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Exploiting the “Win But Does Not Cover†Phenomenon in College Basketball

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  • Jason P. Berkowitz
  • Craig A. Depken II
  • John M. Gandar

Abstract

Wolfers (2006) was the first to document that heavy favorites in college basketball win but fail to cover the pre†game point spread at a statistically higher rate than expected. We generate a hedged strategy to exploit the “win but does not cover†phenomenon using two wagers: a bet on the underdog sides line and a bet on the favorite money line. While one bet is guaranteed to win regardless of the outcome, both bets win if the favorite wins but does not cover. We show that the minimum†variance portfolio best exploits this anomaly, yielding an average return of 0.34% per game and a positive return in five of the seven seasons of college basketball analyzed.

Suggested Citation

  • Jason P. Berkowitz & Craig A. Depken II & John M. Gandar, 2018. "Exploiting the “Win But Does Not Cover†Phenomenon in College Basketball," The Financial Review, Eastern Finance Association, vol. 53(1), pages 185-204, February.
    • Handle: RePEc:bla:finrev:v:53:y:2018:i:1:p:185-204
    DOI: 10.1111/fire.12155
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