Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior
AbstractLevitt (2004) suggested that sportsbooks do not set prices in the NFL to clear markets, as was commonly assumed, but set prices to maximize profits. This paper uses actual betting data from four sportsbooks to test the Levitt (2004) hypothesis in the NBA. For a sample of the 2004-05 to 2006-07 seasons, it is shown that favorites receive a disproportionate share of NBA pointspread bets. In addition, the percentage of bets the favorite receives increases with each additional point of the pointspread. In the totals market, it is shown that overs receive a much higher percentage of bets compared to unders and the percentage bet on the over increases with each point of the total. Unlike the NFL, however, taking a contrarian position and betting against public sentiment is not found to win more often than implied by efficiency.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Fitness Information Technology in its journal International Journal of Sport Finance.
Volume (Year): 3 (2008)
Issue (Month): 3 (August)
Contact details of provider:
Web page: http://www.fitinfotech.com/
Find related papers by JEL classification:
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Humphreys, Brad & Paul, Rodney & Weinbach, Andrew, 2011. "CEO Turnover: More Evidence on the Role of Performance Expectations," Working Papers 2011-14, University of Alberta, Department of Economics.
- Humphreys, Brad & Paul, Rodney & Weinbach, Andrew, 2010.
"Consumption Benefits and Gambling: Evidence From the NCAA Basketball Betting Market,"
2010-7, University of Alberta, Department of Economics.
- Humphreys, Brad R. & Paul, Rodney J. & Weinbach, Andrew P., 2013. "Consumption benefits and gambling: Evidence from the NCAA basketball betting market," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 376-386.
- Rodney J. Paul & Andrew P. Weinbach & Kristin K. Paul, 2010. "Using Actual Betting Percentages to Analyze Sportsbook Behavior: The Canadian and Arena Football Leagues," New York Economic Review, New York State Economics Association (NYSEA), vol. 41(1), pages 35-44.
- Humphreys, Brad, 2010. "Prices, Point Spreads and Profits: Evidence from the National Football League," Working Papers 2010-5, University of Alberta, Department of Economics.
- Rodney Paul & Andrew Weinbach, 2012. "Sportsbook pricing and the behavioral biases of bettors in the NHL," Journal of Economics and Finance, Springer, vol. 36(1), pages 123-135, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson).
If references are entirely missing, you can add them using this form.