Last week we saw one of the most heartbreaking withdrawals in PGA history. Jon Rahm was crushing the field through almost three full rounds at the Memorial Tournament when he found out that he had tested positive for COVID-19 and had to withdraw.
Controversy over payouts and refunds and whether those are correct, warranted or even good for the industry ensued. For the novice bettor, the question that was asked most often is what did his withdrawal actually do to the odds? That is what we are going to discuss today.
How did Jon Rahm’s withdrawal affect the futures odds?
The pre-tournament odds had Rahm at about 10-1, depending on when you made the bet. Those odds were locked when everyone teed off. The way the futures pool works is that every golfer is assigned odds based on their probability of winning plus a little bit of built-in cushion so the books can have a little profit margin. It is a business after all, and running the platforms are not free (or cheap), so we do not begrudge them taking a profit for their services. In Rahm’s case, a 10-1 odds or +1000 is an implied probability of winning that is roughly 9%. Remember that every odds number can be converted into a percentage. If you did this for every golfer in the tournament and added them together the total odds would be greater than 100%. This is because of the built-in cushion the books use to give themselves a profit margin. So even without Rahm in the tournament anymore, you probably still had the rest of the golfers add up to 120-140% minus the 9% probability of Rahm winning. What Rahm’s withdrawal effectively did is give a better chance of winning and higher ROI potential to those who had bets on someone else.
How did Jon Rahm’s withdrawal affect the live odds?
This is the market where you could have really made some money if you were in. As a golfer’s chance of winning a tournament increases, his odds will drop. Rahm started at 10-1 in the futures market, but as he started to take the lead, those live odds dropped down to 8-1, 5-1, 2-1 and eventually to a negative number, meaning he had an implied probability of winning that was over 50% as his lead grew to six shots. Remember from above that every golfer’s odds can be converted into a probable chance of winning. So as Rahm dropped from 10-1 or a 9% probability to -150 or a 60% probability, that means other guys’ odds and probabilities had to move in the opposite direction. Rahm going from a 9% to 60% chance to win means other guys went from a 5-8% chance to just 1-2%. In fact, you could have gotten 10-1 or better on every other golfer left in the pool. By that point Saturday, nothing short of an absolute meltdown by Rahm, an unbelievable round by one of his closest chasers, or some act of god (like COVID-19) was stopping him from winning.
This is where things went a little crazy for those who were in game or in round betting PGA last weekend. When Rahm was announced as a withdrawal, the entire odds board shut down. As stated above, the probability and thus odds on any of the other guys winning at that time were long. Once you take the leader out of the mix though and with the massive lead he had, things changed quickly. If Tipico Sportsbook left up the odds as they were before the Rahm WD, they would have had a massive liability. The leader and likeliest winner would have been out of the tournament and the bets everyone would be making had payouts of 20-1, 50-1 or 100-1 on golfers that now had a realistic shot of winning again. The odds crept up that high because Rahm was so far ahead. Normally a golfer who was eight or nine strokes behind with one round to play would be basically drawing dead, so those kind of odds were warranted. When you remove the leader by six strokes though, that guy who was nine strokes behind and out of the tournament now has a realistic shot, because he’s back to only three strokes behind the guy in front. A guy who was three strokes behind should have had odds that were one-tenth what they were when he was nine strokes back. That 50-1 shot should have dropped to 5-1 or 8-1, and that is exactly what we saw happen when the odds board came back without Rahm on top of it. For those lucky enough to have made bets Saturday, this was a chance to capture some amazing value. For those who waited until after to make a bet, you had to now take the odds as they were with the new set of information and new probabilities of winning.
This situation was not a common one where a runaway leader was forced to withdraw. That said, it was not the first and probably will not be the last time you ever see it happen. I’m not saying we will have another leader withdraw with a positive COVID-19 test, but you may have leaders or golfers near the lead withdraw for any number of reasons, such as an injury. Trying to game the system to get good odds on an injury is impossible. No one can predict when a shot will tweak a back or a guy will get a positive COVID-19 test. All you can do is understand that if you made a bet before the withdrawal, you probably got better odds than you should have. If you make one after, just realize that you probably will not get the chance to take that golfer at the same price after big news like the Rahm withdraw does actually happen.