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Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior

Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior . Rodney J. Paul Andrew P. Weinbach Jiaxin wang Sport finance Mar.20th. Introduction. C hallenged the traditional view of sportsbook behavior

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Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior

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  1. Price Setting in the NBA Gambling Market: Tests of the Levitt Model of Sportsbook Behavior Rodney J. Paul Andrew P. Weinbach Jiaxin wang Sport finance Mar.20th

  2. Introduction Challenged the traditional view of sportsbook behavior The goal of the sportsbook is to set prices to maximize profits, not to clear the market. Common criticism about Levitt model: the use of data from a betting tournament Explores the betting market for the NBA

  3. Regression and Betting Simulation Results For the sides market: For the total market:

  4. Results for the sides and total market for the NBA

  5. Betting Simulations of Wagering on the Less Popular Propositions

  6. Betting Simulations of Wagering Against Public Sentiment

  7. Conclusion Favorites receive a disproportionate share of NBA pointspreadbets. The percentage of bets the favorite receives increases with each additional point of the pointspread. Overs receive a much higher percentage of bets compared to unders. Taking a contrarian position and betting against public sentiment is not found to win more often than implied by efficiency.

  8. Thanks!

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