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Why 52.4% is the most important percentage in sports gambling.
Albert Einstein putatively claimed that compound interest was the most powerful force in the universe, declaring that: “He who understands it, earns it…He who doesn’t…pays for it.”
The simple mathematical logic supporting compound interest’s power to exponentially grow capital over time is irrefutable. Anyone in finance, or with a cursory understanding of bean-counting, knows that time is money. In a similar vain, the fact that sports gamblers must win or cover bets over at least 52.4% of the time is an inevitable hurdle all sports gamblers must clear to be profitable.
What’s the deal with 52.4%?
The economics of sports gambling is constructed so that the house or sportsbooks typically require players to wager at least 1.10x to win x. Put another way, most bookmakers give 10 to 11 odds — forcing the gambler to risk $11 to win $10 contingent on the outcome of a binary event (e.g., win or lose, cover the spread or not). If your team wins or covers, you win $10 (in addition to your $11 depository wager); if not, the bookmaker keeps your $11. And if the outcome is a push (e.g. the margin of victory = the spread), no money is exchanged.
To better illustrate this concept and explain the derivation of 52.4%, let’s turn to an expected value formula [see…