ETA: the T&C of the sportsbook promos I use as examples below have changed since I posted, so don’t rely on this comment to figure out what the promos are/what the optimal strategy is
Just wanted to pipe up because I think this may not be clear to people reading this post — unless you fully hedge, this is not a risk-free opportunity, and if you are pursuing the recommended strategy in this post there’s a very good chance you will lose money. I wanted to comment since I know at least three EA’s who have lost a couple thousand dollars taking advantage of these promos. One very smart person who skimmed this post thought it was describing “free money,” and unless I’ve misunderstood something (very possible!) it’s not — the better way to view this opportunity is, “the E(V) of legal sports betting is always negative, but with these promotions, it’s positive.” If you have a lot of money such that you can afford to be risk-neutral, then hell yeah and go forth, but if you don’t, it’s rational for you to be risk-averse and this might not be a good idea.
If it’s unclear how this is risky, consider that the most common type of free bet promo is one where (1) you unlock the free bet only if you lose your first real-money bet and (2) your free bet doesn’t return the stake. In this case, as the post points out, the optimal strategy is to choose long odds on both bets. This is probably obvious, but that means you are more likely than not to lose your money.
To take full advantage of the offer you’d be making uncorrelated bets on multiple sportsbooks, but that will lessen the risk, not eliminate it. I live in DC — the four “free bet” options in Virginia are Barstool ($1000), BetMGM ($1000), Caesars ($1500), and Unibet ($500). (As of this comment Fanduel no longer has the free bet promo at least in VA.) Barstool, BetMGM, and Unibet unlock the free bet only if you lose the first (real-money) bet. Caesars unlocks the free bet upon deposit. Of the four, only Barstool returns the stake on the free bet. So the optimal strategies for the four in order of first (real-money) bet and second (free) bet are:
Barstool: Long, short
BetMGM: Long, long
Caesars: Short, long
Unibet: Long, long
I’m too lazy to plug in sample numbers but you can hopefully deduce from this that (1) you have a good chance of ending up positive, since it’s optimal to go short on Barstool and Caesars, but (2) it’s still pretty easy to end up in the red. And that’s with 2⁄4 offers that come as close as you can get to free money (Barstool and Caesars, though note Barstool has a −200 line limit, limiting how short you can go).
Of course if you’re risk-averse you can choose a different, non-E(V)-maximizing strategy, but I think some people might understandably just follow what’s recommended here.
Sorry if this was obvious to everyone, I just know some people at least were surprised that you could lose money on this. I don’t think the post is misleading, though I probably would have made clearer at the top that this is not even close to a risk-free endeavor, especially considering the marketing language around these promos already can make them seem otherwise.
Thank you Vivian, you’re absolutely right. I’ll update the “qualifiers to participate” section to make this much clearer, especially for participants living in states with a small number of legalized online sports books.
ETA: the T&C of the sportsbook promos I use as examples below have changed since I posted, so don’t rely on this comment to figure out what the promos are/what the optimal strategy is
Just wanted to pipe up because I think this may not be clear to people reading this post — unless you fully hedge, this is not a risk-free opportunity, and if you are pursuing the recommended strategy in this post there’s a very good chance you will lose money. I wanted to comment since I know at least three EA’s who have lost a couple thousand dollars taking advantage of these promos. One very smart person who skimmed this post thought it was describing “free money,” and unless I’ve misunderstood something (very possible!) it’s not — the better way to view this opportunity is, “the E(V) of legal sports betting is always negative, but with these promotions, it’s positive.” If you have a lot of money such that you can afford to be risk-neutral, then hell yeah and go forth, but if you don’t, it’s rational for you to be risk-averse and this might not be a good idea.
If it’s unclear how this is risky, consider that the most common type of free bet promo is one where (1) you unlock the free bet only if you lose your first real-money bet and (2) your free bet doesn’t return the stake. In this case, as the post points out, the optimal strategy is to choose long odds on both bets. This is probably obvious, but that means you are more likely than not to lose your money.
To take full advantage of the offer you’d be making uncorrelated bets on multiple sportsbooks, but that will lessen the risk, not eliminate it. I live in DC — the four “free bet” options in Virginia are Barstool ($1000), BetMGM ($1000), Caesars ($1500), and Unibet ($500). (As of this comment Fanduel no longer has the free bet promo at least in VA.) Barstool, BetMGM, and Unibet unlock the free bet only if you lose the first (real-money) bet. Caesars unlocks the free bet upon deposit. Of the four, only Barstool returns the stake on the free bet. So the optimal strategies for the four in order of first (real-money) bet and second (free) bet are:
Barstool: Long, short
BetMGM: Long, long
Caesars: Short, long
Unibet: Long, long
I’m too lazy to plug in sample numbers but you can hopefully deduce from this that (1) you have a good chance of ending up positive, since it’s optimal to go short on Barstool and Caesars, but (2) it’s still pretty easy to end up in the red. And that’s with 2⁄4 offers that come as close as you can get to free money (Barstool and Caesars, though note Barstool has a −200 line limit, limiting how short you can go).
Of course if you’re risk-averse you can choose a different, non-E(V)-maximizing strategy, but I think some people might understandably just follow what’s recommended here.
Sorry if this was obvious to everyone, I just know some people at least were surprised that you could lose money on this. I don’t think the post is misleading, though I probably would have made clearer at the top that this is not even close to a risk-free endeavor, especially considering the marketing language around these promos already can make them seem otherwise.
Thank you Vivian, you’re absolutely right. I’ll update the “qualifiers to participate” section to make this much clearer, especially for participants living in states with a small number of legalized online sports books.