Hedging Your LeBron-Will-Leave-Cleveland Bet

Where will LeBron James play basketball next season?

This is a question that has been asked millions of times by some combination of pundits, fans, other players, your mailman, the librarian … any and all of them. The librarian thinks Houston, but I’m not so sure.

The betting markets have been asking this question as well, although not recently (prices were taken down in most places several months ago). In general, LeBron leaving Cleveland was favored over him playing his first game with the Cavs next season to varying degrees throughout the offseason and the early part of the regular season (usually hovering somewhere between -150 and -200 to play his first game elsewhere).

Those people holding tickets on him to play elsewhere (I am one of those people) are faced with a somewhat interesting decision to consider as we enter the playoffs: is there a way to hedge this bet, and if there is, would we even want to?

There have been rumblings with regard to James’ departure for some time. Before the season even began, Chris Sheridan tweeted that he heard from an NBA source: “This will be LeBron’s final season in Cleveland. He is 100 percent leaving.  Relationship with owners beyond repair.” That sounds pretty final, but others were less sure. Ryen Russillo has been adamant that Cleveland is still the favorite. The Ringer’s Kevin O’Connor wrote last month that LeBron has only four teams on his list if he opts out to become a free agent: The Cavs, Rockets, Lakers and Sixers. So if you were one of those people holding Knicks +10000 from a while ago, sorry, but fortune doesn’t seem to favor you. (Same applies if you’re one of the people holding a Knicks ticket for just about anything in the near future other than an under.)

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The interesting part in most water-cooler discussions about this topic concerns what it would take on Cleveland’s end for him NOT to leave. Many are convinced that the Cavaliers winning the title is the only season result that would make Cleveland attractive long-term. The theory goes: Yet another loss to the mighty Warriors, or worse, an even earlier exit, would make Cleveland less attractive.

Using that thought as a premise, it begs the question: If you make a bet on Cleveland +750 to win the title, are you hedging against whatever price you have for him to play elsewhere? The logic being if the Cavs won the title, you win at +750, and if they lose, he will most likely leave, in which case you win your prop for him to play elsewhere vs. the Cleveland.

Here's an example to walk you through the calculations.  I have LeBron to play for another team next year at -180. If I was genuinely convinced he would leave if he did anything but win the title, I would use an arbitrage calculator (found basically anywhere online), and come up with the following amounts:

LeBron to play for another team: $180 to win $100 (placed already)
Cavs to win title at +750: $32.95 to win $247.12

This secures you a profit of about 67 dollars no matter which side comes in.

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Any time you are betting a prop on someone’s behavior, all kinds of weird non-analytical, emotion-driven ideas come into the picture. Because of the low prop limits involved, this type of hedge is much more art than science, and much more fun than anything. But this question is pretty interesting to me, even as someone who thinks the Cavaliers have about zero chance of actually winning the NBA title.  There is a path to the championship, though, involving Steph Curry not being able to return from his injury, the Cavs defeating the Raptors yet again in the conference finals and a matchup against any non-Warriors team in the NBA Finals.  And does LeBron really leave if they win?

No one, possibly not even LeBron, knows what he’s doing at this stage. You just have to use your best judgment with the information available. But thinking about problem-solving and your bets in this way is part of the fun of playing in these smaller markets.  Whatever you're betting on, remember to consider all the possible angles, and sometimes there may be hedges available you didn't expect, including for crazy things such as what jersey another person puts on six months from now.