On nonrecourse leverage

A while ago I was looking at the odds on the McGregor-Mayweather fight. The odds quoted were 1:5, i.e., every $1 on McGregor pays $5 if he wins (the odds have since tightened somewhat). In my opinion, that approximately fairly rates his chances (implied 20% chance of victory). I wasn’t interested in betting at those odds as 1:5 odds with a 15% chance of victory (in my opinion) makes it a zero-sum game or worse, but…

A free $80 bet

A gambling website offered me a free $80 bet to go with my first $20 bet. A classic sucker pitch for those with an underdeveloped prefrontal cortex, or one damaged by too many head punches…

The free bet made the implied odds 1:25, for a 1 in 6 chance of victory. For $20 down I could win $500, implying McGregor has a 4% chance of victory – which is clearly wrong. I give him about a 15-16% chance. So in defiance of my usual habits I put my $20 on McGregor a few months ago. I’m not much of a gambler and in fact I’m not even watching the fight. But I thought the odds were attractive.


There is always a but, with a capital B. Calculating the odds this way only works if I intend on gambling systematically, because on average and over time such bets should win out. However, I will not be betting systematically, not least because I will not get the implied leverage of the free bet every time. So instead of saying there is a 15% chance of making 25x my money, really there is an 85% chance or higher that I have thrown away $20 on this occasion.

There is also a sting in the tail whereby if I win, I have to ‘turnover’ I think 3x my total bets, so I’d have to bet a further $300 through this website before I can withdraw any cash, but that’s alright – it’s for fun and not for money. Wish me luck!

The 10foot gambler thinks if you spend more than $50 a year on gambling you are doing it wrong. Gambling is bad juju and will not make you happy. This is a disclosure and not a recommendation.

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