NFL Betting Lines

We are now going into Week 8 of the NFL season and by this point one can separate the good teams (New Orleans, Indy, etc) from the bad (St. Louis, Washington, Tampa Bay, etc). According to an article by Dan Wetzel, there is something very interesting happening with the NFL this year and it is in Vegas.

The NFL, and every other professional sports league, relies on the uncertainty of outcome of each individual game. Without that, the NFL is the WWE. For sports economists, uncertainty of outcome was commented on by early economists such as Rottenberg and Neale and has been a cornerstone of sport economic research when examining such things as competitive balance and attendance demand. Furthermore, betting on sports games creates interest in games that by themselves would not be as interesting.

This NFL season has been unlike any other NFL season. As Wetzel writes, the weak teams have been so bad that the oddsmakers have not been able to set a high enough line to balance the volume on each side of the spread. Unlike college games which Vegas will take off the board, NFL games rarely come off the board. The result has been big losses for Vegas odds makers in the first half of the season as they have failed to set odds high enough . The details that Wetzel provides is certainly work a quick read for people who are interested in sports betting and also talks about the illegal bookmakers.

Like all other trends, oddsmakers will adapt and certainly make their money by the end of the season. If one would believe the work that Levitt has done saying that oddsmakers do not attempt to balance the books, one might wonder if the oddsmakers are believe that gamblers will fall for the “This team cannot keep losing and have to win the game” theory and are setting odds closer to that thought (especially if it had been a dominate strategy used by gamblers in the past).

1994 MLB Strike

Tonight is Game 1 of the World Series between the Yanks and the Phillies. Fifteen years ago, Game 1 never took place. Yes, it was 15 years ago this year that baseball work stoppage was in full swing.

In today’s Wall Street Journal, Allen Barra writes about the 1994 shortened MLB season.  Tony Gwynn was closing in on .400, and Matt Williams was on pace to break the home run record.  The Montreal Expos had baseball’s best record at 34 games over .500, and a staple of good young talent such as Larry Walker, Marquis Grissom, Pedro Martinez, Moises Alou, and John Wettleland.

Bud Selig, at the time, claimed that the reason for the strike was competitive balance. However, that would prove to be false. Barra writes about how that season was one of the more competitively balanced seasons in recent memory (when examining the dispersion of winning percentage). In fact, the previous five World Series Champions were not in “large” markets (Toronto X2, Minnesota, Cincinnati, Oakland).

As Barra points out, the real reason was salaries (shocking!). The owners of course wanted that salaries lower (and a salary cap) while the Players Association said, “Thanks, but no thanks.” Once the strike ended and the two parties started working on the next CBA, the idea of a luxury tax (an idea that Barra notes came from the Players Association) was introduced by Selig and now is part of MLB.   Since then, the home run record has been broken twice, players have testified in front of Congress about steroids, Montreal Expos is now the Washington Nationals, a Blue Ribbon Panel was commissioned, and the Yankees have won 4 World Series titles and have been to 3 others (counting this year).  All for competitive balance?