# TDs, Safeties, Gisele: Breaking Down the Big-Game Prop Bets

## What do Wall Street and Vegas have in common?

Jan 30, 2015 at 8:19 AM

Super Bowl Sunday is finally upon us! Which means, of course, wings, squares, and prop bets! I'm not really a big wings fan … but I love prop bets and I love square pools (though I've literally never won so much as a quarter in a square pool).

I can't offer much in the way of "edge," since they're generally all drawn randomly. But if you happen to stumble on a squares "auction" -- or someone interested in selling their draw -- NumberFire has a guide to the value of each square. This brings us to prop bets!

It's an interesting year in that the game itself is close to pick-'em as I type. The majority of bets and the majority of the total dollars bet apparently tilt toward the Patriots so far. But most of the money still remains on the table. The expectation is that the Pats will go out as small favorites, at most -2.5.

Why does that matter for many props? Well, it implies a host of them are even-money propositions, such as "team to score first," "first-quarter spread," et. al. This means they don't offer much value-add. If you like the Pats in any of those sort of props, just bet them straight up.

But there are plenty of interesting ones out there. And there's a common theme. The lion's share are priced with the "negative" money at about fair value, because the lion's share of the public wants to make "positive" money bets.

Let me explain. Let's say the probability of Super Bowl prop "X" happening is 33.3%. That implies the fair price of a Super Bowl prop is -200 "no" (bet \$200 to win \$100) and +200 "yes" (risk \$100 to win \$200). The majority of players will want the "yes" bet. So books will price Prop X at something like -200 for "no" and +170 "yes." "No" players will have about zero edge, whereas "yes" players have a sizable negative edge.

This reminds me of our out-of-the-money call pricing when I was a market maker and everything was singly listed. The entire world wanted to overwrite calls, so we posted offers at or below fair value, and posted bids as much below fair value as we could.

Long story short, if we want to find value, we're most likely to find it in "negative" plays. So here we go (all lines from 5dimes):

In Super Bowl history, teams that scored first have won 32 times in 48 tries -- but that's not the best way to analyze this one. It's a small sample, and it's not necessarily comparable to this matchup of even teams.

But as luck would have it, it's close to the right number. There are a few variables to this. No. 1 is who actually scores first. If it's the favorite, the odds are much better. But there's no favorite here, so scratch that. Variable No. 2 is what type of score. According to another prop (more on that next), there's a 60% chance that first score is a touchdown. And finally, variable No. 3 is whether the team that scores first gets the ball to start the second half. That's less than 50%, but if it is in fact that team that didn't get the first-half kick, the odds get even better.

Anyways, I threw this all into the calculator at Advanced Football Analytics and I believe the "fair" price for this prop is about -195. So there's some edge at -165.

Add it all up, and it's pretty consistent with the over/under of 47.5. But the breakdown is slightly off, in my humble opinion. I show them combining for 5.25 touchdowns, but taking under 5.5 at -115 equals roughly 5.35 touchdowns, so that's the tiniest of edges. But I show them combining for 4.2 field goals, so I do think there's edge in over 3.5 at +115. So yes, positive money plays! It's also offered at o3 -152, so it can go negative anyway.

There's a big caveat, though. That's based a lot on the Seahawks great defense and their propensity to force field goal attempts instead of allowing touchdowns. And that depends a lot on the Mike McCarthys of the world playing conservatively on fourth downs (I don't include the NFC championship game in the numbers, so that field goal number might skew even higher). Bill Belichick is not that sort of play caller, so there's certainly less edge than numbers suggest. I still like it, though.

In 2014, there was an average of 0.41 non-offensive touchdowns scored per game. Neither the Seahawks nor Patriots is much different from the league average. It sounds like a Poisson problem. As an aside, starting a discussion of Poisson probabilities is a great way to clear everyone out of a Super Bowl party.

Anyways, if I throw those numbers into an online Poisson Calculator, it suggests that the above prop is worth about 195. So there's modest value in the "offense scores all touchdowns" side at -185. The same exercise on safeties says that prop is worth 1170, so again, you're better off saying "no safety" at -950.

But let's face it, no one's doing that. The Super Bowl saw very few safeties until the Giants got one against the Patriots three years ago. And now we've had those three years in a row. Even minus that (utterly meaningless) trend, few are risking \$950 to win \$100, and few are bothering to risk \$95 to win \$10. Books know that, and that's why they price it as such.

And finally …

It seems pretty bearish on Gisele sightings. And I think the national anthem is usually longer … maybe "sharps" have scouted Idina Menzel and found she buzzes through that "Frozen" song in concert.

In other words, I have no clue. What I do know is that books make enough on prop bets that even if the game "middles" on them, they still come out way ahead. Forty-cent spreads on "fun" props and markets tilted toward "order flow" on ones you can value, all multiplied by huge volume, makes it a great payday in Vegas. So most importantly, enjoy the game!

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

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