Sportsbooks and Betting
Do sportsbooks balance their betting action? The easy answer is – ‘sometimes’. It can depend on a number of factors including the size of the sportsbook. Although balancing the action is often preferred, it isn’t critical for a healthy betting company because they have a built in margin, so most of the bets they lay will have a built in advantage. I say ‘most of the bets’ because a few shrewd bettors will take that advantage from the sportsbook e.g if they get on the right side of a moving line. But over the long term, regardless of the balance of action, the ‘book’ should do well.
If you analyse it, sportsbooks rarely manage to put up a line that doesn’t move. So the line rarely divides opinion down the middle. If the line was perfect, it wouldn’t move because it would attract equal action on both sides. Contrary to popular opinion, this is not actually what the sportsbook wants. If say the spread was a whole number eg. -8 / +8 and it attracted equal action and the game went on to finish bang on the spread at 8 points – then the line would be ‘too good’. Bets would have to be refunded due to the ‘push’ and the whole exercise would have been for nothing.
The best situation for the sportsbook is to open the line at say 8.5 or on a half number (whole number +0.5) and get perfectly equal action on both sides. This never really happens.
So the precision of the line is not really an issue because if the line were too accurate, then too many games would land on the number and the bookmaker would not make his money.
The odds-maker wants to create a line that is not too precise but precise enough so that the public think that the line is right.
One of the problems that the sportsbook may encounter in attracting betting on a team and then moving the line to attract betting on the other team, is that he may fall victim to ‘middlers’. Middlers are generally quite shrewd bettors who bet both sides of the line hoping to profit on both bets due to the movement of the spread, whilst keeping their downside minimal. The best scenario is that they win both sides and the worst scenario is that they win one bet and lose the other for a minimal loss.
Sportsbooks don’t like these types of bettors. If they are forced to move their line from e.g. -6/+6 to +7/+7.5 the opportunity then exists for middlers to take the -6 on one team and the +7.5 on the other. If the game lands on ‘7’ then the bettor/middler could win both sides of their bet.
In summary however, bookmakers do not want to put up a sports betting line that is too accurate.
Sportsbooks & ‘Shading’ Lines
So what does shading a line mean? A sportsbook will use this method to make a bit more money on a game by predicting the big favorites or ‘public’ team. Public teams tend to be bet on by a large percentage of bettors because they are doing well or because they have endeared themselves in some way to the people. Public teams are bet on not just by the fans of that team but also by people who just want a bet.
Naturally some caution is always advisable when taking up a position against a popular team. Some of these teams are on a roll or streak that might be hard to break. They could be getting better and better and covering the spread in subsequent games. Each match up needs to viewed on its merits.
There are geographical implications too. Many sportsbooks report that clients from the Chicago area will bet the Bears regardless of how well they are doing, just as sportsbook players from California are usually on the Raiders or 49 ‘ers, or East Coast residents will be betting on the Giants, Jets or Patriots. These are loyal fans who bet with their hearts and not with their heads and generally don’t mind dropping a few dollars on their team.
Shading, amounts to a sportsbook taking advantage of bettors tendency to bet popular favorites. If an NFL favorite is estimated at -2.5 on the points spread – the sportsbook might well decide to shade the line to -3. That half a point moves the line onto a critical number and that could pay dividends to the book if the money from bettors keeps rolling in.
Where one situation exists it is often true that an opposite opportunity also exists. There are of course teams that people dislike. In the NFL a classic ‘anti-favorite’ are the Detroit Lions. Sportsbook players love to bet against teams like this with great regularity. Once again this creates value opportunities as lines are adjusted to try and draw some action on these unpopular names.
Finally, a week is a long time in sports and when a popular team disappoints on the field, it disappoints the bettors too. There is not a huge amount of loyalty in the heart of a sports bettor and that popular team is often dropped as a sports or football betting proposition, while another is quickly adopted.
Supply, Demand and Betting Line Movements
Most people understand the principles of supply and demand. If a product is in short supply its price will generally rise, conversely if a product is in abundant supply its price will generally fall. The world is full of examples, the controlled supply of diamonds keeps their price high; after a bad storm timber prices often fall due to the sudden volume that hits the market. It is the same in betting.
Let’s take an NFL example of the Indianapolis Colts v The Baltimore Ravens. We’ll put the line at -5 (Colts) +5 (Ravens). Now the action rarely comes in equally on both teams for a sportsbook, so in this situation let’s say that the Colts are attracting a lot of action, while the Ravens only a little.
Traditionally sportsbooks liked to keep their odds at around the -110 on the spread which meant that the spread ‘number’ has to move. The alternative is to keep the number the same e.g. ‘-5’ and move the odds e.g -112 or -108 and so on.
With an imbalance in the action due to the demand for the Colts, the bookie is forced to make the Colts more ‘expensive’ by making their ‘number’ less attractive to the public. He’ll make the Ravens more attractive to the public by adjusting their number, making them cheaper. This raising and lowering of the ‘price’ is therefore achieved via the spread / number.
So we’ll say that the Colts now trade at -6 and the Ravens at +6. It has now become less likely that the Indianapolis Colts will cover the spread than at -5, so they are less likely to turn a profit and, therefore, have become more expensive. By the same token, the Ravens are more likely to cover the spread, so they are more likely to turn a profit and, therefore, have become cheaper.
Today, with new software and a wealth of information available over the internet to players and sportsbooks, lines are adjusted more than ever before, whether it be adjustments in the line or tweaks in the price. Often it is both. Yet the rules of simple supply and demand still exist and remain a crucial fundamental for all sportsbooks and lines-makers.
‘Scalping’ the Line
Scalps are worth looking out for because they are basically free money – it’s just that the decent ones are rare.
With the nature of the web and online sportsbooks competing for customers’ business, lines are getting more and more attractive, as each attempts to lure the bettor. This is how the opportunities crop up.
For example in a baseball game Team 1 is listed at -130 and Team 2 at +125. At another book the line for the same game is -140 for Team 1 and + 134 for Team 2. If you bet the -130 from one sportsbook and the +134 from the other, you would be guaranteed a profit. It is basic arbitrage.
By placing 130 USD on Team 1 to win 100 USD and 100 USD on Team 2 to win 134 USD, you create a ‘no loss’ situation. If Team 1 wins – you lose your 100 USD stake on Team 2 but win 100 USD on Team 1, so you are no worse off. But if Team 2 wins, you lose your Team 1 stake of 130 USD but gain your team 2 win of 134 USD – a profit of 4 USD with no risk. If you are placing e.g 1000 or 2000 USD for your stake thats a risk free profit of 40 or 80 USD
This above example is known as a ‘scalp’ as it involves the moneyline. Where point spreads are concerned the term is known as ‘middle’ or ‘middling the line’ – which we discussed earlier.
What the heck is Vigorish?
Vigorish, in sports betting, is effectively the sportsbook’s charge or commission for taking your bet. The ‘vig’ is really no different to a moneylender’s handling fee or a stock broker’s transaction charge.
On a standard point spread price of -110 (also expressed as 10/11 or 1.91) the customer will have to bet $11.00 to win $10.00.
So if you take a rudimentary example of two bettors each betting $11.00 in the point spread market on an NFL game. One bettor goes for Team A, the other for Team B. The sportsbook takes a total of $22.00 from the two customers.
For the purposes of simplicity we will take out the possibility of a ‘push’ (tie) in this example. We know that one bettor will have to win and the other bettor will have to lose. The winning bettor will receive back his $11.00 stake and his winning profit of $10.00. The losing bettor forfeits his stake of $11.00 which goes into the sportsbook’s coffers.
The sportsbook ends up with $1.00 in commission / profit. Naturally the higher the stakes the more commission the sportsbook will receive. $110.00 bets would provide $10.00 in commission, $1100.00 bet would provide $100.00 in commission.
With money coming in from thousands of customers, many of them betting on more than one game, you can see how the sportsbook can turn a decent profit.
It is not the losing player that pays the ‘vig’ to the sportsbook. The losing bettor simply loses his bet, period. The winning player pays the ‘vig’ from his winnings.
In effect you don’t ‘win money from the sportsbook’ but win money from other losing players. The sportsbook is the broker and it is in partnership with the sportsbook that you have won your money from another player / other players.
So when you see a tout or picks service advertisement stating: “We took down the Man (sportsbook or bookie) again!” or “We gave the bookmakers a hammering last night…” you can be pretty sure that they don’t understand how sportsbooks operate or, perhaps, do know and simply wish to grab business from novice clients by whipping them up into a betting frenzy!
I hope this has been a useful insight into how sportsbooks operate in some betting scenarios.