Odds-Makers and Point Spreads

[JudgeSCR]

In various threads posters use the point spread as an indication of what the odds-maker thinks the margin of victory will be. The short answer is: it might be and it might not be depending on who the odds-maker is.

A Vegas odds-makers’ goal (and your neighborhood bookie’s goal) is to encourage an equal amount of betting on both sides of the event. When that happens they make a guaranteed profit (the “vig”), which is usually 10% of the dollars bet.

So, for instance, if those odds-makers start the betting line as UConn being a 12-point favorite over Baylor they are not necessarily saying that they believe UConn will win by 12 points. They are saying ‘we believe that we have to set the point spread at UConn winning by 12 points in order to encourage an equal amount of money to be bet on UConn and on Baylor.’ But they are NOT necessarily saying ‘we think this will be the point differential of the outcome.’

That is why betting point spreads will change from day-to-day and sometimes, in a heavily bet event, from hour-to-hour. It is not that the odds-makers thoughts on how much a team will win by change from hour-to-hour, it is that the initial odds caused heavier than expected betting on one team and they need to change the odds in order to get people to bet on the other team.

Now we also have “odds-makers” who are simply prognosticators – they are not necessarily trying to encourage betting and will make no money from it – they are just trying to predict the outcome. Those “odds-makers” ARE telling you who they think will win the event and by how much. Their reputation (to some extent) may hang on how accurate they are.

So all this is to say that we should take the Vegas (or bookie’s) point-spread with a grain of salt – unless you are planning on betting the game. The prognosticator’s point spread … two grains.

 

[phil sampieri]

Except if you have angst about our team and you see a spread of 23 points knowing exactly what you said is true, those people are seldom if ever off that much. go to sleep on it

 

[wire chief]

What remains puzzling in our Baylor game is how the odds were set when we have almost no track record and are up against a higher ranked squad.

 

[JudgeSCR]

What remains puzzling in our Baylor game is how the odds were set when we have almost no track record and are up against a higher ranked squad.

From a Vegas odds-maker's perspective it's a series of calculations. They look at past betting history, fan base enthusiasm, the teams' play, home court advantage, previous opponents, etc., throw that in the algorithm and then ask the question "where do I set the odds for people to bet evenly." My guess is that a big piece is that generally more money gets enthusiastically bet on UConn and they were trying to even the odds.

I looked at those teams (through my UConn lense) and thought Baylor by 5. Shows you what I know.

 

[Wilderness]

Betting odds also represent the collective prediction of some number of people who are putting their money on the line. It's a bit like a survey with skin in the game. In a betting market on sufficient scale, betting odds should outperform any individual prognosticator.

 

[UcMiami]

The issue with 'reading' the Vegas line is determining who is betting - the professional gamblers and most of the big money is pretty dispassionate about their bets - they are not emotionally connected to either side of the bet and just want to 'be in the action' and hopefully win. But there are a lot of amateurs who are betting their heart. In general, the amateurs are not betting enough money to sway the odds in heavily bet events, so the line reflects a pretty dispassionate guess as to what the likely outcome will be. That changes when you get into fringe events with light money and women's basketball generally falls into that category. The total money being bet on Baylor/Uconn was probably a lot less than the largest single bets on any one of the NFL games this Sunday so a single punter who decided to put $1000 on the Baylor/Uconn contest would likely have changed the odds offered immediately and he might have made the bet based on emotional reasons and not on analysis of the contest.
And occasionally on the big money events there is a human interest story that throws a whole lot of amateur money in one direction and skews the line from what the professional money thinks. Doesn't happen all that often but occasionally.