THE TIME VALUE OF FUTURES BETS
Do you think you have futures bets all figured out?
Well, maybe we will change your mind.
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.
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.
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.