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 transcript:

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

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

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

Results for the sides and total market for the NBA

Betting Simulations of Wagering on the Less Popular Propositions

Betting Simulations of Wagering Against Public Sentiment

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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