Bookmakers capitalize on fans' emotions to turn a profit, new research shows

phys.org | 4/12/1996 | Staff
moni (Posted by) Level 3
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At the start of each term in Brian Soebbing's class on financial management in sports, he asks students how many would always bet on the hometown Edmonton Oilers, whether they're favored to win or not.

"Most raise their hand," said the University of Alberta sports management expert. "Then I ask the Oilers fans how many would almost always bet on the other team. There are a few, because we also see there's a lot of other people who would hedge their bets and always bet against the Oilers. Because at the end of the day, they're going to walk away happy—either their team won the game, or they're going to win their bet.

Bookmakers - Jobs - Advantage

"Bookmakers know this, are really good at their jobs and they take advantage of it," he explained.

And recent research he conducted looking at how bookmakers capitalize on this sentiment bias backs it up.

Colleagues - West - Virginia - University - University

Soebbing and colleagues from West Virginia University and the University of Southern Denmark analyzed the point spreads and bet outcomes for three decades of NBA games and found that bookmakers increase prices on bets involving popular home teams.

"When we think about the point spread, it's going to capture all relevant, fundamental information—the strength of both teams, who's injured, who's the home team, stuff like that," said Soebbing. "What we found is a portion of those spreads can be attributed to popularity."

Point - Spread - Forecast - Number - Points

A point spread is a forecast of the number of points by which a stronger team is expected to defeat a weaker one in an effort to invite equal betting on both teams, which in turn reduces bookmakers' risk. With a profit margin built into a bet, equal betting, or action, ensures the bookmaker makes money no matter who wins.

Soebbing said early sports betting literature often assumed bookmakers attempted to balance the volume of bets on individual...
(Excerpt) Read more at: phys.org
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