Point Shaving in College Basketball: A Cautionary Tale for Forensic Economics
Steven L. Heston
University of Maryland - Department of Finance
University of Illinois at Urbana-Champaign - Department of Economics
August 25, 2008
Point shaving is the practice by favored teams of attempting to win by less than the point spread to yield profits for gamblers who bet on the underdog. Consistent with point shaving, strong favorites are anomalously likely to win by less than the spread. To distinguish between innocent and criminal explanations, we (1) exploit information in line movements and (2) isolate games without betting lines to identify games where point shaving is implausible and document similar patterns. The data are better explained by strategic efforts to maximize the probability of winning. These findings highlight the importance of indirect method design.
Number of Pages in PDF File: 22
Keywords: pointshaving, gambling, forensic economics
JEL Classification: L83, C14working papers series
Date posted: July 26, 2007 ; Last revised: August 29, 2008
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