Yesterday was a huge day for the DTAYS Baseball Fund. The system went 10-4 on the day, including two level three bets that both paid off. The total profit on the day was $250.32, which was a profit of 2.54% on the $9854.80 that the fund started the day with.
Today, the fund will be placing nine more bets. If they are all winners, it will finish the day up 6.67% on the year. If they are all losers, the fund will finish the day down 4.04% on the year. The odds are pretty good that neither of those extreme options will happen. It is far more likely that the fund will perform somewhere in the middle, hopefully with slightly more wins than losses.
The Different Types of Bets
Now that we are just over a month into tracking the performance of the Baseball Fund, I am beginning to notice certain things about the types of bets that it takes. It seems that they generally fall into one of two categories.
The first category is betting on a favorite that has an even better chance of winning than Vegas is giving them credit for. The Detroit Tigers were a great example of this yesterday. They are one of the best teams in baseball, and their ace, Justin Verlander was pitching against a solid Royals team.
The Vegas moneyline that WagerMinds gave me for the Tigers was -122. That suggests that they had a 55% chance of winning the game. After processing the projections for each team and starting pitcher using values from Baseball Prospectus, my spreadsheet suggested that the Tigers actually had a 61.8% chance of winning the game.
The difference of 6.86% meant that I would be risking 1% of assets under management on the Tigers yesterday. If successful, that bet would pay $80.78. This was the classic case of a better team starting a better pitcher while being undervalued in the eyes of Vegas, and it paid off.
The other category that keeps registering bets is underdogs that are just priced too low. There was also a great example of this yesterday with the Tampa Bay Rays. The PECOTA projections from Baseball Prospectus show that the Rays and the Yankees are both likely to finish the year with 86 wins, so the teams are pretty evenly matched.
Yesterday, the Yankees had their ace, CC Sabathia, pitching. The Rays were rolling out Erik Bedard, who is no Sabathia. To illustrate that point, Sabathia has a WARP of 2.5 and Bedard has a WARP of 0.3.
When two evenly matched teams are starting pitchers with dramatically different values, you would expect that the team starting the better pitcher would be favored. In this case, that is exactly what happened. The Yankees were listed at -155, which means that they had a 60.8% chance of winning the game.
However, when I plugged all of those numbers into my spreadsheet, it showed that the Rays actually had a 41.1% chance of winning the game, compared to the 40.8% chance Vegas was giving them. Therefore, while they were not expected to win the game, there was still value to be found in betting on them because the payout was larger than it should have been.
You Can’t Predict Baseball
Another interesting anecdote happened last week with a different Yankees game.
When I processed the day’s games early last Thursday morning, the Yankees were listed at 115, meaning they were underdogs at home to an inferior Seattle Mariners team starting a dude named Roenis Elias. I didn’t need a spreadsheet to tell me that this line was out of whack.
When I plugged the numbers into the spreadsheet, it showed that the Yankees actually had a 62.3% chance of winning the game, as opposed to the 46.5% chance Vegas was giving them. The difference of 15.78% meant that this was a bet where I would risk 2% of assets under management.
As the day progressed, my hunch that this line was severely mispriced became apparent and the line eventually moved to something like -155, making the Yankees solid favorites. That means that I was able to get a HUGE BARGAIN on this bet.
This is the type of bet that you would take every single time possible. The odds were clearly stacked in my favor. Then, because baseball is baseball, the damn Yankees went out and lost to the Mariners anyways, proving that even the best bets can go wrong. That is why we must always focus on managing the risk.