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Preseason bias in the NFL and NBA betting markets

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  • Justin L. Davis
  • Kevin Krieger

Abstract

This study extends research in the sports gaming literature by examining the efficiency of betting markets related to preseason professional sporting events. Using NFL (1995–2014) and NBA (2005–2014) data from preseason games, we examine the pricing efficiency of point spreads in these markets and consider evidence of systematic mispricing. Findings suggest point spreads are too large in these situations, providing a profitable betting opportunity for those willing to systematically wager on underdogs. Similar findings are not seen within the context of NFL or NBA regular seasons. These findings are more pronounced as preseason point spreads become larger. Further stratification by week of the NFL preseason demonstrates that underdogs discontinue their superior performance for the one week (Week 3) in which clubs tend to expel a higher level of effort.

Suggested Citation

  • Justin L. Davis & Kevin Krieger, 2017. "Preseason bias in the NFL and NBA betting markets," Applied Economics, Taylor & Francis Journals, vol. 49(12), pages 1204-1212, March.
  • Handle: RePEc:taf:applec:v:49:y:2017:i:12:p:1204-1212
    DOI: 10.1080/00036846.2016.1213367
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    References listed on IDEAS

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    1. Andy Fodor & Michael DiFilippo & Kevin Krieger & Justin Davis, 2013. "Inefficient pricing from holdover bias in NFL point spread markets," Applied Financial Economics, Taylor & Francis Journals, vol. 23(17), pages 1407-1418, September.
    2. William Dare & A. Steven Holland, 2004. "Efficiency in the NFL betting market: modifying and consolidating research methods," Applied Economics, Taylor & Francis Journals, vol. 36(1), pages 9-15.
    3. Justin L. Davis & Andy Fodor & Michael E. Pfahl & Jason Stoner, 2014. "Team interdependence and turnover: evidence from the NFL," American Journal of Business, Emerald Group Publishing Limited, vol. 29(3/4), pages 276-292, September.
    4. Nancy Ammon Jianakoplos & Martin Shields, 2012. "Practice or Profits," Journal of Sports Economics, , vol. 13(4), pages 451-465, August.
    5. Zuber, Richard A & Gandar, John M & Bowers, Benny D, 1985. "Beating the Spread: Testing the Efficiency of the Gambling Market for National Football League Games," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 800-806, August.
    6. Bryan Boulier & H. O. Stekler & Sarah Amundson, 2006. "Testing the efficiency of the National Football League betting market," Applied Economics, Taylor & Francis Journals, vol. 38(3), pages 279-284.
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    Cited by:

    1. Christian Deutscher & Bernd Frick & Marius Ötting, 2018. "Betting market inefficiencies are short-lived in German professional football," Applied Economics, Taylor & Francis Journals, vol. 50(30), pages 3240-3246, June.

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