Team Owner Luxury Suite

TL DR:

• The mighty have fallen, nobody is undefeated.
• Stefan achieves his first win of the season.
• Every single player is injured. All of them.

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We’re rocking and rolling now folks. A bit of compression between our top and bottom teams, keeping things (relatively) competitive.

Many of us are currently in injury hell, with numerous teams losing some of their more crucial pieces and the free agent scrap heap getting quickly picked clean.

Week 4 Recap

Tony, George, Will, Kate, Sadie, and Stefan are the Week 4 winners 🥳

Alec, Rosie(?), Joey, Sydney, Sam, and Emma are the Week 4 losers ❌

Only one team failed to clear the 100 point mark but the Guzzlers were close enough with 94.24 that it wasn’t totally embarrassing and we can round it up. Great work everyone (me) on sucking a little bit less overall this week.

This despite a string of injuries across the league that is putting a strain on scoring. Lamar went out early and there are basically no RBs left who both can play and will score. If you have one of those RBs, consider yourself lucky.

While Sam retains his team scoring record for the season but Sadie stole the individual player record thanks to Tetairoa McMillan’s monster 45.2 point performance. Not only did she nab that record, our defending champ also delivered Sam his first defeat of the season, pulling him back down to Earth and reminding us why she won last year.

No particular close matchups, though once again most everybody was at or above the 100 point mark, making for some much more compelling matchups than in previous weeks. Though I wouldn’t call them blow outs, the Staybehinders rinsed the Slurs and the Buckos cranked the HouseOfDaDragIcon in our least competitive matchups of the week. Joey is still looking for his first win, while the Slurs simply struggle to keep their head above water.

Week 4 Standings

And of course, the most important part, the Official Week 4 Power Rankings.

From the Office of the Commissioner

🎵 Now Playing 🎵

Preliminary thoughts on extracting Steady, Uncorrelated returns from popular gambling sites Prediction Markets.

Bear with me on this.

There was a guy, Mike Wohl, who devised a system for generating consistent gains from sports betting.

From that post linked above:

There is, however, a long-tail advantage — if you are willing to be patient, something most bettors have a problem with. Wohl found his advantage in betting the money lines for college football teams that were favored by 20-25 points. He wrote in his paper: “There were 376 games in the last six seasons (approximately 62 per season or approximately 4.5 per week) that had spreads of between 20.0 and 25.0. Of those 376 games, 94.95 percent of the favorites won the game outright. Investing equal amounts on all 376 contests produces six straight years of profitable returns with an average annual (non-compounded and non-annualized) return of 12.24 percent.”

The post is a few years old and the paper discussed is even older. But the core idea may still hold.

Relatedly, Matt Levine has discussed numerous times in the Money Stuff column the “Nothing Ever Happens” trade

We have discussed, a handful of times, the simplest of these strategies, the “Nothing Ever Happens” factor: Bettors on prediction markets seem to be biased in favor of stuff happening (because that’s more fun), so betting “No” on every event seems to have positive returns.

Just from like an intuitive, first principles analysis, fewer things actually happen than could possibly happen (ex. there are X number of Academy Award nominees but only 1 winner). Our friends at the prediction markets let people make wagers on all possible outcomes and resolve when we have determined the single outcome (they are binary contracts that resolve to ‘yes’ or ‘no’ at some predetermined time or when specific conditions have been met). So theoretically there is value to extract from people taking positions on long shot propositions that almost certainly won’t occur (mid-tier player to win MVP, Jesus to return, etc.).

Do you see the connection? From a far enough view, the strategies are basically the same. You’re selling lottery tickets to punters; people who believe Jesus will return before the New Year or that the heavy underdog actually has a chance. Degenerate gamblers Sports fans will wager a small amount on a underdog because gambling is fun, random people might have incongruous views on which actors will win an Oscar, and I guess somebody believes today is the day that Jesus walks the Earth again. (although in reality, the Jesus returns markets are weird. Nobody actually believes that to be the case, or at least, if they do, it doesn’t actually make sense to try to make money on it because if it does happen you’ll probably have other things to worry about. So the markets kind of just trade with a return on the ‘no’ resolution close to the risk-free interest rate, because it doesn’t make sense to pay 99 cents for a contract that pays out 100 cents in a few months when you could buy a bond for 97 that has the same payout.)

The prediction markets do a bit to help us out here by packaging both types of contracts (sports outcomes and random props) on a single platform. Our totally normal and rational government gives us a little help too, by taxing gains from traditional sportsbooks less favorably than gains from prediction market wagers.

There are concerns with these strategies. They have a sort of “picking up pennies in front of a steamroller” quality to them. You’re betting like $100 to get paid out $112 so in the case that the underdog does actually win, your bankroll takes a huge hit. If the Wohl math is correct though a ~95% hit rate is definitely something we can work with. The prediction markets are a bit tougher but they have a lot of data that can help us dial in the risks.

And as an aside; places like Kalshi will advertise that there is no “house” and that you’re just betting against fellow citizens with view on the world. This isn’t a lie, but its not totally true. Kalshi isn’t the house, but Susquehanna International Group is. And it’s not a secret, they’ll tell you about it! This isn’t like, nefarious, it’s just to say that there are very sophisticated firms that are working in these markets and helping to set prices, so if there is still margin for us, it’s very small.

One final benefit to using the prediction markets is that, unlike a traditional sports book, the won’t cut you off if you turn out to be a sharp.

If I knew literally the first thing about financial modeling I’d try to implement this. But I don’t, so I can’t, so I’m just telling you all about it… I do call dibs though, don’t get any ideas.

Observe: Mike Tomlin coached the Pittsburg Steelers for 19 seasons, never once finishing with a losing record; the longest such streak for an NFL head coach.

During that time, he also built this sick Minecraft world with his kids, continuing to work on it even after they stopped.

Now we get to partake in it’s majesty…

…what have you ever done?

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You do all suck, just a little less than last week.
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Peace,
Alec