SportsInsights put together some thoughts on its philosophy of “contrarian sports investing.” We publish betting articles and research on the topic — but why does it actually work? Is there really an edge? How robust are the results? A good betting strategy will have a fundamental reason for why it works — and will be backed up by results. Here, we take a “big picture” view of contrarian sports investing and “why it works.”
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Prime Example: Indianapolis Colts vs. Tennessee Titans
This NFL match-up helped to motivate this article. This is a prime example of “contrarian investing” ( in any marketplace!) — “in action.” About 6 out of every 7 bets took Peyton Manning’s Indianapolis Colts, giving about three points. Indeed, earlier in the day, the betting percentages were even more “lopsided” — with a whopping 91% of bettors taking the Colts. The line opened at Colts -2 (at CRIS), but the steady pounding on the public favorite Colts pushed the line all the way up the Colts -3.5 (and even Colts -4 at some “public books”).
On the face of it, this game looked like a complete mis-match. How could last-place Tennessee compete with mighty Indianapolis? The Titans had lost five games in a row (entering Thursday night’s contest), and were getting just a field goal! Sports fans — and particularly sports bettors were drooling over this game, thinking:
There is no reason the game should be competitive. This should be easy money.
Peyton Manning is a Hall of Fame QB who can often throw for four TDs in a game!
Manning had a few off-weeks, so he is bound to bounce back strongly.
Indianapolis got to the Super Bowl last year (and got to two out of the last four Super Bowls) — winning four years ago.
Tennessee is in last place and has lost five games in a row.
Meanwhile, many SportsInsights’ members took “the road less travelled” and “bet against the Public.” SportsInsights made the Tennessee Titans an NFL Square Play selection.
And what happened? Indeed, the Colts jumped ahead 21-0 — and it was looking like a long night for the underdog Titans. However, the Titans came back and made it competitive. Very late in the game, the Titans were not threatening to win the game — BUT (and this is a big “but”) — their late touchdown gave them a “backdoor” cover “against the spread” (ATS). This allowed contrarian sports investors to squeak out a hard-fought value victory ATS.
How can “David beat Goliath?” Points Matter!
While Indy bettors are scratching their heads on how “that one got away” — “value sports investors” realize that this is a business of numbers and profit margins. The team at SportsInsights often writes articles and blog posts about “point spreads being a great equalizer.” Here are some thoughts:
Oftentimes, the “favorite” completely demolishes the “underdog.” Please click here to see this pertinent blog post. Here, one of SportsInsights analysts commented that: “… Truth be told: if we played this game 100 times, we’d probably see 30 blowout victories for the (favorite). They are still a strong team…” Indeed, the favorite (New England in a Monday Night Football game), crushed Miami by a score of 41-14 in that lopsided-bet game.
On the other hand, in the same blog post, the analyst commented that this underdog would probably cover “against the spread” about 55% of the time.
This strategy does not work all of the time, but this is a “real edge.” And, like “real edges” — although it is measurable and leads to profits, the profit margin is relatively thin.
People often ask, “How and why does contrarian investing work?” Although most marketplaces are highly efficient, because real dollars are at stake — public perceptions can often push pricing out of line with actual value. In the case of sports betting, the betting lines are impacted by public perceptions and betting syndicates.
Line value: The sports marketplace is very efficient. Take the Colts-Titan game that we mentioned above. The point spread opened at Titans +2, which is exactly where the game ended! However, the constant pounding of betting on the Colts pushed the line all the way up to Titans +3.5. This extra bit helped contrarian sports investors squeak out a win — and allows bettors who “bet against the Public” achieve a measurable edge against the spread.
Contrarian methods work in the sports marketplace, as measured by SportsInsights’ Square Plays. Below is a chart showing the results of “betting against the Public” using our Square Plays, which have been published for Members since 2003. The chart shows results for every major U.S. sport and is taken from our Sports Investing book.