One of the terms we heard thrown about a lot when it comes to sports betting is ‘smart money’. It’s a very important concept for sports bettors to understand, but it’s largely misunderstood and misused.
Simply put, the smart money is the money bet by the sharps. Sharps can be defined in a number of ways, but basically they are the professional sports bettors who have better knowledge, do more and better research, have bigger bankrolls, and have a better long term expectation of profit than the typical bettor. Another way to look at it is that the smart money is the opposite of the public money, and the public money is what the large majority of bettors bet.
The single most important thing to know about smart money is that sports books are very good at identifying it and knowing how it is acting (i.e. where and when it is being bet on a particular game) and how it is likely to act in the future. Books do not like losing money, and they know that because smart money is being bet with the intention of making a long term profit and backed with the knowledge to do so. That means that they are going to be far more afraid of smart money than they are of public money – because there is a long term expectation that the public will lose the money they bet. That in turn means that books will respond much faster to the smart money – by adjusting their odds to balance action – far more quickly than they will typically respond to the public money.
Another thing to keep in mind when looking at smart money is that there aren’t nearly as many sharps out there are people think they are. People who bet on sports have egos – they have to or they wouldn’t be interested in trying to predict the future and outsmart the oddsmakers. Because of those egos the large majority of sports bettors think that they have a much bigger edge than they actually do, and that they are far more insightful and effective handicappers than they actually are. Smart money can be very useful to observe, and can show you valuable ways to act, but it is very important that you are reasonably sure you are actually seeing the smart money in action before you do so – not just the action of someone who thinks that he is sharp but really isn’t.
Why is the smart money important for average bettors? For one thing the smart money is what is going to move the odds in a game. If you can have a sense of which side the smart money is on and how aggressively it is on that side then you can time your bets to get the best possible price for your opinion. That might sound complicated, but it really isn’t. Let’s say for example that your handicapping has led you to really like a three point underdog in a football game. If the smart money is on your side of the game as well then the odds are only going to get worse for you – you’re team will become two point underdogs or worse. In that case it would make sense to make the bet as soon as you can to get the best price – especially if you can bet to get the key number on your side. On the other hand, if the smart money is on the other side then there is a good chance that the odds for your side are only going to get better the longer you wait, so there is no reason to bet before you have to.
That brings up an important point to remember – smart money wins more often than the public money, but it still loses fairly often. Over the long term there isn’t anyone that can beat the point spread more than 60 percent of the time. That means that about four out of 10 smart money bets are going to be losers. Some bettors use smart money as a guide and refuse to bet against it. That just limits your opportunities. If the smart money is clearly on the other side of a game than you are then you should definitely look at the game again to make sure you are confident in your position, but if your handicapping supports your position and you trust it then there is no reason not to make your bet. As I said before, betting against the smart money can help you get great prices.
Smart money can also be useful to spot particularly interesting games. You can’t just look up a website that will tell you where the smart money is in every game, but there are ways that you can easily spot it. One of the best ways is to look for games where the large majority of bets have been placed on one team – more than 70 percent of all bets. When that happens we would typically expect the line to move to make the side that all of those bets are on less attractive. In some games, though, the line will actually move to make that side more attractive. That means that even though most of the bets are on one side the books aren’t afraid of taking even more action on that side. That probably means that the smart money is on the side that the public isn’t on. That, in turn, means that the team that the smart money on is probably worth a very close look. That’s especially true when the line in question has moved through one of the key numbers of three or seven.
One final thought about smart money – timing can be very important. Once you get comfortable with it you can spot where the smart money is being played reasonably easy. It often takes a while to spot the action, though, and often times you can’t spot it until after the action has been laid and the line has moved. If you bet on the same side that the smart money has bet on then you are doing it at a different price than they got, and you may not be getting any value. You certainly won’t be getting as much value as the smart money did. For that reason it is very important not to rely on what the smart money is doing too much – unless you have access to their research and the bets they are making just as they make it you aren’t going to have the same success they are. In short, pay attention to smart money, but be sure to do it very cautiously.