Learn · Reasoning

Skill, Variance & Edge

Separate skill, variance, and edge — and explain why knowing sports rarely beats the line and vig.

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Skill, variance, and edge

Three terms, three ideas — edge = skill minus margin.

Conflating them is the #1 reasoning error in sports betting.

Skill — picking winners above chance. Real in some bettors (Cantinotti et al., 2004: expert hockey bettors beat 50% on picks).

Variance — short-run noise. Win 7 of 10 coin-flip bets and you might have zero skill — just luck.

Edge — your expected return after the operator's margin. Most bettors have negative edge.

The formula

Edge ≈ skill − operator margin

Pick at 51% on -110 lines (4.5% vig per leg)? Edge ≈ 51% − 52.4% = negative.

Skill can be real. Profit is not guaranteed — or even likely.

Quick checkTry the question. The answer will not affect your mastery score.

Pick accuracy 1% above line, vig ~4.5%. Long-run edge:

Pick accuracy 1% above line, vig ~4.5%. Long-run edge:
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