Auburn plays Florida St. in tomorrow’s national championship game and the holders of those futures-bet tickets are looking at a potentially big payday. Auburn went 3-9 last year and plays in the talent laden SEC, which is why the long odds were put up in the first place. They came down steadily as Auburn racked up win after win, but the 14 players who bought tickets at 1,000-1 have that payout locked in. LVH hasn’t disclosed the amounts bet, but since these types of wagers tend to be potshots taken by alumni and other die-hard fans, they’re usually for small amounts, like $10 or $20. Still, that puts the book in the quarter-million-dollar range in terms of exposure, at least.
If the book is sweating that exposure (and we can guarantee it is), consider what it’s gone through in watching Auburn get to this championship game. Even standing at 10-1, they were still long shots to make it with two games left against staunch competition and several teams ahead of them in the polls, but an unlikely series of events ensued. First they beat Georgia 43-38 on a last-second bomb that bounced off a defender and into the hands of an Auburn receiver. Then they defeated #1 ranked and two-time defending national champion Alabama 34-28 by returning a time-expiring field goal attempt for a touchdown in what will go down as one of the most famous plays in college history. Even then, at 12-1, they needed a loss by either Florida St. or Ohio St. to get the bid, and Ohio St. fell to Michigan St., putting Auburn in the championship and one upset away from a nightmare finish for the bookies. Sorry LVH.
So what can the lucky 14 (and others who bet with other sports books) do with their 1,000-1 tickets? A sports ticket is a bearer instrument that can be transferred or sold to any willing buyer. If you can find another party to buy the ticket at a discount so you can ensure a profit, that’s perfectly legal. The casino sports books won’t buy them back, but they do the next best thing, which is offer other bets that allow you to hedge all or part of the risk.
A quick word about hedging. It’s almost never mathematically optimal to hedge, because you’re usually betting more money into a negative-expectation situation (the bookie has the advantage on most bets). A purist would argue that you’re getting 1,000-1 on what’s become a 3-1 proposition. That's about as good a gambling deal as you'll ever get, so just roll with it. In the real world, though, there are bankroll and financial considerations that almost always lead players to make a hedging maneuver of some sort.
In the following discussion, we’ll assume you hold a $20 futures bet that will generate a $20,000 payout if Auburn wins. At the time of this writing, Florida St. and a -8.5 favorite or -300 on the money line. Keep in mind that these techniques can be used in any hedging situation.
Since Florida St. is the favorite, the easiest strategy of going for a "middle" is eliminated. Had the line been reversed, you could guarantee a win by taking Florida St. +8.5 for something like $11,000 to win $10,000. In this scenario, if Auburn wins by 9 or more, you win $20,000 and lose the $11,000 hedge for a $9,000 profit. If Florida St. wins, you win $10,000 (minus the $20 for the original futures bet). And if Auburn wins by 1 to 8 points, you win both bets and score a $30,000 bonanza. (Some players always take the Monday-night favorite in weekly football contests so they can bet off on the dog in this fashion when they have a perfect ticket.) Alas, as the favorite, Florida St. is laying the points, so this strategy doesn’t apply, but you can still lock in a profit using the money line.
The money line is a bet on which team will win outright (no pointspreads). The -300 on Florida St. means you have to bet $300 to win $100. Now you can bet $15,000 to win $5,000 on Florida St., sit back, and wait to collect $5K no matter who wins the game. Or you could take a partial hedge, betting, say, $9,000 to win $3,000 on Florida State. Now you net $11,000 if Auburn wins (your $20K future minus $9K) or $3,000 if Florida St. wins (the payoff on your hedge bet).
There are other ways to hedge. For example, you could bet an "alternative line" that might have Florida St. +3.5/-550. In this case you could bet $9,900 to guarantee a win of $10,100 with Auburn, $1,800 with Florida St., or $21,800 if Auburn wins by 1-3 points. Sophisticated players might use Florida St. as the final leg on several teasers, or play semi-hedges, such as betting the Auburn team total over and Florida St. team total under (understanding that there’s a correlation between these results and the game result). One more approach is to roll the dice from the start, with an eye toward hedging at half time, or even monitoring in-game wagering where available, allowing the possibility of hedging at any time.
The bottom line is, even though the sports books won’t buy back your bet outright, they provide all the means you need to sell it back in just about any proportion you like. Remember that if you do sell the ticket to someone before kick-off, you will almost certainly have to discount it. Since the current odds suggest there's about a 1-in-3.5 chance the ticket cashes, the $20,000 ticket is worth about $5,700, but you’ll probably have to sell it for around $4,000 to get someone to bite. The buyer will likely use a version of one of the options just outlined to lock in a better return, so you might as well do it yourself.
[Editor’s Note: These are the types of discussions that take place in our LVASportsboards fee-based forums. They’re hosted by Frank B, who contributed to this answer. You can try the boards through the Super Bowl for $24.95 and also be eligible for a free-to-play Super Bowl contest.]
