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RODNEY J. PAUL ANDREW P. WEINBACH JIAXIN WANG SPORT FINANCE MAR.20TH Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook.

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Presentation on theme: "RODNEY J. PAUL ANDREW P. WEINBACH JIAXIN WANG SPORT FINANCE MAR.20TH Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook."— Presentation transcript:

1 RODNEY J. PAUL ANDREW P. WEINBACH JIAXIN WANG SPORT FINANCE MAR.20TH Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior

2 Introduction Challenged the traditional view of sportsbook behavior The goal of the sportsbook is to set prices to maximize profits, not to clear the market. Common criticism about Levitt model: the use of data from a betting tournament Explores the betting market for the NBA

3 Regression and Betting Simulation Results For the sides market: For the total market:

4 Results for the sides and total market for the NBA

5 Betting Simulations of Wagering on the Less Popular Propositions

6 Betting Simulations of Wagering Against Public Sentiment

7 Conclusion Favorites receive a disproportionate share of NBA pointspread bets. The percentage of bets the favorite receives increases with each additional point of the pointspread. Overs receive a much higher percentage of bets compared to unders. Taking a contrarian position and betting against public sentiment is not found to win more often than implied by efficiency.

8 Thanks!

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