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Sentiment Bias in National Basketball Association Betting

Author

Listed:
  • Arne Feddersen

    (University of Southern Denmark, Department of Environmental and Business Economics)

  • Brad Humphreys

    (West Virginia University, College of Business and Economics)

  • Brian Soebbing

    (Louisiana State University, School of Kinesiology)

Abstract

We develop evidence of bettors with sentiment bias in the betting market on National Basketball Association (NBA) games. We use novel measures of team popularity, arena capacity-utilization and team all star votes received, as proxies for the presence of biased investors. Analysis of point spreads and bet outcomes for more than 33,000 NBA games played in 1981-2012 shows that bookmakers offer favorable point spreads on games involving popular teams, an outcome consistent with sentiment bias. These favorable point spreads do not translate into higher returns for informed bettors, suggesting that bookmakers shade point spreads to increase their profits.

Suggested Citation

  • Arne Feddersen & Brad Humphreys & Brian Soebbing, 2013. "Sentiment Bias in National Basketball Association Betting," Working Papers 13-03, Department of Economics, West Virginia University.
  • Handle: RePEc:wvu:wpaper:13-03
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    File URL: http://be.wvu.edu/phd_economics/pdf/13-03.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Igan, Deniz & Pinheiro, Marcelo & Smith, John, 2015. "A study of a market anomaly: “White Men Can’t Jump”, but would you bet on it?," Journal of Economic Behavior & Organization, Elsevier, vol. 113(C), pages 13-25.
    2. Arne Feddersen & Brad R. Humphreys & Brian P. Soebbing, 2017. "Sentiment Bias And Asset Prices: Evidence From Sports Betting Markets And Social Media," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 1119-1129, April.
    3. Benjamin Waggoner & Daniel Wines & Brian P. Soebbing & Chad S. Seifried & Jean Michael Martinez, 2014. "“Hot Hand” in the National Basketball Association Point Spread Betting Market: A 34-Year Analysis," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 2(4), pages 1-12, November.
    4. Rostislav Staněk, 2017. "Home bias in sport betting: Evidence from Czech betting market," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(2), pages 168-172, March.

    More about this item

    Keywords

    sentiment bias; sports betting; NBA;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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