If you’ve clicked on a sports website in the past week, you’ve probably read an article about a bettor in line to win 1 million dollars if Michigan State were to win the NCAA title this weekend.
Indeed, Derek Stevens, a supposed regular at the Golden Nugget casino, placed a $20,000 bet on December 5th on the Spartans to win the title. At 50:1 odds, Stevens’ bet will pay big if the Spartans can pull off upsets of both Duke and either Kentucky or Wisconsin this weekend.
There’s just one problem.
Stevens’ bet wasn’t that smart.
Back on December 5th, the Spartans were 5-3 and looked headed for the relatively unspectacular regular season that they were expected to have. Preseason polls had Michigan State as the third best team in their own conference and ranked No. 18 in the nation, and by week 5 of this season, the Spartans were unranked. Getting Michigan State at 50:1 wasn’t a good deal then and I’m still not sure it looks like a good deal now (most prediction sites only give MSU about a 5% chance to win it all, even with two games left).
Instead, like many futures bettors, Stevens would have been much better investing his $20k in the Spartans before the tournament began. For example, I went through MSU’s tournament path what a bettor would have earned off a $20k investment in the Spartans to win each game, assuming that 100% of the return was simply re-invested in Michigan State to win its next game. For example, the Spartans money line was -250 against Georgia; a bet of $20k would’ve yielded an $8k profit, and together, that $28k sum would be again invested on the Spartans to beat Virginia.
Here’s a graph of the results.
Two things stand out. First, a bettor would stand to make just under $1 million on the Spartans in this scenario…before they even played the championship game. Indeed, this strategy would yield a profit of just over $900,000 if Michigan State beats Duke on Saturday.
Second, assuming a line of +350 for Michigan State versus either Kentucky or Wisconsin (and that’s generous towards MSU), such a strategy would yield more than $4 million if MSU were to win the title.
Of course, there are several caveats here. Futures bets are not always bad ideas, and you cannot use the described strategy with all teams. For example, Kentucky was +650 to 2015 title a year ago; before the tournament began, the Wildcats were close to even money. Indeed, the Michigan State bet would’ve looked like a pretty good wager if the Spartans had started the tournament at, say, 10:1 or 12:1 (they didn’t, opening at anywhere from 30:1 to 40:1).
So, while the headline you are reading continues to say “Bettor can win $1 million dollars on MSU,” perhaps the more applicable headline is “Bettor cost himself $3 million dollars in profit by taking a futures bet in December.”
Of course, he would have had to be in Vegas for the entire tournament. And the casinos would be more likely to decline the later bets (“I’d like to bet a million dollars on MSU to beat Kentucky!” “Uh, no thanks.”), so maybe a higher payoff but a more difficult implementation. On the other hand, he could also pull out at any point in the series of bets, which presumably has some value.