Betting on Draws as a Value Investment

Who likes to bet on a football match hoping nothing happens?

Who likes to cheer on a boring 0-0?

Betting on Draws is not exciting for amateur bettors.

They love to bet on winners.

Amateur Bettors

Most of them are recreational punters who want to pick winners.

They want to share the success with friends and even better if the winner is the team they support.

It is also a matter of ego to say: I was right!

It is not about betting on the winner only as a favourite. Even the underdog high odds are attractive because of the big reward.

Those are all choices far from the logic of a value bet made to get a profit.

Amateurs bettors first bet with emotion and then justify the choice with logic.

Bookmakers know that very well.

Great news!

Now that the odds are above the fair price, they are good enough for a value investment.

Well, it doesn’t end there.

You can bet on draws and make a profit thanks to the behaviour of another type of punter.

Big Spenders

Have you ever heard of them?

They are sharp bettors with a large bankroll who bet so much money to move the odds line in their favour. 

By placing big losing bets on the worthless odds of a winning team, they intentionally increase the opponent ones. At the right time, the Big Spenders will place a value bet on the opponent juicy odds that will make a long term profit, despite the first losing bets.

Bookmakers

Even though the line movements create the opportunity of finding value bets on the overpriced odds of the draws, those are not the only situations in which bookmakers allow you to make a profit by betting on draws.

Other opportunities to value bet on draws can arise when the bookmaker makes public the odds for each outcome.

Although the bookies use sophisticated algorithms for calculating the fair odds of draws, accurate estimation is still difficult for some reasons: such as the rarity of the event, a weakness in their formulas (e.g. Poisson distribution), a weighted thought to not offer fair odds on the opening line.

How many chances to make a profit from draws!

The wise punter has no choice but to identify them, and that is just what I did.

I developed value betting strategies to take advantage of high-yielding draws.

Betting on Draws like Investing in Derivatives

The same edge you can generate over the financial market, you can get it from the betting market.

Just like a derivative, which derives its price from an underlying asset (e.g. stocks, bonds, commodities), in a similar way the draws have their underlying asset in the performance of the football teams.

At a given time, a football match produces a score from which you can get a profit, just as you can get a payoff of a stock that depends on its behaviour at a certain time.

With the advantage that the betting market is independent of prevailing political and economic conditions.

A football draw does not depend on what is moving the stock market up or down, as well as a bet on that draw.
In this way, your investment capital will not be exposed to sudden huge losses as it happens with a stock market crash.

Therefore, you can see how the betting market is recession-proof as well as uncorrelated to global finance events.

That’s why football draws, as a one-of-a-kind alternative asset class, can provide an attractive long term solution to generate positive returns.

In his 2008 letter to Berkshire Hathaway shareholders, Warren Buffett wrote:

beware the investment activity that produces applause; the great moves are usually greeted by yawns.

Great moves like bets on draws that are usually greeted by yawns.