Presentations text content in Price setting in the nba
Slide1
Price setting in the nba gambling Market
Tests of the levitt model of sportsbook behavior
Rodney J. Paul & Andrew P.
Weinbach
International Journal of Sports Finance, 2008
Slide2Overview
In 2004 steven D. levitt challenged the traditional view of sportsbook behavior
Levitt sportsbooks use their knowledge of common bettor biases to set prices
Setting biased
pointspreads
LESS POPULAR SIDE OF PROPOSITION WINS MORE THAN 50%
Slide3purpose
Test
levitt
model of sportsbook behavior in the
nba
Levitt sportsbooks
in
the
nfl
do not set prices to clear markets (commonly Assumed)
Sportsbooks
in
nfl
set prices to maximize profits
Slide4theory
Traditional theoryGoal of sportsbook is to profit without riskSet a pointspread
that attracts same amount of wagering dollar
Over/under Equal & favorite/underdog equal
Levitt theory
Sportsbook incorporate common bettor biases
Sportsbooks are willing to accept uneven betting dollars
Willing to accept loss on individual game basis for higher overall returns
Slide5Background / Method - nflJournal of prediction markets
Levitt model
Used data from a betting tournament
Paul and
weinbach
Used actual sportsbook data
Every game of the 2006
nfl
season
Slide6results
ConsistentBetting did not appear to be balanced Favorites & Road favorites The percentage bet on the favorite became greater as the
pointspread
on the favorite increased
Slide7Method - nba
Betting percentage data Favorite & underdog Pointspread market
OVER & UNDER
TOTALS MARKET
Slide8Method – nba (continued)
Data Gathered from sports Insights Provides data from four sports books
All
nba
games from 2004-05 to 2006-07 seasons
Slide9Results - similarities
Bets were not evenly balanced in pointspread or total marketsBigger favorites attract more bets on the favorite
Slide10Results – key differences
Betting against public sentimentDid not generate profitsAlthough betting dollars were imbalanced win percentages 50/50 proposition
Slide11conclusion
Nba market is a lot smaller and less liquid than nfl marketSPORTSBOOKS ARE NOT AS WILLING TO EXPLOIT KNOWN BETTING BIASES AS THEY ARE IN THE MARKET FOR THE NFL
CONTRARY TO LEVITT BELIEF
SPORTSBOOKS ARE NOT ATTEMPTING TO EXPLOUT BETTING BIASES N EVERY CASE TO MAXIMIZE PROFITS
Slide12QUESTIONS?
Any questions
Price setting in the nba
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