February 2, 2014
Posted by Jay Livingston
I have posted frequently – maybe too frequently – about the “wisdom of crowds” in sports betting (in this post, for example, which has links to earlier posts going back to the early days of this blog). For those of us who doubt that wisdom, today’s Superbowl looks like a notable opportunity.
The initial line two weeks ago from most bookmakers was pick ’em or even the Seahawks favored by a point. The crowd, in its alleged wisdom, jumped all over the Broncos. The bookmakers, desperate for Seahawks action to balance their ledgers moved the line, and by early in the week the Broncos were 2½-point favorites. Betting is still going 75% for the Broncos.*
Of course, a single game (n = 1) is not a good test of this betting strategy. Still, as Damon Runyon said, the race is not always to the swift, but that’s the way to bet ’em.
It’s two hours till game time, and although this may be the year of the horse, I’m going with Seattle.
UPDATE, Monday, Feb. 3: Well, that was easy. Rarely is the crowd so decisively unwise. Their Broncos handed the Seahawks a two-point lead on the first play of the game, and after that it was all downhill. The Seahawks won 43 - 8.
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*Bookmakers are leery of raising the line to 3 to attract Seahawks money because if the Broncos do win by 3 (the most common margin in football outcomes), those new bets will be result in a push rather than a win for the books. The books will pay Broncos bettors, who only gave 2½ points, but they will not collect from Seahawks bettors who took the 3 points. So instead, the books are lowering the vigorish (in effect, the surcharge on losing bets) from 10% to 0% for Seattle bettors but raising it to 15% or 20% for Broncos bettors.
2 comments:
This is not a question of wisdom of the crowds but of risk management by the bookies. N=1 and all that.
When the books adjust the line and vig in response to the action, that’s risk management. They’re trying to reduce their exposure to a Broncos win. Some bettors do that too by hedging, especially when the line changes and they try to catch a middle or an edge. Imagine someone who thought the Broncos would win and bet $10,000 at the opening pick ’em line. He might well hedge back a chunk of that with a bet on the Seahawks +2½. Risk management (not to mention the 2-point middle).
What I’m talking about is a system where you always bet against the public (which usually means a line move in your favor). You won’t win them all, but if the theory is right, you’ll make money over the course of the season. That’s what Damon Runyon and the law of large numbers have in mind.
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