If you want to look at your team’s chances of winning, sometimes the best place to go is Vegas. After all, Sports Books wouldn’t still be around if they got it wrong all the time. I have listed all the MLB teams below with their odds against to win the 2013 World Series (yes, you can already bet on that).* To interpret odds against in this format, think about it this way: If you were to bet $100 on a team, and that team won the 2013 World Series, you would win the amount shown under Odds Against (plus your bet). That 700 for the Tigers really just means 7-to-1 odds.
So there’s Seattle down at 8000. A one-dollar bet on the M’s would net you 80 bucks if they won the whole thing. A one-dollar bet on the Angels, though, would only net you 7 bucks. In the third column, “Pay Probs,” I’ve included the break-even probability. In other words, if a team’s true probability of winning the WS is actually greater than the break-even probability, then it’s a smart bet.
So how does Vegas make money? I’m glad you asked. If you add up all those break-even probabilities, you get 139.7%. Those “pay probabilities” can’t be true probabilities because they’d have to add up to 100%, and so the casino is essentially stealing the other 39.7%. Pro-rating the probabilities correctly gives us the fourth column, with each implied true probability noticeably lower than the implied break-even probability.
Vegas sets the initial odds, but then routinely adjusts those odds based on how people are betting. If no one seems to be betting the Mariners, for example, they’ll make the payouts higher until people see it as a “good bet.” Thus the true probabilities—scaled from the Vegas odds—are functions of both Vegas’ computer nerds, and the masses of bettors. Basically it’s an adjusted Wisdom of the Crowd. As of right now, Vegas and the bettors have combined to give Seattle less than a 1-in-100 chance to win the 2013 WS. But you have to believe that M’s chances are better than 1-in-80 before you start betting. Tricky!
*According to sportsbook.ag on February 6th, 2013.