Wednesday, January 26, 2005

The wisdom of crowds in Vegas? 

It's fairly well known that the purpose of a betting line is to get an even amount of money bet on each team (the line being an inducement to put more money on the team perceived more likely to lose.) According to this article about the line for the Super Bowl, that comes from five guys sitting around a table.

The LVSC has five oddsmakers devoted strictly to developing odds for NFL games. Before Sunday's championship games even began, the group already had created lines for each of the four potential Super Bowl matchups.

As it became clear Sunday that New England and Philadelphia would meet Feb. 6 in Jacksonville, each of the oddsmakers independently came up with his final line based on statistical analysis, historical significance and, yes, gut feeling.

Dan O'Brien, one of the five deciding oddsmakers, picked New England to win by 6. White, the boss of the crew, chose the Patriots to win by 3. Another picked New England by 6, another chose 6� and the final oddsmaker was torn between 5� and 6.

White then considered all of the input to create a final number � Pats by 6 � which was distributed to the clients.

O'Brien said he decided to pick New England by 6 because he believed Philadelphia is a stronger team than Carolina, New England's opponent in last season's Super Bowl. New England was favored by 7 in that game but failed to cover.

I have been told that for other games, once the Las Vegas Sports Consultants set the line, the line is offered to a small group of professional gamblers, whose behavior is used to tweak the number. So 6 was the "virgin line" that came out of the books, but it quickly moved to 7, indicating more money has gone on New England than Philadelphia.

The question is whether line movement on a game that is so public, so much bet by amateurs, tells you the same thing as the movement in, say, Week 16's San Francisco-Washington match that nobody cares about? Is there a wisdom of amateur bettors, or should you bet against amateurs? Skip Sauer says bet against the movement. I say wait. If you get the extra half point, go Eagles.