Why Lebron James is a Bad Sports Bettor
It’s a numbers game
“The greatest trick the devil ever pulled is convincing people that sports betting is a contest of who knows the most about sports.” – Plus EV Analytics
I’m horrible at basketball. I can barely dribble, my passes never go where I want them to, and I can’t remember the last time I hit two consecutive three pointers. Knowing this, if Lebron James and I had a free throw shooting contest where the first person to miss lost, who would you bet on?
It’s a trick question, because I didn’t tell you the price. Of course if it was even money, meaning a $1 bet on Lebron would pay $2 if he won, the answer would be him. But what if the odds were a million to one, meaning a $1 million bet on Lebron profited $1, and a $1 bet on me profited $1 million? I’d take me every time.
Math vs Vibes
Most people place bets based on their feelings, rather than the math. There’s nothing inherently wrong with this; sports betting is entertainment, and if a few bucks on your favorite team makes the game more exciting it’s money well spent. It becomes a problem when gamblers don’t realize their bets are entertainment, and mistakenly think they’re going to make money. A bettor who thinks they’re winning in the long run is far more likely to become addicted and lose lots of money compared to someone who understands their bets are for fun, and not profit.
This overconfidence isn’t hypothetical. A recent NCAA survey found that 50% of sports bettors between 18 and 22 agreed with the statement “if I were to frequently engage in sports betting activities, I could consistently make a lot of money,” while only 20% disagreed. High rates of delusion among sports bettors has real consequences. A 2021 report from the National Council on Problem Gambling found that sports bettors are “three or more times as likely than those gamblers who did not bet on sports to report frequent risky behavior,” including being unable to stop and lying to hide their gambling.
Bad Bets
Unlike traditional casino games, it is possible to consistently make money betting on sports. Sports betting odds are complex and always changing, allowing “sharp” bettors to pinpoint mispriced odds. Most people know these winners exist. What they don’t know is that profitable sports betting is more about data analysis than sports knowledge, and the two often aren’t correlated. Being able to recite the entire Yankees roster doesn’t mean someone will have any edge when betting on the Yankees; in fact, they almost certainly won’t.
Don’t just take it from me. According to Marco Blume, head of trading at Pinnacle (widely considered one of the sharpest sportsbooks, and known for not kicking out or limiting winning bettors), “Many people who know, or believe they know something about a sport actually cannot quantify it. If Lebron James is not playing for the Cavaliers, everybody knows it’s bad for the Cavaliers, the question is how bad is it? This quantifying– is Lebron James worth 5% equity? 2%? 7%?– [there’s a] big difference between all of those numbers! And so the real skill comes when you have sport knowledge and you can quantify it, and only very few people are actually able to do this over a long run basis.”
This recognition that it’s possible to win, combined with the inability to identify which strategies or gamblers actually win, is what makes sports betting so dangerous. It’s why no one asks the guy who posts his slot win for advice on which slot machines to play, but on sport betting forums you’ll see comment after comment begging users who post a winning slip to share their next bet. It’s also why touts––sports bettors who advertise and sell their picks, even if they are major losers––have been around forever, and show no sign of going away.
The Problem with Sportsbook Partners
Before widespread legalization, sports betting promotion happened on the fringes of society. Today it’s inescapable, and mostly done by celebrities and former athletes such as Charles Barkley for Fanduel, Tom Brady for MGM, and as of next NFL season Lebron James for Draftkings.
Having influential athletes promoting betting comes with obvious dangers, mainly an increase in underage gambling as kids signup to bet like their heroes. These and other concerns led the U.K. and Ontario to ban athletes from participating in gambling ads. But what’s rarely addressed is how these athletes aren’t just promoting gambling: they’re promoting bad gambling.
If you go to the grocery store and see two identical mangos, one for $1 and one for $2, you’re going to choose the $1 mango. In sports betting, this price comparison is known as line shopping. Sportsbooks frequently offer different odds than one another, meaning if users compare they can save money by choosing the site which gives them the best price.1
Line shopping significantly decreases the house edge––how much the casino is expected to win–– resulting in far lower losses in the long run. It’s often the first piece of advice experienced bettors give amateurs who want to stop losing so much.
Sportsbooks and their celebrity partners obviously don’t advertise this, because they want bettors to only use their app. In 2021 Draftkings CEO, Jason Robins, told investors the company doesn’t want “odds shoppers,” and more generally that “people who are doing this for profit are not the players we want.” Charles Barkley, meanwhile, only promotes his bet of the week on Fanduel even if the odds are better somewhere else, because they’re the one cutting his check.
Why Lebron Loses
A lack of line shopping is one thing. Ignoring prices completely is another. Even the best bettors only profit a few percent, meaning minor odds changes can be the difference between a bet being good or bad.
Lebron’s partnership with Draftkings hasn’t started yet, but his past comments on betting make it clear he doesn’t care much about the odds. On October 5th, Lebron tweeted out his pick for Thursday Night Football. “I’m going with Wash over Chi,” he told his 52 million followers. Asked about his record the previous week, @KingJames replied he was 12-2.
To a casual observer, these statements won’t disprove Lebron’s betting prowess. If anything they’ll help solidify it; 12 wins and 2 losses is pretty good! But to knowledgeable gamblers Lebron outed himself as a novice, which in betting parlance comes with a different title: loser.
Nowhere did he mention the odds at which he thought Washington was a good bet, or what he actually thought the likelihood of them winning was. That isn’t an issue if you’re picking winners and losers for fun, but it is if you’re gambling based on his recommendations.
What about his 12-2 record? 11 of Lebron's 14 chosen teams were favored to win. Had someone bet $1 on each of his 14 picks, they would’ve turned $14 into $19.64, for a 40% profit. If going 12-2 but profiting just 40% seems inconsistent, that’s because you’re not not supposed to equate wins on favorites and underdogs like Lebron did.2
Without knowing the odds and amount of each wager, simple win/loss records are useless because they don’t tell you anything about overall returns. It’s like if a Lehman Brothers executive said stockholders profited 9 out of 14 years between 1995 and 2008; they wouldn’t be lying, but it’s less important than the fact stockholders lost 99.8% overall.
Promoting Responsible Play
Banning athletes and celebrities from sports betting ads is a good idea. But more important is making sure bettors have a basic understanding of how the odds work, so they don’t get duped into thinking their bets are going to make money in the long run.
Gambling education should start in schools, so young people are prepared by the time they’re legally allowed to gamble. Promising models exist, but states should experiment with different methods to see what works best.
We know from decades of sex and drug education that school-based programs encourage responsible use. Preventative interventions are also cost effective. Crucially, education cannot be left to gambling companies or organizations funded by them.
A world where every sports bettor can immediately calculate the house edge and always checks the odds on 10 different sites before placing a bet is about as likely as me beating Lebron James in one on one basketball. But a future where gamblers, particularly young ones, are better equipped to understand how and why the house always wins is possible.
Would I bet on it? Depends on the price.
This is especially true for same-game-parlays (SGPs), which have a huge house edge. Athletes and sponsors frequently promote SGPs.
Simple win/loss ratios are only meant for spread or totals bets where the odds are even on both sides, so it’s obvious if a gambler is winning (one can compare them to the 50% expected win rate). Lebron wasn’t doing this, as evidenced by the fact that multiple of the teams he chose to win didn’t cover the spread.