Evidence of Betting Market Intraseason Efficiency and Interseason Overreaction to Unexpected NFL Team Performance 1988-2006

Steven G. Sapra
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Steven G. Sapra: Analytic Investors, Los Angeles, and Claremont Graduate University, steve.sapra@gmail.com

Journal of Sports Economics, 2008, vol. 9, issue 5, 488-503

Abstract: A structural model is derived describing the relationship between the probability that the favored team is victorious and the point spread through the use of a "no-arbitrage'' condition. A series of probit models are developed that show that NFL wagering markets were efficient within season during the period 1988-2006 and that the point spread is a statistically significant indicator of probability of victory. A team-level excess performance metric is estimated, termed an NFL Alpha, that indicates the extent to which a team's on-the-field performance exceeded betting market expectations. Finally, it is shown that there exists a market overreaction effect for NFL Alphas across seasons.

Keywords: sports betting; market efficiency; probit; NFL; Alpha (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:9:y:2008:i:5:p:488-503

DOI: 10.1177/1527002507311726

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