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The late-season bias: explaining the NFL's home-underdog effect

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  • R. Borghesi

Abstract

This article examines price efficiency and out-of-sample predictability in the NFL point-spread betting market. Our main contribution to the existing literature is the identification of a persistent increase in bias magnitude during the final few weeks of each season. We demonstrate that this anomaly causes the much-documented home-underdog effect. We also offer evidence that the limits of arbitrage have enabled this phenomenon to persist for decades. Finally, we use several regression models to confirm our univariate analysis and show that these models can be used to implement profitable betting strategies. The predictive models presented differ from those in the prior literature by taking into account both short-term and aggregate biases.

Suggested Citation

  • R. Borghesi, 2007. "The late-season bias: explaining the NFL's home-underdog effect," Applied Economics, Taylor & Francis Journals, vol. 39(15), pages 1889-1903.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:15:p:1889-1903
    DOI: 10.1080/00036840600690314
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    Cited by:

    1. Christian Deutscher & Bernd Frick & Marius Ötting, 2018. "Betting market inefficiencies are short-lived in German professional football," Applied Economics, Taylor & Francis Journals, vol. 50(30), pages 3240-3246, June.
    2. Andy Fodor, 2014. "Does Jet Lag Create A Profitable Opportunity For Nfl Bettors?," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 8(1), pages 41-52.
    3. N. Winchester & R. T. Stefani, 2013. "An innovative approach to National Football League standings using bonus points," Applied Economics, Taylor & Francis Journals, vol. 45(1), pages 123-134, January.
    4. Daniel M. Chin, 2011. "A Test of Unbiasedness and Sports Book Profits in the NFL Point Spread Betting Merket Using Circadian Advantage," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 5(3), pages 15-26, October.
    5. Steven Caudill, 2009. "OSU and LSU: easy to spell but did they belong? Using the method of paired comparisons to evaluate the BCS rankings and the NCAA football championship game 2007-08," Applied Economics, Taylor & Francis Journals, vol. 41(25), pages 3225-3230.
    6. Miller, Thomas W. & Rapach, David E., 2013. "An intra-week efficiency analysis of bookie-quoted NFL betting lines in NYC," Journal of Empirical Finance, Elsevier, vol. 24(C), pages 10-23.
    7. B. Jay Coleman, 2017. "Team Travel Effects and the College Football Betting Market," Journal of Sports Economics, , vol. 18(4), pages 388-425, May.

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