For the PerplexusBowl match between the Pascal Probabilities and the Random Results, a bookie was offering the following payoffs:

PP to win in normal time, 3 to 2

RR to win in normal time, 2 to 1

PP to win in overtime, 7 to 1

RR to win in overtime, 9 to 1

(The first line means that if you bet $2 on PP to win in normal time, and it does, you get your money back plus $3.)

Without knowing anything about football or the involved teams or the actual probabilities, can you show why these payoffs are illogical?

In bookie terms: the market has been framed with a negative percentage A very clever gambler (or mathematician) could make a nice profit no matter what the result by betting as follows

PP to win in normal time, $308.87 at 3 to 2 (wins $772.17) RR to win in normal time, $257.39 at 2 to 1 (wins $772.17) PP to win in overtime, $96.52 at 7 to 1 (wins $772.17) RR to win in overtime, $77.22 at 9 to 1 (wins $772.20)

So for an outlay of $740 dollars you are guaranteed a return of at least $772.17.

Increasing the bets in the same ratio would increase the profit.

Posted by Mindy Rodriguez on 2005-11-26 21:25:16