The Time Value of Futures Bets - Are they worth the ROI?

2024-06-19

What is the Time Value of Futures Bets?

When we say the time value of futures bets, we are referring to the length of time it will take for your futures wager to be graded. For example, it's the beginning of February, and the Super Bowl was just played. Sportsbooks have now released the futures odds for next year's Super Bowl. The time it would take before this wager would be graded would be roughly one year. 

Not all futures bets require this amount of time. Many bettors like to place futures wagers right before the playoffs or a major tournament begins. A futures wager such as this may take five to six weeks to be graded.

Let's revisit our Super Bowl example. In this scenario, the Super Bowl has just ended, and you are interested in placing a wager on next year’s Super Bowl winner. Is this a good idea?

If you place this bet, it will take roughly one year for this wager to be graded. Could your money be put to better use for one year, rather than just sitting in your pending wagers, waiting to be graded? You should look at this wager (and all wagers that you make) as an investment. 

 

Benchmarking Returns on Futures Bets

It depends on the individual, but most people who invest are looking for annual returns in the 7%-10% range, although this can differ based off of betting volume. If we apply this logic to a year long futures wager, you now must overcome the increased house edge on a futures play, and the 7%-10% return you could have received on your money had you not placed the bet. The vast majority of futures bets would not be able to overcome such a high percentage. Only place such a long-term wager if you are confident that you are receiving sufficient odds to do so.

 

Additionally, if you are comparing the edge that you have on Futures Bets to the edge that you have on daily games, even a 1% edge bet daily compounds significantly faster than a 10% edge that takes 6 months to materialize. There are rare cases where with increased liquidity or limits in an account, or a great promotional offer where these factors offset the downside of locked up capital - but the correct way to bet these is by taking all these factors into account.

 

Rolling Over Futures Bets vs. Rolling Over Individual Bets

In THIS video by Rob Pizzola, he reviews a March Madness example, where in some formats it actually makes more sense to bet a team's individual moneyline odds each game & rollover & re-bet the profits into the following game, vs. betting a Future to have that team win outright. The benefits of this are many, including less vig on each market (moneyline bets have less margin than futures bets) and more flexibility (as you receive your capital back after each game). In some winner-move-on formats & tournaments, this is another way to reduce the time for which your initial stake is locked up.

 

Cancelled Bets

Before placing any wagers, check the house rules of your sportsbooks. Some futures may be cancelled if the event must be rescheduled at a different date. With the recent pandemic we have seen many futures bets voided.

Remember, bets such as win totals require that all games be played in the season. A modified or reduced schedule will guarantee such a bet will be cancelled. Having your money tied up for a long period of time just to be refunded at a later date can be frustrating, and is something that you should keep in mind.

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