Do Sportsbooks Accurately Price Money Line Odds?

Abstract

Employing a unique NFL gambling dataset that includes both spread and money line data, we examine the disconnect in profitability between similar betting strategies across the two markets. If a naïve bettor wagered $110 on the favorite in every game against the spread (money line) he or she would, on average, lose $4.50 ($4.53) per game. Conversely, if the same bettor wagered $110 on the underdog every game he or she would, on average, lose $3.11 per game in the spread market, but lose less than 1 cent per game in the money line market. Further examination shows that a bettor could earn a 2.17% return betting the money line on the underdog if the closing spread was 7 or less and greater than 3, and 6.55% if the spread is 3 or less. As such, our results challenge the market efficiency of the NFL betting market and have important implications for sportsbooks and bettors.