Super Bowl Betting – How the Bookies Lost

Great article from Bloomberg shows how the linemakers are reluctant to change the spread from where it’s set, even when they know its wrong.

Why, if the sportsbooks could see all the money flooding onto the Giants, did they simply not move the point spread? In financial markets, if all the money is short then the market will move down and if all the money is long then the market will move up.

The answer is that in sports betting, once the line has settled then the books will only move away from that point spread if there is major injury news. If Tom Brady had an injury so serious that he missed the game then the line might have moved from favoring the Patriots by 12 to favoring them by only 5, or perhaps less.

But if the line had been moved because of the weight of money, then the books may have found themselves taking early action on the Giants +12 and late action on the Patriots -9.
If the game then ended with the Patriots winning by 10 points they would have had to pay out to both sets of bettors, which would have been seriously expensive. In bookmaking terms this is known as getting ``middled'' and it is what linesmakers try to avoid doing, at almost any cost.

Using Statistical Evidence to Catch Crooked Refs A Tough Task

From the Numbers Guy in the WSJ. The article also mentions a possible non-public information trading opportunity:

Certainly refs, like any group of people, have natural tendencies, and the betting market can't adjust for those because the NBA doesn't announce officiating assignments in advance. But not all behavior is predictive. A clutch-hitter in baseball one season is no more likely than his teammates to hit well in tight spots the next season. The same may well be true about refs who officiate over unexpectedly high-scoring games in one season.

Just look at the 10 top officials who were found most likely to referee games in the 2005-2006 season in which scoring exceeded the predicted total, and who then returned the next season. Four of the 10 were no longer in even the top half of all refs for the over bet. Mr. Donaghy himself wasn't consistent, even before the period of suspicion. The over bettors won just 44% of his games in the two-season period ended in 2005. But in the three years before that, these bets won in 60% of his games.
...
Brigham Young University statistician Shane Reese demonstrated how such a system might work by examining all referees last season to see whether any of their results on over-under bets were outside normal variation. No refs would have tripped the switch on this warning system -- not even Mr. Donaghy. "There's nothing suggesting he was an outlier," says Prof. Reese.

NBA Betting Scandal

From the NY Post:

THE FBI is investigating an NBA referee who allegedly was betting on basketball games - including ones he was officiating during the past two seasons - as part of an organized-crime probe in the Big Apple, The Post has learned.

The investigation, which began more than a year ago, is zeroing in on blockbuster allegations that the referee was making calls that affected the point spread to guarantee that he -- and the hoods who had their hooks in him -- cashed in on large bets.

No specific games are mentioned.