Oscars Betting: And the Academy Award goes to...There’s often money to be made betting on the Oscars and Robert Blincoe has the proof. Here he offers readers a crash course on how to get inside the minds of the few thousand Academy members who decide the prizes each year
Oscar-winning screenwriter William Goldman famously wrote that “nobody knows anything” about the film industry. He didn't mean that Hollywood execs are stupid, but that prior to a film coming out they don't know how it’s going to do at the box office.
Pre-Christmas, the Oscar race is pretty much like that. The film companies know which of their movies they'd like to win and they're lobbying and marketing hard. There are frontrunners in each category, but some contenders haven't even been released. Films are being tipped by pundits, maybe based on inside information, cast lists, a director’s record, wishful thinking, trailers, publicity shots, whatever.
Oscar winners aren't the film you like best, the one the critics like best, or even the best work of the winners. Like choosing the next Pope or the location for the forthcoming Olympics, it’s the view of a select group – around 6,000 artists and professionals in the Academy of Motion Pictures Arts and Sciences.
Favourites win. At least one favourite is turned over every year. Actors and directors win when there is a feeling they've been robbed in previous years, like Martin Scorcese getting the Oscar for The Departed in 2006 after not getting it for Goodfellas or Raging Bull. Kate Winslet had been nominated five times before winning for 2008's The Reader.
A comedy like 1991’s City Slickers would never normally stand a chance at the Oscars but sentiment for Hollywood veteran Jack Palance saw him bagging Best Supporting Actor.
Important films generally become nominated because they have had the most people working on them, who are all members of the Academy.
“It's private information,” says professor Leighton Vaughan Williams, director of the Betting Research Unit at Nottingham Trent University. “Unless it leaks you're trying to guess the views of a few individuals. You've got to understand the politics of the academy and got to think what they would think. It's a genuine skill.”
For this reason he thinks that a single expert, whether a film pundit or bookmaker, might have better insight than any betting exchange. It's not a case of the wisdom of crowds. Look at a pundit’s track record. For a bookie, look at the size of their margin implied by the odds they're offering on a category. The smaller the margin, the most generous odds, implies they're confident in their estimates.
All this information comes into play immediately the markets open. This is when there are big opportunities to find value. Normally the bookmakers open their books around the same time, but PaddyPower expects to be ready in early December, BoyleSports in January, and Ladbrokes around the time the nominations are announced on 2 February.
Last year PaddyPower had eventual Best Picture winner Slumdog Millionaire at 20/1 in early December. “We got it very, very wrong!” says the market maker Sharon McHugh. “The price wasn't long moving.” BoyleSports opened at 2/5 and Ladbrokes at 4/9. When the markets closed these three had the prices at 1/80, 1/8 and 1/9 respectively.
Other awards like the Golden Globes, which come out ahead of the Oscars, are also useful predictors. The trick though is wondering if they predict the winners in a way that isn't fully incorporated into the odds. People might think they are more of a predictor than they actually are, and it might be better to take a contrarian approach – pick the candidates that didn't win the Golden Globes because you know the prices have overshot.
But ahead of that there is a long history of incredible value on Oscar markets when enough books are open. At best prices across several bookies the markets are overbroke, which means the margin is in favour of the bettor. You can arbitrage.
In 2001, the year Julia Roberts won the Best Actress Oscar for the film Erin Brockovich, the top prices (thanks to research by professor Vaughan Williams) were: 11/10 Julia Roberts, 12/1 Joan Allen, 20/1 Juliette Binoche, 20/1 Ellen Burstyn, 20/1 Laura Linney. The margin in favour of the bettor was 30.4 percent.
“It's the equivalent of a bookie offering 15/8 against both horses in a two-horse race,” says Vaughan Williams.
This wasn't a one off and the prices stay around long enough to get some money on. “It's not a five-second one,” says the professor. “It's not fastest finger first, but you ought to be there at opening. You can't expect to wait until you come home from work.”
The Best Actor prices (Russell Crowe won for Gladiator) gave a margin of 11.2 percent in favour of the bettor. Best Picture (again Gladiator) market offered a margin of 9.5 percent at best prices. The next year offered the same opportunities with the best being the Best Director market offering 16 percent (Ron Howard, A Beautiful Mind).
The problem is, you can't usually get enough money on to make this really work. PaddyPower says it accepts bets in the thousands, but it depends of the odds. The bookies know there's an overbook, but may leave it for a short time for goodwill and publicity.
Buy you can't rely on lumping on. Professor Vaughan Williams cuts to the chase. “Arbitrage is for wimps. For the stakes you're going to get on you're not going to make much by arbitraging. You ought to look at all the odds to give you an idea as to where's the value. If everyone's got different prices, one of them must be valid. Which one is it?”
If somebody is putting one of candidates at 2/1, another at 9/4, and someone else is giving you 8/1. Just bet on the 8/1 – that's the value and you probably can't get much on anyway. This is particularly true in the 19 categories outside of the big five of film, director, actor, actress and supporting actor and actress. When it comes to animated short, or best sound mixing, the market knowledge doesn't run quite as deep, where the prices may be more attractive but the stakes limited.
The Oscar campaign season kicks off in November with the race for nominations. The Academy says it has successfully eliminated gimmicks, gifts and bribes from the procedure, so the ‘race’ to be nominated consists principally of attempts by studios, independent distributors and publicists to make sure that each of the nearly 6,000 voting members of the Academy sees their film. It means special screenings for Academy members, free admission to commercial runs of a film, and the mailing of DVDs.
There's also a good deal of schmoozing.
So what's looking popular? Up in the Air, Nine, The Hurt Locker, Invictus, Avatar, Precious: Based on the Novel 'Push' by Sapphire, are all looking popular for nominations across all the big categories. Star Trek and District 9 could do well in the technical categories. The Lovely Bones has potential with Best Actress and Screenplay as does An Education.
Public Enemies, which came out earlier in the year with a lot of serious talk about its Oscar potential, seems to have slid out of the big category favourites but is worth looking at for Cinematography and Costume.
I loved it, but Oscar-wise that means nothing. Some critics hated it. Same thing. One actor in it, Channing Tatum, who has about three minutes of screen time before being shot dead, was being tipped as a Best Supporting Actor at one point. And that's because Oscar buzz is great box office, and those film companies are going to try and play the market as strongly as they can. You've got to think about it all.
As Oscar winning film director William Friedkin said earlier this year, the Academy Awards are "the greatest promotion scheme that any industry ever devised for itself". And that includes its betting market.
UNDERSTAND THE OSCAR VOTING
There are just under 6,000 voting members of the Academy of Motion Pictures Arts and Sciences. They represent 15 general areas – actors, animators and short film makers, art directors and costume designers, cinematographers, composers and songwriters, documentary film makers, directors, executives, film editors, make-up artists and hairstylists, producers, public relations specialists, sound technicians, visual effects experts and writers. Actors constitute the largest voting bloc at around 22 percent of the Academy's composition.
There are 24 Oscar categories and members of the various branches nominate the films in their respective fields (within the Animated Feature Film and Foreign Language Film categories, nominations are selected by vote of multi-branch screening committees). All members can submit nominees for Best Picture.
There are usually five nominees, but this year there will be 10 in the Best Picture category. The winners are then determined by a second round of voting in which all members are then allowed to vote in most categories, including Best Picture.
In five categories – Animated Short Film, Live Action Short Film, Documentary Feature, Documentary Short Subject, and Foreign Language Film – members can vote only after attesting they have seen all of the nominated films in those categories.
Votes are certified by the auditing firm PricewaterhouseCoopers. Nominations will be announced on 2 February. Final ballots are mailed to voting members in late-January and are due back to PricewaterhouseCoopers on Tuesday 2 March prior to Oscar Sunday on 7 March.