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Evidence of Betting Market Intraseason Efficiency and Interseason Overreaction to Unexpected NFL Team Performance 1988-2006

Author

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  • Steven G. Sapra

    (Analytic Investors, Los Angeles, and Claremont Graduate University, steve.sapra@gmail.com)

Abstract

A structural model is derived describing the relationship between the probability that the favored team is victorious and the point spread through the use of a "no-arbitrage'' condition. A series of probit models are developed that show that NFL wagering markets were efficient within season during the period 1988-2006 and that the point spread is a statistically significant indicator of probability of victory. A team-level excess performance metric is estimated, termed an NFL Alpha, that indicates the extent to which a team's on-the-field performance exceeded betting market expectations. Finally, it is shown that there exists a market overreaction effect for NFL Alphas across seasons.

Suggested Citation

  • Steven G. Sapra, 2008. "Evidence of Betting Market Intraseason Efficiency and Interseason Overreaction to Unexpected NFL Team Performance 1988-2006," Journal of Sports Economics, , vol. 9(5), pages 488-503, October.
    • Handle: RePEc:sae:jospec:v:9:y:2008:i:5:p:488-503
    DOI: 10.1177/1527002507311726
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    References listed on IDEAS

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    Cited by:

    1. Justin Davis & Andy Fodor & Luke McElfresh & Kevin Kreiger, 2015. "Exploiting Week 2 Bias in the NFL Betting Markets," Journal of Prediction Markets, University of Buckingham Press, vol. 9(1), pages 53-67.

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