Sportsbooks Set Lines like Stocks

One of the most irritating things that a knowledgeable gambler will hear is when he watches the babbling talking heads on television say that “Vegas thinks that team X is seven points better than team Y.”  WRONG! 

You will often hear such ignorance on the television or on the radio but don’t, for a second, believe that is how it works.  The sportsbooks set the line based on PUBLIC PERCEPTION, not the true merits of the teams involved. 

There is no better example of how the betting line is REALLY made than the most recent Super Bowl game between the Pittsburgh Steelers and Seattle Seahawks.  The Steelers were the sixth and final seed in the AFC while the Seahawks were the number one seed in the NFC.  We know that the Super Bowl is always played on a neutral site field, (Detroit’s Ford Field this time), so the Seahawks should have been the favorite, right?  WRONG!

Pittsburgh was installed as a four-point favorite despite having the lower seed and lesser record.  This was based on several factors starting with the fact that Pittsburgh was a far more “popular” and “name brand” team than the Seahawks.  Yes, that is much different than betting on a horse because of its name or colors but the Steelers simply had better name recognition and a far deeper national following than Seattle. 

Beyond the popularity factor, the Steelers were developing a reputation as giant-killers and road warriors as they won all three of their playoff games away from home.  They first defeated the upstart Cincinnati Bengals who had developed a stellar reputation during the season and had a wild sellout crowd on their side.  They next won at the number-one seeded Indianapolis Colts, who were considered a juggernaut type team.  Pittsburgh clinched the Super Bowl with a win at Denver against a Bronco team with a stellar home field reputation 

Seattle, conversely, got to the Super Bowl through the safety and comfort of home games against Washington and Carolina.  Seattle dominated throughout the season and was the far more consistent team of the pair matched up in the Super Bowl, but the combination of Pittsburgh’s national following and playoff run made the Steelers the chalk as the sportsbooks had to set a price that would attract action Seattle’s way to offset the heavy amount of “ignorant” money that would go towards Pittsburgh. 

While sportsbooks and oddsmakers have the reputation of wanting even action on both sides of a wager, often times they don’t mind getting overloaded on one side, as long as all of that money is on the losing side of the proposition.  A great example would be the 2004 NBA Finals between the Los Angeles Lakers and Detroit Pistons.  Few franchises in any sport have the name recognition and appeal of the Lakers, and they were set as 5-1 series favorites.  That line didn’t last long, however, as the Lakers were bet all the way up to an 8-1 chalk as public and ignorant money gushed in on the Lakers, who have a considerable world-wide following, (not to mention being Las Vegas’ unofficial hometown “team”).    The sportsbooks smirked as the public was sucked in on the Lakers, only to be left holding the bag as the Pistons won the series.

In college football such “name brand” teams as the Miami Hurricanes, Michigan Wolverines, Tennessee Volunteers, and Oklahoma Sooners constantly burn the pockets of gamblers, particularly as home favorites, as the oddsmakers will jack them up as overlays based on public perception. 

Pro football teams with national followings such as the Green Bay Packers and Dallas Cowboys also face a “Public tax” as gamblers will, more often than not, have to pay an extra point or two for action on such teams. 

In baseball the New York Yankees won 97 games and the division title in 2005 and yet LOST MONEY for the season because of the exorbitant overlay prices charged by the sportsbooks based on the market demand of gambling consumers who wanted action on the pinstripes and were willing to pay a premium price to get it.

Sports gambling is much like the stock market as the lines and prices are set based on public perception and consumer demand rather than the actual merits of the teams involved.  The sooner a gambler understands that, the sooner that he will get some of that house edge back on his side.