Sunday, 2 January 2011

Big Home Dogs

The Atlanta Hawks duly covered the -1.5 spread this afternoon against the Los Angeles Clippers and as midnight approaches, that'll be the last activity on the account before Betfair draw their arbitrary line in the accounts and determine whether or not to apply the Premium Charge next week. How solid this midnight deadline is, I am not sure. As I wrote earlier in the week, actually last year, I had a four figure win settled at 00:07 on Monday and unless this was somehow included in the total for last week, then it looks like I will be hit despite my best anti-PC efforts.

Speaking of arbitrary lines and the NBA Handicap markets provide a nice segue into the subject of the lines in basketball, which as I have commented on before are extremely accurate.

How the point spread is set may be of interest to some. From what I can find out, a company called Las Vegas Sports Consultants (LVSC) establishes the odds for approximately 75% of the licensed sports books in Nevada, with most illegal and online books in and out of Nevada drawing their odds from here. These lines are posted at 8am Pacific Standard Time (4pm UK) on game day and can fluctuate until each game’s tip–off. Of course, on the exchanges the line stays set but the price of the line will adjust. The generally accepted assumption is that these opening betting lines are set to equalize the amount of money bet on each side of the betting line, minimizing the bookmakers’ financial risk and guaranteeing their revenue.

There are clearly some inefficencies with these lines. While the betting line is designed to balance the betting market, it does not correspond to the incentives of the teams: the teams care about wins and losses. A win is a win. There is no incentive for a team to win by anything more than one point, and though the line may be set at 13.5 for example, a team won't care if they win by 13 or 14 points, just so long as they win. You see this all the time in games - if the favourite is comfortably ahead, the game becomes far less intense. Starters are rested, the crowd gets distracted, the commentators start talking about upcoming games, and there's a general atmosphere of going through the motions. The intensity only picks up again if the underdog starts to close the gap and get within single figures, at which point the starters go back in, the crowd gets back into it, and the game resumes in earnest.

All very interesting to notice, but is there a way to profit from this?

A study of results in the NBA suggests that there is an advantage on playing the big handicaps. (Big is usually accepted as being those in excess of 12 points, while small spreads are those at 6 points or less - presumably because six represents the usual maximum from two possessions, which is the signifier for a close game). In the 18 NBA seasons up to 2007, the ratio of favourite to underdog wins was 7805:7822 (49.95%:50.05%), but when you look at the large spreads, there's an advantage in backing big 'dogs.

How big an advantage, I hear you say?

When the spread is 12.5 points or more, the 'dog covers the spread in 53.05% of all games, but teams tend to play better at home than on the road, and when we are a lot more selective, and only back big 'dogs playing at home, the numbers get very exciting. The problem is that you need to be very patient, because these opportunities don't come along every night.

Big 'dogs at home cover the spread in an astonishing 70.52% of games. Overall, the home 'dogs cover just 48.96% of the time, but for every handicap from 7 and up, home underdogs cover more than 50% of the time. Now all you need is to find the right price on the exchanges.

1 comment:

Anonymous said...

Hi Cassini,

This is very interesting and something I've looked at myself. However the data I've used gives different results to you, but then I’ve only analysed results from 2000 to 2010.

For the 10 seasons I've looked at, the number of games where home teams are big dogs is pretty small from a statistical point I think. Can too much be read into these games? For example, I only make it 45 games in total where home teams have had between 12 and 16 points given them, and even then don’t see an advantage to these spreads overall.

The spreads where I do see advantages are pretty small, although I actually think road underdogs seem to perform better at a small number of these.

Overall, I see it as amazingly close; with home wins ATS at 48.82% and road wins ATS at 49.27% (with 1.91% of ATS games ending in a push). If that's right, then the LVSC guys do some pretty amazing work!

I can’t be totally confident in my results, as the lines are all closing lines, but I’m not sure how they were calculated (i.e. one bookie, or an average of several).

I could have also got something drastically wrong in my analysis of course.

If you wanted to share the results, I’d be happy to send along what I’ve done so far. I’m also interested in finding other sources of data, as like I say, I’m not 100% confident in the one I have.

All the best,
The One Armed Trader