Kai Rooney
Wayne Rooney and his wife Coleen recently celebrated the birth of their first child, Kai, and the bookmakers were quick to offer odds on Kai Rooney following in his father’s footsteps. PaddyPower is currently offering odds of 150/1 for Kai playing football for Everton, 200/1 on him playing for Manchester United and 250/1 for him playing for England. Those odds sound pretty good at first glance, but when you factor in the often overlooked matter of inflation, the value is diluted somewhat.
Consider a scenario in which Kai does indeed follow in Wayne’s footsteps and become a professional footballer, and let’s imagine that he will play in his first match for Manchester United in 17 years time. If we bet £10 now at odds of 200/1 then we would get a total return of £2,010. But in 17 years time that £2,010 wouldn’t have the same kind of buying-power as it does today, and that’s because inflation will have reduced the value of our cash.
Assuming a constant 3% rate of inflation over the next 17 years, you would need £16.53 in the year 2026 to buy as much as £10 will currently buy in 2009. That would mean that your eventual payout of £2,010 would only be worth £1,215.97 in real terms. Looking at it another way, the odds of 250/1 would, in real terms, be reduced to roughly 121/1.
If the rate of inflation was 5% for the next 17 years then the scenario would look even bleaker. You would need £22.92 in the year 2026 to buy the same as £10 will buy you today, which effectively means that your £2,010 payout would only buy you what £876.96 will buy you in 2009. That means the 250/1 odds would only be worth around 87/1 in real terms.
These odds are genuine because you have to hand over your stake money at the time you place your bet, which means that the bookie gets to keep that stake (and all the interest that it generates) whilst you are waiting for the bet to mature. If your bet wins then the bookie effectively pays you out at odds that are quite a bit shorter than the outcome merits, and if your bet loses then the bookie is automatically quids in – either way the bookie is onto a real winner!
Most sports betting enthusiasts don’t need to worry about inflation when placing Ante Post bets because they are generally betting on events that will be taking place within the next few months, or maybe within a year at the outside. However, when you are considering betting on events that will take place several years down the line, it is certainly worth bearing in mind the effects of inflation and only betting if the lower odds would be acceptable to you.
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