NFL Betting Market Efficiency, Divisional Rivals, and Profitable Strategies

Abstract

In this paper, I examine market inefficiencies in the NFL betting market from the 2003 season through the 2016 season. I examine the impact that division rivals and previously known determinants of inefficiencies have on the current NFL gambling market. The results show that games against division rivals have a lower chance of the home team covering the spread and the chance the game will result in an over. This result demonstrates that the sportsbooks underestimate the familiarity that teams have with each other’s players, coaches, and tendencies from playing each other twice per year. Moreover, using this result in conjunction with previously known inefficiencies, I put forth a model to test out of sample predictions. The results from these tests show profitable strategies in the point spread and totals market with a win rate of nearly 57%. Overall, this paper demonstrates inefficiencies in the NFL betting market that future bettors may be able to take advantage of.

Keywords: Gambling, Market Efficiency, NFL, Sports Betting, Familiarity

JEL Classification: G14, L83