NFL Futures

King Yao is the author of Weighing the Odds in Hold‘em Poker, and Weighing the Odds in Sports Betting. He uses his experience from making millions in financial derivative markets and translates it into gambling. Since he left his trading position in 2000, he has been playing poker and betting on sports. He travels to Las Vegas frequently, especially during football season.

When people bet on NFL futures, they consider the strength of the team and the odds being offered. They weigh the two and if the odds offered are greater than their expectations, then they bet. This method makes sense, but it is not the best way.

You can do better by taking into consideration the expected market lines of games yet to be played. You can use expected market lines of future games to compare the futures bet to the combination of the individual money lines for the rest for of the season or playoffs. If the combination of the individual money lines offers better odds, then you are better off forgoing the futures bet and betting on each game as it comes up.

The advantages of using the expected market lines in games yet to be played are:

• You avoid making a futures bet that is inferior to betting multiple individual games
• You have a superior structure to value the ongoing risks of your bets
• You can figure out perfect hedge amounts in case you want to change positions

Here is an example of a NFC futures bet being analyzed late in the regular season.

Hypothetical NFC Odds: Seattle

It is December and the Seattle Seahawks have clinched the NFC West. It looks like they will be slotted as the number four seed in the playoffs due to the records and tiebreakers of the division winners. In order to win the NFC, the Seahawks will need to win three playoff games. Their first playoff game will be at home against a wild-card team. Their second playoff game will be on the road against either the Chicago Bears or the New Orleans Saints, the top two seeds. If the Seahawks make it to the NFC championship game, it will likely be on the road again, though they could get lucky and play at home against a wild-card team.

The best odds being offered in all the sportsbooks in Las Vegas on the Seahawks to win the NFC are 20-1. Here is my evaluation of the Seahawks to win the NFC by examining the expected line in each round of the playoffs.

Wild-card round

In the first playoff game, the Seahawks will play a wild-card team in Seattle. The Seahawks have a good home field advantage as their fans are vocal and supportive. The Seahawks are thought of as a team that was lucky to make the playoffs, and may have a worse W-L record than the wild-card team. Home playoff teams have done well historically; this fact may be built into the line. But the wild-card team they will face will likely be a better team. I am going to peg the Seahawks as a 2-point favorite, which is about 53% to win the game.

Divisional round

If the Seahawks win the first playoff game, then they will have to travel and play one of the teams that received a bye. Who they play depends on the outcome of the other NFC playoff game in round 1. There is a higher chance the Seahawks will play the number one seed, the Bears, who are considered the best team in the conference. Teams that get a bye in the first week are often big favorites at home in their first playoff game. Given that the Seahawks are thought to be a relatively weak team, and they will be playing the cream of the crop in the NFC, I peg the point spread at between 7 and 10 points. A 7 point underdog has about a 25% chance of winning the game, and a 10 point underdog has about a 20% chance of winning the game. I am going to use an average of these two percentages and go with 22.5%. This is a rough estimate, so I need to keep that in mind as part of my margin of error.

Conference finals

If the Seahawks win in round 2, they likely will travel again for the NFC conference title game. If they won as a big dog in round 2, the game was likely close rather than a blowout. They may not be as big an underdog in the NFC title game because they likely are playing a weaker team than they beat in round 2. Winning in round 2 may have increased their respect in the marketplace. There is also the remote chance that a wild-card team will get to the NFC conference title game, in which case the Seahawks would play at home, and would likely be the favorite. Given these assumptions, I am going to peg the chances of the Seahawks winning the NFC conference title game at 25%. This is another rough estimate. There are a lot of things that can happen between now and the NFC conference title game to change the odds. There is also the assumption that there are no major injuries that changes the relative talent of the teams. These estimated lines are made with the thought that the actual lines will have an equal chance of being higher or lower.

Putting it together

Now I have the estimated probabilities for all three rounds. Given the estimates above, I can calculate the chance of the Sea-

hawks winning the NFC.

Round 1 (vs. wild-card team): 53%

Round 2 (vs. #1 or #2 seed): 22.5%

Round 3 (NFC Conference Final): 25%

Round 1 x Round 2 x Round 3 = Seahawk’s probability to win the NFC

53% x 22.5% x 25% = 3% or 32-1.

The best line in Las Vegas or Reno is 20-1. Given the analysis above, 20-1 is a bad bet. Even though the Seahawks have already clinched a playoff berth and are one of six teams that can win the NFC, they are a long shot to get to the Super Bowl. That is because the Seahawks are likely to play two games on the road as big underdogs, and their likely lone home game is close to a coin flip.

The lines above reflect my estimates on the market lines in the future. But I thought the Seahawks were an underrated team. They had early-season injuries, but key components of their team would be ready for the playoffs. They would be a stronger team in the playoffs than they have shown in the regular season. Instead of market estimates of 53%, 22.5% and 25% in their possible three playoff games, suppose I think better estimates are 60%, 30% and 35%. Those odds indicate the Seahawks have a 6.3% chance (15-1) of winning the NFC. With these odds, betting the Seahawks to win the NFC at 20-1 looks to have positive EV.

However, even if I am right in handicapping that the Seahawks are a better team than the expected lines are implying, I would not bet them at 20-1. It does have positive EV assuming my handicapping is good, but there is more EV in waiting and betting on the Seahawks on each individual game. If my estimates for the expected lines are correct, then I can bet the Seahawks at a price close to 32-1 to win the NFC by betting them in the money line during each individual game. 32-1 is better than 20-1.

Of course I need to be comfortable with my estimates. They are rough, so I may go back and adjust the expected lines to make sure I am comfortable that I can get better value by betting them in individual games rather than the futures bet of 20-1.

This process is made more efficient when you go through it for every team that has a chance to make the playoffs. The sum of the probabilities for all the teams to win the NFC should be 100%. If you are expecting the Seahawks to have a 53% chance to beat the wild-card team in the first round, then you should be expecting the wild-card team to have a 47% chance to beat the Seahawks. If you change the expected line of one team in a specific game in the playoffs, you need to adjust the expected line on their potential opponents. Thus changing the line for one team to get a new estimate on futures odds for that team will affect your estimates of futures odds for other teams as well. The NFL playoffs are a zero-sum game. Only one team can win the NFC.

This is part of an occasional series of articles.

Excerpted with permission from the e-book version of Weighing the Odds in Sports Betting by King Yao, edited for this format.