For example, in last year's first round of the NFL playoffs, the bookies set the Cardinals as a 1.5-point underdog against the Falcons in the first round, which caused something like 75% of the bets be placed on the Falcons. The line could have been raised of course, but the houses preferred to take a position. This is pretty rare, but it does happen every now and then.
I am not sure how the different bookies end up colluding - maybe the big guys set the line and the little guys have no choice but to follow.
BTW, I have never placed an official sports bet - I just follow these things as a fan. It's a lot more enlightening to look at posted odds than to read journalist analysis. People seem to magically get smarter when their own money is involved - either that or smart people are attracted to situations where their own money is involved.
I doubt this very much because even if an oddsmaker was right most of the time, people will always focus on the losses, and this would eventually cost him his job. When you run a casino, nobody really takes notice when you get the expected payback or even more, but when you lose money, people want to know why. Gary Loveman wrote an interesting article about this a number of years ago after his firm bought the Rio and lost money on its premier client business (he didn't realize that his Chinese clients who were playing on credit would insist on renegotiating their losses after they returned home). He survived, but nobody wants to go through the experience of having to explain why money was lost in what should have been a sure thing.
People seem to magically get smarter when their own money is involved - either that or smart people are attracted to situations where their own money is involved.
Some have proposed a more nefarious rational for smart money.
You could argue that it was unintentional, but my impression is that over the past few years they are going more and more in this direction.
It's true that in many businesses, bosses refuse to put up with any screwups at all - as they shouldn't. This won't work very well for an oddsmaker, though. I think these guys have dealt with these types of issues and developed the needed statistical models for everything, including bankrolls & risk, etc. It's really hard to find cases where they behave irrationally.
Look for example at tomorrow's baseball games:
About half the games have at least a 75:25 betting discrepancy, with tens of thousands of bets on each.
The public has some betting biases and it's perfectly logical for the books to exploit this when the risk can be managed. For example, the public tends to overvalue the hot team (like the Giants) and undervalue the longer-term body of work (like the Patriots had that season - they actually slumped into the Super Bowl, as funny as that sounds).
Case 1: oddsmaker puts the line at 10 points (the same money on each team point)- Result: Washington has a better chance to beat the spread, but the house always makes a 5% return with no risk.
Case 2: oddsmaker puts the line at 7 points (the same probability of win for each team point) - Result - More than 50% of the money is bet on Dallas but each team has an equal chance to beat the spread. If Dallas wins, the house loses money because of the greater percentage betting Dallas (this occurs half the time by definition). If Washington wins, the house makes money because of the greater percentage of people betting Dallas, (and this also occurs half the time). The house expectation is still a 5% return, but with risk.
The expectation for the house in these two cases is exactly the same. All that has happened is that the Beta has increased in Case 2, which is undesirable.
Now between these two points, more people will bet on Dallas and Washington will beat the spread more often, so there is the opportunity to make additional money, but the upside is limited and is accompanied by a higher beta. Worth the risk? As an investor, I'm very skeptical because this requires knowledge of the two points above.
> Worth the risk? As an investor, I'm very skeptical because this requires knowledge of the two points above.
You only need a better guess than the public. When you are less sure, you can take a safer stance (in your example, maybe a 9.5 point spread).
I am more or less certain that the oddsmakers are doing this. The public betting patterns are too unbalanced on too many events for it to be an accident. It also seems to me that ~10 years ago, the oddsmakers did this less frequently. Maybe they are more confident now in their simulations or better-equipped to handle the risk & bankroll issues.
lvsc runs a computer prog and it generates a line. due to certain betting tendencies by the public, vegas will shade certain lines. they know the public's betting tenancies better than the public knows themselves. having said that, they have to be careful not to open themselves up to sharps who will severely punish any mistakes and will bet against the public. it's complicated, but the short answer is for most games they're gonna lock in a profit, and in other games they're gonna take a position hoping to ensure a huge profit due to their superior knowledge. Some call it a "trap" game, but in reality it's just vegas doing their job.
My favorite so far: the last two minutes of the first half of the Eagles-Vikings playoff game last year. It was a clinic! Childress was trained well. :)
> I just want to see the Eagles in a lot of close games, so that we can see Andy Reid manage the 2-minute drills. That's always fun.
Yeah Andy Reid is not the best "gameday" coach! He is so busy mumbling plays into his scorecard that he forgets there is a game going on. He also has seems to really be against giving the ball to Westbrook! Except against Dallas. :)
> Actually, I'm surprised Westbrook is still productive at his age, he takes a beating. In my view the Redskins overuse Portis.
Yeah that is another problem with Andy Reid, as GM he has been reluctant to get a good pounding running back so that Westbrook doesn't have to be what he is not: the bruiser type running back.
I am not sure what game it was last year (I may have blocked it from my mind), but the Eagles needed 1 yard to win the game and Andy Reid called the same play 3 times in a row: Westbrook up the middle. (I think it was against the Giants)
Running up the middle for a bruising 1 yard is NOT what the Eagles or Westbrook do, yet Reid was determined to prove his play call was the correct choice!
Reid is a good coach but not the guy I want coaching a team that needs to win one game to save the universe! (or a playoff spot) (that coach would probably be Joe Paterno in his prime!!)
> Reid is a good coach but not the guy I want coaching a team that needs to win one game to save the universe!
True. He's an excellent overall coach - he builds the team well, makes good long-term decisions about players, they always play hard, etc.
There are always several coaches who just don't have any grasp of the 2-minute situations. Maybe they should hire someone to help with this.
As far as the best strategists: from the current generation, you have to go with Belichick. Dungy was also really good (and underappreciated) here, the Colts always got those situations just right.
Andy Reid is excited to run the "wildcat" with Vick. Yeah...maybe Andy Reid should get excited about drawing up a play that can gain a yard on 4th and 1 first!!
It seems odd to me that the Eagles would take a chance on Vick (who was not a good quarterback for the west coast offense with the Falcons) and yet they refuse to get a bruising running back. And they also refuse to keep around great leaders and players like Brian Dawkins
What do you think of the signing Vas? I am surprised Daniel Snyder didn't try and get Vick!
From purely a football point of view, it's clearly a nice pickup. For a very low price, Philly gets an excellent backup QB, plus someone who can contribute in the wildcat or maybe even with something like returning punts.
>OK, but keep your paper bag ready, just in case
That's part of the game equipment!
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