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Truth About Sharp Money

The term “sharp money” is bandied about on twitter all the time, especially during football season. We hear industry types (myself included) using the term casually when breaking down line movement leading to confusion among new wagering enthusiasts.  Sharp money isn’t only important for bookmakers to do their job but acknowledging it’s existence in the market is an invaluable tool for bettors fine-tuning  handicapping thought processes looking to maximize return on investment.

Balanced books are an industry myth. In an ideal world oddsmakers create pointspreads that drive perfectly balanced action with infinite volume simply collecting the juice for profit. This model works perfectly in a vacuum but in the real world bookmakers rely on their sharper customers to help shape, steer, and guide markets to the appropriate number for maximizing profit.

Last weekend provided a perfect example of a game where bookmakers stood their ground on a game that did anything but attract equal 2 way action. Betonline said the handle on the Patriots vs Colts game was the largest of the entire season, creating massive liabilities for the house with 1 sided Patriots action. Recreational bettors bought into the narrative that New England would do everything in their power to make a statement (who could blame them given what we’d seen from the Patriots this season) while professionals stuck to their guns looking to take the points every time the number ticked through 8. Most shops here in Vegas reported 85% of tickets (or higher) being printed on the road favorite Patriots placing the house in a precarious position. Now, I know what you’re thinking: “If the professionals are betting the dog, shouldn’t  larger bets balance out the sheer volume of wagers from the public meaning the house actually needs to root for for New England?” It’s a great question and entirely fair to ask but this isn’t normally the case…here’s why.

A sharp bettor isn’t always defined by the size of his wager. There are plenty of instances where a known pro will bet a game for a fraction of what a recreational bettor or house customer fires yet a sports book moves in favor of the sharp bet. This is the cat and mouse game that goes on nearly every day in larger betting houses; books attempting to identify the advantage customers using their action to identify the “correct side.” When bookmakers know their customers they feel comfortable drawing a line in the sand inviting recreational bettors of the $5 or $5,000 variety to fire into the market. Books align financial security with players they deem to have a long term edge while limiting the amount of exposure created by this same group of bettors. This scenario doesn’t always work out perfectly (see Patriots vs Cowboys 2 weeks ago) yet it does allow the house to have proper decisions going for them rather than grinding out a few pennies with perfectly balanced games.

This value of sharp money feeds into the concept of “reverse line movement;” knowing where professionals are moving numbers despite overwhelming public sentiment the other way. Sharp money isn’t always right, let me be the first to tell you that here and now.  That’s another myth about sportsbetting that needs to be squashed immediately.  Those thinking differently are sorely mistaken, operating under the incorrect assumption that the best betting groups achieve a success rate of astronomical proportions.  Everyone aspires to win 100% of their bets but when you consider the break even threshold for sports bettors is 52.4% (10% juice) hitting a “mere” 55% becomes outstanding with 60% the ultimate gold standard.

Just remember the next time you hear the term sharp money thrown around it’s not a guarantee a bet will win. Hell, if it was that easy none of us would have to handicap we’d just follow the rainbow to the pot of gold. Most books (not all) hold advantaged players to lower limits meaning they typically find themselves rooting for the Pros instead of the Joes when it comes to the biggest sporting events.  The public may not have a lot of say in moving lines each week but they definitely move the needle when it comes to a book’s profitability on any given Sunday.