NFL Betting Biases, Profitable Strategies, and the Wisdom of the Crowd
I find that betting biases in the NFL market extend beyond preferring the favorite and the over. The results show that the percentage of wagers on the favorite team increases as more bettors place wagers, bettors have a preference for betting against the line movement, and they prefer to bet on the favorite when the away team has lost recent games. Furthermore, bettors have a nonlinear preference in the point spread betting, as they are less likely to wager on the favorite when the spread is small or large. In the totals market, bettors wager the over when the home team has covered the over in recent games. Finally, using a contrarian strategy when 50% to 60% of bettors place the same wager is shown to make economic profits. These results have important implications, as the sportsbook can use them to create betting lines to maximize profit.
JEL classification: D7, G14, L83