Good Article on the Myth about "splitting the action"

[FlyersFan]

DIRECT FROM NEVADA
With Linesmaker Nick Bogdanovich
THE MYTH OF "SPLITTING THE ACTION"
You've probably heard for years, even decades, that the goal of the oddsmaker is to "split the action" on each game.
That means he wants half the money on one side of the betting line, and half on the other side. Since losing bets are charged a 10 percent "vigorish," sportsbooks are guaranteed a profit whenever the money breaks out evenly. The losers pay the winners, and the sportsbooks put 10% in their pockets thank you very much.
It doesn't actually work out that way.
Sure, there are some games where the money comes in close to 50/50. Often you'll see the public (referred to as "squares" in Nevada) betting on one side, while professional wagerers (called "sharps") are on the other. What's more common these days is for the sportsbooks to take a position on a game while giving bettors "the worst of it."
What do I mean by that?
If oddsmakers are confident the public is going to be betting one side very strongly, which is fairly common when you're talking about big name college football teams or the most hyped pro squads, they'll inflate the line a couple of points in that direction. The public isn't betting the "true" line that reflects the actual difference between the teams on the field. They're paying a tax of a couple of points because their betting is so predictable. As a result, squares who still make that bet are laying 11/10 AND a bad number. It's tough enough to beat the 11/10 over time. Doing that against bad numbers will make money for the sportsbooks even if the money doesn't split out evenly.
In some sports though, it's mostly sharp action that's hitting the board. Oddsmakers will try to do the same thing here by studying sharp betting patterns. If they notice that the sharps are hitting an off-the-radar team in college basketball, or maybe Unders with certain NBA teams, they'll adjust that line a couple of points as well. Now the sharps have to decide whether or not they want to lay 11/10 at a line not particularly to their liking. If they do, the sportsbooks figure they're okay because they've charged the tax and have the 11/10 working for them.
Let me give you an example that will help you see how powerful this is. I've heard often through the years about "offers" that certain illegal bookies around the country will make to their square clientele. They're so confident the squares will lose with a lot of action, they tell the mark that he can move the line one point in his favor in every game...but he has to bet EVERY game. Now, this ONLY works against real squares! Most guys can win with that kind of edge. Sharps would make a killing. Squares find a way to lose no matter what the proposition is.
Now, imagine a book told you that HE would get to move each game a point in whatever direction HE wanted, you still had to lay 11/10, and you had to play every game on the board. That would be horrible for a player. You'd never take that offer in a million years. Imagine it was two points instead of one. Nobody in their right mind would take that offer.
Well, that's what's going on here to a degree. Sportsbooks realize how the public bets, they're charging them 11/10 on each play, and they're making them lay 1-3 points the worst of it depending on the game. I'm not saying the public plays the board. But, oddsmakers know which games the public will be focused on. That universe is tilted very strongly against the squares. The "squares' board" is a stacked deck.
Oddsmakers haven't quite yet realized how to beat the sharps. But, they have slowed down the sharps with this type of approach. That 11/10 vig AND "penalty" points create quite a hurdle for players to clear even if you're talking about an obscure college basketball game or an NBA total.
In baseball, the same thing happens on the moneyline. You saw high prices on the Cubs in their first round National League playoff series against the Dodgers because the public loves betting the Cubs. Squares had to pay a surcharge for the right to bet on Chicago. This past season, when the sharps pounded a young up-and-coming pitcher in his first couple of starts, the line dropped immensely the next time he took the mound. There were several young arms this past summer who were priced like veterans by their third appearance.
As you can see, there's no need for an oddsmaker to sweat how the action breaks down in each game as long as he's put the house in a good position. He knows that things will work out for the sportsbook over a large sampling of games.
"Splitting the action" is a myth. That's not the way it happens in the real world.
If you want to win when betting college and pro football, you have to be aware of this phenomenon and put it to your advantage. Go against the public teams so you can put the free points in your favor. Don't bet any side or total where you believe the line has been shaded against you. Make your own calculated assessment of what the "true" line should be. Then try to find edges you can exploit. You'll still be dealing with the 11/10. But, you'll have a fighting chance to be on the right side more often than not.
Then the squares will be paying YOU instead of the house!

[hodown]

what's 11/10?

[Underdog88]

Originally Posted by hodown

what's 11/10?

The standard vig- ie 110 to win 100

[Flop2nutz]

Sportsbook Margins: “Shading” Example

Now, what happens to these results if sportsbooks shade their lines to exploit human tendencies? A simple example that SportsInsights.com has discussed in the past – is the fact that most people like to bet on favorites and overs. Sportsbooks could “pad their pockets” by shading the lines to “overprice” favorites and overs, on average.

There have been several articles and sources that suggest that this “shading” takes place. Levitt’s academic article states that sportsbooks could potentially improve their profit margins 20-30% by shading their lines.

Here, we study the market structure of the sports betting world and see if this makes sense. What if a sportsbook:

• instead of – centering the line (or probability) of a game “exactly as expected” –
• shaded their lines to make certain teams more expensive?

First, we studied a sportsbook’s profit margin if they shaded their lines so that the “probability distribution” was shifted 1%. In our example above, the game priced at 180/-220 is “centered” at 200 – so that the favorite might be expected to win two-thirds (66.7%) of the time. Since the sportsbooks know that most people will want to bet on the favorite, they might shift the probability distribution – or pricing – of the event so that this favorite might win only 65.7% of the time.

We computed a sportsbook’s expected profit margin based on results over a wide range of events (small favorites, heavy favorites, etc.). Note that the percentage of public money (on the “overpriced side”) – impacts results and expected profit margin. For the purposes of the table below, we assume that each bet is the same size.

Table 1: Sportsbook Profit Margin –

A Function of Probability Distribution “Shading” and Public Money

Public % on Overpriced Side	Profit Margin (Prob Dist Shaded 1%)	Profit Margin (Prob Dist Shaded 2%)	Profit Margin (Prob Dist Shaded 3%)
100%	6.3%	8.2%	10.2%
80%	5.6%	6.7%	8.0%
60%	4.9%	5.3%	5.7%
50%	4.5%	4.5%	4.5%
40%	4.2%	3.8%	3.4%
20%	3.5%	2.3%	1.2%
0%	2.8%	0.9%	-1.1%

Conclusions: What does this mean?

Based on the results in Table 1: Sportsbook Profit Margin, we see that there is, indeed, a strong incentive for sportsbooks to shade their lines, on average. Below are some notes and conclusions.

• If sportsbooks shade their “probability distributions” just 2-3%, their expected profit margins do, in fact, increase 20-30% (from 4.5% to 5.3%-5.7%, at the Public 60% level). Profit margins are even higher at higher Public % and higher “shading” levels.

• If sportsbooks shade their lines 3% or more, they are starting to “leave some on the table” for sports investors with good information. Note the highlighted –1.1% at the bottom-right of Table 1.

• With many sports bettors paying reduced vig (or shopping around for “softer lines”), sportsbook profit margins are being pressured all the time. Lower margins give sportsbooks even more incentive to shade their lines – and improve their profits.

• These results agree with SportsInsights’ – and most people’s – philosophy that it pays to be a contrarian investor and “Bet Against the Public.”

• Based on SportsInsights’ results (that have been profitable over the years, across various major sports), it seems like sportsbooks could be shading their “probability distributions” as much as 3-4%.

We believe that serious sports investors can earn a profit in the sports marketplace. In this article, we used some theoretical tools to analyze the real-world sports betting world. We showed how – and why – sportsbooks might price sporting events the way they do.

These are just some of the reasons why SportsInsights’ tools and statistics are effective and can help you succeed in sports investing. Note, however, that the sportsbooks have a nice cushion to work with (the vig!) so it takes a lot of hard work! This is why we always encourage a cooperative effort – and ask that you share your thoughts and ideas on our forums so we can learn together!

[Stifler's Mom]

I've been saying this for years and I don't think its is any big secret anyway. Finding the oddamakers opinion is huge in capping, imo, although not a be all, end all.

Maybe I should have written an article too, lol.

In any case, still good info

[FlyersFan]

stif- you would be surprised at the amount of people who will tell you (and ive even heard it here) that the oddsmaker wants action on both sides.....not true at all....

[Stifler's Mom]

I know....and in a perfect world it makes complete sense, and would be desirable to get 50/50 money on each side i'd think....but for many variables that I won't waste my time getting into, it's obviously just impossible.

The reason I make the comment I did is because I've had quite a few people tell me I was nuts (and much worse, lol) for saying "traps" DO exist (it only becomes a "trap" when the public allows itself to fall into it though, imo, as the oddsmakers can't FORCE you to put your money on any certain side), and in addition, that the oddsmakers/books DO have an opinion on SOME games, and are willing to take a public beating on these sides because they know the results will turn out in their favor more often than not, and in addition, they're getting +110 odds (or thereabout), so they need to be right LESS THAN 50% of the time to profit.

This goes back exactly what I was saying about the PSU/WIS game this weekend....that there's no way the oddsmakers like WIS in that one. For whatever reason, and weather they're right or not, remains to be determined....but there's no way they're trying to sucker PSU action at -4, -5 and now -6 in this spot. Not a freakin chance. If the oddsmakers liked WIS, this line would be NO MORE THAN PSU -3, and more than likely closer to a pk...hence the reason I said "something just doesn't feel right" about getting all those points at home with WIS.

[FlyersFan]

Originally Posted by Stifler's Mom

I know....and in a perfect world it makes complete sense, and would be desirable to get 50/50 money on each side i'd think....but for many variables that I won't waste my time getting into, it's obviously just impossible.

The reason I make the comment I did is because I've had quite a few people tell me I was nuts (and much worse, lol) for saying "traps" DO exist (it only becomes a "trap" when the public allows itself to fall into it though, imo, as the oddsmakers can't FORCE you to put your money on any certain side), and in addition, that the oddsmakers/books DO have an opinion on SOME games, and are willing to take a public beating on these sides because they know the results will turn out in their favor more often than not, and in addition, they're getting +110 odds (or thereabout), so they need to be right LESS THAN 50% of the time to profit.

This goes back exactly what I was saying about the PSU/WIS game this weekend....that there's no way the oddsmakers like WIS in that one. For whatever reason, and weather they're right or not, remains to be determined....but there's no way they're trying to sucker PSU action at -4, -5 and now -6 in this spot. Not a freakin chance. If the oddsmakers liked WIS, this line would be NO MORE THAN PSU -3, and more than likely closer to a pk...hence the reason I said "something just doesn't feel right" about getting all those points at home with WIS.

yeah but stif if you read the article...it goes both ways. it talks about a "square" not only paying 11/10 but also paying a "tax" on his play of 1-3 points. so in this instance, if the oddsmaker thought PSU was the "square" side he would inflate the line to make PSU bettors pay a premium. The whole point is that if they know the side the public likes they will inflate that number against them knowing it doesn't matter anyway. So it doesn't necessarily mean that the oddsmaker would like penn state if he inflated the line. depends where the public money is going in that game, and that i couldn't tell you.

[tdawgmd]

definitely good info--I've always known that these lines weren't meant to get the play to be exactly 50/50, and figured vegas had a good way of making more money than 10% on some games than others. However--I always thought it was the sharps that keep some lines in place because they bet larger sums of money. Doesn't matter if 70% of people are betting NYG if 70% of the MONEY is on CLV for example. I think regardless we're both looking at the same trends.

Interesting discussion nonetheless.

[Horfin]

Don't bash me too hard (stif and ff). But the article seems to PROVE the point that the book wants even action on any given bet.

The squares for the most part are betting smaller than the sharps...correct?

So the books bash the squares by making them take The redskins at -13, when the line should have been -9. (tax on the line).

If the line was Redskins -9 say you would get 1000 $50 bets =$50,000.00
and
You get 100 $500 bets = $50,000.00 (sharps on the dog at +9)

If the line is Redskins -13 (shaded) you would (according to the article) get 1000 $50 bets = $50,000.00. (I mean you are not going to get more bets, if anything less)

but this is the problm with the logic:
It would seem to me that the sharps would lay more money on the opponent +13 or you would get more sharps on the dog becuase there is a better line, when the line should have been +9....correct?

so you get 100 $700 bets = $70,000.00

So now the line has to move back to -12 to get more action on the Redskins.

I am not taking a position...I am pointing out a problem with the logic.