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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 Behavior
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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
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Regression and Betting Simulation Results For the sides market: For the total market:
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Results for the sides and total market for the NBA
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Betting Simulations of Wagering on the Less Popular Propositions
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Betting Simulations of Wagering Against Public Sentiment
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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.
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