Introduction to Wagering on National Football League Games
Intro
The problem of estimating the outcome of the National Football League games started to gain attention in the literature only since the 70's! Most of these authors, not all, argue that one can try to estimate the spread or build profitable wagering strategies by using outcomes of games from past seasons. Some of these strategies are simple and easy to understand while others require high-level statistical background. My interest is in the statistical wagering strategies, but why use these if the simpler methods work better? So, we will first look at the simple, non-statistical approaches to wagering in the next blog, Simple Wagering Strategies. Here, for those not familiar with NFL wagering, I will briefly discuss how it works.
Wagering on NFL Games
The gambling procedure for the NFL is quite trivial. Each week bookmakers establish a point spread (or just the spread) for each of the games. The bettor wins if the bet is placed on the favorite team and the favorite team wins by more than the point spread or if the bet is placed on the underdog and either the favorite team does not win by more than the point spread or the underdog wins the game. The bookmaker charges a 10% ante on all bets. That is, if a $100 bet is placed ($110 with the ante) and wins, the bettor is paid $100 and keeps the ante; if the bettor loses she pays $110. In order to break even, how many winning bets does the bettor need? 52.38%. (Say p=proportion of winning bets then to break even solve 100p=110(1-p) which give p=.5238 or 52.38%.) .
I am not a bookmaker nor do I intend to be. Hence, I do not know exactly how they arrive at the point spread. I do know that their intentions are not to predict the true point spread but to separate the population in half. This way, the bookmaker can guarantee 5% profit regardless of the outcome of the game (10% from half of the betting population). It is for this reason that many researchers believe there must be a profitable strategy. But which one? And if people find about it, will it still be profitable? So why am I wasting my time trying to find strategies in football wagering? In short, because I'm a statistical geek.
This study is a competition between strategies. I could have gathered the data from previous years, obtained the results immediately and found out which strategies were more profitable, but I find it more amusing to test this strategies in real-time. Watching NFL games with friends is fun. Talking about players' expected performances is better than listening to the guys on ESPN. Seeing your predictions unfold right in front of your eyes, priceless.
Performance of wagering strategies and picks in this blog are based solely on profitability against the mother of all bookmakers, Vegas baby! Of all the websites giving the Vegas daily point spreads, I will use the winner of the Google search algorithm keyword Vegas point spreads: www.vegas.com/gaming/index.html. All wagering strategies are data-based, that is, no feelings, preferences, or opinions about a city or team are taken into consideration. Only the past performance of each team (or player) until the day before the game is used.
On a side note, don't try this at home! Sports betting (online and offline) and specifically betting on the outcome of football games is not only illegal in most states, but a very risky endeavor. I do not encourage anybody to use the strategies I will discuss in real gambling situations since even the authors that claim to have found profitable strategies, only made at most 5% on their money, which is what I'm currently getting in my risk free CD at my local bank.
The problem of estimating the outcome of the National Football League games started to gain attention in the literature only since the 70's! Most of these authors, not all, argue that one can try to estimate the spread or build profitable wagering strategies by using outcomes of games from past seasons. Some of these strategies are simple and easy to understand while others require high-level statistical background. My interest is in the statistical wagering strategies, but why use these if the simpler methods work better? So, we will first look at the simple, non-statistical approaches to wagering in the next blog, Simple Wagering Strategies. Here, for those not familiar with NFL wagering, I will briefly discuss how it works.
Wagering on NFL Games
The gambling procedure for the NFL is quite trivial. Each week bookmakers establish a point spread (or just the spread) for each of the games. The bettor wins if the bet is placed on the favorite team and the favorite team wins by more than the point spread or if the bet is placed on the underdog and either the favorite team does not win by more than the point spread or the underdog wins the game. The bookmaker charges a 10% ante on all bets. That is, if a $100 bet is placed ($110 with the ante) and wins, the bettor is paid $100 and keeps the ante; if the bettor loses she pays $110. In order to break even, how many winning bets does the bettor need? 52.38%. (Say p=proportion of winning bets then to break even solve 100p=110(1-p) which give p=.5238 or 52.38%.) .
I am not a bookmaker nor do I intend to be. Hence, I do not know exactly how they arrive at the point spread. I do know that their intentions are not to predict the true point spread but to separate the population in half. This way, the bookmaker can guarantee 5% profit regardless of the outcome of the game (10% from half of the betting population). It is for this reason that many researchers believe there must be a profitable strategy. But which one? And if people find about it, will it still be profitable? So why am I wasting my time trying to find strategies in football wagering? In short, because I'm a statistical geek.
This study is a competition between strategies. I could have gathered the data from previous years, obtained the results immediately and found out which strategies were more profitable, but I find it more amusing to test this strategies in real-time. Watching NFL games with friends is fun. Talking about players' expected performances is better than listening to the guys on ESPN. Seeing your predictions unfold right in front of your eyes, priceless.
Performance of wagering strategies and picks in this blog are based solely on profitability against the mother of all bookmakers, Vegas baby! Of all the websites giving the Vegas daily point spreads, I will use the winner of the Google search algorithm keyword Vegas point spreads: www.vegas.com/gaming/index.html. All wagering strategies are data-based, that is, no feelings, preferences, or opinions about a city or team are taken into consideration. Only the past performance of each team (or player) until the day before the game is used.
On a side note, don't try this at home! Sports betting (online and offline) and specifically betting on the outcome of football games is not only illegal in most states, but a very risky endeavor. I do not encourage anybody to use the strategies I will discuss in real gambling situations since even the authors that claim to have found profitable strategies, only made at most 5% on their money, which is what I'm currently getting in my risk free CD at my local bank.
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