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Is the NFL betting market still inefficient?

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Abstract

In this paper, I examine market efficiency in the National Football League betting market. In the point spread market, sportsbooks appear to underestimate the abilities of the home team as they are more likely to cover the spread when they are a substantial underdogs and when the home team has not covered the spread in its previous games. In the totals market, games are more likely to cover the over when the closing line is small or large showing a quadratic relationship to game outcomes and when the home team has covered the over in its previous games. Overall, the results show that both the point spread and totals market are statistically inefficient.

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Notes

  1. The America Gaming Association notes that about 97% to 98% of wagers are done illegally outside of Nevada.

  2. $110 divided by $210 provides the 52.38%

  3. This paper follows Paul and Weinbach (2005) and uses information about the teams last 2 games to use as the hot hand.

  4. A variable to examine how the hot hand of covering the previous two games for the home and away team is not included as there is no evidence from Table 1 that it would cause a significant result. Results are consistent if these variables are included in the model.

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Authors and Affiliations

  1. Oklahoma State University, 405c Business Building, Stillwater, OK, 740748, USA

    Corey A. Shank

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  1. Corey A. Shank
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Correspondence to Corey A. Shank.

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Shank, C.A. Is the NFL betting market still inefficient?. J Econ Finan 42, 818–827 (2018). https://doi.org/10.1007/s12197-018-9431-4

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  • DOI: https://doi.org/10.1007/s12197-018-9431-4

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