Abstract
The betting market for the NHL is investigated using actual betting percentages on favorites and underdogs from real sportsbooks. Sportsbooks do not appear to attempt to price to balance the book as betting percentages are not proportional to set odds. As in the NFL and NBA, bettors are shown to have a strong preference for favorites and road favorites in particular. Simple strategies of betting against significant imbalances toward the favorite are shown to generate positive returns. Although not pricing to balance the book, sportsbooks do not appear to price to exploit known bettor biases in all cases. Clear bettor behavioral biases for road favorites are not priced into the odds as the prices set in these cases appear to be a forecast of game outcomes. Pricing as a forecast may ensure long-run viability for the sportsbook as it discourages entry into this market by informed traders and still allows the sportsbook to capture its commission on losing bets over time.
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Notes
For sports with extremely large betting volume, such as the NFL, it may become worth the transactions costs to actively price to exploit known bettor biases, which could be why betting on home underdogs (against road favorites) were found to earn profits in the professional football betting market (Levitt 2004).
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Paul, R.J., Weinbach, A.P. Sportsbook pricing and the behavioral biases of bettors in the NHL. J Econ Finan 36, 123–135 (2012). https://doi.org/10.1007/s12197-009-9112-4
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DOI: https://doi.org/10.1007/s12197-009-9112-4