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Totals Markets as Evidence Against Widespread Point Shaving

Listed author(s):
  • Richard Borghesi
  • Rodney J. Paul

    (St. Bonaventure University)

  • Andrew P. Weinbach

    (Coastal Carolina University)

Wolfers (2006) suggests that NCAA basketball is marred by widespread gambling corruption. We examine totals wagers in a variety of sports betting markets to determine whether observed outcomes are symmetric around closing lines, an important assumption Wolfers makes in his analysis. Our results show that totals wagers result in just under outcomes more frequently than they result in just over outcomes. This occurs because gamblers strongly prefer to take the over in totals betting, and profit-seeking bookmakers capitalize by shading totals lines upwards. Likewise, prior work shows that gamblers in point spread markets strongly prefer to bet on favorites, so it is not surprising that win/no cover outcomes occur more frequently that do win/cover outcomes. We conclude that the critical but erroneous symmetric-distribution assumption is responsible for creating the illusion of widespread point shaving.

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Article provided by University of Buckingham Press in its journal Journal of Prediction Markets.

Volume (Year): 4 (2010)
Issue (Month): 2 (September)
Pages: 15-22

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Handle: RePEc:buc:jpredm:v:4:y:2010:i:2:p:15-22
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