MMA Oddsbreaker Premium 2013 Performance Review: How Much Money Are We Talking? Jan 10, 2014

For those of you following the MMAOddsBreaker’s Premium betting service, congratulations on 2013! You literally beat the market. What do I mean by that? Well, two things actually.

First, you have to look at sports betting in the proper context. It’s not you against the casino. It’s certainly not you against any team or fighter. It’s you against the betting public, the “market.” And that’s a tough match up, because the “wisdom of crowds” is a powerful force and markets have an uncanny ability to stamp out inefficiencies with an Invisible Hand that throws a mean hammerfist. But that doesn’t mean you give up, it just means you have to be willing to view the market realistically. The market is good at pricing outcomes and placing bets, and in the long run blindly competing against the market will lose you money. The trick is in knowing when to play and when the pass.

Trying to pick every winner is impossible. Upsets happen frequently in mixed martial arts – 32% of the time, actually – and that’s only in fights where there’s a clear -150 or more favorite. Upsets are even more frequent when you consider closer lines. And playing both sides of the bet is also a losing proposition, as a small margin is built in to allow the bookmakers to do business to begin with. In order to actually profit from betting, you don’t need to always pick winners, you just need to outperform the rest of the market on bets you choose to make. Play the bets you know best, and compare your expectations with those of the market. When the market gets irrational with the lines, that’s your best opportunity to play. You need to beat the market by a fair bit to overcome the small margin of profit built in for the bookmaker, and then, finally, you’ll be earning a profit.

The team at MMA Oddsbreaker knows a thing or two about betting on sports, and more specifically, betting on MMA. We began offering a Premium Picks betting service back in May of 2013. With the year having just ended, it seemed like a good time to look back and see how our recommended plays performed. We could have just picked all the favorites or all the underdogs, but doing so would have lost us money in the long run. We chose when to play and when to pass, and we played bets where we had confidence that the market was wrong.

It’s time for some analysis.

We’ve created a hypothetical bank roll or “fund” of $100. For each bet a certain number of units was played, where a unit is 1% of the bank roll. At the first event back at the end of May, units in this analysis began as $1. With each event the 1% floated with the overall value of the fund, such that eventually units were larger than $1 each. The bets for each event were tracked by unit size, win/loss, and return, and after each event a new fund total was calculated with a new unit size assumed. A complete list of the bets and outcomes is listed for all to see, and each event’s Premium Picks are posted immediately after an event.

So those are the rules of this analysis. The emphasis here is not on win-loss records, which are of little importance against betting lines. It’s all about whether or not we beat the market and profited from our bets. How did we do?

MMAOB 6-Month Return end of Year 2013

Very well. We did very well, indeed.

In just six months the fund grew by 73%, which means we were well on our way to doubling our money inside of a year. Despite the ups and downs, the long-term trend is strongly upward, suggesting that given more time, the fund will grow and grow. The curve also suggests some learning going on. Even experienced gamblers can improve their plays over time if they are smart and willing to learn from experience. The team at MMA Oddsbreaker has been tracking what types of bets (straight picks, Over/Unders, Parlays, etc.) have performed best and can use this information to better inform future strategies. Let that sink in folks: we’re only getting better at all this.

One word about scale: in the graph above the original unit size is a mere $1, which of course is ridiculous, because why bother betting such small plays. Add two zeros to the numbers above to see how unit bets of $100 each would perform. According to the analysis, betting this way would have resulted in a profit of almost $7,300 in six months.

MMAOB 10k Bank Roll - 6-Month Return end of Year 2013

Wait, I know what you’re thinking. You could have just put your money in the stock market and not jumped through all these hoops. Just set it and forget it, right? Sacrificing the thrill of watching fighters win you money on fight night is a small price to pay for the comfort of limiting risk and knowing that your pot of money will grow just like everyone else’s. So how would a fund following MMA Oddsbreaker Premium Picks have performed compared to the same amount of money put into the stock market? Here you go:

MMAOB 6-Month Return end of Year 2013 with Comps

Feel better now? Investing in the good old Dow Jones Industrials would have netted you an impressive 7% return in just 6 months, while hopping on the elitist S&P 500 would have returned over 11%. Not bad, not bad at all. But 73% return in six months for betting on MMA? No comparison. The Premium Picks from MMA Oddsbreaker beat the “market,” for the second time. Historically, your fund will have grown after >70% of events, and shrunk less than 30% of the time, that’s the nature of volatility. The way you beat volatility is by competing in the long run.

Now, I am not personally a risk seeking individual. Many say I am too risk averse, which is why I never gamble in casinos playing games of “chance.” But I am interested in betting on game where I am well-informed, and where the market has occasionally irrational tendencies. Mixed martial arts is still relatively new compared to baseball and football, and few analysts are taking a rigorous approach to betting on MMA. Armed with this analysis, I am going to suggest that betting on the seemingly chaotic sport of MMA can still be profitable when done wisely, patiently, and objectively. It requires a lot of discipline and research, but that’s why you have us. We’ll do the work so you don’t have to, and we’ll tell you what we think every week. Our Premium Picks service can’t be free, otherwise the markets would absorb the information en masse and eliminate the opportunities we identify. In economic terms, “the market will have competed away the inefficiency.” In this sense, we like inefficiencies, and we want to keep them when they favor us. The arbitrage business is a fleeting one. However, the analysis shows that for any serious bettor wagering anything more than ~$15 per unit play, the service is worth the price. Generally speaking, that’s less than $100 risked per fight night.

Consider listening to the Premium Oddscast podcast as part of your research before placing bets on MMA, or better yet subscribe to the Premium Picks and take a ride alongside us. Premium Picks are posted the day of fights in order to include the latest breaking information. We wouldn’t have it any other way.

Here’s to a profitable 2014!

Written by Reed Kuhn

Dropping science in the cage with UFC statistics & analytics. Quantifying underlying drivers of the fight game, and ending barroom disputes everywhere.

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