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The Effects of Risk Aversion on Wagering: Point Spread versus Odds

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  • Woodland, Bill M
  • Woodland, Linda M

Abstract

Currently, casinos and bookies use the point-spread method for betting on football games. Since an odds system is used in various other sports, what factors explain the current structure of the betting market? As the bookie's profits are a percentage of the total money wagered, the existence of point-spread betting indicates that the total money wagered under this betting scheme is greater than that generated by odds betting. This paper suggests that the current market structure is a consequence of risk-averse attitudes of bettors. Copyright 1991 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 99 (1991)
Issue (Month): 3 (June)
Pages: 638-53

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Handle: RePEc:ucp:jpolec:v:99:y:1991:i:3:p:638-53

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Web page: http://www.journals.uchicago.edu/JPE/

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Cited by:
  1. Mark Burkey, 2005. "On "Arbitage" and Market Efficiency: An Examination of NFL Wagering," New York Economic Review, New York State Economics Association (NYSEA), vol. 36(1), pages 13-28.
  2. Evan Osborne, 2001. "Efficient Markets? Don't Bet on It," Journal of Sports Economics, , vol. 2(1), pages 50-61, February.
  3. Humphreys, Brad, 2010. "Prices, Point Spreads and Profits: Evidence from the National Football League," Working Papers 2010-5, University of Alberta, Department of Economics.
  4. Bill Woodland & Linda Woodland, 1999. "Expected utility, skewness, and the baseball betting market," Applied Economics, Taylor & Francis Journals, vol. 31(3), pages 337-345.
  5. Rodney Paul & Andrew Weinbach, 2005. "Introduction to sports symposium," Journal of Economics and Finance, Springer, vol. 29(3), pages 382-384, September.
  6. Steven D. Levitt, 2003. "How Do Markets Function? An Empirical Analysis of Gambling on the National Football League," NBER Working Papers 9422, National Bureau of Economic Research, Inc.
  7. David Alan Peel, 2013. "On the Implications of the Markowitz Model of Utility embodying Gain Seeking Preferences for Odds on Betting and Bookmakers choice of Spread or Odds Betting," Economics Bulletin, AccessEcon, vol. 33(2), pages 1420-1428.

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