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bookmaking - is there a science to it?

The latest Journal of Prediction Markets features an article looking at ' Does Sportsbook.com Set Pointspreads to Maximize Profits? Tests of the Levitt Model of Sportsbook Behavior'

Looks like an interesting read but can't see myself paying $40 for the privilege.

Amongst their findings:

Abstract:
The Levitt (2004) model of sportsbook behavior is tested using actual percentages of dollars bet on NFL games from the internet sportsbook, Sportsbook.com. Simple regression results suggest that Sportsbook.com sets pointspreads (prices) to maximize profits, as the Levitt model assumes, not to balance the betting dollars, as the traditional model of sportsbook behavior assumes. Sportsbook.com is found to accept significantly more wagering dollars on road favorites, larger favorites, and on the over for the highest totals in the over/under betting market. Bettor liquidity constraints and sportsbook betting limits may help explain this result.



All sounds pretty logical to me - if there's ever a time you want to take on a favourite, it's when they are away from home. On stronger (larger) favourites, then the risk is far less anyway and mug punters love the overs so the smarties are generally on the unders. Not rocket science, but worth learning how and where bookies try to make money from punters.

Here's the link

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