Andrew P. Weinbach

Bettor misperceptions in the NBA - the overbetting of large favorites and the "hot hand".

Systematic bettor misperceptions are found in the NBA point spread gambling market for the seasons of 1995-1996 to 2001-2002. Evidence of the overbetting of favorites is found, with a strategy of betting big underdogs rejecting the null of a fair bet. Betting big home underdogs not only rejects a fair bet but is also shown to reject the null of no profitability. In addition, betting against winning streaks, as first suggested in the “hot-hand” article of Camerer and later tested by Brown and Sauer, is also shown to be profitable.

Fair bets and profitability in college football gambling

Efficient markets in college football are tested over a 25-year period, 1976–2000. the market in general is found to be efficient, but betting on underdogs of more than 28 points violates a fair bet. The strategy of betting home underdogs reveals stronger results. Home underdogs of more than seven points are found to reject the null hypotheses of a fair bet over the last 10 years of the sample, 1991–2000. Home underdogs of more than 28 points are found to reject the null of no profitability during the same time frame.

Efficient markets, fair bets, and profitability in NBA totals 1995-96 to 2001-02

Abstract The market for NBA totals was examined from 1995–96 to 2001–02. For the sample as a whole, a fair bet could not be rejected, leading to the conclusion of an efficient market. For the highest of the totals, however, the null hypothesis of a fair bet is rejected in the same manner as professional football in that overs are over bet. Although, winning percentages on betting the under above certain totals were found to be above 52.4%, the percentage needed to overcome the vigorish of the sportsbook, statistically significant violations of the null hypothesis of no profitability were not found. In addition, tests of betting with or against streaks in the spirit of the “hot hand” were not found to be profitable. It appears that bettors prefer the over to the under, but informed bettors will bet the under to the point where it is profitable for them to do so, which is enough to allow for the null hypothesis of a fair bet to be rejected, but not enough for profitability to be found.

Expectations and Voting in the NCAA Football Polls: The Wisdom of Point Spread Markets

A week-to-week voting model for college football using voting points from the ESPN/USA Today and Associated Press polls is specified. The point spread differential, the score differential of the most recent game minus the point spread, is shown to have a positive and highly significant effect on votes in both polls. A team that covers the point spread will receive an increase in votes in both polls. A team that wins but does not cover the point spread will lose votes. This result shows the role of expectations in this market. If a team performs better than expected, it will receive more votes in the polls and possibly move up in the rankings. Television coverage is also examined, and voter reaction to team performance is found to be greater for those games that are televised, which could be due to the television exposure itself or the fact that televised coverage is a proxy for important games.

The Role of uncertainty of outcome and scoring in the determination of fan satisfaction in the NFL

Fan satisfaction with individual sports games is likely to be an important indicator of future sales of tickets, television and radio advertising, and team merchandise sales. For the 2009-2010 National Football League (NFL) season, NFL.com, the official website of the NFL, had fans enter a ‘‘fan rating’’ for each game of the season. This rating was on a scale of 0—100 with 100 being the most memorable. Using these figures, the authors test the economic hypotheses of the importance of uncertainty of outcome during the game and overall points scored by both teams in the game. As expected, the margin of victory in the game was shown to have a negative and significant effect on the fan rating, implying that fans enjoy uncertainty of outcome as the game is played. In addition, higher scoring games led to higher fan ratings than lower scoring games, implying fan preference for scoring.

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.

Market efficiency and NCAA college basketball gambling

The betting market for NCAA college basketball is examined from the 1996–97 season through 2003–04. In the overall sample, market efficiency cannot be rejected. For big favorites, specifically those favorites of 20 or more, a simple strategy of betting the underdog in these games is shown to reject the null hypothesis of a fair bet since the underdog wins more than implied by efficiency. This bias appears to be the same as in other sports. The home-team bias in college basketball is shown to be the opposite of the other sports, however, since big favorites win more often than implied by efficiency. Potential reasons for this bias such as NCAA tournament incentives and uniformity of playing conditions are discussed.

Investigating Allegations of Pointshaving in NCAA Basketball Using Actual Sportsbook Betting Percentages

Detailed gambling market data are used to investigate allegations of pointshaving in college basketball by Wolfers. Data on actual sportsbook betting percentages on favorites and underdogs and changes in pointspreads are used to test for evidence of corruption by players and/or coaches of NCAA basketball teams. After establishing a rejection of the balanced book hypothesis, the authors test for corruption in a variety of ways by investigating the games that Wolfers describes as likely situations for pointshaving, specifically games involving big underdogs. In a variety of tests, which include differences in betting percentages on big underdogs who cover and do not cover the pointspread, betting simulations based on thresholds of percentage bet on underdogs, analysis of pointspread movements toward big underdogs, and an analysis of coaches and programs that meet the conditions of Wolfers, little evidence is found to suggest rampant pointshaving in this market.

Uncertainty of Outcome and Attendance in College Football: Evidence from Four Conferences

The relationship between the uncertainty of outcome hypothesis (UOH), where fans prefer games that are expected to be closely contested, and attendance is investigated in four non-AQ football conferences. The teams in these smaller conferences play games against each other and against bigger, more prominent schools in the elite AQ conferences. Using the betting market point spread as a proxy for uncertainty of outcome, two key points concerning the UOH emerge: college football fans in these conferences prefer less uncertainty of outcome both when their team is a home favorite and when their team is a home underdog.

Baseball: A Poor Substitute for Football—More Evidence of Sports Gambling as Consumption

Due to the use of sports wagering market data as a laboratory to test the Efficient Markets Hypothesis, sports bettors have been assumed to behave as investors. With the rejection of the balanced b...Due to the use of sports wagering market data as a laboratory to test the Efficient Markets Hypothesis, sports bettors have been assumed to behave as investors. With the rejection of the balanced book hypothesis and the persistent support of market efficiency, the notion of the sports bettor as investor should be in doubt. Using betting volume data from online sportsbooks, bettors are shown to substitute out of baseball betting into football betting when the season starts. The authors argue that these findings are consistent with consumer behavior, but inconsistent with the notion of bettors as investors.