Revisiting an oldie but goodie

Although we constantly talk about the value of betting against the public, one of the most popular strategies for bettors is the 80-20 betting system. In the past we've discussed how bettors can win at a 57.1% rate by fading large public favorites, but we had not analyzed this system in years and wanted to know whether a more-informed betting public had impacted this system’s profitability.

This system is quite simple: find teams receiving at least 80% of spread bets and bet against them. Ever heard the old adage that the house always wins? This strategy ensures that you’re usually on the same side as the house.

Although contrarian betting is a consistently profitable strategy, the sweet spot for betting against the public varies from sport to sport. For example, we focused on teams receiving less than 30% of moneyline bets in our MLB Betting Against the Public Report but teams receiving less than 30% of spread bets are not profitable for NFL bettors.

Historically teams receiving less than 30% of spread bets have a winning record (51.2%) but that does not win frequently enough to cover the juice charged by the Pinnacle sportsbook.

Contrarian betting becomes profitable at the 25% threshold, yet our return on investment (ROI) more than triples when focusing on teams receiving less than 20% of spread bets. It’s also interesting to note that only one favorite (Jacksonville Jaguars -3 vs. Tennessee Titans on 9/11/11) has ever received less than 20% of public bets.

Bring On The Big Dogs

With the knowledge that this system disproportionately backs underdogs and that historically large dogs have performed better against the spread (ATS) than small dogs, we wanted to see if underdogs of 7+ points had provided superior value for bettors. So we consulted our Bet Labs software and, despite the fewer number of matching games, the number of units won actually increases from +14.83 to +17.6 and the return on investment sky-rockets from 8.2% to 23.5%. Not only does this prove our original hypothesis, but it also indicates that small underdogs (6.5 points or less) receiving less than 20% of spread bets have been a terrible value for bettors. According to our research, such teams have gone just 53-54 ATS with -2.76 units lost and a return on investment of -2.6%.

Familiarity Breeds Strategy

In the past we've also written about how familiarity between teams often benefits the underdog inordinately, so we further examined conference vs. non-conference games. The expectation was that both criteria would be profitable, but we would see an increased return on investment in conference games. It turned out that layering on the conference filter nearly doubled our ROI while improving our earnings by nearly three units.
 

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