Sports: does gambling affect results?

According to Aaron Brown, point spreads do affect the outcomes of games

Sports: does gambling affect results?

Bookmakers don't fix matches. Prior to World War II, bookmaking was a local business, and fixes were attempts to cheat bookmakers. Then Charles McNeil invented the point spread and organized crime took over gambling. From about 1945 to 1980 U.S. betting was centralized. The mob made a low-risk profit by balancing bets. It made the same profit whichever team won. It discouraged attempts at fixing as that kind of fraud could attract investigations and hurt business. Since 1980, the betting industry has fragmented into retail operations that try to balance books, risk-taking bookmakers and syndicates, and assorted other players, none of whom have much incentive to fix. It's amateurs who have been caught fixing games.

Like kidnapping, the hard part of match-fixing is not the crime, but collecting the money. Retail betting sites protect themselves by cutting off winners. At matching sites like BetFair, you must win computer battles to get significant betting action at normal odds. Wholesale betting sites will continue to do business with winners, but they learn a lot about them, and also about suspicious matches.

Professional bettors typically rely on getting thousands of wagers per year at 5 percent to 10 percent edges.  Having a dozen or so bets with 20 percent edges from fixes would be nice, but not worth the expense or risk of fixing. And trying for hundreds of fixes or sure-thing fixes is how people get caught.

The University of California college football team trailed the University of Washington 38 to 7 this past weekend with one second left on the clock and facing a fourth-down-and-twenty-one. When there's no chance of winning, coaches usually either “take a knee,” give seldom-used players a chance to gain some experience in real-life game conditions, or fight to the end by calling long-shot touchdown attempts.

California opted for the unusual choice of a field goal attempt. Washington was favored to triumph by 28.5 points. A field goal would be good for three points and reduce the margin to 28, so bettors wagering on California would win. Sports announcers are discouraged from mentioning gambling, so they often use coded expressions such as “this is meaningful to some” and “people in the desert  are watching.” At 2 a.m. Sunday on the East Coast, with an outcome forgone by midnight, the remaining television audience was likely made up of bettors who understand the code.

Odd late game decisions that don't affect the outcome but change which bettors get paid are common in sports. To some people this proves that betting affects games, while other people laugh that nuts will build conspiracy theories on any unusual event. Academic economists have opinions. The 2005 best-seller "Freakonomics" alleged match fixing in Sumo wrestling and a classic 2006 paper by Justin Wolfers claimed that point-shaving was widespread in college basketball.

These and similar conclusions have been attacked and defended vigorously. It's clear that betting affects game outcomes because the statistical distribution of results is not consistent with everyone ignoring the spread. What's controversial among academics is whether the deviations can be explained by corrupt actions such as players shaving points for money or coaches trying to please local bettors. No one has come up with a plausible story of rational actors profiting from systematic fixing. Plenty of people have been caught fixing matches,  but their capers are filled with confusion, double crosses and idiotic carelessness. Are there only occasional amateurish attempts to fix, or is fixing endemic and we catch only the most foolish attempts?

People in sports know the spread. Many of them bet despite rules against such activities, and nearly all know people who bet. A college coach who knows that most of his or her school's boosters have bet on his or her team might have a hard time making a decision that is meaningless in game terms but costs them money. Knowledge of crowd desires by referees  creates large home-team advantages. Knowledge of the spread should have similar effects on everyone. That's why academic papers show betting affects games, but this does not mean large numbers of people are acting corruptly.

Sports are played by people -- not angels -- motivated by lots of things: the rules, team loyalty, personal benefit, friends' benefits, opinions of others. These and many other things interact in complicated and often unconscious ways. Individual actions interact for more complexity. You can rarely trace a specific game outcome to a specific motivation of a specific individual. But by averaging over thousands of games, you can demonstrate that point spreads affect outcomes.

 

Bloomberg | Aaron Brown

Prepared by Laura Rocha Rueda

 

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