Farbror the Guru

Before addressing progressive betting or martingale, first some background.

The Underdog Theorem is ultimately about a new idea. The book quite thoroughly explains the idea to the reader (showing 15 years of results), then the reader is free to use the idea as it stands, modify the idea if he thinks he can improve it, or reject it altogether. Whatever the reader’s final opinion of the book is, I hope to hear from him in the Forum on my Blog. I hope the Forum becomes a place to discuss everything having to do with the Underdog Theorem – people’s success using it, people’s doubts about it, people’s changes to it.

The idea is pretty simple. For the reasons laid out in the book, we know that certain outcomes will happen every year in the NFL and we can use this knowledge to inform our bets.

Last season, the Patriots memorably demonstrated how difficult it is to finish an NFL season undefeated. One of the outcomes we can predict each season is, as I say in the book, that “no team will go undefeated in the NFL for a very long time, if ever again”. Every year the NFL has many undefeated teams, most commonly they are teams with records like 2-0, 3-0, 4-0. As you’d expect, there are more 2-0 and 3-0 teams than there are 8-0 teams. With every passing week, an undefeated team usually loses its undefeated status. The Underdog Theorem positions the gambler to profit from this. (*There is more to the Underdog Theorem. It is not enough to just bet against every undefeated team, as explained in the book, there are other factors to consider, such as “Schedule Conflicts” and “High Risk” scenarios.) But betting against the undefeated team is part of the basic idea, and it’s an angle that has been overlooked by all sports fans. I say this because with every week that an undefeated team continues to win, everyone (fans, players, media) views this team as moving one week closer to an undefeated season. The Underdog Theorem sees that this undefeated team is actually moving one week closer to its first loss.

The idea of gambling in general is an important topic and it starts out the book. The Underdog Theorem wants to point out that gambling occurs all the time in America, especially on Wall Street. Yet, absurdly and hypocritically, US politicians have banned gambling on sports. In order to keep the parallel with Wall Street, I provide the Underdog Theorem gambler with two “funds”. On Wall Street, they call their gambling strategies “products”, many of these products are sold in the form of “funds”. Like Wall Street, the Underdog Theorem offers funds: the Underdog Theorem Value (UTV, less risk, less reward) and the Underdog Theorem Growth (UTG, more risk, more reward). I suggest that people put their money in the UTV fund. In the long run, UTV and UTG aren’t that far off in terms of percent return. However, within individual seasons they can vary greatly. Ultimately it’s the gambler’s call. UTV has the gambler accept losses. UTG does not.

Progressive Betting and Martingale

The Underdog Theorem uses point spread betting. While many teams experience streaks against the spread they’re for the most part rare with Underdog Theorem picks. As the 15 seasons of data show, the Underdog Theorem’s picks against the spread rarely lose 2 times in a row, and even more infrequently, 3 times in a row. (Not betting every undefeated team is mostly responsible for this success.) However, 3 losses in a row by one team does occur. When it does, the more conservative bettor, who uses UTV, accepts his losses.

Now back to the first question. “Is progressive betting part of your theorem?” With the UTV fund the answer is “yes and no”. The UTV will follow a loss with a larger bet because of how quickly the point spread delivers wins, but it does put an end to this and requires the bettor to accept losses when a streak occurs. Even when accepting losses, the book shows that the Underdog Theorem is still incredibly profitable, far outperforming Wall Street over the same period.

Which brings us to the second question, “Martinglale”.

My friends and I love to gamble. Many of them live by the motto, “Let it ride!” I think they’re insane in general, and they pretty much agree. They’re into gambling for the huge highs (and the huge lows). For people like them, and to also have a more risky and more profitable counterpart to one of Wall Street’s risky yet profitable “funds” (or “products” or “vehicles” — they’re all gambling strategies by different names), I have the UTG fund. It’s pure Martingale and is not for the faint of heart.

I find many things interesting about Martingale and sports betting, but I still don’t suggest that conservative gamblers (people unlike my friends) use it. There are several factors, listed in the book, that make the Martingale different in the context of the Underdog Theorem. One is that in sports betting, Martingale completely bypasses upper limits. Casinos impose maximum bets, stock exchanges impose maximum bets, anywhere people put money on the line there is an upper limit so that people cannot chase losses indefinitely. This isn’t true in sports betting since there are countless outlets all offering close to or exactly the same deal. I wanted to include this point in my book. To me it is a fascinating loophole. Others think the mere mention of Martingale suggests negative things. However, I don’t think people should be afraid to rationally discuss ideas, no matter how seemingly crazy or sane, so long as they’re discussed rationally. The book doesn’t shy away from Martingale’s huge downside; it explains that Martingale is usually disastrous for the gambler. Most importantly, the book explains that Martingale is not required to apply the Underdog Theorem. The book shows what happened to UTG bettors when the ‘98 Broncos and ‘05 Colts went on their impressive winning streaks ATS. In the book I ask readers to always keep those seasons in mind when deciding between UTV and UTG.

If anyone has any questions at all, you can reach me at — eddiegetz@gmail.com

To visit the Underdog Theorem Forum on my Blog — http://underdogtheorem.wordpress.com/forum/

Thanks to the Guru for hosting this, and thank you for reading.

Bets of luck, Eddie Getz