The rigid and reactive nature of a strictly numerical approach to handicapping

**xyz** · 01-17-11, 02:47 PM

I think the take away from your post is that the books have better resources and technology in processing information, so that it has an advantage over the majority of the bettors. I think that is applicable to any market, including the stock market. The same argument can be made about HFT (high frequency trading). Better technology always wins. I think there are multiple individuals in the Think Tank that actually have an edge in processing information over a subset of books. And they rightly so profit from that advantage day in and day out.

**SparJMU** · 01-17-11, 03:08 PM

Amateur speaking here, just responding with how I understand this business.....

First of all I would argue that true experts or syndicates are capable of creating better lines than Vegas/offshore books. While the books are obviously very intelligent people making nice salaries, aren't the sharpest and brightest minds out on their own betting millions of dollars, with almost no ceiling to the amount of money they can make?

I also think you are missing another point. Let's say that Vegas and professionals both have 100% perfect models that don't have a single inherent flaw.... aren't certain sportsbooks still going to shave their lines one way or another based on where they expect the action? Won't professional modelers be able to identify when the sportsbooks are intentionally offering a bad line and be able to take advantage of that?

I think there is a lot more to handicapping than blindly following numbers, but I also believe there are a lot of people out there who rely almost entirely on numbers and make a killing in the process.

**jgilmartin** · 01-17-11, 03:15 PM

Originally posted by SparJMU

First of all I would argue that true experts or syndicates are capable of creating better lines than Vegas/offshore books.

Yes.

**peacebyinches** · 01-17-11, 03:42 PM

begin incoherent rambling

Perhaps I am over estimating the abilities of the big boys out in Vegas, but I still feel that they are pretty good at what they do. The lines these days just seem so amazingly sharp... well, here is an analogy (that I am literally making up on the spot, so bear with me... again...)

Lebron James, Kobe Bryant, and Michael Jordan are some of the greatest basketball players to ever play the game (if not the best ever). They refined their skill over many many years, and a jillion hours of doing nothing but playing basketball, because that is their entire basis of their career, their work and purpose in life. The courts, arenas and facilities are where they spend their equivalent of our 9-5 work days. If I spent twice as much time over the course of my life devoted to improving my basketball abilities, I would probably still get cut from most high school basketball teams (even at 23 years old haha). I guess I would make JV, but that's assuming I put in 2 jillion hours of practice. Now, what if I went and played a pick up game at the gym a few times a week with fellow scrubs instead of spending the equivalent of a 40 hour work week with elite coaches and trainers doing drills and working out? I'd get cut the first day of tryouts (and get embarrassed by a bunch of 15 year old kids haha)!

My point is that the suits in Vegas are like Kobe, Jordan and Lebron. Not only do they devote an immense amount of time and effort improving their game, they could pick up a basketball for the first time in their life, show up to any high school in the world, and be the varsity team's captain like it was nothing. The big boys, the line makers at the huge books that put out their lines before any other casino or book are not just some scrubs that are decent at what they do, but still nothing special. Sure, some of them are the equivalent of an average ball player in their respective handicapping businesses, but there is still a reason every book is basing their lines on what they set them at.

Another good analogy (I forget who said this quote, but anyways...) "Everyone that gets into med school is smart, and everyone that makes it to the NFL is pretty damn good at football".

Are there people out there capable of making it to the handicapping big leagues? Sure. But even if you make it there, how long is your career going to last before you get hurt, or some young talent comes in and takes your spot on the team?

end incoherent rambling

**jgilmartin** · 01-17-11, 04:17 PM

1. As a whole, over a large number of games, do you acknowledge that closing lines are closer to the actual probability than opening lines are (in major markets at least)?

2. If you do acknowledge that, do you believe this sharpening of the line is simply due to new information on injuries, weather, etc., or do you think it could be that the market can set a better line than oddsmakers can?

**sharpcat** · 01-17-11, 05:14 PM

This thread is ridiculous.

I guess you consider a college basketball opening spread of 5 that closes at 7 "sharp" or a CBB total that opens at 139 and closes at 134 is a "sharp line"????

What supportive evidence do you have to support your theory that bookmakers can set a more accurate line than anyone else could????

**uva3021** · 01-17-11, 07:20 PM

well of course vegas has an arsenal with which to counter any sort of market vulnerabilities in standard wagering for most sports, in a sense its an arms race between sharps and vegas

but where handicappers establish remunerative opportunities is with exotics and modeling "unpopular" leagues

certainly edges can be found in volleyball, WNBA, junior swedish soccer.....

**tomcowley** · 01-17-11, 07:36 PM

Originally posted by peacebyinches

Thoughts?

You're absolutely on crack that Vegas even matters, or that Vegas+illegals does anything like what you're giving them credit for doing. Your competition on gameday lines is other bettors having knocked the value out of lines before you, not from books getting ubersmart.

**peacebyinches** · 01-17-11, 07:58 PM

Hey, sorry I can't respond more in depth right now, I do want to make some points, but I need to keep this short because I'm kind of exhausted right now (probably crashing from all the caffeine earlier haha

)

Originally posted by jgilmartin

1. As a whole, over a large number of games, do you acknowledge that closing lines are closer to the actual probability than opening lines are (in major markets at least)?

Not trying to be nitpicky here but I'm assuming you mean "outcomes" right?

I guess you consider a college basketball opening spread of 5 that closes at 7 "sharp" or a CBB total that opens at 139 and closes at 134 is a "sharp line"????

What supportive evidence do you have to support your theory that bookmakers can set a more accurate line than anyone else could????

No, I never suggested that movements in lines/totals signify sharpness by the books or bettors.

Additionally, I hate it when people discuss things on the radio/tv/SBR about whether a certain line should be different, or that the books made one team to big of a favorite or underdog or whatever... It is not their job to predict the total amount of points that will be scored or even which team will win by how much... the most accurate line possible is the line that gets as close to 50% of the action on each side as possible, allowing them to safely collect the vigorish without worrying about the outcome of a game. If you feel that a line or total is not representative of what the final outcome will be, then go pull the trigger on it.

If line makers were consistently making +EV lines and were so far off that sharp bettors felt confident in betting insane amounts of money at he last second before the books could change the spread/odds enough to draw equal money on both sides, then they would be fired and replaced by more competent line makers until either they don't get cleaned out by the sharp bettors like before, or the entire profession of "Las Vegas Sporting Event Line Makers" wouldn't exist.

Hence, the mere presence of profitable books proves that at the very least, lines makers are pretty damn good at what they do.

hit me back playas

**Inspirited** · 01-17-11, 07:59 PM

If anything this posts reveals the OP's own myopic, rigid and reactive thoughts towards statistical modeling. I find it amazing that he apparently does not think there are any "higher level cognitive processes,[...]highly evolved executive functioning and creative abilities" involved in modeling.

**peacebyinches** · 01-17-11, 08:15 PM

Well now, I never once said statistical modeling had no beneficial use in handicapping sports, rather that other approaches need to be incorporated into any handicapping methodology that strictly relies on numerical computations. Your ability to predict sporting event outcomes cannot and will not improve over time without at least some non-numerical, qualitative analyses. Formulas and numbers do have the ability to change and adapt to market forces, but the line makers certainly can change and adapt how they set their lines in order to reduce any existing edge they may have once given up.

**peacebyinches** · 01-17-11, 08:20 PM

Let me just quickly emphasize that I am NOT arguing for a complete abandonment of statistical modeling, that would be foolish, just that qualitative analyses are an integral part in the handicapping process and when properly utilized will make up for the lack of flexibility inherent in approaches that are purely numerical.

**sharpcat** · 01-17-11, 08:33 PM

Originally posted by peacebyinches

Hey, sorry I can't respond more in depth right now, I do want to make some points, but I need to keep this short because I'm kind of exhausted right now (probably crashing from all the caffeine earlier haha

)

Not trying to be nitpicky here but I'm assuming you mean "outcomes" right?

No, I never suggested that movements in lines/totals signify sharpness by the books or bettors.

Additionally, I hate it when people discuss things on the radio/tv/SBR about whether a certain line should be different, or that the books made one team to big of a favorite or underdog or whatever... It is not their job to predict the total amount of points that will be scored or even which team will win by how much... the most accurate line possible is the line that gets as close to 50% of the action on each side as possible, allowing them to safely collect the vigorish without worrying about the outcome of a game. If you feel that a line or total is not representative of what the final outcome will be, then go pull the trigger on it.

If line makers were consistently making +EV lines and were so far off that sharp bettors felt confident in betting insane amounts of money at he last second before the books could change the spread/odds enough to draw equal money on both sides, then they would be fired and replaced by more competent line makers until either they don't get cleaned out by the sharp bettors like before, or the entire profession of "Las Vegas Sporting Event Line Makers" wouldn't exist.

Hence, the mere presence of profitable books proves that at the very least, lines makers are pretty damn good at what they do.

hit me back playas

Why should a lines maker be fired if he does not put out the most accurate line on every game? This is why bookmakers move lines, sharp players can actually increase a books longterm profit if the book is not sleeping behind the wheel and adjust their line properly. More importantly injuries, line-up changes and many other factors can effect the line throughout the day.

Books care less about balancing action and more about making sure they have the most accurate line, if the line is where it is supposed to be the book is taking +EV plays on either side and long-term does not matter if their action is balanced.

No, I never suggested that movements in lines/totals signify sharpness by the books or bettors.

Heavy line movements like I pointed out to you earlier are an indicator that the book is not always as sharp as you seem to think it is.

the most accurate line possible is the line that gets as close to 50% of the action on each side as possible, allowing them to safely collect the vigorish without worrying about the outcome of a game

The most accurate line is definately not going to be the line that gets 50% action.

Not really sure what the point of this thread is!!! Are you implying that it is impossible to set a more accurate line than the books on the hundreds of betting lines they offer daily?

**Data** · 01-17-11, 09:35 PM

peacebyinches, let me start with acknowledging that what (I think) you mean is true. However, what you actually said is not. You critics of the numerical approaches is absolutely correct if the direct it toward numerical approaches demonstrated by Bill the Cop in this forum not too long ago. However, it is evident by the examples you have given that you do not understand what many regulars in this forum do using their numerical approaches. Some people use it to exploit market inefficiencies across the large number of sportsbooks and markets available for a given contest (derivatives). Others use complicated models that produce a "true" line. Both approaches have absolutely no need to "react" to the changes in linemaking you were talking about. So, your point on being rigid and reactive is inapplicable to these two latter approaches.

**peacebyinches** · 01-17-11, 09:58 PM

Originally posted by sharpcat

Why should a lines maker be fired if he does not put out the most accurate line on every game? This is why bookmakers move lines, sharp players can actually increase a books longterm profit if the book is not sleeping behind the wheel and adjust their line properly. More importantly injuries, line-up changes and many other factors can effect the line throughout the day.

Books care less about balancing action and more about making sure they have the most accurate line, if the line is where it is supposed to be the book is taking +EV plays on either side and long-term does not matter if their action is balanced.

Heavy line movements like I pointed out to you earlier are an indicator that the book is not always as sharp as you seem to think it is.

The most accurate line is definately not going to be the line that gets 50% action.

Not really sure what the point of this thread is!!! Are you implying that it is impossible to set a more accurate line than the books on the hundreds of betting lines they offer daily?

I think there is some confusion on one or both of our ends because a lot of what you said is in complete agreement with what I said. A few quick points though:

Your definition and use of the phrases "accurate line" and "where the line is supposed to be" should be clarified. Especially here:

"Books care less about balancing action and more about making sure they have the most accurate line, if the line is where it is supposed to be the book is taking +EV plays on either side and long-term does not matter if their action is balanced."

Books that set blatantly inefficient lines that draw unbalanced action are not making +EV bets on both sides at all...

The only reason a book can guarantee a profit will be made on a sporting event is if the amount of vigorish they collect from the winning side and the total amount of money the losing bettors placed is greater than the amount they have to pay out to the winners of the wager. If 80% of the action is on one team, and that team wins, the book is going to lose a ton of money. One outcome is -EV and the other is +EV (for the book) due to creating an inefficient market, putting the book at financial risk. Very small inefficiencies may be intentionally set in the line if an abundance of sharps are on one side, but any sensible book is not going to adjust the market price so drastically as to draw any more than a few percent of the action to one side or the other, because books are not in the business of gambling!!! They are in the business of staying in business and collecting wagers from everyone who thought they were smarter than the people on the other side of the wager, and collect their "tip" (vig) from the bettors that correctly predicted the outcome they said would occur.

An "accurate line", or "correct line" or whatever you want to call it does not mean the book is predicting how many points Team A is going to beat Team B, rather they are predicting the spread or total that will sway approximately 50% of the action to be placed on both potential outcomes (while including an acceptable amount of vigorish to guarantee that at the end of the day they will turn a profit.

**tomcowley** · 01-17-11, 10:06 PM

It really helps if you know what the words mean. Market efficiency is not defined by balanced action. Books have imbalanced positions all the time.

**peacebyinches** · 01-17-11, 10:21 PM

Originally posted by Data

peacebyinches, let me start with acknowledging that what (I think) you mean is true. However, what you actually said is not. You critics of the numerical approaches is absolutely correct if the direct it toward numerical approaches demonstrated by Bill the Cop in this forum not too long ago. However, it is evident by the examples you have given that you do not understand what many regulars in this forum do using their numerical approaches. Some people use it to exploit market inefficiencies across the large number of sportsbooks and markets available for a given contest (derivatives). Others use complicated models that produce a "true" line. Both approaches have absolutely no need to "react" to the changes in linemaking you were talking about. So, your point on being rigid and reactive is inapplicable to these two latter approaches.

Ah, now I think we are getting somewhere useful. I will be the first to admit that I am not going to be winning any nobel prizes in mathematics (if they even give out nobel peace prizes for math... which I don't think they do...) but anyways, I'm not as proficient in mathematics and statistics as many of the posters here, but I also have a enough practice and knowledge regarding statistics, market values, and analyzing data that my logic is grounded.

Perhaps I should clarify what I mean by the inability of numerical approaches to "react" to changes in line and odds making... To save myself a lot of typing I'm just going to copy/paste my reply to SparJMU who messaged me earlier about this thread and made some good points.

I feel that even when certain flaws arise in Vegas lines they don't exist for a substantial enough time for even the sharpest gamblers to take advantage of them sufficiently. I watched an interview that was posted in a SBR thread (that despite searching for like a half hour I still can't find it...) with a professional poker player turned professional handicapper that did make a considerable amount of money on NBA over/unders over the course of 2 years. He took advantage of poorly made over/unders by finding a significant correlation between the amount of 3 pointers that teams took from the corners (rather than taking shots closer to mid-court) and realized that books were making their totals much lower than they should based on the simple fact that their was a common belief that corner 3 pointers were assumed to be a lower percentage shot and teams that were liberal about taking these shots would miss more often than teams discouraged to take corner 3-pointers. After studying hours and hours of game tape, he figured out that the assumption regarding these 3-pointers was exactly the opposite of what the belief was at the time. (Also, I believe this was as recent as 8-9 years ago that he made his winnings on sports).

Anyways, the point is that his success only lasted a little less than 2 seasons before the books (and NBA head coaches as well) adjusted their lines/strategies accordingly. The worst part about the story was that he had actually lost nearly all of these winnings because he failed to realize the soft totals were being more accurately calculated.

If anyone knows the guy I'm talking about, or finds that video I'll give you 2 points... after midnight though haha.

Also, I'm very open to learning about forming different statistical models that actually are founded in logic (I feel that some methods that people use seem a little iffy to me...) and don't require a PhD in physics to work with...

**tomcowley** · 01-17-11, 10:27 PM

That's basically playing an angle. And angles (when they are +EV at all) tend to work until they don't, and you find that out when you get crushed, if you have no better way of telling a market has adjusted. What you're saying about the market getting smarter and smarter is (likely) true, but it really has nothing to do with the books- it has to do with the other (sharp) bettors getting progressively smarter.

**bztips** · 01-17-11, 10:29 PM

OP you clearly have a fundamental and simplistic misunderstanding of how books make and adjust their lines. Here's a good place to start:

The Power of the Vig

http://www.docsports.com/vig.html

**sharpcat** · 01-17-11, 10:59 PM

Your theory about books wanting to balance action is wrong and your understanding of the point spread appears to be flawed also.

-If an NBA pointspread is off by 1/2 point it can push your expected win % up by more than 2%.

-A book does not have to balance the flow of money coming in if their line is accurate, this is similar to a casino not having the need to balancing action among red/black bets on a roulette wheel, since they have an advantage on either side they will profit long term regardless.

**Justin7** · 01-18-11, 10:36 AM

Originally posted by sharpcat

Your theory about books wanting to balance action is wrong and your understanding of the point spread appears to be flawed also.

-If an NBA pointspread is off by 1/2 point it can push your expected win % up by more than 2%.

-A book does not have to balance the flow of money coming in if their line is accurate, this is similar to a casino not having the need to balancing action among red/black bets on a roulette wheel, since they have an advantage on either side they will profit long term regardless.

Books have no clue if their line is "right". They can only guess, based on its similarity to the market. In some cases, books have additional information based on what their players are betting. That doesn't tell them what the accurate line is, so much as that the current line is inaccurate?

**sharpcat** · 01-18-11, 12:01 PM

Originally posted by Justin7

Books have no clue if their line is "right". They can only guess, based on its similarity to the market. In some cases, books have additional information based on what their players are betting. That doesn't tell them what the accurate line is, so much as that the current line is inaccurate?

True

Obviously Nobody can forecast an exact probability on any sporting event but with the advantage that the book has they really only need to be in the ballpark and they should maintain a long term advantage. Maybe they can not quantify their exact edge but if perceived sharp players are no longer hitting them for max wagers they should be close enough to the accurate number.

I was only trying to point out to the OP that splitting action 50/50 is not truly a bookies intentions. If a books well respected groups no longer find value in betting a line who cares if their action is balanced?

**That Foreign Guy** · 01-19-11, 03:16 AM

http://pokercast.twoplustwo.com/poke...?pokercast=144 - Haralabos Vulgaris, he was also interviewed by another poker podcast at around this time, can't remember which interview he discussed the corner three issue in but both were very good.

Splitting action 50/50 is the minimax (I think that's the term for it) - ie the most risk averse strategy for a book. If it believes its handicapping to be suspect, if its bankroll is insufficient, or if the corporate structure such that losses should be avoided then this is the strategy it will attempt to take.

Setting the most accurate line possible will maximise their expected profits if and only if they accept unlimited bets from all players and player population estimates of the line are not skewed (dollar weighted mean line estimate = 0 error).

Once you start factoring in limits on either max bet or on "sharp" players - both of which can skew the player population estimate by reducing the effect of sharps (players with lower than average line errors) - then a shaded line can become more profitable.

If a book has the following distribution of total money players are willing to bet for a game with a fair line of -3 (so there is a total of $500 available at Fav-2.5 etc).

-2.5 $200 +2.5 $50 probability bookie win 40 / 60
-3 $100 +3 $100 probability 50 / 50
-3.5 $50 +3.5 $200 probability 60 / 40

Then I hope you can see their profit is maximised by setting the line at 3. They get $100 on each side and would pocket the vig. Setting -3.5 would give them a 60% chance of "winning" -$150.

Now, take this distribution where we add a favourite homer to the player pool who will bet $200 up to -3.5

-2.5 $400+2.5 $50 probability bookie win 40 / 60
-3 $300 +3 $100 probability 50 / 50
-3.5 $250 +3.5 $200 probability 60 / 40

Where is the most profitable place to set the line now? I have to go to my real job now but it looks to me like setting it at Fav -3.5 is best as they then have a 60 % chance of winning $50.