:: This “How Sportsbooks Set Betting Lines” was written by Trace Fields that appeared in our print edition.
I hope everyone had a good week. This week I have a few NCAA games I have analyzed, they can be found at the end of this article. My article this week looks at how the line is created. It is always a good article to start the season off as it provides a basis for understanding what the line is based on, and the goal trying to be achieved by the linesmakers. Have a great weekend and we’ll see you next week.
The line originates out of Las Vegas, mostly through Las Vegas Sports Consultants. LVSC supplies the opening lines to most of the major casinos. Football odds for the next week are usually posted Sunday night. Linemakers such as LVSC try to handicap the sports bettors that create most of the monetary action. The linemaker puts himself in the shoes of the sports bettor and predicts how the bettors will react to the betting situation. The betting situation involves six key factors: overall talent, technical analysis, public perception, location, current form, and injuries.
The linemaker will first access overall talent through computer power ratings. The Sagarin computer power ratings in USA Today are an example of this type of computer power rating. The computer power rating gives linemakers, such as LVSC, a baseline to start their power rating for each team.
The linemaker will then adjust the team power ratings higher or lower based on current form and public perception. Current form is concerned with how the team is playing within the last two or three games. If the team is recognized as hot by the linemaker over the last two or three games the linemaker, in this case, would add additional points to a team’s power rating to account for this current form. The current form of a team can be very poor, as they might have played badly over the last two or three games and the linemaker will account for this by adjusting the power rating downward. Current form and public perception are related with a hot or cold team.
The linemaker knows the public is influenced by the most recent performances and that is why the line is adjusted. The natural actions of the linemaker take advantage of the public by adding addition points to a team’s power rating that is playing strongly. The linemaker knows the public wants to play “on” this team. On the other hand, the linemaker also knows the public wants to play opposite of a team that is playing poorly, so additional points are deducted from the power ratings. Even though linemakers deny it, the line is fiendishly designed to take advantage of the public as the public reacts to current performances.
The linemaker is concerned about public perception because even though the line is designed to even the monetary action on wagers bet in the real world, that is not the case, as sports books always get stuck sitting on one side or the other. For simplicity’s sake I will use a typical NFL Sunday as an example. Let’s say there are thirteen games on an NFL Sunday, a sports book will have little betting action on four of those thirteen games, even money action on five of those thirteen games, where both sides are bet equally, and four games where the casino is sitting on one side of a game, as the public has made a one-sided wager on a particular team they favor. The linemaker has to win half of those four games where the public has bet on one-side to make money for the casino. In this example that means the casino has to win two of the four games the public has significant one-sided wagers on. So the linemaker is very concerned about public perception, as he wants to beat the public on these four games if possible and get at least half of them in the long run. The linemaker knows that NFL bettors, as a general rule, do little technical analysis and rely on team reputations. This is basically saying people who play NFL games are not working very hard towards analyzing why Denver is beating the spread through a 50/50 run/pass balance while holding the opposition to less than 3.4 yards per carry. The NFL bettors are basically thinking Denver is good and I think they will beat the Chargers by 17. Never mind that the Broncos’ power rating is only 10 points above the Chargers, they are coming off of a huge revenge win over the Raiders, and the linemaker knows the entire NFL betting world wants to play them this week also. It is clear the linemaker wants to predict public perception in the world of NFL handicapping. When people wager on teams they are either betting for or against teams. After a couple of weeks the linemaker knows which teams the public favors and the power ratings will be adjusted accordingly.
The linemaker will then subtract the adjusted power ratings from one another, depending on which teams are playing. This will give a power rating spread for the game. From this power rating spread the linemaker will adjust the spread, accounting for the other factors. Technical analysis is the study of special circumstances that affect team performance. The technical analysis factor will depend on historic information complied by the linemaker through the use of computers. An example of a technical analysis factor would be that Oklahoma is 1-9 against the spread (ATS) the last ten years the week after playing Texas. Will that be the case this year? The linemaker makes his judgment and moves the spread. Note that technical analysis plays a larger role for the linemaker in the NFL than it does in college. The linemaker looks more towards talent and public perception in the college game. Whatever is driving the betting dollars, the linemaker will find it and adjust the line because of it.
The location in football is said to make an average of a 4-point difference in advantage to the home team in college football. This is misleading to use because some teams have much stronger home field advantages than others. Obviously, paltry attendance for a poor team might result in a NEGATIVE home field rating! It is unusual, but not out of the question. On the other end of the spectrum, a team like Nebraska could have a home field rating as high as 8 points for their great fans and performance at home in the past. The point is to determine what the home field situation is for the teams in question and not use the 4-point advantage as a general rule. The home field advantage is already built in to the line that was opened up on Sunday night. Do not make the mistake of assuming a set 4-point home field advantage as they are all different.
The linemaker always accounts for injuries in the opening betting line. So many times bettors get caught up in the fact that a team’s starting quarterback is injured and use it as an excuse to play the game against the injured team. The linemaker has already built a 3-point swing into the line to adjust for the above injury. This is a very standard adjustment for a quarterback. The question the bettor has to ask is, “How good is the replacement?”. The linemaker knows, do you? The key point is the only time the linemaker has not adjusted for an injury is if the injury occurred after the opening line has been released. It is very difficult, if not impossible to take advantage of this situation because most of the sports books use information services which alert them before you see the injury broadcast on ESPN! A significant injury to a quarterback or other skill player might result in the game becoming circled. This means a lower maximum bet limit has been set on playing the game. A sports book might lower the limit from $10,000 to $2,000. This should affect only the larger sports bettors.
There you have a basic overview of how the betting line is created. Good luck this weekend.