Sports Betting

Sports betting is the activity of predicting sports results by making a wager on the outcome of a sporting event. Betting on team sports has become an important service industry in many countries. For example, millions of Britons play the Football Pools every week.The key sports that most bets are placed on include: Pro Football, Basketball, Soccer, Hockey, and Baseball. This article will look more in depth into the history of sports betting, different possible types of bets and how the opening line is determined.

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History

Sportsbook in Vegas

Sportsbook in Vegas

People have been informally betting on sports just about as long as there have been sporting events. Organized sports betting took off in the United States at the horse racing tracks that sprang up in the 1800s. Betting really caught on in the early 1900s when the pastime became more accessible to the middle and lower classes. Las Vegas gambling was legalized in 1931 but in the early days the only places to get a bet in were called “turf clubs” and were nothing like the sophisticated sportsbooks that are in the town nowadays. It wasn’t until 1958 when a reputed Chicago gangster by the name of Sam “Momo” Giancana got sports betting started big in Las Vegas at the Stardust. As more and more sporting events began to get televised in the ‘70s, sports betting really took off and started to gain mainstream popularity. As Vegas started to get bigger in the ‘80s, online gambling took off with the invent of the internet. Although it was limited to just a few sportsbooks in the early years and was never really a threat to the Las Vegas income at the time, it has become a force to be reckoned with currently. There are hundreds, if not thousands, of online sportsbooks currently and you can place a bet from almost anywhere in the world. Today, betting on sports is more popular then ever before.Last year, Nevada took in almost $2 billion in betting from more than 150 sports books in the state. That is just asmall percentage, however, of the money bet worldwide. An ESPN The Magazine article published in 2003 estimated that the onlinesports betting industry takes in $63 billion a year. It has also been estimated that one in every four Americans bets ona sporting event at least once a year and that 15 percent ofthe U.S. population bets on sports regularly.

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Different Type of Bets

The Point Spread

A parlay bet consisting of a spread bet and a moneyline bet

A parlay bet consisting of a spread bet and a moneyline bet

The point spread is used in high-scoring sports like football and basketball. The spread gives one team an advantage of a few points. Standard notation for the point spread shows the favored team first, followed by a negative number (the actual spread). The home team is shown in capital letters. So if Dallas was playing against Philadelphia in Philadelphia, and they were favored to win by seven points, it would look like this:

Dallas -7; PHILADELPHIA

If someone bets on Dallas to win, Dallas would actually have to win by more than seven points for the bet to win. It’s as if Philadelphia were given a seven-point lead at the start of the game.

The Money Line

The money line is used in sports that are not that high-scoring like baseball and hockey. A money line listing might look like this:

CANUCKS -120; Avalanche+110

If you want to bet on the favored team, the Canucks, you have to bet $1.20 for every $1 you want to win. If you want to bet on the underdog Avalanche, you have to bet $1 for every $1.10 you want to win. Chances are greater that the favored team will win the game, so it costs more to bet on the favorite to win that amount than it costs to bet on the underdog.

Here’s an example: Imagine that using the money line above with the Canucks and the Avalanche, you want to win about $100. If you place your bet on the favored Canucks, you will pay the bookie $120. If you win, you get your $120 back, plus $100 in winnings. If you lose, the bookie keeps your $120. If you bet $100 on the Avalanche, you’ll get $110 in winnings if they win, and only lose $100 if they lose.

Pick’em

Sometimes money line games will be listed as “pick” or “pick’em.” This means that the teams are considered equal, and the line on both teams is -1.10. Betting on either team requires $1.10 per $1 in potential winnings.

Over/Under

An over/under bet is a wager in which a sportsbook will predict a number for a statistic in a given game (usually the combined score of the two teams), and bettors wager that the actual number in the game will be either higher or lower than that number.

Parlay

A parlay is just a combination bet. Instead of making five separate bets on five different games, the bettor places a single parlay bet, hoping he or she can predict the outcome of all five games. If any one of the games is a loser, the entire parlay is a loser. The payout is better for parlays, because the odds of successfully picking multiple winners are much tougher to beat.

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How the Betting Line is Determined

LVSC_logo234x100

Las Vegas Sports Consultants (LVSC) is the world’s premier oddsmaking company and the most respected authority on making the lines. There are four or five oddsmakers assigned to make lines for each of the major sports (Pro & College Football, Basketball, MLB, NHL, Boxing, Soccer, and Golf). Each of these oddsmakers brings unique opinions, strengths and weaknesses to the process.

In an interview, Seba, a senior oddsmaker for LVSC explained, “The #1 thing for us is to make a line for each game that creates good two-way action. We do this by drawing from past experiences and applying them to current situations. People think it’s much more complicated, but it’s not.”

What Is the Line Trying to Accomplish?

Many people believe that the point spread represents the oddsmaker prediction of how many points the favorite will by. However, that is not true at all. The intent is not to evenly split the ATS (against the spread) result between the teams; rather, their goal is to attract equal betting action on both sides. Stated another way, they want to create a line that half the people find appealing to bet one way while the other half find it appealing to bet the other way (known as ‘dividing the action’).

How the Opening Line Is Made

There is an entire method to how the opening line is created. The opening line is the first line created by oddsmakers, which is then sent out to all sportsbooks. The first step is that each oddsmaker creates a line on each game based upon their own personal approach. This usually includes having up-to-date power ratings on each team. Power ratings are the oddsmaker’s value of each team and are used as a guide to calculate the “beginning” pointspread on a future game.  The powers are adjusted after each game that certain team has played. However, if a team does not play than factors that would require an adjustment to a team’s power rating include:

  • Key injuries
  • Player trades
  • Amount of time off between games

Once a game’s power rating based point spread is determined, then the oddsmaker will make more adjustments to that line considering the team’s recent games played and games previously played against that opponent. Also, adjustments can be made by after reading each team’s local newspaper to get a sense of what the coaches & players are thinking going into that particular game.

The next step into determining the line is to look at public perception and betting patterns by the public on a certain game. For example, the public may have heavy betting interest week after week on a popular college basketball team such as North Carolina. If an oddsmaker comes up with a beginning line of North Carolina -8, then an adjustment up to -8.5 or -9 would be made in response to the public’s expected North Carolina bias.

The final step in making the line is taking one final look to determine whether or not the line feels right. The oddsmaker common sense and past experience with how games are bet comes into play. After the final line is made than a discussion among the four to five oddsmakers involved is conducted and a consensus line is decided by the Odds Director before it is released to the sportsbooks. Usually, two of the most respected oddsmaker’s opinion is weighed more heavily by the Odds Director before setting the final line.

Why the Line Changes

Once the opening line is released by LVSC, the individual sportsbooks decide if they want to make any adjustments before offering it to the public. Reasons for such adjustments include:

  • Experts working for the individual books having a strong opinion on the game
  • Individual books having players who consistently bet with certain tendencies (such as an extreme bias toward favorites or toward a certain popular team like North Carolina)

The purpose of these adjustments, like all line adjustments, is to more equally divide the betting action. Once betting begins, sportsbooks can adjust the line at any time. In doing so they attempt to make more attractive the team that is getting less action. By moving the line, sportsbooks can influence how the public bets on a particular game. For example, if the pointspread on a game is 7 and most of the money is coming in on the underdog (taking the +7), sportsbooks will then move the number down to +6 to try and attract money on the favorite. Moving the line is the oddsmaker’s effort to balance betting action, and often times such moves can have a major impact on a bettor’s decision. Oddsmakers can also change the line depending on event related factors such as injuries or the weather.

“The main objective is that our clients get equal action on both sides,” Seba explained. “We’re not trying to pick the team that covers the spread; we’re trying to make it a coin flip, a tough decision (for the bettor). If we’ve done that, we’ve done our job.”

Example of a line change for a basketball game throughout the day

Example of a line change for a basketball game throughout the day

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About the Author

Manpreet Athwal is a second year Business Operations Management student at British Columbia Institute of Techonolgy in Burnaby, British Columbia. This research article ssigment was made for Cyri Jones, instructor of the Project Management Course that is offered at the University.

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References

http://en.wikipedia.org/wiki/Sports_betting

http://www.sportsbettingworld.com/history-of-sports-betting

http://entertainment.howstuffworks.com/sports-betting1.htm

http://sportsgambling.about.com/od/sportsgambling101/a/bettingbasics.htm

http://en.wikipedia.org/wiki/Parlay_(gambling)

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