From: zwiebel@leland.Stanford.EDU (Jeffrey Zwiebel)
Subject: Re: Money line vs. point spread?
Organization: DSG, Stanford University, CA 94305, USA
Date: Sun, 13 Sep 92 19:14:18 GMT

In article <1992Sep13.085456.18363@lsil.com> mitch@lsil.com writes:
>In article 27558@leland.Stanford.EDU, zwiebel@leland.Stanford.EDU (Jeffrey Zwiebel) writes:
>>>For instance, Lompoc State opens at +12.5 against Cedar Rapids A&M and CRAM
>>>gets a ton of action.  Instead of changing the line to +13.5, +14.5, etc,
>>>you would adjust the money line from -1.10 to -1.20 to -1.40, etc., etc.
>>>encouraging more bettors to take the +12.5 even or +1.10.  Makes it look
>>>like they are not paying the vig, in a way.
>>This discussion makes little sense to me.  Why should the house dislike
>>it when betters take both sides of a points bet after the line has
>>changed any more than when they take both sides of an odds bet? 
>>Either way, if a better knows how the line will move (and if the line
>>moves sufficiently to cover for the house advantage), the better can
>>profit from such arbitrage.  Presumably, it is consequently not easy to 
>>predict such changes in the line.
>
>If you think about it enough it should become very clear why the house doesn't
>want bettors ever betting on both sides of a middle.  How would you like it
>if the opening line was 2.5 and moved to 3.5 and the final score was 10-7?
>You'd get crucified for sure.  Now, if you get a ton of action on the -2.5,
>it's certainly more prudent to move the money line to +2.5/+1.10 in order
>to entice more action to the other side.  You're going to take a bath if
>the favorite covers anyway but you're not going to have to pay off both
>sides, now are you?  So you have to lay +1.10 to the dog bettors, it's
>certainly better than having them lay you 11-10 at +3.5.
>

I think you missed my point here.  Sure the house doesn't want me to be 
able to hold an over 2.5 and an under 3.5 bet on the same game.  But it
also doesn't want me to hold a -1.1 bet on the favorite and a +1.3 bet
on the underdog.  Both afford me an arbitrage profit.  In the former 
(ignoring the vig) I break even unless the team wins by 3, and then I
win both bets.  Thus I win a "large" amount a small fraction of the
time and otherwise break even.  In the latter, (once again ignoring the
house advantage), as long as I bet the right amount on the two games,
I will win a small amount of money ALL the time.  Until you tell me 
how responsive demand is to a change in the lines (i.e, by how much
you have to change the spread or the money line to achieve the desired
balancing of bets), you can't say anything about in which situation
our arbitrage better will make more in expectation.  

The point is, a better who can anticipate the direction that either
the line or the odds move, can make money for sure (provided the 
movement is large enough to offset the house advantage).  The is 
just as true with the money line as the point spread.   Without 
specifying how responsive demand is to changes in the two types of 
lines, one cannot make the statement you make below.  

>Basically, the opening line was obviously flawed and moving a moneyline
>instead of the pointspread is going to cost the bookie less money in the
>long run.
>


Yes, a bookie will lose money on a bad opening line.  How he then chooses
to adjust the line will not allow him to in recoup this money in expectation,
at best it will allow him to affect the distribution of returns on the game;
just as a betting scheme won't change the house advantage in roulette, but
will only change the distribution over returns.


Jeff