Scalpers and Middlers
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.
Scalpers and middlers engage in similar activities. Some of their thought processes and techniques are the same. Some of the risks they face are the same. Here are some of the similarities between scalpers and middlers.
Both benefit if they can correctly anticipate line moves.
Both face the risk of getting both bets down. It is possible they will bet one side, but not be able to bet the other side at the expected price. If the line moves as they are getting to a sportsbook, they may be left naked with the initial wager without being able to bet the second wager at the expected price.
Scalpers and middlers need two different lines on the same event in order to gain positive EV. Thus they are always seeking places and ways to find these different numbers.
Line hunting gets them different numbers at different sportsbooks at the same time. Often the theoretical underpinnings behind a sports wager take a back seat to actually making the bet in the real world. Anyone would be happy to enter into a positive-EV scalp, but executing the scalp is the difficult part.
Anticipating line moves allows them to get different numbers (at the same or different sportsbook) at different times. If the line does not move as they anticipate, then they are left naked with just the original bet.
Even with all the similarities, there are still some differences between scalpers and middlers.
Middlers need to have a good understanding of the probability a game will land on certain numbers; scalpers do not.
Middlers have risk after the bets are made; scalpers do not.
Middlers usually put themselves in the position to win big, but lose small. Scalpers cannot win big; they win only small. But if they scalp perfectly, they cannot lose.
When you find an attractive opportunity to scalp or middle, decide which side is the tougher bet to get down, and then bet that side first if possible. If you bet the easy-to-find side first, then there is some chance the tough side will not be available when you get to the sportsbook. It is also possible that the tough side is a mistake, and the sportsbook will limit your action. On the other hand, if you bet the tough side first, it should not be difficult to find and bet the easy side afterwards.
Example of betting the tough side first
Dodgers -165 can be found at many sportsbooks. Only one place has Padres +170. The scalper should bet the Padres +170 first, because it will be easier to bet Dodgers -165 since many places have it. A scalper who bets the Dodgers -165 first might find that the Padres +170 is no longer available.
Positions after a scalp or middle
When a scalper is done placing bets, there is only one outcome: small reward, but no risk. On the other hand, when the middler is done with his bets, he can have a few different types of positions. Here are some of these different types of positions.
Closing a position: two bets with the same criteria
Scalps are usually thought of as two bets that are made almost simultaneously. But sometimes a scalper can wait to bet the second leg of the scalp. This may be due to the scalper anticipating the line will move. Or it can be due to scalping out an open wager like a future.
Example of a scalp with a game versus a future
Initial bet: Dodgers to win the National League West
Situation: After 161 games, the Dodgers are tied with the Padres for the NL West. The two teams play each other in the last game of the season. Whoever wins game 162 wins the NL West.
Second bet: Padres to win game 162 against the Dodgers Risk remaining: If the bet amounts are in correct proportions, the combined risk remaining is zero. The scalper has done one of the following three things: locked in a profit, locked in a loss, or locked in a push.
The initial bet and the second bet in this example are not always mirror images of each other. They are in this example because it is given that the two teams are tied for the division lead with one game to play.
A distributional spread combines two bets that are related but not mirror images of each other. The two bets have different winning criteria. While some results in the final score of the game or event will have one bet as a winner and the other as a loser, there may be certain distributions of scores where both bets win or both bets lose. The typical middle is a bet with a distributional spread.
A time spread involves two bets that partially overlap in game time. In a time spread, it is possible to win both bets, lose both bets, or win one and lose the other. This is not a middle but it is related.
Here is an example of a time spread.
Second bet: Bengals -6 in the first half vs. the Raiders
Risk remaining: In the first half of the game, you are rooting for the Bengals to cover the 6-point spread. However, you are also hoping that the Bengals do not win the first half by too many points because you still have the Raiders +11 in the game. The you would rather have the Bengals win the first half by 7 points than by 10.
Once the first half ends, you are naked with the risk for the bet on the whole game. The risk in the first half of the initial bet is hedged to a degree, but the risk in the second half is not hedged.
Return on risk
When analyzing the profitability of short-term scalps and middles, it is better to use ROR (return on risk) rather than ROI (return on investment). The risk of a well-executed scalp or middle is small even though a large investment is often necessary. ROI underestimates the profitability of scalps and middles in relation to other type of bets because it is not possible to lose the entire investment.
Scalping and middling can be profitable activities. The scalper needs the ability to bet the same event with different lines. The middler can use the same talent as well, but the middler also needs to understand the probability distribution of games landing on certain numbers. In the modern age, scalping is difficult because books have easy access to information about the offerings of competitors.
This is part of an occasional series of articles.