A recent study analyzed betting data from the 2005 to 2009 NFL regular seasons to investigate the effect of the “hot hand” theory. The authors found that bettor biases exist when it comes to betting on teams on winning or losing streaks.
The “hot hand” theory was found to exist in the NBA betting markets, but hadn’t previously been studied in the NFL. In this most recent study, the authors found that there is an increase in bets on teams riding win streaks, but that it doesn’t create profitable opportunities for contrarian bettors looking to take advantage of this bias.
In the study, the authors operate under the assumption that bookmakers accept unbalanced betting on most games. The “balanced book” theory has been disproved in a number of different studies (see: Paul, Weinbach 2007, 2008), and it’s a well-known fact that sportsbooks take a disproportionate number of bets on favorites, and road favorites in particular.
If the line were to change in response to betting volume, then that could potentially create profitable opportunities for bettors looking to exploit the other side, which would in theory carry extra value. But often times, particularly in the NFL, the line rarely moves more than a point or two off the opening number, and it’s extremely rare to see a line move three points or more.
Nonetheless, public bettors who subscribe to the “hot hand” theory are likely to place their wagers regardless of the point spread. In other words, whether the Green Bay Packers are -12 or -13.5 is unlikely to make much of a difference to a public bettor who is dead set on betting them.
In this study, the authors looked at teams riding two- and four-game winning streaks both straight up and against the spread to measure the change in bet volume on ‘hot’ teams. Here is a summary of the findings:
- The percentage bet on the home team increases with teams on winning streaks.
- Road favorites attract the highest percentage of bets.
- With home teams, the bigger the favorite, the higher the volume of bets.
- When a team is on a two-game win streak, the percentage of bets on that team rise by about 3 percent.
There are similar findings for teams riding four-game straight up or ATS streaks, but the results aren’t as reliable due to those streaks being less frequent.
The question, then, is whether or not a contrarian bettor can take advantage of these short-term biases. The findings reveal that the NFL betting market, considered to be the most efficient of the four major sports, is also extremely efficient in this regard. Betting on or against hot teams is a 50-50 proposition, which does not yield a positive return.
“Given that betting is significantly imbalanced and betting against teams on winning streaks did not generate profitable returns, it does not appear that sportsbooks shade the pointspread toward the “hot” team (or against the “cold” team) to exploit bettor biases,” the authors write.