Naive Betting Strategy Review
Each week we review several simple hypothetical betting strategies, including 1) betting with changes in the spread, 2) fading the public (i.e. betting on teams to cover that have garnered less than 40% of public betting support), 3) taking all favorites to beat the number, 4) backing all home teams versus the line and 5) supporting home underdogs ATS. Consistent with research on the topic, we expect certain trends to exhibit profitability over extended horizons. For example, Paul and Weinbach (2010) find evidence of statistically significant profitability related to betting against public sentiment; and Borghesi (2004), Gandar, Zuber and Lamb (2007), Borghesi (2011) and Humphreys, Paul and Weinbach (2013) all validate the existence of a home underdog effect in NFL betting markets. But, while over reasonably long timeframes these tendencies are likely to manifest, from one season to the next we allow for the potential emergence of shorter-term drifts that run counter to these bigger picture predilections. We hope this form of analysis serves as a cross-check for our power rankings and computer simulation-based picks from one week to the next.
The Betting Line
According to data from TheFootballLines.com, the direction of the move from the opening to the closing point spread was consistent with the actual ATS winner in seven games, but led bettors astray six times last week. At week 4's conclusion, the season-to-date record to the betting line stood at 26-23-1, good for a nominal profit (assuming a bet to win 1 unit on each pick, at the standard vigorish of -110).
Betting Against Sentiment
The seesaw continued in week 4 for fading the public. In weeks 1 and 3 the strategy of betting against teams garnering 60% or more of betting volume (as tracked by SportsInsights) delivered 10.5 units of profit, on a 16-5 record ATS. After a 3-7 out in week 4 though, this approach is 7-12 in even numbered weeks, for a loss of 6.2 units. Despite the most recent setback though, in aggregate, fading public spread picks is still up 4.3 units of profitability on the season. However, the strategy has ceded the position of best performing naive strategy.
Favorites
Underdogs followed up on a 12-4 ATS week 3 showing with a 9-7 performance in week 4. As such, the unfavored are now 36-26-1 versus the number on the year, for 7.4 units of profit. Further, dogs have assumed the mantle of the most profitable naive betting strategy on our radar.
Home Teams
Home teams modest profitability through week 3 was more than undone last week, as traveling teams staged a 10-6 showing that resulted in a 5 unit loss for the strategy of backing all home teams to cover. Now, at 31-31-1, teams competing before the home crowd have covered at a rate identical to that of teams on the road.
Importantly, despite the second consecutive winning week for underdogs, teams receiving points in their own stadium were a more moderate 2-3 ATS in week 4. This modest giveback might have been expected given the blistering 7-3 record posted by home dogs in week 3. Moreover, season-to-date record for this contingent is a still profitable 15-11 on the year.
Profitability Summary for Naive Strategies
Underdogs +7.4 units
Fading the Public +4.3 units
Home Dogs +2.9 units
Line Movement +0.3 units
Home Teams -3.1 units
The Good, the Bad and the Ugly
Regrettably, last week we experienced the variation we thought we averted in week 2 -- in a big way. Our NFL Sunday picks finished 2-9 ATS; our selections were highly skewed toward the home squad in a week that would favor away teams.
As a silver lining of sorts though, we submit that, in an endeavor such as handicapping football, it is exactly as hard to lose 82% of the time as it is to win 82%. So we are confident that week 4 is not indicative of our overall prowess and look forward to a chance at redemption in week 5.
A final point about a terrible week 4: it is worth noting that both our Thursday and Monday Night Football picks cashed in, in spite of our atrocious overall performance (though the Chiefs cover versus Washington Monday evening was absolute luck).
When the dust finally settled on last week's action, we were a deflating 4-9 ATS. We now stand at 21-19-1 on the season. This disappointing performance more than sapped the 5 unit gain we had amassed over the course of weeks one 1-3, and we presently find ourselves in the undesirable position of being down 1 unit on our published picks.
Down to Brass Tacks
Our power rankings factors agree on six ATS picks for Sunday, and our computer simulation work highlights other three games. The following graphic illustrates each of our wagers, the actual vigs we incurred, the extent to which the public is aligned with our thinking (as reflected by the percent of spread bets tracked by SportsInsights that back our pick), the expected cover margin and an account of the appropriate model's season-to-date performance picking games featuring the involved teams.
Consistent with the strong showing from road teams last week, we note that two-thirds of our nine NFL Sunday picks back away teams. As such, we are (implicitly) banking on a continuation of the strength exhibited in week 4 by this contingent. Further, we are approximately evenly split between favorites and dogs this week (note: though we are taking the Chiefs on the moneyline, Vegas expects Kansas City to win by a point as of the time of this writing). And save our play on the Panthers to cover, we are avoiding games where betting support has reached extremes. As the profitability of this latter factor has been feast or famine from one week to the next, such positioning might support a less volatile performance this week.
Happy betting!!