The BLE of Sports Betting
posted by Dave Hoffman
I know that we’re engaged in talking about serious subjects, but this Bill Simmon’s column really is a great read. Bill makes the following claim, which I pass along without evaluating whether it is, well, true. This year, against the Las Vegas NFL line, underdogs have gone 137-97-6 for the season. Bill continues:
“Out of those 136 underdogs that covered, an astonishing 100 won their games outright (including 11 of 13 last week). I can’t even rationally discuss this anymore.”
Honestly, I don’t get it either. Are the folks in Vegas taking their eyes off of the ball, perhaps due to personal problems? Or has the NFL’s crazy economic scheme, resulting in parity of a sort, made betting on games really a matter of chance? (Simmons blames an unexpected triumph of common sense, but, really, would common sense have predicted the Eagles’ win over the Cowboys last week?)
And now, back to real legal topics. And grading.
December 29, 2006 at 1:53 pm
Posted in: Behavioral Law and Economics
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Responses (7)
Steve Bradford - December 29, 2006 at 2:17 pm
You’re missing the point of the Vegas line. The point is not to estimate the outcome of the game, but to estimate the betting interest. The fault, dear Brutus, may lie not in the oddsmakers, but in ourselves.
We can’t know which it is without information about the profits of the betting houses providing the odds.
dammitboris - December 29, 2006 at 2:58 pm
also, see here:
http://www.freakonomics.com/blog/2006/12/28/home-underdogs-in-the-nfl/
dave - December 29, 2006 at 3:02 pm
Steve is, of course, right. The book is making money by playing against bad bettors. Assuming that bettors can learn from their mistakes, though, why hasn’t this effect been competed away? (The Levitt link is fantastic. I don’t know whether to wrote for him or against him.)
Seth - December 29, 2006 at 3:06 pm
Yeah, as Steve says, lines have nothing to do with predicting the game’s outcome, but are all about trying to get the betting as close to even as possible (if the house can get an exact 50/50 split, it always wins thanks to the vig).
But I think Steve’s wrong to say that the fault may be with the bettor rather than the oddsmakers, because the initial spreads are set by the oddsmakers. And while the spreads may move a little, after the fact (based on how folks are actually betting), we’re generally talking about a half-point or full point shift at most, which wouldn’t account for the wrong team being labeled the “underdog” (which is basically the gist of Simmons’ argument).
All I know is (in the hypothetical, of course), I’ve done really well (hypothetically) betting almost entirely on the underdogs these last several weeks.
And Dave, common sense actually could have predicted the Eagles win (I, hypothetically, made a killing betting on the Eagles money line), if you watched what the Eagles and Dallas had each been doing in the past couple of weeks. The Tony Romo love fest has slowed down because now that he’s got a few NFL games under his belt, folks have game tape to see what he does and can figure out how to play him. And the Eagles, while still with their problems (they’re a Philly team, how can they not have problems), are basically playing with house money right now, which is sometimes the best thing for a team. And Garcia is really playing a surprisingly solid game right now (while he probably won’t get enough pass attempts this week to actually qualify in the rankings, he currently has the top QB passer rating in the NFC).
Football is so much more interesting to talk about than law, ain’t it?
Daniel J. Solove - December 29, 2006 at 6:14 pm
The moral of the story seems to be: Put your money on the underdog with the points. Since the goal of the Vegas odds is to get people betting equally on each side, it would seem as though people are systematically underestimating the strength of underdog teams. Vegas odds are thus an attempt to measure the collective wisdom about an NFL matchup — but the collective wisdom may suffer from basic cognitive biases.
Perhaps people haven’t fully come to grips with the fact that the NFL has reached parity. Or perhaps there is a greater psychological tendency for people to undervalue underdogs (or certain kinds of underdogs, such as really mismatched underdogs or slight underdogs). In other words, is the underdog systemically undervalued and thus given more points in all sports? This would be an interesting empirical question to explore, with a potentially lucrative payoff.
Frank - January 2, 2007 at 2:29 pm
This blurb on Paul C. Weiler’s “Leveling the Playing Field How the Law Can Make Sports Better for Fans” may be of interest:
(from:
http://www.hup.harvard.edu/catalog/WEILEV.html
The world of sports seems entwined with lawsuits. This is so, Paul Weiler explains, because of two characteristics intrinsic to all competitive sports. First, sporting contests lose their drama if the competition becomes too lopsided. Second, the winning athletes and teams usually take the “lion’s share” of both fan attention and spending. So interest in second-rate teams and in second-rate leagues rapidly wanes, leaving one dominant league with monopoly power.
The ideal of evenly balanced sporting contests is continually challenged by economic, social, and technological forces. Consequently, Weiler argues, the law is essential to level the playing field for players, owners, and ultimately fans and taxpayers. For example, he shows why players’ use of performance-enhancing drugs, even legal ones, should be treated as a more serious offense than, say, use of cocaine. He also explains why proposals to break up dominant leagues and create new ones will not work, and thus why both union representation of players and legal protection for fans–and taxpayers–are necessary.
Using well-known incidents–and supplying little-known facts–Weiler analyzes a wide array of moral and economic issues that arise in all competitive sports. He tells us, for example, how Commissioner Bud Selig should respond to Pete Rose’s quest for admission to the Hall of Fame; what kind of settlement will allow baseball players and owners to avoid a replay of their past labor battles; and how our political leaders should address the recent wave of taxpayer-built stadiums.
pat - January 5, 2007 at 5:04 pm
Professor Solove,
I think your first point is right on point. NFL has definitely reached a level of parity that makes it nearly impossible to wager on. I doubt that underdogs are systematically undervalued. I could be wrong, but certainly someone has done studies on that, the general public would know about it, and there would be a representative line shift.
From my (hypothetical) experience gambling on sports, I can just say that someone that knows what they are doing could possibly make money betting on college sports. But in the NFL, it is nearly impossible. Betting on the NFL is just like giving your money away.
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