stand to win a large sum of money
For instance, if a bettor selects the Cubs to win the World Series in a futures bet, and the Cubs make the World Series, then the way a bettor would hedge is to bet the Cubs’ opponent for the series. In this example, if the initial bet pays $10,000, and the Cubs opponent is a +200 underdog in the series the bettor has a few options.
Let it ride: If the Cubs win the bettor wins $10,000
Hedge: By betting $2500 on the Cubs opponent at +200, the bettor could guarantee he'd be paid either way - $7500 if the Cubs win (The $10,000 futures bet less the $2500 loss) or $5000 if they win ($2500 at +200).
Hedging depends on risk tolerance and confidence in the original bet. Some bettors like to “let it ride” and not hedge but that creates a zero dollar floor whereas a smart hedger may bet half the potential winnings of the original futures bet to assure a large payday. There are two important factors to consider when hedging a bit the expected value of the second bet and the variance associated with the bets. Take the following scenario:
We have structured a deal where you are guaranteed to win $100 if a coin lands on heads.
I offer to let you bet $40 on whether you think it will win land on tails, but if it doesn't you have to pay me $50. As an independent bet, this is a bad bet. There is a 50% chance that you pay me $50 and a 50% chance that I pay you $40, so you are expected to lose $10 if we ran this scenario repeatedly.
If you Let it Ride, your expected value is to win $50, because you have a 50% chance of winning $100 or a 50% chance of winning $0. If you hedge, your expected value becomes $45. You have a 50% chance of winning $50 and a 50% chance of winning $40.
In this example, by hedging, you would reduce your expected payout by $5 but be guaranteed a profit. While this might not be worth the tradeoff in a situation for $100 you can imagine how that could change if you have the chance to win $10,000 or $100,000.
Before hedging futures bets, you should consider whether or not the hedge bet is a good bet in isolation.
Edges to Look for in Futures Bets
With the mean futures bets listed above, you can bet on an individual player or team performance of achieving a future outcome and there are dozens of futures bets that get posted. The single biggest edge a bettor can have in a futures markets is by looking for stale lines. We are looking for 2 main things here: 1) Does this factor impact a team's odds of winning the futures bet and 2) Has it been priced into the betting market. For books that are slow to adjust pricing on futures bets, we may be able to capture an edge related to #1.
In the NFL a team may have opened 2-0 while the divisional opponents are 0-2. Because this team is now more likely to win the division, make the playoffs and even get a first round this should impact their odds of winning the Super Bowl.
In the NBA the current favorite may suffer a key injury that hurts their team's odds to win the Championship such as when Lebron James was injured for the LA Lakers. In addition to that team no longer being a good betting value, it would improve the odds of the other teams within their conference. While major news like Lebron James is likely to be accounted for, there will be some sportsbooks that are slower to react than you are and there could be other players who get injured that have a slightly smaller impact but the sportsbooks don't adjust immediately.
In MLB a pitcher may have opened with 3 straight wins, 30 strikeouts, and increased exit velocity, all of which make him a more favorable Cy Young candidate.
In GOLF, by the month of May your sportsbook will likely have futures odds already posted for the next year's Masters. While it is possible they'll update these weekly, its also possible that they'll forget to update them for a few weeks or even longer, and the lines will get stale. In this time period, a PGATOUR golfer may go on a run winning one event and finishing inside of the Top 5 of a few others. In addition to guaranteeing a spot in the Masters, this golfer is also likely to have an improved skill set that has not been priced into the futures odds for The Masters. For the 2019 Masters Xander Schauffele was available at up to 100-1 in some futures markets just the week before the Masters, but when the sportsbooks reset their prices for that week he was down to 30-1.
Major news items that are predictable will often get priced in quickly. If a line existed at 40-1 last week and has moved to 35-1 or 45-1, the sportsbook has likely taken some of the news into account. Free Agency, Trade Deadline flurry, the Draft and superstar injury news will all get adjusted in futures markets very quickly, but less obvious news items or trades that happen at off-peak times of the year may get overlooked. Before placing a futures bet consider whether or not the sportsbook has already priced in the edge you think you have found.
Interested in learning more about How to Bet on Sports? Check out our educational series.
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