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James Holzhauer: How sportsbooks really make their lines and (early) tips on where to beat them
By James Holzhauer Jun 17, 2021
In the sports betting marketplace, much like on Wall Street, prices are constantly changing. Every gambler has experienced something like this: you submit a play on a team laying six points, the line suddenly moves to 6.5, and your bet gets rejected by the sportsbook. (Or worse, the book confirms your bet at the worse line without your consent and you’re stuck with a wager you didn’t really want.) This is particularly annoying because your best bets will be the ones where the market agrees with your opinion, so it’s like you’re being told, “smart pick, but you can’t actually bet it at that price.”
Unlike pari-mutuel horse racing, where the payout on your ticket can shift wildly before post time, sports bets are locked in at a fixed price even if the odds take a big turn — like when the Broncos had to play the Saints without a quarterback last season. Timing the market is one of the most important factors that separates professional bettors from amateurs: in fact, pros understand that when you choose to bet can be as important as what you choose to bet. There are even plenty of pros who make a living trading games where they have no opinion whatsoever; they just play line moves.
Let’s take a closer look at where the line comes from and how it develops from opening to closing.
(One note before we begin: A popular misconception is that sportsbooks set their lines in order to get an equal amount of money on each side. Aside from rare exceptions like the Super Bowl or 2017’s Mayweather-McGregor fight, public money is generally not enough of a factor to move the odds. The book typically prefers to keep the line close to the “correct” number and gamble on the result, rather than move to an off-market number and attract a flood of action from advantage players. This means that the popular strategies to look for “sharp vs. square” or “reverse line movement” games will not show an automatic profit.)
The betting market for an NFL game begins to take shape almost two weeks before kickoff. Each Tuesday, a few select sportsbooks release the so-called “look ahead” lines for next week’s games, also known as 12-day numbers because betting opens 12 days before next Sunday’s kickoffs. These opening odds are based on the opinions of a few smart sportsbook managers, but not a ton of thought goes into them. Look-ahead limits are typically a thousand bucks or two: large amounts for most punters, but less than a typical professional would risk on a single pro football game. In spite of this, most look-ahead wagers are from sharps who are convinced they’ll get worse odds if they wait; typical gamblers want to bet on games that are happening sooner rather than later.
Odds on next week’s games are taken off the betting board when the early Sunday games kick off, then they reappear at that same handful of sportsbooks late that afternoon, often with significant adjustments based on how teams performed that day. Betting limits are slightly higher but remain low, and the action still comes largely from sharps. Sportsbooks will move their lines aggressively in response to early limit bets from known winning players. Late Sunday night or Monday morning, all the other sportsbooks — who have been sitting out the sharp early action — essentially copy their competitors’ lines and open the games for betting at their own shops.
Why would a sportsbook manager knowingly book these early bets from wiseguys when it will cost their shop money in the long run? Because they can get that money back — and more — by using the information to their advantage. Sportsbooks keep detailed records of each player’s wagering history, tracked when the player logs in to a phone app or swipes a player’s card at the betting window. (It’s nearly impossible to make a substantial wager anonymously, as each book requires anyone betting more than a certain amount to register a player’s club account.) If a long-term winning player likes the Lions to cover the spread against the Bears, the book can change its strategy to try and attract more money on the Chicago side and discourage Detroit backers. This could involve moving the line to give Detroit bettors a worse price, or allowing customers to bet more than the usual house limit on the Bears but not the Lions.
As the week goes on, betting limits progressively increase. Each time the limit jumps, sharps who were waiting to make a larger play pounce quickly and the line moves in response. Late in the week, odds tend to be more stable unless significant news breaks. By the weekend, even a six-figure bet usually won’t move the point spread unless it comes from a known sharp player.
The oddsmaking process for other sports doesn’t take two weeks to play out, but it works very similarly: the opening line is released the day before the game with only small wagers allowed, and limits increase to their full amount by the next morning. Major line moves usually occur in response to sharp action shortly after the limits bump up, or when news breaks that an important player is out of the lineup.
This whole process is similar in many ways to an IPO that fluctuates wildly in its first day before the price levels out as more traders get involved. The stock market is not perfectly efficient, as we saw in January’s #stonks frenzy, but an asset’s price tends to generally follow its underlying value once the market has had time to sort itself out. Applied to sports betting, the general rule is that the odds on a game get more efficient — closer to the “true” price — between the release of the opening line and the start of the game. This is not true 100 percent of the time, but in comparison to openers, closing lines have been shown to be a significantly more accurate predictor of the final results.
Since the inherent variance of gambling makes it difficult to estimate one’s true ability to pick winners based on results alone, professionals prize a metric known as “closing line value”: if your wagers consistently offer better odds than you would have gotten betting the same side right before the game starts, you’re likely to show a long-term profit. Because this is such a powerful indicator, sportsbooks often utilize a player’s closing line value as the primary determinant of how sharp that customer is. At some shops, bettors can be quickly limited or banned if they are consistently beating the closers, even if their picks have lost money by overall.
How can you use this knowledge to improve your results? My first suggestion is to make your bets as early in this process as possible. The competition for gamblers to pick off good lines is like a run on the grocery store, and you don’t want to delay shopping until Sunday morning when only Necco Wafers remain on the shelves.
If you have good reason to believe that a line is “off”, bet it as soon as you can because the number is likely to move closer to where you think it should be. Try to be prepared as early as possible with your own estimate of the odds for every game you might want to bet, ideally even before the opening lines are released.
When you bet right after the opening number is posted, you essentially gamble that you’re smarter than the handful of sportsbook employees who set the line. When you bet 10 minutes before the game starts, you hope in vain that you know something all the world’s sharp bettors don’t — after all, why aren’t they betting it and thus moving the line? One of these lives has a future, and one of them does not.
Next, if you are serious about being a long-term winner, start tracking the closing line value offered by all your wagers. In the short- and medium-term, this metric is the single best indicator of whether you can expect your future bets to return a profit. If you play a few different angles and track them separately, this may also be a way to distinguish the good ones from the bad.
Finally, I strongly recommend in-game wagering for serious gamblers. If NFL odds just before kickoff represent the peak of market efficiency, the polar opposite occurs when prices must be set quickly and certain factors may be over or undervalued. With only a couple of minutes to take bets during a commercial break, a bookmaker does not have time to carefully weigh all situational factors before setting the in-game price, nor does the market have much time to become efficient. This is where savvy bettors can find their biggest edge.
This can be especially true immediately after a major event such as a key injury or a big play that changes the game dynamics. In this case, mathematical models often struggle to keep up with a bettor’s human intuition. When Patrick Mahomes exited the Chiefs’ playoff game against the Browns this January, that uncertainty led to massive differences in the in-game odds. Some sportsbooks, likely assuming Mahomes was out for the game, made the Chiefs -450 favorites on the money line; others dealt the Browns at +600, perhaps thinking he might return to action on Kansas City’s next possession. A pure arbitrage player could have locked in a 4 percent profit by betting both sides, and an even better expected ROI was available to bettors who had a strong reason to lean toward one side.
The timeout situation in football is another factor that doesn’t get enough weight in the in-game model used by many sportsbooks, especially late in the fourth quarter. Many of my most profitable bets have come in the final few minutes of a football game — even if a team is down by multiple scores, an alternate point spread is often available. In basketball, the book may not take into account how many fouls each team has committed or whether a team comes out playing more aggressively than expected. Especially when multiple games are running concurrently, it may be hard for the lines manager to account for everything, and a pure math model can be exploitable.
As with everything in sports betting, it takes hard work to identify advantageous opportunities, but they are much more plentiful in-game than right before tip-off.
Best of luck!
By James Holzhauer Jun 17, 2021
In the sports betting marketplace, much like on Wall Street, prices are constantly changing. Every gambler has experienced something like this: you submit a play on a team laying six points, the line suddenly moves to 6.5, and your bet gets rejected by the sportsbook. (Or worse, the book confirms your bet at the worse line without your consent and you’re stuck with a wager you didn’t really want.) This is particularly annoying because your best bets will be the ones where the market agrees with your opinion, so it’s like you’re being told, “smart pick, but you can’t actually bet it at that price.”
Unlike pari-mutuel horse racing, where the payout on your ticket can shift wildly before post time, sports bets are locked in at a fixed price even if the odds take a big turn — like when the Broncos had to play the Saints without a quarterback last season. Timing the market is one of the most important factors that separates professional bettors from amateurs: in fact, pros understand that when you choose to bet can be as important as what you choose to bet. There are even plenty of pros who make a living trading games where they have no opinion whatsoever; they just play line moves.
Let’s take a closer look at where the line comes from and how it develops from opening to closing.
(One note before we begin: A popular misconception is that sportsbooks set their lines in order to get an equal amount of money on each side. Aside from rare exceptions like the Super Bowl or 2017’s Mayweather-McGregor fight, public money is generally not enough of a factor to move the odds. The book typically prefers to keep the line close to the “correct” number and gamble on the result, rather than move to an off-market number and attract a flood of action from advantage players. This means that the popular strategies to look for “sharp vs. square” or “reverse line movement” games will not show an automatic profit.)
The betting market for an NFL game begins to take shape almost two weeks before kickoff. Each Tuesday, a few select sportsbooks release the so-called “look ahead” lines for next week’s games, also known as 12-day numbers because betting opens 12 days before next Sunday’s kickoffs. These opening odds are based on the opinions of a few smart sportsbook managers, but not a ton of thought goes into them. Look-ahead limits are typically a thousand bucks or two: large amounts for most punters, but less than a typical professional would risk on a single pro football game. In spite of this, most look-ahead wagers are from sharps who are convinced they’ll get worse odds if they wait; typical gamblers want to bet on games that are happening sooner rather than later.
Odds on next week’s games are taken off the betting board when the early Sunday games kick off, then they reappear at that same handful of sportsbooks late that afternoon, often with significant adjustments based on how teams performed that day. Betting limits are slightly higher but remain low, and the action still comes largely from sharps. Sportsbooks will move their lines aggressively in response to early limit bets from known winning players. Late Sunday night or Monday morning, all the other sportsbooks — who have been sitting out the sharp early action — essentially copy their competitors’ lines and open the games for betting at their own shops.
Why would a sportsbook manager knowingly book these early bets from wiseguys when it will cost their shop money in the long run? Because they can get that money back — and more — by using the information to their advantage. Sportsbooks keep detailed records of each player’s wagering history, tracked when the player logs in to a phone app or swipes a player’s card at the betting window. (It’s nearly impossible to make a substantial wager anonymously, as each book requires anyone betting more than a certain amount to register a player’s club account.) If a long-term winning player likes the Lions to cover the spread against the Bears, the book can change its strategy to try and attract more money on the Chicago side and discourage Detroit backers. This could involve moving the line to give Detroit bettors a worse price, or allowing customers to bet more than the usual house limit on the Bears but not the Lions.
As the week goes on, betting limits progressively increase. Each time the limit jumps, sharps who were waiting to make a larger play pounce quickly and the line moves in response. Late in the week, odds tend to be more stable unless significant news breaks. By the weekend, even a six-figure bet usually won’t move the point spread unless it comes from a known sharp player.
The oddsmaking process for other sports doesn’t take two weeks to play out, but it works very similarly: the opening line is released the day before the game with only small wagers allowed, and limits increase to their full amount by the next morning. Major line moves usually occur in response to sharp action shortly after the limits bump up, or when news breaks that an important player is out of the lineup.
This whole process is similar in many ways to an IPO that fluctuates wildly in its first day before the price levels out as more traders get involved. The stock market is not perfectly efficient, as we saw in January’s #stonks frenzy, but an asset’s price tends to generally follow its underlying value once the market has had time to sort itself out. Applied to sports betting, the general rule is that the odds on a game get more efficient — closer to the “true” price — between the release of the opening line and the start of the game. This is not true 100 percent of the time, but in comparison to openers, closing lines have been shown to be a significantly more accurate predictor of the final results.
Since the inherent variance of gambling makes it difficult to estimate one’s true ability to pick winners based on results alone, professionals prize a metric known as “closing line value”: if your wagers consistently offer better odds than you would have gotten betting the same side right before the game starts, you’re likely to show a long-term profit. Because this is such a powerful indicator, sportsbooks often utilize a player’s closing line value as the primary determinant of how sharp that customer is. At some shops, bettors can be quickly limited or banned if they are consistently beating the closers, even if their picks have lost money by overall.
How can you use this knowledge to improve your results? My first suggestion is to make your bets as early in this process as possible. The competition for gamblers to pick off good lines is like a run on the grocery store, and you don’t want to delay shopping until Sunday morning when only Necco Wafers remain on the shelves.
If you have good reason to believe that a line is “off”, bet it as soon as you can because the number is likely to move closer to where you think it should be. Try to be prepared as early as possible with your own estimate of the odds for every game you might want to bet, ideally even before the opening lines are released.
When you bet right after the opening number is posted, you essentially gamble that you’re smarter than the handful of sportsbook employees who set the line. When you bet 10 minutes before the game starts, you hope in vain that you know something all the world’s sharp bettors don’t — after all, why aren’t they betting it and thus moving the line? One of these lives has a future, and one of them does not.
Next, if you are serious about being a long-term winner, start tracking the closing line value offered by all your wagers. In the short- and medium-term, this metric is the single best indicator of whether you can expect your future bets to return a profit. If you play a few different angles and track them separately, this may also be a way to distinguish the good ones from the bad.
Finally, I strongly recommend in-game wagering for serious gamblers. If NFL odds just before kickoff represent the peak of market efficiency, the polar opposite occurs when prices must be set quickly and certain factors may be over or undervalued. With only a couple of minutes to take bets during a commercial break, a bookmaker does not have time to carefully weigh all situational factors before setting the in-game price, nor does the market have much time to become efficient. This is where savvy bettors can find their biggest edge.
This can be especially true immediately after a major event such as a key injury or a big play that changes the game dynamics. In this case, mathematical models often struggle to keep up with a bettor’s human intuition. When Patrick Mahomes exited the Chiefs’ playoff game against the Browns this January, that uncertainty led to massive differences in the in-game odds. Some sportsbooks, likely assuming Mahomes was out for the game, made the Chiefs -450 favorites on the money line; others dealt the Browns at +600, perhaps thinking he might return to action on Kansas City’s next possession. A pure arbitrage player could have locked in a 4 percent profit by betting both sides, and an even better expected ROI was available to bettors who had a strong reason to lean toward one side.
The timeout situation in football is another factor that doesn’t get enough weight in the in-game model used by many sportsbooks, especially late in the fourth quarter. Many of my most profitable bets have come in the final few minutes of a football game — even if a team is down by multiple scores, an alternate point spread is often available. In basketball, the book may not take into account how many fouls each team has committed or whether a team comes out playing more aggressively than expected. Especially when multiple games are running concurrently, it may be hard for the lines manager to account for everything, and a pure math model can be exploitable.
As with everything in sports betting, it takes hard work to identify advantageous opportunities, but they are much more plentiful in-game than right before tip-off.
Best of luck!
