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

Rodney Paul and Andrew Weinbach

International Journal of Sport Finance, 2008, vol. 3, issue 3, 137-145

Abstract: Levitt (2004) suggested that sportsbooks do not set prices in the NFL to clear markets, as was commonly assumed, but set prices to maximize profits. This paper uses actual betting data from four sportsbooks to test the Levitt (2004) hypothesis in the NBA. For a sample of the 2004-05 to 2006-07 seasons, it is shown that favorites receive a disproportionate share of NBA pointspread bets. In addition, the percentage of bets the favorite receives increases with each additional point of the pointspread. In the totals market, it is shown that overs receive a much higher percentage of bets compared to unders and the percentage bet on the over increases with each point of the total. Unlike the NFL, however, taking a contrarian position and betting against public sentiment is not found to win more often than implied by efficiency.

Keywords: efficient markets; gambling; sportsbook (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
http://wvuecommerce.wvu.edu/index.cfm?do=product.p ... id=70&sub_cat_id=470 (text/html)
Full-text download requires subscription from FIT.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jsf:intjsf:v:3:y:2008:i:3:p:137-145

Ordering information: This journal article can be ordered from
http://www.fitinfote ... IJSFbackissueWVU.tpl

Access Statistics for this article

International Journal of Sport Finance is currently edited by Arne Feddersen, Babatunde Buraimo, Joachim Prinz and Jane Ruseski

More articles in International Journal of Sport Finance from Fitness Information Technology
Bibliographic data for series maintained by Victor Matheson ().