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Unpredictability is an inevitability in sportsbooks. No matter how calculated the oddsmakers are with their initial lines, the major sports leagues all deal with constant transactions, injuries, and breaking news that could massively affect a futures betting line in an instant.
Typically, sportsbooks develop an initial expectation of a line constructed by experts based on qualitative and quantitative factors. They will adjust the lines through the use of movements, which are a response to the money coming in on each side. In an effort to ensure they have zero exposure tied to the outcome, sportsbooks will move the line until there is practically an even amount of money on each side. After that, they take their percentage (known as the vig) and profit regardless of the outcome.
However, when breaking news occurs that can impact the likelihood of a futures outcome, sportsbooks need to ensure that an overwhelming amount of money does not fall on one side of the scale. A change in circumstance that causes a massive influx of money on one side could be troublesome for sportsbooks, as they would be exposed to the outcome and at risk of actually betting on the event. Sportsbooks never bet, so ensuring that breaking news does not impact their zero-sum exposure is a priority.
In response to breaking news, sportsbooks occasionally have to take the lines off of the board to prevent a disproportionate amount of money from falling on one side of the bet. They reevaluate the odds and adjust the futures in a way where they can maintain even exposure.
While some breaking news is more predictable than others, sportsbooks need to ensure that the public knowledge of the news does not entail a mass betting on one side in which they cannot offset by simple line movements. In these circumstances, a preemptive odds change may be necessary. I lay out several instances of this occurrence along with examples of how sportsbooks and bettors should adjust to breaking team news.
Most Predictable: Retirements, Suspensions, or Lingering Injuries
Few athletes have the ability to largely impact futures. In the major sports leagues, betting lines are mainly impacted when the news surrounding a star player’s availability breaks. Retirements, suspensions, and lingering injuries can all force a player to miss time and impact futures surrounding the player and team.
One famous example occurred in 2019 with the Indianapolis Colts. Mere weeks before the beginning of the season, their franchise quarterback Andrew Luck shocked the world by announcing his retirement. According to the sportsbook director at the Golden Nugget casino, “It just changes so much. When it broke, we took down just about everything. Odds to make the playoffs, season wins, division odds, conference odds, just about everything you can bet on them.”
Nearly all sportsbooks had to take down the current odds and reassess what lines would help them to keep their exposure to a minimum. Don’t forget, sportsbooks had already received wagers on the team’s futures as well as the spread for the first week of the season. They have arduous the task of creating a line that will allow them to balance their current and future exposure to all bets regarding the Colts.
As expected, the odds for the Colts in all of their futures took a massive hit. Caesars Sportsbook in Las Vegas moved the Indianapolis Colts’ season win total from 10 wins before the news to 7.5 wins after the announcement. Their Super Bowl odds plummeted from 15-1 to 40-1, their odds to win the division fell from +210 to +325, and the point spread for their Week 1 outing versus the Chargers went from Colts +3 to Colts +7, with the over/under falling 3.5 points.
This move did not only impact the Colts, but it raised the odds for several other teams. The three teams in their division saw a boost in win totals, odds to win their division, and Super Bowl odds. Prop bets like NFL MVP and passing yardage leaders were also affected as Luck was removed from the betting options. While most retirements are not as sudden as Luck’s, breaking news such as this has a major impact on the league and can cause a frenzy in sportsbooks.
So how do you approach this situation as a bettor? If you already placed a bet against the Colts before the news broke, you could utilize the new odds to hedge your bet. For example, if you placed a bet on the Colts to win under 10 games at the beginning of August, you could find value in betting the over 7.5, creating a proposition to double down if their record falls between the totals. Depending on the odds, this could create a perfect opportunity to find arbitrage and take advantage of the sportsbooks needing to adjust the odds. If you placed a bet in favor of the Colts earlier at the higher number, you may have a sunk cost and need to take the news on the chin. You won’t find great value on the other teams given that their odds saw a commensurate increase in comparison to the Colts’ downturn.
A perfect way to avoid the impact of this news is to stay abreast of reports that come out during the offseason. Luck’s lingering injury was a storyline throughout the offseason, and though it was indicated that he would be ready for the season opener, his lack of participation in practice proved otherwise. You may not have been able to see the retirement coming, but his injury concerns may have given you cause to bet against the Colts or avoid the futures completely due to the uncertainty. The same could be said with suspensions, as there would likely be an indication a player violated a league rule or is under investigation.
Sportsbooks can’t speculate without confirmation since this could open them up to greater liability. If they move the futures odds without assurance of the event actually occurring, then they themselves are gambling on an outcome, which is a cardinal sin of their business model. Yet, if you keep yourself aware of the indicators of a potential retirement or suspension, you can stay ahead of the curve before the majority of the public and sportsbooks find out.
Less Predictable: Trades and Free Agency
With player mobility at an all-time high, free agency and trades occur more often and the construction of teams can look very different year-over-year. Sportsbooks need to account for how major players switching teams will impact futures and adjust those odds accordingly to reduce their exposure to the bet. The best examples of player movement affecting betting lines occurs in the NBA, where seemingly every free agency period there are a few big names that change teams and create utter turmoil in the basketball landscape.
In 2018, LeBron James was set to test the free-agent market and choose between a variety of suitors, including his current club the Cleveland Cavaliers, his old club the Miami Heat, and a new destination in the Los Angeles Lakers. When the news broke that LeBron James had chosen to sign with the Lakers, sportsbooks had to adjust all of their lines to support the new information.
At Westgate, the Lakers’ championship odds shifted from 20-1 to 7-2, only trailing the Golden State Warriors for the best odds in the NBA. The Lakers’ win total and odds to win the conference also saw a major boost as LeBron James was a foundational piece in the NBA and had a history of massively changing the fortunes of other franchises. His decision saw his old team, the Cleveland Cavaliers, drop from 30-1 to win the title to 500-1 after the news broke.
As speculation grew before the initial announcement that the Lakers were a favorite to sign James, a large percentage of the public’s money was placed on the Lakers to win next year’s title while their odds were at an extreme value. As the wagers increases, sportsbooks were increasingly adjusting the Lakers’ futures to attempt to diminish their exposure. Nevertheless, more money kept coming on the Lakers’ side until the news officially broke, in which Vegas adjusted the line completely to reflect the new situation.
Like what much of the public had done regarding the James situation, bettors can anticipate free agency moves and trades by watching out for reports from team beat writers, player social media, and other outlets to gain pertinent information. Sportsbooks may build in some cushion into their futures if the likelihood of a transaction seems high, but they can’t change the odds completely without garnering serious risk.
Bettors have the advantage of speculation on their side and may be able to read the tea leaves before the sportsbook has the opportunity to take the odds off of the board and react to the breaking news. While this method isn’t flawless, because rumors change daily and can be erroneous, it’s a value play that can pay dividends if done correctly.
Unpredictable: In-Season Injuries
While retirements, suspensions, and player movements typically have a period of data beforehand to suggest the event is coming, sudden injuries during a season in which a player was healthy beforehand can take the sports world by surprise. With in-season injuries, there is no benefit of foresight unless the player had an injury history and is now suffering from an aggravation of the previous ailment. It is brand new information and changes everything at the drop of a hat.
I’ll go back to the NFL for this example, discussing Patrick Mahomes’ leg injury during his 2019 Super Bowl season. In his Week 7 contest against the Denver Broncos, Mahomes suffered a sudden leg injury during the second quarter of the game. The severity was unknown at the time of the injury, but speculation was rampant. The outcomes ranged from missing one week to missing the rest of the season.
After it was stated that Mahomes would miss only two to three weeks with a knee dislocation, many sportsbooks elected not to change Kansas City’s odds to win the conference or Super Bowl. While some did drop their odds from 10-1 to 12-1, including Caesars and CG Sportsbook, most of the futures regarding the team’s overall performance stayed static. However, the point spreads for the next three games did see a five or six-point adjustment due to the drop-off in skill level between backup Matt Moore and Patrick Mahomes.
The futures that involved Mahomes specifically did see a massive change. Mahomes’ odds to win the NFL MVP saw a noticeable drop after he entered the week with 9-4 odds, leading all other players. After the injury, his odds fell behind several others to give him the fourth-highest odds to win the trophy. Given that MVP is so dependent on a player playing a full season, sportsbooks needed to account for the missed games and adjust the odds accordingly.
With sudden injuries, bettors won’t have any foresight into what will happen. Predicting that an otherwise healthy player will suffer a season-ending injury in which they will miss significant time is nearly impossible and requires more guessing than actual analysis. There is no true value to gain on player injury news because the sportsbooks will have the information simultaneously to the public.
Nevertheless, once the news breaks and the odds change, there is still an opportunity to take advantage. For example, you can wager the Kansas City Chiefs as a value bet given their title odds see a decline. If you still believed the Chiefs could win the Super Bowl, you can enjoy a discount as Mahomes’ injury would likely not have caused his team to miss the playoffs. While in-season injuries are virtually unpredictable, reactionary betting can derive an opportunity for upside in these circumstances.