Episode #38: EVBettor, Dr. Bob Sports, “Special Super Bowl Show: It’s Higher-Stakes Poker is What You’re Playing”
Guest: Our guest today prefers to be anonymous, instead going by the alias, “E.V. Better.” E.V. works in predictive analytics at Dr. Bob Sports.
Date Recorded: 2/1/17 | Run-Time: 1:12:33
Summary: In honor of this Sunday’s Super Bowl, Episode 38 is a special, bonus “gambling” podcast. We welcome mystery guest, E.V. Better, which is an alias for “Expected Value Better.”
Meb starts by asking E.V. how he got to this point in his career. E.V. had a traditional finance background, working at a long/short hedge fund for 5 years, but realized he could apply certain predictive analytics that work in the financial world to the sports betting world. He helped create a basketball model at Dr. Bob Sports and enjoyed it so much that he made the jump from traditional finance.
Next, Meb requests a quick primer for the non-gamblers out there; for instance, how the various types of bets works, the “lines,” the most popular bets, and so on. E.V. gives us the breakdown.
The conversation then drifts toward examples of “factors” when it comes to gambling (such as “value” or “momentum” is in the stock market). E.V. tells us there are really two schools of thought in traditional investing – fundamental and technical investing. When it comes to gambling, there are similarly two schools of thought; you have the strength of a team that’s measured by traditional stats (for example, net yards per pass) or technical factors (having been on the road for 14 days…having suffered 3 straight blow-out losses). When you combine these two factors, you better a better idea of which way to go with your wager.
These leads to two questions from Meb: One, how many inputs go into a multi-factor model? And, two, how do you replace older factors that don’t have as much influence or predictive power as they used to? E.V. gives us his thoughts.
Meb asks about “weird” or interesting factors that are effective. E.V. points toward “travel distance,” though the effect has diminished over time as travel has become easier. He also points toward “field type.” This leads into a discussion about betting against the consensus (contrarian investor, anyone?). And this leads into a common investing mistake – recency bias. For example, because the Broncos won the Super Bowl last year, people expected them to be great again this year…and they didn’t even make the playoffs (Meb is still bitter).
Meb steers the direction away from the NFL. Whether basketball, baseball, or whatever other sport, you’re simply trying to find an edge over the house. Meb brings up “variability” (the more games the better if you have a slight edge), and asks how this changes over different sports.
E.V. says duration of season is a huge factor. Also, the level of data available for analysis is key (for example, the amount of data in baseball is amazing). But overall, E.V. says the goal is reduce the variance to make thing as simple and predictive as possible to find your edge.
Meb asks about underrepresented sports (curling, or NASCAR) offering more, or better opportunities (think “small caps” versus the “Apples” of the investing world). E.V. says the issue is finding a counter-party. You might be a great curling modeler, but have fewer market participants from which to profit.
This leads into how to quantify an edge, and what a good edge value should be. E.V. says a 10%+ edge would be fantastic, but it’s important to be conservative in your estimate of just how big your edge is. After all, you won’t have a consistent edge every game. Meb makes an interesting correlation to investing you’ll want to hear.
Next, Meb asks about gambling as an asset class. Where would gambling fit into a portfolio and how would it work together? E.V. says sports is a unique alternative asset class that’s uncorrelated to other markets. This quality makes gambling an interesting addition to a portfolio.
Next, Meb moves to “quick hits” – shorter questions, many of which came from listeners via Twitter.
- What’s the worst bad beat you’ve seen?
- Have you looked at “intra-game” gambling, or do you only focus on full-game bets?
- How does a sport with a small dispersion in scoring (like soccer) affect how you bet versus a high-scoring sport (like basketball)?
- Have you thought about any lines that change over the course of a day based on the concept of betters losing in the morning and becoming increasingly aggressive in the afternoon (going on tilt, trying to win back money).
- What do you think about “the hot hand”?
You’ll want to hear E.V.’s answers.
Finally, we get to the topic du jour – the Super Bowl. Meb asks E.V. directly, “Who do you like with New England at -3?” If you’re thinking about betting this Sunday, don’t miss it.
There’s far more in this bonus episode, including discussion of betting on the results of the Super Bowl’s coin toss… How long it will take for Luke Bryan to sing the National Anthem… How many times will “Gronkowski” will be said by the commentators during the Super Bowl broadcast… Want to put the odds in your favor? Then join us for Episode 38.
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Transcript of Episode 38:
Welcome Message: Welcome to “The Meb Faber Show,” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas all to help you grow weather and wiser. Better investing starts here.
Disclaimer: Meb Faber is the Co-Founder and Chief Investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
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Meb: Hello podcast listeners. After our two-week podcation, we’re back with a lot of fun podcasts lined up. We just had John Bollinger this week and we wanted to squeeze an extra one seeing as it’s Super Bowl week. So we got a unique podcast today. Our guest is anonymous and we’re gonna go by his Twitter handle E.V. Better. Welcome to the show.
E.V.: Hey man. Thanks for having me. I really appreciate it. I mean I particularly enjoy this podcast so it’s a real pleasure to be on.
Interviewer: Well good. We’re gonna have back-to-back gamblers. I’m not gonna give away who our next guest is after you but we’re gonna have back-to-back gambling episodes. So, E.V., I’m gonna call you that throughout the podcast, which for the finance types who understand, stands for expected value. But today’s podcast is all about sports betting, gambling, handicapping. So why don’t you introduce yourself? Tell us a little bit about how you got to your position today, which is working as a writer and a handicapper. What is your title? Is it handicapper of sports…? What’s the correct phrase?
E.V.: Predictive analytics, sports analytics at Dr. Bob Sports so, and I would say that would be my official title.
Meb: Sorry, go ahead. I was gonna say Dr. Bob is a site for those that aren’t aware. He’s been around for probably 20 years and it’s had a statistical quantitative bent towards sports analytics and betting. So, yeah, tell us a little bit about your background. How did you get hooked up with Dr. Bob?
E.V.: You know, I took a traditional finance background coming out of school. I went through an investment banking program. Went into private equity and I worked at a hedge fund, a long/short hedge fund for around five years. Throughout this time, I always thought I would be in finance for, you know, the rest of my career. You know, towards the tail end of my stint with the hedge fund, I decided… You know, I was being burnt out and decided that I wanted to take a vacation while I was young instead of while I was too old. So I took some time off, went traveling, did a lot of research on different things. And you know, all this time, I was continuing to invest in the sports…or in the stock market but also in the sports market. And a lot of new statistical techniques, predictive analytics techniques I used from the stock market, I could apply to the sports market.
And so, when I got back to San Francisco, Dr. Bob is also based out of San Francisco, I got connected with him. He was looking for someone to help with a…he called it “basketball model.” I, you know, worked on it with that for him for a short project. It had really promising, good results and through that, I ended up going full time with him. And we decided that, you know, I would do…help with baseball modeling and then take over for the football handicapping at the site. So me and him do football and we use, you know, completely quantitative model with no… You know, we build a model but we don’t have any sort of direction on who it’s gonna pick.
Meb: We’ve seen this kind of huge interest and genesis of popularity for sports analytics and betting. Certainly, Moneyball helped popularize it for the broad populous. But for those of the listeners that either aren’t into sports betting or are just traditional financial types, why don’t we do a quick primer for the nongamblers out there? And maybe give us an overview, just very briefly, on how sports betting works, some of the most popular bets and lines. We can talk about lines, money line, but just a real quick overview of how it works.
E.V.: Yes. So the sports betting market are run by sports books, traditional Vegas books who set lines. There are a couple of different lines you can bet on. The most popular ones would be an against-the-spread line which will happen in all sports. You know, for example, for the Super Bowl, the Patriots are favored to win by three points. So they’re essentially making it a 50/50 proposition that Patriots win by at least 3 points. If they win by less than three points, two or one, then the Falcons would win. So you’re either laying or taking points with a certain team. That’s probably the most popular bet and with the highest limits would be against-the-spread bet.
The second bet would be a moneyline bet which is the same thing as an against-the-spread bet. It’s just a win probability which is the spread, amount of points a team is given is based off of the win probability and it’s a simple function of if the team… You know, a team that’s given 3…or that needs to lay 3 points would be expected to win by approximately 60%. So you’d be laying 150 to win 100 or, you know, that equates to 60% win probability. So that’s the second most popular bet which is called the moneyline bet.
And then there’s a total bet, which is on the total number of points that are gonna be scored. So the total for the Super Bowl, for instance, is set at fifty-eight and a half. So if both teams combined scores go over fifty-eight and a half, then that is… You can either bet on the over or the under for that and that’s generally set as a 50/50 proposition with Vig or I guess the house cake set on both sides so.
Meb: And so Vig is, for the listeners who aren’t familiar with betting, you know, Vegas takes its cut which roughly equates to just like in a casino or in trading on Wall Street, it’s almost like bid-ask. You know you’re paying a little bit on the winning bet if you win and it equates to what? Roughly it’s 10% on one side but roughly 5% overall, is that correct?
E.V.: Yeah. About four and a half percent overall minus 110 odd. So you pay when you lose. So you risk… So generally, the standard bet would be 110 to 100. So you’re gonna pay that 10 cents extra on the dollar when you lose. Yeah, it roughly equates to four and a half percent expense ratio. So you need to be above fifty-two and a half percent handicapper to be profitable.
Meb: Which is almost like talking about Blackjack and a lot of people say, “Man, I only gotta get slightly above 50%, right. This seems like an easy game.” But in reality, much like the efficient markets of investing, it’s actually pretty hard. However, you know, there’s been a lot of academic research over the years. There’s been a lot of publishing. Although, there’s not nearly as much as you see in the financial markets for various reasons but there are some academics that talk about it. I know Justin Wolfers out of Stanford, there’s been a lot of books, some famous ones by Stanford Wong. MIT even has a Sports Analytics Conference now which I think is next month and has a lot of great speakers like Billy Beane of the Athletics as well as Nate Silver from FiveThirtyEight, etc., etc. So it’s become a lot more popular.
So I figured, you know, since most people are familiar with the NFL and that’s one of the most popular in Super Bowl time, we’ll kind of continue to use that as our example before going into some other ideas. You actually had a monster year this year. So we talk about that 52% just to break even. And if I read correctly on the Dr. Bob’s, I think you did something like 70% against-the-spread with your picks this year, which is a pretty massive outperformance.
So let’s start talking about the NFL. Why don’t you give us an example maybe of a factor? So in investing, we all know that, say, value is worked historically, Buffet style or momentum. What’s maybe a factor that either historically has worked or maybe doesn’t anymore or historically is something that you could talk about? That has given betters an edge over the years that you think would be a good, kind of, introductory example of something that may have or continue to work in the NFL betting world?
E.V.: Before I touch on that, I just wanna mention Dr. Bob was actually a presenter a few years ago at MIT Sloan’s Sports Conference.
Meb: Oh, cool.
E.V.: And so that sports conference doesn’t have a sports betting bent. You will see a lot of analytics come from the sports betting worlds go to that conference. Because figuring out player value and figuring out team value is essentially what sports betters are trying to do.
Meb: Maybe we could get a journalism pass and that would be great. Have ever been, E.V.?
E.V.: I’ve never been but, like I said, the guys I work with have been before, and have presented there, and been on panels. So I’ve heard mixed reviews about the quality, again like any conference, but it depends on who’s gonna be going and speaking so.
Meb: All right. Well sorry to distract you, back to the NFL.
E.V.: Sorry, yes. So the factors at work, so basically when you talk about value and momentum, there are really two schools of thought in traditional finance really. The way I think about it, there’s fundamental and technical investing. Where fundamental is you ‘re looking at… you’re figuring out the intrinsic value of a company through DCF, simplistic multiple EBITDA, PE, price to book, etc. And then there’s the technical aspect which you’re looking a momentum, [inaudible 00:11:18], and things that don’t relate to the intrinsic value of that company.
And in sports betting, it’s the same way. You have the sort of strength of a team that can be measured by its, you know, traditional metric that you see, net yards per pass, on the offense or the defensive side, play success rate. Things that can be measured on a team basis, which I’d call the fundamental factors of investing. And then there’s a second group that are less wildly used. It’s the technical factors which would be like a team coming off of a huge loss. Playing 3 road games in a row, having 14 days of rest versus 7. All these factors need to be… While they don’t pertain to the intrinsic value of that team, they’d be pertaining to a team’s motivation in how they set up to play that next game.
And so, when you can combine these two types of styles, you really get just like you would get in any quant investing strategy would look at a value and momentum, and combine those to get a better tilt. You can do the same thing in sports investing. And, you know, some fundamental factors, I’d look at that are interesting are something like turnover differentials. Where teams that generally have high turnover differentials tend to regress more…tend to be very successful teams because they’re getting a lot of interceptions, fumbles, etc. But a lot of these things have a lot of high variance components to them.
So you’re gonna see, over the long term, that a lot of these regress downwards. It’s hard to sustain elevated levels of turnover differential. So that you won, sort of simplistic one that you could look at as a factor that is gonna be factored in any model. And what that does is it makes a lot of fundamental factors look better like points scored, defense. Because teams are getting shorter fields and so when you can compensate for these, you get more accurate predictors of how the team will do going forward.
Meb: You know, it’s interesting, when you think about this multi-factor approach, which you’re talking about, and it’s so endlessly complex. So starting to think about a market like sports betting where a factor becomes known and the same thing happens in investing. We often talk about price to book, which is one of the most talked about and published factors in the literature, and then a lot of money went into it. It has worked much, much…had a much worse track record in the following decades than it did in the early ones. And I’m sure the same thing happens in sports betting.
And so, you compiled this multi-factor model and one question would be, how many inputs do you actually look at in, sort of, this multi-factor model? And then two, you know, how do you think about either introducing new factors or removing factors that maybe worked historically? That maybe the market has caught on to and then doesn’t really have as much, sort of, influence as they used to?
E.V.: Yeah, those are great questions. I think it’s the same way that you would test any predictive model. You know, there’s a lot of hyper parameters that go in with the model. You prune, you do a lot of testing, iterations in trying to improve these models. Figuring out which factors to leave in, which factors you may have to leave out, and eventually, you come up… You know, what you’re trying to eventually find is an edge that you have in this certain game based on a lot of these different factors.
You know, a big difference in sports betting versus the stock market is there’s no bull market in sports betting. You can’t ride a rising wave. So it’s pure… Your comparison to Blackjack was apt in that you’re literally just playing edges. And so trying to find out things that have been priced into the market and then trying to find things that aren’t necessarily priced in the market is the game you continually play with sports betting so.
Meb: It’s a pleasant distraction for me. There was a couple of years ago where I started to go down this dark, deep examination into sports betting. And then I kind of shook my head and said, “Hey, no, this isn’t my day job but it’s a lot of fun.” And then you read about some of these factors that are fascinating to me. And one that had caught my mind was something like circadian rhythms. Meaning a team on the east coast, and I may get this totally backwards, but that was flying to the west coast and playing a late game. You know, meaning that their body was normally like thinking they should be asleep. And there was actually a little bit of an edge that could be had there.
Are there any sort of weird factors that you can talk about? And you may say, “Look, these are proprietary, too bad.” Any sort of weird or interesting factors you could talk about that maybe people would be surprised about. Rather than say, “I think you’re favorite net yards per pass or whatever it was?” Any kind of kind weird ones that come to mind?
E.V.: Yeah. Well I would say what you just described there can be accounted for in a lot of ways. You’ll see it a lot more in amateur sports or, you know, college athletics versus professional. But travel distance, you know and that’s one of the factors that used to have a much bigger difference than it has today. Distance traveled for teams going, distance wise longitudinally, latitudinally does have a difference in how teams play. But that effect has been diminished over time and, you know, sort of the narrative behind that is that travel has gotten a lot easier for these teams, right?
So, you know, before a college team is taking a bus and couldn’t study. But now they have iPads to watch a film on a flight and it makes it a lot easier to prepare for the next opponent. Things like that are interesting and you will have to keep watch. I would say some interesting ones that maybe well-known would just be, you know, the field type. You know, as it relates to football, whether you’re playing on grass, AstroTurfs, open stadium, closed stadium I mean these have statistically-significant impacts on point totals and different styles of teams benefit from different styles of surfaces.
So you’re looking at really any type of factor that you can quantify, or measure, or turn into a factor. You know, we’ll try to test and see if it has an impact on to the predictive accuracy.
Meb: You know, there’s a lot of talk of and a lot of sites will publish the percentage of bets that are lining up on a certain side. Does that come into play at all this kind of anti-consensus or betting against the crowd?
E.V.: Yes. So, you know, it does and it has an effect in a way. So for NFL for instance, you know, the way that… When I talked about the fundamental and technical aspects of evaluating games, their early season versus mid-season is a different way that you evaluate. And you see a lot more better biases come into play early in the season. And the reason for that is because it’s impossible really to gauge a team’s strength off of preseason indicators or… Because you don’t really know how X player is going to factor in to their new team. You know, especially in a lead like the NFL where there’s a high amount of turnover. Early in the season, you are gonna have preseason grades on these teams but it’s hard to measure the actual team strength without seeing them play the game.
So what you’ll see early on in the season is what you just mentioned, better biases coming into play. Like you know, I know you’re a big Broncos fan. You know, early in the season because they worked in the Super Bowl last year, they had high expectations going into this season. You know, now this year, they didn’t make the playoffs. So next season, you’re gonna see the better bias be that they’re not as great of a team as you thought they were coming into this season.
And a lot of times, you’ll see over and under-reactions based on the way a team performed last year and based on how you know the public is gonna view them. And through that, that’s how the bookmakers then set the price. And that’s where you can try to take advantage of your edge. And that was sort of it, just basically…
And then also, you know, I guess, you’ll see better biases all throughout the season. But for me, it really takes place in the early season, and then it’s sort of pricing anomalies later in the season. But early in the season, a lot of what I’m looking at is better biases. And how to capture how the betting market is going to view certain teams when there’s no real, concrete evidence on whether a team is this much better than they should be or not.
Meb: That was interesting because the “fading consensus” was something I had written about a few times in the blog. We have an internal, company-wide network where you bet…get the games against the spread. And, you know, for me, I just always bet the anti-consensus and had won. I had a pretty good year this year. Historically I figured…I seem to remember it comes in around the extremes are 55% against the spread. So good and enough to maybe beat the Vig but not that crazy interesting.
And so, of course, being the over confident guy that I am, entered the Super Contest, which Hilton puts on…I believe it has been going on for over a decade where you have to pick five games against the spread each week. And so I did this in 2014 and the winner usually is in the 60% range, somewhere between 60% and 70%. So I figured, you know, if this has a 55% edge, I just need a little luck, maybe a little magic, and I can hop into the top decile from maybe just the top quartile. And sure enough, 2014 was the highest percent winning for the winner. It was like 72%, which of course said I’m never gonna play again. But I’ve continued to win the inter-office this year. Jeff’s looking at me because he came in dead last and that includes Jeff by the way. I missed an entire week, so anyway.
E.V.: I think what you’re touching on is a great point in that because, you know, it’s a common misconception that books set the lines to get even action on both sides. And, you know, there’s been research done. There’s a good paper out by Steven Levitt the author of “Freeconomics” basically that, you know, these sports books they shade their lines based on well-known, better biases. And these biases include you know, loving historically-good teams, having… And so they will shade these numbers to reflect this side. And so because they know, they want action on the other side to increase their possibility so, you know…
Meb: And that particularly happens in the Super Bowl, is that correct?
E.V.: Well, so the Super Bowl, yeah, has an interesting aspect because, yeah, there’s a huge bias. It’s one of those largest, if not the largest, publicly-bet sporting event of the year. And so you’re gonna get a lot of first time betters who don’t, you know, look at 100 games in the season. And so when they see a team, you know, they see a team like the Patriots and they see a team like the Falcons, a bias that a lot of people have is to root for the underdog. And to bet on that moneyline where you’re getting plus money. You know, you’re betting $100 to win more than $100. And so what sports books will generally do is they’ll shade their lines downwards on that money line. So you’re going and conversely do the inverse to the favorite. So you’ll get a cheaper price betting the moneyline on the favorite than you would in a typical game.
And so, you know, there are certain intricacies throughout the sports thing world like this where the book are not necessarily trying to take balanced action. A lot of times, what they’re trying to do, you know, is increase their profitability. That’s why a contrarian betting strategy like the one you… A simple one like that can be pretty successful.
Meb: And this is interesting. So to me, it’s interesting because the NFL would seem to be the equivalent of a very efficient market where there’s a lot of money chasing it, big bets. And so, you also weighed in some other sports, right? So I know you do major league baseball which from a gambler’s perspective to me…or college do you do…? And you do college sports, college football and basketball, is that right or no?
E.V.: College basketball… So I’ve done models…I’ve built predictive models for college basketball which I’m improving actually as we speak. And then I did a preliminary baseball math model over the summer working with Dr. Bob on these projects. And you know, these are, yes, just different betting markets where you’re trying to do the same thing, gain an advantage over the house.
Meb: And so the cool thing about that is that, you know, in the investment world, we’d call this breadth. So from a gambler’s perspective, if you have an edge, the more bets you take, the better it is because it spreads out the short term variability. So sports like major league baseball and basketball are great because they have a massive amount of games, massive amount of teams. NFL is only gonna be 16 weeks per year plus pre, post-season. So to the extent you can gain an edge in those…
So talk a little bit about the differences in some of the sport. So what are the main differences between handicapping and analytics on the NFL versus major league baseball versus say college basketball. What’s similar and what’s totally different?
E.V.: Yes, no. That’s a good question. There’s a lot of differences and, you know, one of the big ones you mentioned on was the duration of the season. You know, a big one that you see in college basketball and baseball that goes in conjunction with that is the level of data. You know, baseball is really the first sport to, sort of, who are at the forefront of this sabermetrics, predictive analytics in sports. It’s really there. There are data sets out there that we use that are pitch by pitch, where you can get literally the rotation count, the number of spin the baseball is pitching, spatial coordinates of the data. When a pitch leaves the pitcher’s hands to when it hit the catcher’s gloves. So there’s a lot of really granular data in the baseball field. There’s a lot of games played.
And so with that, you know, you have to come to the betting market with the knowledge that this is kind of there for everyone. So you have to know that, “Can I incorporate this?” Whenever you’re making a bet, you have to just ask yourself, “Do you actually have an edge in this market versus the sports book versus other market participants?” And so with a sport like baseball, you’re gonna have a lot more data, you’re gonna need to be a lot more precise. Factor in everything from umpires, to weather, to stadium size, to type of pitcher. So from that standpoint, these sports can be very different. You know, college basketball is also different than football. But where they all share similarities and where, you know, really all predictive analytics share similarities is that you’re just trying to reduce the variance within these systems to come with sort of the true odds of the game, no matter what it is.
So in basketball, high variance events could be how well a team shoots from the three-point line that day. You know, I talked about for football high variance events could be the turnovers or baseball, you know, the contact percentage… You know, the difference between a single and an out could be a few feet over a second basement gloves. So there’s a lot of, sort of, variance within these sports that you then have to try to… You try to figure out where these sort of leverage points are and then release them all to try to find an edge. So while they’re different sports, the concepts are pretty much the same in trying to gain an edge in these sports.
Meb: Oh, it seems to me like there’s a lot of sports out there and you’re kind of covering the major ones but they would seem to be under exploited. Meaning, you know, the NFL and Major League Baseball, in my mind, and I could be wrong, seem to be probably the most sophisticated with most people chasing it. But I don’t know. NASCAR or I don’t even know if there’s betting markets in curling, or cricket, or everything else around the world. Is there sort of a range where you would say, “Hey, here’s some markets that there’s probably a lot of opportunity that there’s not a lot of people weighting in?” Just the same way in the U.S. if you’re focusing on small microcap stocks where no analyst are covering it or you’re focusing on Malaysian, you know, companies. There’s probably a bit of an edge to have where there’s not as much competition versus the 10,000 person who’s following Apple. Are there some sports that you think that there’s a lot of opportunity and fruits still to be had or what’s your perspective there?
E.V.: Yeah. You know, you made a great analogy with small caps versus the Apples of the world and it’s the same thing. But a big difference in sports betting is the [inaudible 00:30:22] effect imposed to you finding a counter-party. So you could spend all the time you want and you could probably get to be the best predictive modeler in curling but, you know, how much money are you gonna make from that really? Because you know the limits on a curling event or some sort of esoteric sport is gonna be really low.
Where when you get to these major sports, you’re gonna see higher limits and also you’re gonna see more market participants in a sport like the NFL. The NFL is a unique sport. You know I would say more unique than baseball or even basketball in that the public likes to bet the NFL. The public doesn’t necessarily like to bet baseball or basketball where, you know, every person that you meet is gonna have an opinion on football. So you could say that that’s a disadvantage but you could also, you know like we talked about earlier with the biases, consider that an advantage in some respects. While, yeah, I agree that the lines are probably softer on more esoteric sports, there’s a lot less capital to be had just because of the way book set limits.
Meb: You can’t move around $10 million bet sizes betting cricket and curling is what you’re saying?
E.V.: You know, pretty much sure about it. But curling, yeah…
Meb: I was gonna say this is a great segue, you know, and this is kind of a first podcast. There’s so much to be talked about here, we may have to have you on regularly but.. So we’ve kind of talked about the overview, about NFL, and a few sports. So assuming that you have an edge and like let’s say your NFL system, let’s say you’re confident that you have an edge. Now that doesn’t mean you’re gonna win every year, it doesn’t mean you’re gonna print 70% a year but let’s say you have an expected value where… And what’s a good estimate? Is there something you target? Is it 60%? Is there a certain sort of number that you’re looking at on a per-year basis by the way?
E.V.: You’re talking about returns or…
Meb: No, no, no.
E.V.: …you’re talking about…?
Meb: Percent wins. Okay. So we’re gonna go into the returns and money matters here in a second. But is there kind of like against-the-spread percentage of games that you target or is that totally not something you even really focus on?
E.V.: No. I mean absolutely that’s something we… We quantify how much of an edge we think we have but it’s, you know, been shown that it’s hard to actually… Most people are overconfident with their hedge so we generally try to either not talk about that or really be concerned about how much of an edge we think we have. So if say we think that this game is mispriced and instead of -3, the Patriot should be -6 favorites, you know? That will be a big discrepancy in terms of win percentage. I’d probably say you have a 10% plus edge, which would be a huge edge. And I would say that, you know, you really have to study your methods, your process and make sure that… And just generally be conservative on what type of edge you think you have. It’s gonna be different for every game. You’re not gonna have a consistent, you know, 3% edge every game. Some games, just like when you’re picking stocks, some stocks will show value based on the indicators and filters that you have. Some games will show up with a 5% edge, some will show up with a 2% edge. But, you know, generally just like with investing, you wanna err on the side of conservatives and how much of an edge you actually think you have.
Meb: And that’s a great example. I mean talking about Warren Buffet, I actually watched his documentary last night on HBO which, listeners, it’s great, by the way. But he talks about the Ted Williams “fat pitch,” right? So “waiting for that fat pitch.” And the funny thing about, you know, service like a yours but in investing as well as is it’s not that sexy to talk about, “Hey, man, we’re targeting 55% or 58% win rate,” despite the fact that that will make you a rich man one day. The same thing as investing. If you say, “You know, we’re expecting this globally diversified portfolio to do X.” You know the sexy stuff is the people saying, “Oh, we think you can do 20% a year” as unrealistic as that is. But people, and you mentioned, are looking for the lottery tickets on betting where they bet these huge underdogs at a moneyline of 500. The same way that an investor is looking for small caps or these lottery tickets, but on average they don’t work.
So let’s transition a little bit. I’ve seen a quote where you said, “Sports analytics is a misunderstood asset class,” and I want you to explain a little bit about that. So that if you did have an edge in say NFL, and Major League Baseball, and college basketball, you know, treating that as an asset class that’s something that you think you can have a positive expected value, how does that fit in? How do you incorporate that and how do you start to think about kind of money management and bet sizing the same way you would, one, as a standalone portfolio but also as a portion of someone who has a larger investment portfolio?
E.V.: Yeah. I think, you know, just like when I was working in finance. You know, you use proportional bet sizing to determine how much you’re going to put on each independent event. Because sports is a unique culture and an asset class in that it’s uncorrelated with the rest of the market. I think that’s one of its biggest advantages whether the stock market is going… You know, when the stock market goes up, the housing market…you know, there’s some correlation with that.
And like we saw on the financial crisis, when things go down, you know, [inaudible 00:36:32] goes to walk towards one. You know, but that’s gonna affect how the Golden State Warriors are gonna play. That’s not gonna affect how the Atlanta Falcons are gonna play. So you get these independent, uncorrelated asset classes where if you do truly have an expected edge, you can really calculate and maximize your returns. Using you know simple formulas like the Kelly Criterion in which you determine your edge and the odds that you’re giving to come up with a proportional bet size to your bank roll. And through that, you know, you can start to… You know, just like if you’re playing Blackjack or just like if you’re doing any sort of events which are market agnostic, you’re not trying to predict the outcome of these events. You’re trying to play these edges that you have in the market and try to maximize the return from these different edges so.
Meb: You know, one of the biggest mistakes we see people make not just in investing but also in sports betting and in the casino is over betting. So they’ll sit down at the Blackjack table and they’ll be betting 10% or 20% of their bank roll on any given bet. And like you mentioned, that’s probably a recipe for disaster just because of the short term variability. The old school flip a coin six times in a row, you know, there’s a chance you’re gonna get six heads and a lot of people just don’t think about that.
And so, I saw one quote you had somewhere where it said…talking about bet sizing and thinking about Kelly. It says, “Your bet sizing is kind of correlated… How much are you willing to lose?” And so for a lot of people, they say, “My god, that sounds boring.” But if you have say $100,000 bank roll, a lot of these bets being placed at 1%, 2%, 3% of total bank roll but scaling that up and down based on the edge you think you have or the particular opportunity, right?
So we have a lot more to talk about. By the way, so what do you think is capacity? So let’s say Bill Gross is listening to this podcast. He says, “Oh, man, I need to start a betting fund and I wanna target three different sports.” What’s capacity like? Is it 10 million bucks if you really wanted to have an army of disguised betters in Vegas like Billy Walters used to in the computer group? Or is it a million bucks, is it 100 million? Like what’s the capacity on a sports betting operation if someone was to go about it?
E.V.: Yes. As someone who looks to maximize earning potential from this endeavor, this is definitely something that I’ve looked into and it’s… You know, we think about it from a domestic perspective just, you know, like you point out a lot of times. People look at stocks from a domestic perspective. But when you look globally, if you look at countries like the U.K., Australia, there’s a lot more fee regulation around sports betting in these countries. And so, you’ll see a fund set up that will place millions of dollars on, you know, a lot of times a soccer match because those are the most heavily bet overseas. But you’ll see these… You know, depending on what sport you wanna bet, depending on what edge you wanna have, there a lot of markets especially overseas.
We think domestically about Vegas Casinos and that is a small fraction of the amount of volume that gets transacted globally. I think I’ve seen from the 8GA, you know, who was estimated $100 billion in transactions that went on last year in gambling and sports betting. And globally, that number is gonna be much bigger. Because, you know, obviously when you have entities able to bet into these markets, you’re going to get a lot bigger players. It’s just it’s higher stake poker is what you’re playing. So here, because of the regulation that surrounds it, they can get a little more murky on how much you can get down, and the limits, and things like that. It’s smaller domestically but internationally, if you’re willing to look there, you’re gonna find much bigger markets.
Meb: Well, there is some stat already that Macau’s revenue is something like four times Vegas already. Just something that’s just totally astonishing. And I see that one of the most gambling-centric cultures in the world is getting to ready to add casinos. Isn’t Japan coming online with casinos? I think I saw that the other day? Anyway, so it’s interesting. You know, I think a lot about it but let’s move on.
So we now, are gonna move on to a little bit of quick hits. So these are shorter questions. Feel free to answer as long as you want. But also there are some questions that were submitted from Twitter and if the responses are any indication, sports betting is a very large interest for a lot of people because we got a ton of questions. So feel free to take as long or as short as you want with these questions.
First one, what’s the worst bad beat you’ve seen either personally or just in sports betting over the last few years?
E.V.: Oh, man, I mean I could go into a lot of different stories on different bad beats. I mean I think any time you have, you know, the traditional, yeah, you bet the under on a football game and it’s garbage time for a team. I think last week’s Pittsburgh-New England game I think, you know, the game was well out of hand. I think the Patriots were up 21 plus points. And, you know, the game is really meaningless under three minutes to go for the Steelers but they’re still scoring points. And for the regular person, you’re not watching the game. But for someone who has a financial interest in the game, you’re at the edge of your seat and just thinking to yourself, “Why is this guy trying to sort of touchdown passes when the game is out of reach? Just give up.” And so, you know, that over will hit and it will just be one of the many bad beats. But you know, you take the good with the bad because a lot of times you’ll get it the other way. So I think just understanding the variance, the inherent disorder that is gonna be in football, you have to do this and look at games over a long season. You have to expect it and it’s gonna go both ways so college…
Meb: I remember before I became a quant way back when, one of the reasons I became a quant is because I took on way too much risk. I would take as much risk as you’d give me. And I remember I had something like a nine-game parlay which, listeners, if you don’t know, you have to like all nine games right which is the equivalent of buying Apple in 1980 and then forgetting about it for 20 years. There’s a very, very small chance.
So I was getting ready to win this massive game parlay. And then Deion Saunders who was playing for the 49ers returned some punt, or a kickoff, or a touchdown which made me lose the entire parlay. And I will never, never forget that.
All right, next quick hit, have you looked at any anomalies or thought about intragame? You know, I know there’s a lot of markets in betting to kind of do this future style where the betting can go on during the game, as well as quarters, and full game lines. Have you looked into that at all or do you focus purely on the full-game bets?
E.V.: Oh, absolutely. We’re really in an inflection point of how sports market places are evolving. You know, traditionally, the bets I talked about earlier on the show, you know, against the spread, totals, money line, those are all pregame bets that were set. Now, these books will set in-game line. You can literally bet in between drives. You know they’ll adjust their lines based on win probability. And what I’ve been doing this past season to some, you know, success was just getting out… I, you know, based off of some of my football models, did a half-time line. Where a half-time I had an automated program simulate how the game would play out. And if there was an edge based on the half-time line that most all sports books would put out. You know, I would Tweet that out and say, “Hey, you know, the book says that there’s 52% chance, my simulation has a 55% chance,” or whatever that maybe. So I think that in-game, there is a lot of opportunity too where a lot of people studied the full-game lines. But in-game probabilities, half-time, a lot of these things are newer and just with newer propositions. There is gonna be less data. There’s gonna be less people that are really good at that. So I think that, you know, these are gonna be things that are gonna continue to evolve and things that definitely we’re looking at exploring and exploiting so.
Meb: Well, I mean back in the day in a lot of the books, I mean you go back far enough, they used to do the full game, half game, quarter lines, or whatever, they would just divide it in half. And that’s obviously very sub-optimal but one of the reasons that the half-time line may have an edge is because the books have less time to come up with [inaudible 00:46:24] line and less time for the market to react. And so that’s a potential anomaly that maybe interesting as well.
Next question, Twitter, how does a sport with a small dispersion in scoring, like soccer, affect how you bet versus one with a higher level like basketball?
E.V.: Yes. So I mean that’s a great question that has a lot of levels to it. And I would say, you know, anytime you look at a different sport, you have to look at how much skill versus how much variance is within the sport.
So with the game like basketball, you’re gonna have, you know, around 100 [inaudible 00:47:05] of the game, in a professional game, around 65 in a collegiate game. And so, you know, more often than not, the true winner is gonna come out on top. It’s gonna be very rare that you see the Golden State Warriors lose to a team that they shouldn’t lose to.
Whereas, you know, in sports with fewer positions like hockey…you know, soccer is a little different, they have a bit more. But a game like football, right, I compare football to soccer, you know, I’d estimate the variance component to be around 25% to 35%. So because, you know, in football, you only have 22 drive the game, and soccer, I’m not sure of the correct…exact amount of possessions but it’s far fewer than what you’re gonna have in basketball.
So, you know, if you can capitalize on one of these opportunities, then you’re gonna have a much higher chance of winning. And it’s gonna be a lot harder even if you’re an underdog for the favor to come back. So I would say that’s one of the…whoever asked that question, that’s one of the key fundamentals and the first steps in breaking down any sport is determining that, sort of, skill-to-luck component that is involved in the game.
Meb: Michael Malbeson [SP] who, I think, is at Credit Suisse now has written a lot on this as well as Charlie Ellis, and well add some links to the show notes. But talking about games that are a little more dependent on luck versus games that are a little more dependent on skill really, really interesting stuff. We’ll include in the show notes.
Next quick question, have you thought about any lines in a sport that changed over the course of the day based on the concept of betters losing in the morning and becoming increasingly aggressive for long shots in the afternoon? And the common thoughts would be either horse racing or of course that the NCA tournament where later in the day, people that lost all their cash are getting increasingly aggressive in poker. In a lot of sports we call this “going on tilt,” to try to win back that money. Is that something you think books or you guys adjust for or ever thought about?
E.V.: I haven’t adjusted for that but I would say that, you know, there are obviously better biases that books take advantage of so…
Meb: Are you gonna tell us what they are?
E.V.: …you know, I wouldn’t be surprised if the books realizes that they had a huge winning day. And that people are trying to make money back and know which way the shade a line. And that would not surprise me. That’s not a factor that I’ve looked into. But, you know, just knowing that it’s not a true marker when there’s a buyer for every seller. It’s you versus the sports book. So knowing that you know, it’s not surprising that they try to take advantage of sports that are biases.
Meb: One more question, a quick hit and then we’re gonna move on to the Super Bowl. What do you think about the “hot hand?”
E.V.: You know, the “hot hand” is something that I’m not a believer in. You know, just because like I pointed out earlier, the goal in predicting these outcomes of these matches is reducing variance. And so, when you think about streaks, when you think about flipping… You know, flipping a coin 6 times heads in a row doesn’t make the next time any more or less likely that it’s gonna be heads. I believe that, you know, there’s a true value of what a shooter is shooting, when a passer, his completion rate will be and they’re gonna regress. How quickly or slowly that that happens, you know, is the tough part in determining. But eventually, you know, I think there’s a lot of variance within these games and we try to build marriage into the pond.
Meb: That’s great and that’s interesting. So you and I had actually talked about this before and there’s a good book by Aswath Damodaran that just came out. And on of the biggest challenges for a quant, like myself, or you who has this quant betting model, is putting a narrative around that system. So it’s pretty boring to go on CNBC and then be like, “Meb, why do you not like, you know, U.S. stocks or what is going on?” In particular, it’s really hard for me in the early days when we were just talking about trend following.
And so if you ever watched David Harding of Winton Capital go on, it’s the most mind-numbing thing for the interviewers. And I actually sympathize for a quant, it’s just like that’s what the model says, and that’s the answer to like 99%. So trying to weave in a story around why you like these various opportunities is tough but we’ve been getting a little bit better mainly because we hired Jeff but…
So for you, we’re gonna move on to Super Bowl. And now, I’m gonna start asking you some specific questions and if you say, “I’m sorry that’s paywall,” that’s fine. Who do you like? New England -3, who do you think is gonna win?
E.V.: Yeah. So you know, the games is really interesting from a perspective that New England has been something like 14 and 3 against the spread. I mean 14 and 3 against the spread this season, continually outperforming market expectations which, you know, is rare [inaudible 00:52:48]. But Atlanta has a historically good offense. And, you know, basically like you said, it’s boring to say but the models has a slight lean towards Atlanta. It’s not a play either way but it would be taking Atlanta +3. A lot of that has to do with their historically good offense and New England’s strength is [inaudible 00:53:12] adjusted defense is actually not that good. Taking the Falcon’s plus the points would be the lean.
The better play, I think, is on the under or that the model has is on the under. You know, Atlanta, just like New England, is an interesting team, outperforming market expectations against the spread. Atlanta is something like 14 and 2 on the over to the season. So the market has continuously undervalued their ability to score on any type of defense. Last week, they had a totals at 60 which was the highest ever seen in a playoff game, and one of the highest in something like 17 years. And it went over that totally.
You know, the market has continually just set expectations high and now, the total is at fifty-eight and a half where the average total for Falcons games during the season was 50. You’re seeing a pretty big market correction. You know, I think that there’s a lot of values, sort of, on that under so I think that’s the better play.
Meb: And so you mentioned Atlanta which I like to hear because as a Bronco’s fan, I kind of despise the Patriots. We got a lot of Pats fans in the office. But you also said in your article about the Super Bowl betting anomaly. Didn’t you say that…and maybe I read it wrong. Isn’t that sort of favoring the Pat’s moneyline or did I read that wrong?
E.V.: No. So what that’s saying is you’re gonna get… So I wrote an article about the anomaly that the books like to shade their moneylines just based on knowing that the receivable is gonna one of the most publicly-bet games. And knowing that instead of taking Falcon’s +3, what most people will do is take Falcon’s plus the moneyline. You know my research has shown that about 9% more people… So say that 50%…40% of people are gonna bet on the Falcons +3 points then that would mean about 50% of people are gonna bet on the Falcons plus the moneyline.
So you’re gonna see an overexposure to that moneyline that the books will generally try to compensate for by shading those moneylines lower for the Falcons. And getting less [inaudible 00:55:47] for the Flacons and getting a discount for the favor or for the Patriots. So it wasn’t an article saying that you should bet on the Patriots or you should bet on the Flacons. The play I was trying to convey was that if you want to bet on the Patriots, you should consider taking the moneyline because you’re gonna get a discounted moneyline price, if that makes sense.
Meb: Interesting. Okay. Well, a couple of other quick ones. Coin toss, you want heads or tails? As a quant I wanna say?
E.V.: You tell me.
Meb: I feel that there’s a lot of fun…
E.V.: You figured out… No.
Meb: Yeah, there’s a lot of fun with [inaudible 00:56:29].
E.V.: What’s that?
Meb: I’m gonna just read you a couple because there’s the classic, “How long is it gonna take to sing the national anthem?” And the average historically is around 2 minutes but the line I’ve seen online is over 2 minutes and 15 seconds. So maybe Luke Bryan is a long-winded singer, I don’t know. But there’s some of the real funny ones. And I can’t imagine any of these next three would be under. So like there’s one that says how many times will Gronk or Gronkowski be said on TV during the live broadcast? And the over under is only three. Doesn’t that seem like that would be a really low over under? I mean I feel like they pan to him almost every time the Pats have the ball. Do you think that that’s gonna go over or is that something that I’m just crazy about?
E.V.: It depends on where he’s placed in the stadium, right? I hadn’t looked into it but I think we saw a lot of him in the AFC Champions Game because he was in the press box with the owner Bob Kraft, and so they could pan to him a lot. But depending on where his placement is in the Super Bowl, you know, they may or may not pan to him too much and depending on how much you can view. So, you know, that would be what I’ll try to look for if I’ll try to evaluate that bet but.. You know, with this process…
Meb: We also have how many times will Gisele be shown on TV and the over under is only one and a half. I feel both of those are really undervalued. I think it’s gonna way over.
E.V.: See, the thing that I think you have to think about is there’s a lot of things that they’re gonna show during the Super Bowl, right? They’re gonna have to show Gisele once, they’re gonna have to show Gronk a couple of times. But there’s only so much time in the Super Bowl because then you have all these commercials you have to show. You have to show, obviously, the game itself. So, yeah, it’s interesting how they set these lines and, you know, if I had a data set, I would try to figure it out. But barring that, it’s just…
Meb: The Gronk days…
Meb: …is a limited amount of games. Although you could probably go back to every game he’s been heard in and say how many times have they said the word “Gronk?” that seems like a good orb and it seems to me like it would over. They even have a line that you can bet that says, “Who will Donald Trump pick to win the game?” And he’s, obviously, friendly with Brady and so it’s actually Pats is 1 to 10 and Falcons is 11 to 2. But he’s so unpredictable. I feel like that’s almost a good bet just to take him randomly picking the Falcons. I don’t know.
You also had a good article going back to this kind of bet sizing, talking about the Super Bowl. So this ties in a little about just money management and investing. And, you know, this is on my mind because I watched the Buffet documentary. And we had actually written an article called something like “Buffet or Berkshire, which Would You Rather Invest in?” And so you have a very recent article that just came out called “Belichick or Buffet, Who Would You Rather Invest in?” Could you talk about that article a little bit?
E.V.: Yeah, it was just a fun concept. You know, when I was researching how well the Patriots had done since Belichick took over, I mean it’s astounding. He’s like 75% win percentage straight up. And when you think about the NFL and how much parity they try to induce with free agency, the short careers that these players have, the turnover on these rosters, you know, it’s really amazing that just… It’s really an amazing job he’s done in managing that team and keeping them afloat even when Tom Brady got hurt. I mean they went 11 and 5 when Matt Cassel was quarterback. So this guy has done it with a different cast of characters. And it’s hard to say that it’s anything but Belichick dominating not only NFL but also the betting market. He is 59% against the spread around in 17 seasons. So he’s…
Meb: Has that varied? Has that stayed pretty consistent or…? I guess you said they were like 14 and 2 this year?
E.V.: I mean it definitely varies from season to season. Like I said, this season, he’s been something like 14 and 3 against the spread which is incredible…incredibly profitable but he just bet on the Patriots every week. And so what I said was, “What if you just bet on the Patriots every week since 2000 when Belichick became head coach of the Patriots?” And I took that and I basically looked at that against Berkshire Hathaway A shares and said, “What would your return be based on betting on Belichick every week versus betting on…or versus being fully invested in Warren Buffet, with $100,000.” And basically, the conclusion was that, you know, Buffet I think would have turned your money $100,000 into something like $430,000 while Belichick would have turned it into something like $375,000. So not a difference but some caveats are that with Belichick, you know, the NFL season like you pointed out, it’s only 17 to 21 weeks a season. So two-thirds of the year you’re gonna have 100% dry powder.
Meb: Yeah. So I bet if you included the money sitting in T-bills, that actually would outperform by quite a bit.
E.V.: That’s right, exactly. You’re taking that dry powder and investing in, you know, safe houses like T-bills, or a managed feature against an account, or anything else, other strategy, you have that ability with this Belichick strategy so. I was just gonna say another interesting point is the max drawdown, obviously, all stocks were hit hard and the great recession. Berkshire was no different, you had to drawdown of around 50%. The max drawdown, you’re gonna see with proportion to Kelly sizing was around 27%.
In a run, that was [inaudible 01:02:35] actually the Patriots undefeated season where market expectations caught up to them after they won eight straight if you remember it, the Patriots were undefeated in 2007. After that, the market said, “We’re gonna start putting a really high spread on the Patriots every week.” And they subsequently under-performed for quite a while. But the max drawdown with this Belichick strategy was only 27% versus 50% by investing in Buffet. So it’s just a fun study. I don’t think many people have the financial discipline to leave $100,000 with Buffet for 17 years or bet on the Patriots every week. But it was just something that I wanted to look at.
Meb: All right. So we’re not gonna launch the Belichick ETF. We would have some sort of deflate ticker. What would DFL be…? I don’t know.
Meb: Sorry for all my Pats fans. All right. So we gotta start winding this down. We’re running out of time. So for all of the aspiring, young quants, sports betters out there, talk to me a little bit about resources. So if someone is interested, obviously, what are some of the best, if you have, any favorite books, and then websites, and then lastly, like software or databases?
E.V.: Yeah. So for books, I would say just looking at for money management I think “Fortune’s Formula” which talks about, you know, Ed Thorp, Claude Shannon, how they derived sort of the Kelly Criterion, what came to be. Then for sort of domain-specific knowledge, I think that there are, you know, pretty easily accessible resources out there for different sports.
So for the NFL, I think that this book written in the late ’80s called “The Hidden Game Football,” has a lot of concepts that still aren’t implemented today in the NFL. Like when you should go for [inaudible 01:04:30] fourth down. The value of getting the ball on the 20-yard line versus the 25-yard line and quantifying that. That book really goes into detail on that.
For basketball, I think the Dean Oliver’s “Basketball on Paper,” has a lot of, sort of, quantitative metrics that are still used today in terms of the four factors. A lot of it has been advanced since then but I think those books are great starting points for anyone looking to get into it.
In terms of software, I think there’s a cool app out there called Onside Sports where it has different lines. You can put in bets as, you know, basically a dummy account and then you can see how much you had won or loss. And they’ll calculate that for you to see how well your picks would do. So I think that’s a good resource in terms of software that’s an app for your phone.
And then, you know, in terms of the process that I use myself, it’s no different than I used at my past financial job. We used databases. You know, we have a large backend in terms of debt pipelines that we pay for sports data, play-by-play data, pitch-by-pitch data, things of that nature. And then you know?
Meb: Is that something that’s publicly accessible or is it something that like, you know, people…or kind of like the Chris database? They’re gonna be putting…plopping down 10, 20 grand? Or is it all customized software and simulation for you guys, or is there a kind of the off-the-shelf stuff?
E.V.: So the predicting software is custom but the data itself, the feeds are, you know, they’re payday PIs. There’s a lot of different service providers for these different sports, for the different types of sports data you can get. And there’s different levels for different sports and so… It’s no different than if you were gonna get a Bloomberg feed. You know, they have financial data, we have sports data that we download and then use that to create our model.
Meb: Well, Bloomberg is not cheap either. I think we still pay like 25 grand. Somebody needs to disrupt that. Last question, any great sports betting podcast or Twitter handles we should be following?
E.V.: Yeah. I think you know, a sports betting podcast, it’s a fun one that I go on a few times. It’s called “Beating the Book with Gill Alexander.” He’s a guy that I used to work with and he’s done a great job of getting guys. He’s had you know Jeff Ma, the guy from MIT Blackjack Team on this show talking about sports gambling. You know, looking at ways to handicap the games. You know, I think that’s a great one to start off with. And then, obviously, there are sort of mainstream ones that you’re gonna see from like ESPN. They’re gonna have a lot of sports being podcast, obviously, that cater towards that specific demographic.
Meb: E.V., we always ask people if they have something beautiful, useful, or magical at the end of our podcast, you got anything for us?
E.V.: Yeah. One thing that I really find beautiful, useful, and magical is this extension on Chrome called Ebates. I’m not sure if you’re familiar with it. But essentially, the way it works is they are an affiliate marketer but they split the fee with you. So if you go and buy something on Amazon and they get a 3% fee then they will send you back something like one and a half percent. And the reason that this really works well with Chrome extension is because you’ll go to websites that you don’t even think have a rebate and you’ll see you’ll get 10% cash back. And then they just either write you a check or they’ll PayPal you the money. So for someone who does a lot of their shopping online like myself, it really comes in handy, more than you’d think so.
Meb: What ‘s the name of it again?
E.V.: It’s called Ebates like rebates without an R.
Meb: That’s one of these fascinatingly-obvious business plans and I’ve always thought and I never understood why this hasn’t taken hold. If so many of the social networks/websites… So like even Google, or Facebook, or you know, I mean YouTube does this a little bit for their creators. But the people who participate, the people that are involved that they don’t compensate them. So I’ve always wonder why, say like you couldn’t build a competitor to Google. And say, “You know what, we’re actually gonna give you quarter of your search revenue. So when you search for something, you click something, we’ll give you a quarter of it.” But the people that are involved and even more so for the content creators, the same thing for Facebook. Why would you not go to social networks says, “You know what, we’re gonna return a quarter, or a half, or whatever the revenue is to the people involved.”
We even wrote about this for content creators for one of our old Million-Dollar ideas in Fintech called “TheStreet.com 2.0.” for a lot of these websites that aggregate content. But a lot of the content creators, and writers, and bloggers don’t participate. So that’s a great idea. You just sparked a little bit of a weekend project presumably.
E.V.: Like you said, it can be applied to a lot of different industries. I think online shopping is a fairly obvious one that’s easy to implement. But even talking about trading or a lot of different things that have high frequency where someone is getting a commission and you could give some back some of that to customers. I think there’s a lot of potential there with that idea that you mentioned, yeah.
Meb: A very cool idea. Thanks so much for joining us today. It’s been a lot of fun. I imagine we’re gonna get a great response when we have to have you back on every once and a while. Where can people follow you if they want more information on your articles and writing?
E.V.: I think you mentioned my Twitter handle is @EVBetter. I’m posting all my writing at doctorbobsports.com. Just let me know if you guys want me to look at anything in particular and, you know, write about anything interesting. I’m always open to new ideas so.
Meb: Great. I have a lot. One of my buddies favorite, we’ll call him anonymously Chris, that’s actually his real name but he loves betting. I think he’s at Oakland Games when there’s a big storm coming in. Because I think it’s like under sea level or something and the field always gets swamped. So weather is his big favorite. We’ll talk about weather next time we have you on.
E.V. Better, thanks so much. Everyone, thanks for taking the time to listen today. We always welcome feedback and questions through the mailbag at email@example.com. As a reminder, you can always find the show notes in other episodes at mebfaber.com/podcast. You can subscribe to the show on iTunes, my favorite app is Castro and if you’re enjoying the podcast, hey, leave us a review. We actually read all of them and thank you. Thanks for listening, friends, and good investing.
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