At the start of each term in Brian Soebbing’s financial management class, he asks students if they would always bet on the Edmonton Oilers, win or lose.
“Bookmakers know this, are good at their jobs and they take advantage of it,” he explained. 22Bet taps into fan sentiment to set odds. This helps them balance emotional betting habits with insights from data.
Recent research from Soebbing backs this up. It reveals how bookmakers exploit sentiment bias. Bettors’ loyalty often drives the market more than logic does.
The number of points that a stronger team would defeat a weaker team is predicted by a point spread. This lowers the risk for the bookies by balancing betting on both sides. A profit margin on a bet means equal action helps the bookmaker earn money, no matter who wins.
Soebbing noted that early sports betting studies often assumed bookmakers aimed to balance bets on games. This way, they could earn a profit no matter the outcome. Yet, it appeared this behaviour doesn’t necessarily occur.
“You never know why someone cheers for a team. They might love the mascot or, like in horse racing, support the underdog,” said Soebbing. “There are all these sorts of biases and one is the idea of sentiment. We’re looking at betting popularity.”
The point spreads for more than 33,000 regular-season games were compared with this data by the researchers. The competitions were held from 1981 to 2012. Soebbing started collecting this data as a U of A PhD student a decade ago.
Evening the Odds
They found that a 1% increase in the home team’s stadium capacity led to a 1.3-point boost for the home team in betting odds.
For every one percent that the home team led in all-star voting shares over the away team, bookmakers raised the spread by 0.2 points.
“Books like to make favorites, especially if it’s a popular team,” Soebbing said. “If they weren’t a favorite, they would make them a little less of an underdog.”
He is referring to a game that took place on April 12, 1996. It was between Michael Jordan’s Chicago Bulls and the Philadelphia 76ers. Bulls, at 68-9, were seeking to establish a record single-season win record of 72. They were also bound for their fourth championship. The 76ers had 18 victories in the year.
The Bulls were playing at home, which Soebbing pointed out was a significant advantage. The team discovered that the home team prevailed 62% of the time. The victory margin was less than four points from 1981 through 2012.
But this wasn’t two equal teams. Oddsmakers changed the betting line due to the perceived mismatch. They made the Bulls a record 20-point favorite.
“The Bulls’ popularity was a factor in that 20-point spread even when we look at home-court advantage, on-court success, and talent.”
The Bulls won 112-82 and covered the point spread. This result wasn’t a complete surprise, Soebbing said. Oddsmakers wouldn’t have shaded the odds very much.
Soebbing said oddsmakers can use this strategy to boost profits. But it’s a one-way street.
“In the end, if you skip betting on popular favorites or underdogs, you won’t profit from that strategy.” But the bookmakers will.”