Point Spread Market Research Articles

Modeling the complexity of basketball games using marked mutually exciting point processes

The basketball game is rarely predictable due to the complexity of its scoring process. To deal with the complexity and forecast the game results, we develop a marked mutually exciting point process model for the scoring process. In the model, the dynamic of the scoring intensity is characterized by a mutually exciting point process. A time varying background rate is used in the intensity function to account for the non-homogeneity. The dependence between scoring events is incorporated into the model with two team-specific exponential exciting kernels. The distribution of the points obtained in each scoring event is modeled as a categorical distribution with parameters from a Dirichlet prior. An empirical Bayesian method and an expectation-maximization algorithm are developed to estimate the model parameters. We design a simulation algorithm to do pre-game and in-game predictions. An empirical study is conducted with National Basketball Association games in four seasons. It is showed that the proposed model outperforms the benchmark model both in the win-loss prediction and score prediction. Moreover, our model can obtain positive returns when betting in the point spread market. Besides forecasting, an index called added winning probability is designed based on the model to evaluate the players’ performance.

Betting Market Outcomes and NBA Television Viewership

The authors demonstrate that betting market outcomes are a statistically significant and economically relevant driver of local market television viewership in the National Basketball Association. Ratings are higher when the local market team covers the point spread and when point spread outcome uncertainty is increased. They further illustrate that point spread market outcomes have a larger relative impact on viewership in less-popular games and when the local market team is expected to perform poorly. This suggests wagering market access serves as insurance to the league and its franchises against reduced viewership in games that are less appealing to consumers. The results assess the degree to which wagering interest has driven past revenues as well as how the legalization of sports wagering may influence future revenues.

NFL Betting Biases, Profitable Strategies, and the Wisdom of the Crowd

This paper finds that betting biases in the NFL market go beyond preferring to bet on the favorite team and the over. The results show that as more bettors place wagers, the percentage of wagers on the favorite team increases. Additionally, bettors have a preference to bet against the line movement to receive better betting odds in the point spread market. Moreover, bettors prefer betting on the favorite when the away team has lost recent games and on the over when the home team has been covering the over in recent games. Furthermore, bettors have a nonlinear preference in the point spread betting, as they are less likely to wager on the favorite when the spread is small or large. Finally, economically profitable strategies are put forth based upon the percentage of bettors betting on the favorite or over by using a contrarian strategy when 50% to 60% of bettors place the same wager. These results have important implications as they can be used by the sportsbook to create betting lines to maximize profit.

NFL Betting Biases, Profitable Strategies, and the Wisdom of the Crowd

This paper finds that betting biases in the NFL market go beyond preferring to bet on the favorite team and the over. The results show that as more bettors place wagers, the percentage of wagers on the favorite team increases. Additionally, bettors have a preference to bet against the line movement to receive better betting odds in the point spread market. Moreover, bettors prefer betting on the favorite when the away team has lost recent games and on the over when the home team has been covering the over in recent games. Furthermore, bettors have a nonlinear preference in the point spread betting, as they are less likely to wager on the favorite when the spread is small or large. Finally, economically profitable strategies are put forth based upon the percentage of bettors betting on the favorite or over by using a contrarian strategy when 50% to 60% of bettors place the same wager. These results have important implications as they can be used by the sportsbook to create betting lines to maximize profit.

Is the NFL betting market still inefficient?

In this paper, I examine market efficiency in the National Football League betting market. In the point spread market, sportsbooks appear to underestimate the abilities of the home team as they are more likely to cover the spread when they are a substantial underdogs and when the home team has not covered the spread in its previous games. In the totals market, games are more likely to cover the over when the closing line is small or large showing a quadratic relationship to game outcomes and when the home team has covered the over in its previous games. Overall, the results show that both the point spread and totals market are statistically inefficient.

Is the NFL Betting Market Still Inefficient?

In this paper, I examine market efficiency in the National Football League betting market. In the point spread market, sportsbooks appear to underestimate the abilities of the home team as they are more likely to cover the spread when they are substantial underdogs and when the home team has not covered the spread in its previous games. In the totals market, games are more likely to cover the over when the closing line is small or large showing a quadratic relationship to game outcomes and when the home team has covered the over in its previous games. Overall, the results show that both the point spread and totals market are statistically inefficient.

Informational Differences in NFL Point Spread and Moneyline Markets

In this paper we test the efficiency of NFL betting markets by examining the ability of NFL point spread and moneyline markets to incorporate information. While bookmakers may properly evaluate available information when setting point spreads and moneylines, we show that the nature of point spread markets makes full information incorporation difficult. We test if information from the finer moneyline market can be used to predict whether favorites will cover the spread in the point spread market. We find that for games with the same point spread, betting on (against) the most (least) favored teams to win (lose), according to the moneyline, results in chances to profit, suggesting an inefficiency in the point spread market.

INFORMATIONAL DIFFERENCES IN NFL POINT SPREAD AND MONEYLINE MARKETS

In this paper we test the efficiency of NFL betting markets by examining the ability of NFL point spread and moneyline markets to incorporate information. While bookmakers may properly evaluate available information when setting point spreads and moneylines, we show that the nature of point spread markets makes full information incorporation difficult. We test if information from the finer moneyline market can be used to predict whether favorites will cover the spread in the point spread market. We find that for games with the same point spread, betting on (against) the most (least) favored teams to win (lose), according to the moneyline, results in chances to profit, suggesting an inefficiency in the point spread market.

SPORTSBOOK BEHAVIOR IN THE NCAA FOOTBALL BETTING MARKET: TESTS OF THE TRADITIONAL AND LEVITT MODELS OF SPORTSBOOK BEHAVIOR

The predictions of the traditional balanced-book sportsbook model and the alternative Levitt model of sportsbook behavior are tested using actual betting percentages on the favorite/underdog and over/under for NCAA Football. Sportsbooks are found to not balance betting dollars, which is in contradiction to the assumptions of the traditional models of sportsbook behavior. In the pointspread market, more bets are placed on the favorite in contests with road favorites and in games with higher pointspreads. In the totals market, more bets are placed on the over as the total increases and in games on television. Some support is found for the Levitt model of sportsbook behavior, as sportsbooks appear to price to maximize profits when the behavioral biases of bettors are clear, such as games with road favorites and games with the highest pointspreads and totals. In all other contests, however, the sportsbook appears to price as a forecast, as each proposition wins half of the time, even in the presence of betting imbalances.

NFL bettor biases and price setting: further tests of the Levitt hypothesis of sportsbook behaviour

Empirical support for the Levitt hypothesis of sportsbook behaviour, where sportsbooks set prices to maximize profits, not to clear the market, is shown using data from actual sportsbooks. Betting percentages on favourites and underdogs (pointspread market) and overs and unders (totals market) were obtained using actual dollars bet (www.sportsbook.com) and percentage of bets made (www.sportsinsights.com). Both data sets reinforce the idea that sportsbooks are not setting prices to attract even betting dollars on both sides of the proposition. Big favourites, road favourites and overs on high totals are all shown to attract a significantly higher percentage of bets in both samples. Betting against public sentiment is shown to be statistically profitable for the National Football League pointspread market, but not in the market for totals.

Testing for Home Team and Favorite Biases in the Australian Rules Football Fixed-Odds and Point Spread Betting Markets

In this article, the authors test two different kinds of bias—the favorite-long shot/favorite-underdog bias and the home team bias—and distinguish between the two, using a distinctive feature of the Australian Football League (AFL): the fact that many games are played on neutral grounds. The authors conduct their tests by subjecting 2001-2004 data for the AFL to detailed scrutiny, using standard econometric weak-form efficiency models of point spread and fixed-odds betting markets. They reject the existence of any significant pure favorite-long shot/favorite-underdog bias in either market and demonstrate the existence of a significant bias in favor of teams with an apparent home ground advantage in games played outside Victoria in the point spread market and in the fixed-odds market during 2002, 2004, and the period as a whole. Games in Melbourne and in Geelong are free of such a bias (except for 2003 in the point spread market in Geelong). Betting simulations that attempt to exploit these inefficiencies yield modest profits.

Overreaction in the NFL point spread market

A tendency for individuals to overweigh recent information and underweigh prior data has been discovered by researchers in financial markets, economic forecasting, security analysis and other areas. A study of point spread patterns in the 2264 regular season National Football League (NFL) games over the 1981–;1995 seasons was conducted to investigate the overreaction bias of bettors. Results indicated that bettors tend to overweigh outstanding positive performance when measured over the previous game, over the previous two to five games or over the previous season. In general, the more outstanding the performance, the greater the overreaction. However, bettors did not overreact to unusual negative performance over the same periods. This result is congruent with the tendency for heavy favourites to cover the point spread less than half the time over the 1969–;1995 seasons. The overreaction bias in the NFL betting market provides another example of a violation of the weak form of the Efficient Markets Hypot...

No place like home: an examination of the home field advantage in gambling strategies in NFL football

Home teams in sports have an advantage because of learning, travel and crowd factors. In the National Football League, home teams won 58% of games over the period 1981–1996. An examination of the betting market on NFL games showed that bettors generally have recognized the magnitude of the home field advantage. The point spread market was efficient in that the strategy of betting on home teams produced a win rate of .499. However, for a subset of games which had national focus (i.e., Monday night and playoff games), betting on the home team produced a .592 win rate, which was significantly different than .5 at the .0003 level, and betting on underdog Monday night and playoff home teams produced a .656 win rate. These results suggest that the home field advantages recognized in the sports psychology literature are increased under the public attention of national exposure to a larger extent than is recognized by bettors, and the point spread market is inefficient for national focus games.

The NFL pointspread market revisited: anomaly or statistical aberration?

An earlier paper by Lacey (1990) examined the National Football League betting market, using data from the 1984–1986 seasons. He tested 13 technical rules for betting and found several that had winning proportions significantly greater than 0.5 and were also profitable after transaction costs. That represented a violation of the weak form of the Efficient Markets Hypothesis. This paper provides an independent test of those same rules over the 1987–1995 NFL seasons. None of the strategies were profitable or had winning proportions significantly different than 0.5. Lacey's results were apparently just a statistical aberration rather than an exploitable anomaly. The results herein suggest the Efficient Markets Hypothesis was not violated.