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NFL betting market efficiency, divisional rivals, and profitable strategies

Author

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  • Corey A. Shank

Abstract

Purpose - This paper aims to examine market inefficiencies in the National Football League (NFL) betting market from the 2003 season to the 2016 season. Design/methodology/approach - The author examines the impact that division rivals and previously known determinants of inefficiencies have on the current NFL gambling market. Findings - The results show that games against division rivals have a lower chance of the home team covering the spread and the chance the game will result in an over. This result demonstrates that the sportsbooks underestimate the familiarity that teams have with each other’s players, coaches and tendencies from playing each other twice per year. Moreover, using this result in conjunction with previous known inefficiencies, the author puts forth a model to test out of sample predictions. The results from these tests show profitable strategies in the point spread and totals market with a win rate of nearly 57 per cent. Originality/value - Overall, this paper demonstrates inefficiencies in the NFL betting market that future bettors may be able to take advantage of.

Suggested Citation

  • Corey A. Shank, 2019. "NFL betting market efficiency, divisional rivals, and profitable strategies," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 36(3), pages 567-580, September.
    • Handle: RePEc:eme:sefpps:sef-11-2018-0354
    DOI: 10.1108/SEF-11-2018-0354
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    References listed on IDEAS

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    1. Sean Wever & David Aadland, 2012. "Herd behaviour and underdogs in the NFL," Applied Economics Letters, Taylor & Francis Journals, vol. 19(1), pages 93-97, January.
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    Cited by:

    1. Moore, Evan, 2021. "A comment on Paul, Weinbach, and Wilson’s (2004) “Efficient markets, fair bets, and profitability in NBA totals 1995-96 to 2001-02”," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 26-29.
    2. Shank, Corey A., 2022. "Information asymmetry in the NFL gambling market: Inside information versus informed bettors," Journal of Behavioral and Experimental Finance, Elsevier, vol. 36(C).
    3. Durand, Robert B. & Patterson, Fernando M. & Shank, Corey A., 2021. "Behavioral biases in the NFL gambling market: Overreaction to news and the recency bias," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).

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    More about this item

    Keywords

    Gambling; Market efficiency; Familiarity; NFL; Sports betting; G14; L83;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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